Investor Relations
Egyptian Transport and Commercial Services Co., S.A.E
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» Why did the net profit decline by almost 50%, with the turnover falling by EGP 9 million?
 
1. The net profit in the consolidated financial statements until September 30th, 2014, was lower, when compared to the same period of the previous year. According to the Egyptian Accounting Standard No. (18) (Equity method), the consolidated income statement does not include affiliated companies’ profits which have been distributed for the period up to December 31st, 2013, which appeared in the separate income statement of EGYTRANS.
2. The level of the company in the consolidated financial statements until September 30th, 2014, was lower, when compared to the same period of the previous year. This was due to the decline in the company's project activities, when compared to the previous year.
3. During this year, the company has invested in affiliated companies for the benefit of the investment returns in the future. The reason for that decline was the lower project activities which had an adverse impact on the income of affiliated companies.
4. Treasury bills were used for investments in affiliated companies. Within the coming periods, this will result in increasing the profits of affiliates of return on these investments.
 
» Is there any plan to resume the IPO of ETAL? If so, how much progress has been made and what is your estimated timeframe or conditions for the NILEX listing?
 
We are currently preparing the required documents for listing ETAL in Nilex in cooperation with our sponsor in order to start the procedures with the official related authorities. However, the final decision about timing has not been decided yet.
 
» Has any decision - or ballpark figure - been made on the size of the stake to be floated, and whether there would be a public offer or private placement?
 
We are still studying this point. We might split the offering between a private placement and IPO with a stake ranged between 10-20%. However, we did not reach an identified percentage for both.
 
» How much do you expect to raise from the listing? How would the capital be used?
 
Value of the expected offering will depend on the percentage of the stake we will offer and also according to the fair value which will be concluded from the independent financial consultant. The value will be used in financing the remaining expansions for ETAL’s assets as we have already invested about EGP21mn and still some new assets are on the run.
 
» Is the plan to spin off from Egytrans ahead of the IPO and then raise its paid-up capital?
 
This point is still under study.
 
» Could you provide revenue/net profit figures for ETAL? (2011 vs. 2012 would be helpful)
 
Revenues 2011: EGP4.81mn - Revenues 2012: EGP5.32mn - YoY change: +10.6%
Net Profits 2011: EGP0.84mn - Net Profits 2012: EGP0.60mn - YoY change: -28.6%
 
» Is Egytrans considering any new acquisitions at this time?
 
We are open for any serious suitable opportunity for us in the market and we study it from all aspects and then decide whether to go for it or not.
 
» Did the Kuwait Investment House acquire EGYTRANS Company?
 
No, it did not acquire EGYTRANS. It only bought 70,000 EGYTRANS shares and therefore it had to disclose this to the Egyptian Stock Exchange because they now own more than 5% of the shares, which requires disclosure in accordance with the instructions of the Egyptian Stock Exchange.
 
» What is the impact of this on EGYTRANS shares?
 
The Kuwait investment house is a big company and having it as one of the company's shareholders will be an added value to EGYTRANS.
 
» What is the fair value of EGYTRANS shares?
 
The fair value of the shares should be determined by a neutral company and we are not the party that can determine this value.
 
» What are the core events that have caused the share price to increase?
 
There have not been any core events other than those posted on the company website. The increase in the share price is due to the company’s achievements that appear clearly in the financial statements of the second quarter of this year and due to the Board of Directors’ hard work to make integrated transport easy, safe and cost effective.
 
» What will the percentage of the free float for ETAL be?
 
It hasn’t been decided yet. First the company will be listed on the Nile Stock Exchange and the capital will be increased through EGYTRANS then trading will begin during 2013.
 
» When will trading on the ETAL share begin?
 
After listing the company on the Nile Stock Exchange during 2013.
 
» Was the idea of investing in a containers company set aside for in favor of supporting ETAL?
 
No, but a due diligence study was conducted for investing in a container company and this project did not demonstrate the desired feasibility..
 
» How will ETAL capital be increased? What is the source of the increase?
 
ETAL capital increase will be postponed until it will be listed on the Nile Stock Exchange
and after that the capital will be increased across two stages: first by a fund from EGYTRANS, then the increase will be through a free float.
 
» What is the progress of the ISO Tank project?
 
The project began in January 2011 and the number of tanks was increased by almost 150%
with providing the surveying service which raise the operating efficiency and leads to achieving revenue increase.
 
