Annual Report - Americana Group

$QQXDO5HSRUW
2014
Kuwait Food Company
(Americana) S.A.K.
50th Annual Report
Established by the Amiri Decree
Dated December 29, 1963
Authorized Capital
Kuwaiti Dinars 40,200,207
Paid Up Capital
Kuwaiti Dinars 40,200,207
Commercial Register No.
4369
Auditors:
Mr. Bader Abdullah Al-Wazzan
Al Wazzan & Co. – Deloitte & Touche
Mr. Abdullatif Hoshan Al-Majid
Parker Randall (Allied Accountants)
Head Office: State of Kuwait - Shuwaikh Industrial Area
Tel: 24815900
H.H. THE AMIR OF STATE OF KUWAIT
SHEIKH SABAH AL-AHMED AL-JABER AL-SABAH
H.H. THE CROWN PRINCE
H.H. THE PRIME MINISTER
SHEIKH NAWAF AL-AHMED AL-JABER AL-SABAH
SHEIKH JABER MUBARAK AL-HAMAD AL-SABAH
Board of Directors
Mr. Marzouk Nasser Al-Kharafi
Chairman
Mr. Bader Mohamed Abdul Wahab Al-Jouan
Vice Chairman
Mr. Abdullah Mohamed Al-Saad
Member
Mr. Mohanad Mohamed Abdul Mohsin Al-Kharafi
Member
Sheikh, Abdullah Salem Sabah Al-Sabah
Member
Mr. Faisal Nasser Al-Kharafi
Member
Mr. Faisal Nezar Ahmed Al-Nesf
Member
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Report of the Board of Directors’
for 2014
Esteemed Shareholders,
By the end of 2014, Kuwait Food Company (Americana) has completed half a century of success and excellence
as one of the leading commercial enterprises in the Arab World and the Middle East in the fields of Restaurants,
Food Processing, Agriculture and Foodstuff trading. Since its inception, the Company adopted a studious strategy of
geographical expansion of its investments along with a qualitative expansion of its activities. The diversification of
investments with their inherent varied levels of risk enabled the Company to mitigate the negative impact of sudden
economic changes on profits throughout the years. This was supported by the keen determination to maintain an
effective balance between the income resources and spending, which led to strengthening its financial position
over the years. Despite the huge challenges it encountered in the major markets where it operates and increasingly
tough competition it faces, the Company took successful decisions year after year and guided its expansion into
new markets while undertaking additional investments thanks to the foresight, knowledge and experience of the
Board of Directors and the Executive management and their alertness to the winds of change in the business & work
environment. All these success factors qualified the company to achieve the expected revenues and profits. At this
context, it is worthy to note that this would not have been possible without the dedication and efficiency of all the
Company’s employees at all operational and administrative levels.
The Board of Directors would like to express its profound gratitude to all our shareholders and customers who have
been all along with the company step-by-step and provided the much-needed confidence to face the challenges
and crises over the years which has been the key element in our Company’s success.
Esteemed Shareholders,
The Board of Directors is pleased to present to you the 50th annual report in which we review the major challenges
faced by the Company and the significant achievements made during the year. With the will of God, We look
forward to a future full of continued excellent performance crowned by the achievement of our goals.
In this report, we will review the Company’s consolidated financial statements for the year ended 31.12.2014 as
well as highlight the outlook of the Company.
The Company achieved sales amounted to KD 922 million (US $ 3.2 billion) during 2014, compared to KD 867
million last year with 6% growth over the previous year. Despite all the tremendous challenges faced during the year,
the company achieved Net profit after the results of financial portfolio, amounted to KD 52 million (US $ 183 million),
growing by 3% compared to KD 50.6 million last year.
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Americana … Half a Century of Excellence and Success:
This year, Americana celebrates the fiftieth anniversary of its establishment. It is indeed a proud moment for the
Company to celebrate the Golden Jubilee Year-2014 of its incorporation thanks to the never-ending support
and confidence of Board of Directors, Shareholders, Customers, and all other stakeholders in all the countries
where it operates. Since its inception, Americana went through successive phases of development and progress.
