Massive Profit Growth at Misr Oils and Soaps, with Qualified Opinion from Accountability Authority

The amended financial statements of Misr Oils and Soaps for the fiscal year ending June 2025 showed a major year-on-year increase in profits.

According to the company’s statement to the Egyptian Exchange, the company recorded net profit of EGP 50.152 million, compared with EGP 816,210 in the previous fiscal year, representing growth of 6,044.4%.

The data also showed that revenue rose during the same period to EGP 3.23 billion, compared with EGP 3 billion in the previous fiscal year.

The Central Auditing Organization issued a qualified opinion on the statements, saying they fairly and clearly reflect the company’s financial position except for the impact of several material reservations.

The main reservations by the Central Auditing Organization included:

1. Tax provisions: The report noted a significant shortfall in provisions. The company allocated only EGP 10.8 million to cover accumulated tax claims of around EGP 64.6 million, requiring immediate strengthening of this provision to meet actual obligations.
2. Asset valuation: The company did not assess impairment indicators for unused machinery and production lines with a book value of EGP 7 million. It also did not review the useful lives of fully depreciated machinery with a value of EGP 48 million.
3. Social and health insurance: The report identified violations in this area, including accumulated debts to social insurance of EGP 3.417 million. In addition, the comprehensive health insurance expense was calculated incorrectly, with the company paying only EGP 664,000 while the legally due amount was EGP 8.211 million.
4. Inventory and credit losses: The authority noted stagnant inventory worth EGP 7.5 million and said the company had not prepared the required study to assess expected credit losses for financial assets, which conflicts with accounting standards.

Profitability and cash-flow analysis: Although the company announced net profit of nearly EGP 50.2 million by the end of June 2025, the report showed that this profit relied mainly on non-operating income. Most of the profit, EGP 46.9 million, came from capital gains from the sale of land at the Mit Ghamr factory.

At the same time, the statements showed negative operating cash flows of EGP 45.7 million, indicating reliance on selling fixed assets to meet current obligations.

Additional observations: The report also included other administrative and legal observations, including delayed submission of financial statements and ongoing land disputes in Zagazig and Zefta.

It also noted long-overdue debts, some dating back to 1990, totaling EGP 22.5 million, as well as court rulings that have not yet been implemented.

The company concluded its statement by saying it would resubmit the financial statements and accompanying notes to the stock exchange and the authority after they are amended by the external auditor, Youssef & Mahmoud Salah El-Din.