» What is the status of the company's river port project in Kafr Shurafa at Qalubia?
 
 
» What are the latest developments in the company project EGYTRANS Barge Link?
 
  • There is a close relation between EGYTRANS for River Ports Co. and EGYTRANS Barge Link as we cannot start the activity of EGYTRANS Barge Link before starting the activity of EGYTRANS for River Ports Co. and this will be after obtaining the necessary licenses.
  • The River Transport project took preliminary approval from the armed forces before 2011 revolution; the revolution affected the completion of most of the required approvals.
  • Finally, the company obtained the approval of Qaliubiya Government and reached an agreement with the owners of the project land
  • The company is currently completing the rest of the procedures to obtain the approval of the General Authority for Reconstruction Projects and we hope to get the final license at the end of 2012.
 
 
» What is the company’s plan for the possession of new land transport fleet?
 
The company set aside EGP 36 million to fund this project, 6 million of which is funded by the company and 30 million pounds via external funding through a leasing company and currently we are finalizing the contract in order to begin the implementation phase. The land transport fleet will contribute in the implementation of the company activities work without relying on subcontractors and this will save millions of pounds and will increase the company’s revenues significantly.
 
» What are the developments in the establishment of the Holding Company EGYTRANS? ?
 
The company has contracted with CI Capital to act as its financial advisor in the process of restructuring the company and Matouk Basyouni Legal Counsel as well as the Office of Ashraf Abdul Ghani as a tax consultant in order to prepare a study on the possibility of restructuring the company to be a holding company. The result of this study was presented before the company Board of Directors who decided at its meeting No. 1/2012 dated 22/2/2012 to keep the company's current structure while making some adjustment on the agreements for services rendered to subsidiaries. The Board as well authorized the Chairman &CEO to take the necessary measures and to get help from a company specialized in the preparation of the legal agreements.  
 
» What is the attitude of the company towards the Global Depot Solution GDS ISO Tank project in controlling stake in the Egyptian market?
 
The foreign partner's share which is 25% was purchased and EGYTRANS has ownership of the whole capital of the company and the company name was changed to be EGYTRANS Depot Solutions EDS.
The feasibility studies for the project showed that the project will start in making profits after the fourth year of operation. Moreover, the results of January 2012 revenues show an increase over the target mentioned in the feasibility study of the project.
 
» Will there be developments in the method of work of the company after purchasing the share of the foreign partner and will that affect the profitability of the company? ?
 
Yes, where the company on its way to be one of the largest companies in this activity in the region.
 
» Are the profits that have been achieved in the first quarter of 2012 a result of 2011 revolution and the lack of work because of the protests and events going on a result of the revolution?
 
Each year is measured alone. As for achieving profits, it was a result of the employees’ hard work and cooperation. The company is working through an organized plan to achieve its targets in line with the company estimated plan
» What are the reasons for the profits increase and whether this increase is commensurate with the capital increase?
 
The increase was due to the projects activity and other profitable activities where the company is carrying out a group of activities and is not necessarily to be distinguished in all of them but it is necessary to make integrated transport easy, safe and cost-effective
 
» Given the various lines of business (LoB) Egytrans has, we needed to get more colour on the nature of some of these lines including commercial operations, showrooms…etc.
 
Concerning the commercial operations LoB, it is simply allow the reputable and credible clients to use our license in order to transport their shipments, albeit on our own responsibility.
As for the showrooms LoB, it is simply that we offer and manage all the handling process and related services for any international exhibitions or fairs that are held in Egypt. Year-to-date, there are no any international events held. For more information about this LoB and the other LoB, please see the 2011 Annual Report on our IR website ir.egytrans.com.
 
» Clearance: is for sea ports or land ports? Since there is a separate one for air?
 
Clearance in the breakdown of the financial statements is related to the Sea Freight LoB. However, Clearance LoB is a major part of our business and we do it for all transport activities whether these activities are sea, air or land.
 
» What is the company’s strategy in adding new LoB? Any expansion plans in the pipeline?
 