Incorporated in December 1963 under the name “Americana Food Manufacturing and Distribution Company”,
the Company had a rather limited activity during the second half of 1965 with sales amounting to KD 76 thousand
and losses of KD 33 thousand. Since then until the beginning of 1969, the Company’s overall scope of work was
linked to traditional commercial policies and systems limited to import and distribution of canned, dry and liquid
foodstuffs in addition to fresh and frozen meat.
At the end of 1969, the late Mr. Nasser Mohammed Abdelmohsen Alkharafi, was elected chairperson of the
Board of Directors, and brought about a stunning leap and paradigm shift in the company’s business strategy and
management style. Under his stewardship, the Company developed a vision and a strategy that sought to keep
abreast with the latest developments in the domestic and international markets. Shortly afterwards, Americana
entered a new business field: the Fast Food Restaurants business. It opened its first restaurant of the world’s most
famous chain at the time, Wimpy at Ahmadi in February 1970, followed by Wimpy Fahad Al-Salem Street in March
of the same year. Eventually, the efforts of the Board of Directors were rewarded with the first profits, amounting
to KD 4 thousands in the year 1971. Since then, Americana never looked back by achieving consecutive success
and higher achievements year after year.
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Mr. Marzouq Nasser Al-Kharafi became the chairman of Board of Directors
in April 2004. Under his leadership, Americana continued to flourish,
achieving further development and attaining higher levels of excellence
Sales
3.2
2014
Billion US dollars
Net Profit
183
and maintaining its leading position in the fields of restaurants and food
processing. Through the tireless efforts of the Board of Directors and the
executive management and the dedication of all its employees, the Company
is well positioned to achieve further achievements and attain greater levels
of success for many years to come by the grace of God.
The following table & graphs show the development of the Company’s sales,
2014
Million US dollars
profits and number of employees over the past thirty years:
Description
Multiplier
Multiplier
Multiplier
for the
for the
for the
Period
Period
Period
1984 1994 (times) 2004 (times) 2014 (times)
Sales
24.6 90.3
(KD million)
3.7
201.4
2.2
922.4
4.6
Net Profits (KD million)
1.7
6.4
3.8
23.5
3.7
52.0
2.2
Number of Employees
(Thousands)
2
8
3.6
20
2.5
66
3.3
Net Profit (KD Million)
Sales (KD Million)
1984
1994
2004
1984
24.6
90.3
1994
201.4
2014
2004
922.4
2014
1.7
6.4
23.5
52.0
Americana has been blessed with seven elements of Excellence. These are:
Pioneering, Universality, Diversity, Development, Efficiency,
Team spirit and Social Responsibility
These elements, which were highlighted in past reports, formed an integrated
work matrix that guides performance, help unify goals and focus efforts to
achieve best possible results.
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The Core Pillars and Uniqueness of Americana:
Most business companies draw plans that include high expectations of expanding the volume of their business,
thereby increasing their revenues and profits. However, only limited number of companies can expand continuously
year after year on a sustainable and profitable basis. We, at Kuwait Food Company (Americana) believe that we
have the right foundation pillars to achieve the needed development paradigm shift in the Company’s business
volume. Americana possesses the elements of excellence & uniqueness that have placed it among the leading
companies in the restaurant and food processing in the entire Arab region. These elements will continue qualifying
the company to achieve sustainable business growth in the long term with the will of God.
The following are the Ten Core Pillars of Americana’s Uniqueness:
1. Strong Emerging Markets.
2. Strong Brands.
3. Proven Leadership and Management Capabilities .
4. Strong Tested and Reliable Systems.
5. Diversification Advantages, Operational and
6. Economies of Scale Advantages.
Geographical.
7. Strong, Long-term Historical Performance.
9. Attractive Strong Growth Prospects.
Here-under, we will review each of the ten Pillars in depth.
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8. Very Sound Financial Position.
