The Financial Regulatory Authority has approved the publication of the disclosure report for Arab Dairy Products "Arab Dairy Panda," which includes a reduction of the company's issued and paid capital through the cancellation of treasury shares. This decision is in compliance with the applicable laws in the financial market.
The capital reduction will decrease it from 500 million EGP to 491.87 million EGP, representing a reduction of 8.13 million EGP. This reduction will be implemented by canceling 8.13 million shares of treasury shares owned by the company, each with a nominal value of one EGP.
Details of the Event
The justification for this reduction is in accordance with Article 48 of Law No. 159 of 1981 and Article 51 of the listing rules, which require companies holding treasury shares for more than three months to reduce their capital by the nominal value of those shares. It has been over a year since Arab Dairy purchased its treasury shares, making it legally obligated to cancel these shares.
In this context, Arab Dairy Panda has decided to proceed with the capital reduction by canceling treasury shares, and the board has approved the necessary procedures for this. The disclosure model has also been approved in accordance with Article 48 of the listing rules.
Background & Context
Arab Dairy has been experiencing a noticeable decline in its profits, having incurred a loss of 183.2 million EGP last year, compared to a profit of 97.08 million EGP the previous year. The company's revenues increased to 2.57 billion EGP, yet this remains lower than the 3.08 billion EGP achieved in the prior year.
During the first nine months of last year, the company recorded a loss of 188.9 million EGP, compared to a profit of 143.1 million EGP during the same period the year before. Additionally, the company's sales decreased to 1.87 billion EGP, down from 2.16 billion EGP in the same period of the previous year.
Impact & Consequences
This capital reduction may affect investor confidence in the company, especially given the decline in financial performance. While the cancellation of treasury shares could be seen as a positive step towards improving the capital structure, it also reflects the challenges the company faces in the market.
Nonetheless, the ordinary general assembly of Arab Dairy has approved the deferral of the shares of board members and shareholders to retained earnings, and the disbursement of 4 million EGP to the company’s employees. This indicates that the company is striving to maintain its financial stability and motivate its employees despite the difficult circumstances.
Regional Significance
These steps are part of the general trend in the Egyptian market, where companies are seeking to adapt to economic and financial changes. Given the challenges faced by many companies in the region, these measures may serve as a model for other firms experiencing similar conditions.
In conclusion, it remains important to monitor the developments of Arab Dairy and how these actions will impact its performance in the future, especially amid fierce competition in the dairy sector.