- We obtained a new license for our Free Zone LoB in Port Said, which is the storage of fully manufactured and canned dry food that is earmarked for exports as well as its related manually repacking activities.
- We are still in the process of getting the final approvals for our new River transport activities via operating river ports and barges through our two companies established for these purposes
- We are in the process of investing around EGP36mn in ETAL in order to buy new trucks, different types of trailers and cranes in order to meet the expected growth in demand, which will has its direct positive impact on our revenues and operating margins by relying on our own fleet rather than sub-contracting.
- We have many future mega projects’ contracts and deals in our Projects LoB’s portfolio. (Please see our IR website ir.egytrans.com).
- For any other Egytrans news, you can see and follow up our disclosures to the EGX or visit our IR website ir.egytrans.com.
 
» Which subsidiaries manage which LoB?
 
All LoB that are mentioned on Egytrans separate financial statements are managed by Egytrans (the mother company), while all other activities like ISO tank cleaning, land transport and related activities in addition to the potential river transport activities are managed by their own separate companies that were established for these purposes. Otherwise, Egytrans owns 30% stakes in two shipping agencies companies namely “Barwil Egytrans” and Scan Arabia”.
 
» What is Egytrans ownership in Egytrans Barge Link Co. and Egytrans River Ports? And what is the difference between these two companies?
 
Egytrans owns almost 100% of each of “Barge Link” and “River Ports” companies. The former was established to manage the operating barges that will be earmarked for the transport activity itself, while the latter will manage the river port activity in terms of containers and cargo handling and all other related services.
 
» In these operations, how are fees set? Government, market, Egytrans board?
 
Egytrans Board who are setting the fees.
 
» What is Egytrans market share in each LoB? (Egytrans import related services outpace exports, does this mean you are more of an international provider of services)
 
You can see 2011 Annual Report on our IR website ir.egytrans.com. In fact, Egytrans strategy is directed towards a more focus on the import activities as we have wide spread and strong global network with the international shipping agencies in almost the entire world.
 
» How many competitors in each segment?
 
- We are considered the major operator in the Projects LoB with a 45% market share (The highest as of 2011). We face competition from a few rivals in the market.
- Regarding the ISO tank cleaning activity, we are the only provider for this activity in Egypt. However, few public companies are cleaning their tanks on their own cleaning stations but not with that high quality and the most advanced equipment technology that Egytrans implements in its Egytrans Depot Solutions “EDS” company (The company that operates and manages this type of activity - 100% owned by Egytrans).
- We are also considered one of the top companies in the Transit business with a considerable market share of 30% as of 2011.
- As for Import activities in general, it is a fragmented LoB with many companies operate in it. However, according to the observance of the tariff of the International Services Division and non-involvement I-Price speculation, Egytrans adopts a restricted policy regarding the shipping prices. The company maintained the shipping rates of about 55 containers on a monthly basis throughout 2011.
 
» Capex strategy going forward
 
Capex strategy is as stated hereunder but is subject to change at any time according to the economic and political circumstances.
For ETAL, our plan is to finance the expansion via debt equivalent to EGP15mn, while we have already purchased an equipment worth EGP21mn till the moment.
As for both IWT projects, our plan is to invest from USD75-100mn throughout the next 2-4 years via 35% debt, 35% equity and 30% as internal finance.
 
» Update on River Ports investment, operational by 2016
 
We are still in the process of getting the final approvals for our new River transport activities via operating river ports and barges through our two companies established for these purposes.
However, on the other hand we are monitoring the problem of Al Nahda Dam in Ethiopia and its effect on the water levels for the Nile and wait for an official final statement from the government regarding this issue to decide our next step.
 
» Update on transportation of various goods plan. Has it started?
 
We are now in the process of finalizing our investment plan in specialized equipment and we will review this issue upon completion of the current plan.
 
» Is the company planning to issue new debts to fund future expansions?
 
As for Egytrans, we are not planning to issue new debts so far. However, each subsidiary will finance its expansions according to its financing plan as aforementioned.
 
» Lease Expense: where is it recognized on the income statement given that you follow IFRS in reporting finance-leased assets?
 
It is reported under the item of Finance Expenses.
 
» Expectations for new licenses revenues at FZ? Any new licenses?
 
Revenues are expected at EGP2.5-3.5mn by end of 2013. Moreover, we have already added a new license for the storage of fully manufactured or canned food that is earmarked for export.
 
» Are you to renew licenses on an annual basis?
 
In November 2012, we obtained an approval from GAFI to extend the Port Said Free Zone license for two years starting December 2012.
 
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