10. Platform for Further Growth Beyond Existing
Businesses Markets.
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1. Strong Emerging Markets:
Our Arab region has many emerging markets that have achieved
unprecedented growth in the past decades and it is certainly capable to
continue this trend for several decades to come. Most of these markets
Number of
Countries
2014
13
enjoy high disposable income and high consumer spending levels in
addition to young fast growing population, which happens to be the
dominant segment of the Company’s customers. This area of the world
is considered as the most sough-after region for multinational brands
looking for high growth markets.
Number of
Cities
2014
105
Americana’s restaurants and factories are located in 13 countries,
Kuwait, Kingdom of Saudi Arabia, United Arab Emirates, Qatar,
Kingdom of Bahrain, Sultanate of Oman, Arab Republic of Egypt,
Jordan, Lebanon, Morocco, Iran, Kazakhstan, and the Kurdistan
province of Iraq. The Company’s restaurants can be found in 105
cities spread across the continents of Asia and Africa. The company’s
activities are primarily focused in four countries namely, Kuwait, Saudi
Arabia, UAE and Egypt.
The Kuwaiti Market: Kuwait is an important market in the
Middle East for the franchise business in general, as it possess the
characteristics of attraction to the world’s most leading brands. It is
an ever-expanding market in terms of the size of population and the
diversity of expatriate community with a population of 4 million, out
of which 54% are under 29 years of age, and the per-capita share of
GDP exceeds US $ 42 thousand. Population is expected to grow at
the rate of 2.9% between the years 2013 and 2018 and the consumer
spending will grow at the rate of 7%.
The Saudi Market: The Saudi market is one of the most attractive
investment market in the region, with a growing population having
huge purchasing power capacity. This market is expected to achieve
considerable growth during the coming few years with a population
exceeding 30 million, out of which 65% is younger than 29 years of
age. The country’s GDP grew at 3.6% in 2014 and the per-capita share
of GDP is expected to grow at 7% per annum during the period 2013–
2018, with an average population growth rate of 2% and a consumer
spending growth rate of more than 11%.
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The UAE Market: A promising market par excellence! Dubai’s success in winning the hosting of Expo 2020
reflects a strong international confidence in the economic position of the UAE. The UAE has a population
of 8.5 million, approximately 34% of whom are under 24 years of age. GDP grew at 4.3% in 2014, while
population is expected to grow at the rate of 1.3% per annum during the period 2013 – 2018, and consumer
spending growth is expected to exceed by 7% during the period.
The Egyptian Market: The Egyptian market is one of the biggest foodstuff and retail markets in the Middle
East. Approximately 60% of the country’s population of 88 million are younger than 30 years of age. In 2014,
real GDP grew at 2.2% despite of the political instability witnessed by the country. Egypt’s population is expected
to grow at 2.4% p.a. during the period 2013–2018 while the consumer spending will grow at more than 10%
p.a. during the same period.
2. Strong Brands:
“Americana” is one of the most popular and prestigious brands in the Middle East. This reputation has been
achieved through both its Restaurants and Factories in the region and by its unique products distributed in
several other regions around the world.
- The “Americana” brand is a unique brand in the Food Processing. As the brand “Americana” has so far
been used for a limited number of FMCG products, it still has a huge potentiality to be used in a wider range
of other food consumer goods segment.
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- Americana holds the exclusive right for using the most famous and
popular brand names in the world, with 14 global restaurant chains
and 9 home-grown chains developed by Americana.
- The Company operates 678 outlets of the world famous fast-food
brand “Kentucky Fried Chicken (KFC)”, the largest and fastest
growing brand in the emerging markets, with 18,800 restaurants in
118 countries. The Company also operates 169 outlets of Pizza Hut,
another giant chain with 14,900 restaurants in 90 countries. It also
operates 282 of Hardee’s restaurants, a leading burger brand that
has 3,300 outlets in 29 countries.
- Americana has 52 TGI Friday’s restaurants, the most unique casual
dining restaurants chain which has more than 900 such restaurants in
60 countries. Americana also operates 14 Olive Garden, Longhorn
Steakhouse and Red Lobster restaurants with these chains having
around 2,000 such restaurants worldwide.
- The company operates in addition to the above, other global chains
such as "Baskin Robbins" and "Krispy Kreme" and other home-grown
chains, such as "Chicken Tikka" and "Fish Market" and others.
- Furthermore, Americana owns and operates a range of
popular
brands in the FMCG sector, including “Americana Meat”, “Americana
Cake”, “Farm Frites”, “California Garden”, “Greenland”, “Lion”,
“Zigo” and “Windows” at Senyorita Company, and “Koki”, “Gulfa”
and other reputable brands.
3. Proven Leadership and Management Capabilities:
The company achieved a ground-breaking formula of success over the
years by blending the corporate discipline with the entrepreneurial spirit,
a blend which rarely achieved in the world of business, more so in large
enterprises, for it requires unique leadership skills. The unprecedented
success is owed to the Board of Directors who formulate and articulate
the vision, put the strategies and provide support to the Management
in order to implement such strategies. The existing management have
developed a wealth of experience working for the company through
numerous difficult situations and tremendous challenges, benefiting from
the international exposure and local and regional practice.
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The management has a long track record in delivering the objectives of our stakeholders, with great emphasis
on maximizing the shareholders’ value. Importantly, the company strives to provide an attractive work
environment that enables the human capital to achieve their goals. The Management has also earned the trust
of the various parties who deal with the Company such as suppliers, banks and other parties, and has never
failed to discharge its commitment to the societies in all the countries where it operates.
4. Strong Tested and Reliable Systems:
“Knowledge” is one of the most valuable assets of Americana that is accumulated over the years. The
Management succeeded in developing effective systems within the company to increase efficiency and
improve the learning curve of employees. The company has also continued the process of developing a
set of systems that have an influential role in strengthening their capacity for growth. For example, the
“Home Delivery” and “Call Centers” systems, which have been highly accepted and appreciated by our
franchisors.
In addition, the Company has achieved a remarkable success in developing large number of operating systems
in FMCG field, particularly the logistic systems, increasing the efficiency of the procurement and storage through
effective Supply Chain system and developing the “Online Bidding” system. These systems have been quite
instrumental in controlling the costs, thereby increasing competitiveness and promoting growth opportunities.
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5. Diversification Advantages, both Operational and
Geographical:
From the beginning, the Board of Directors and the Executive
Management emphasized diversification as a strategic direction of the
business as it ensures the Company’s sustained growth at the highest
level for a maximum possible period. Initially, it was the diversification
in the Quick Service Restaurants based on diversity of the products
offered (chicken, burger, pizza and others). The same approach was
then followed in the Casual Dining Restaurants (CDR), Coffee Shops
and Confectionary Desserts Shops as well.
Expanding to the FMCG business was also one way of implementing
the diversification strategy. Meanwhile, Americana is managing several
FMCG companies such as Farm Frites, California Garden, Senyorita and
Greenland. It also operates Agriculture and land reclamation companies
such as Americana Land Reclamation and Cultivation Company and
Karwin Land Reclamation Company. In addition, the company has an
active Trading business throughout the Commercial Agencies division in
Kuwait, poultry breeding and poultry product processing activities, feed
production activities under the umbrella of Cairo Poultry Group.
Diversifying geographically aims at reaping the economic benefits in
the countries where we operate and avoid the negative impacts of
concentrating activities on a narrow geographical scale. This led to
the presence of the company’s restaurants and factories in 13 countries
spread across Asian and African continents.
6. Economies of Scale Advantages:
Obviously, the large volume of any business would grant it huge
competitive advantages over the existing competition. This means
increased stability and more bargaining power, both of which lead to
an increased ability to provide adequate resources for buying the most
modern operating equipment needed for production and capturing the
profitable investment opportunities as they arise.
The large size of the business operations enables Americana to
undertake central and combined marketing activities, and provides
a huge advantage for other centralized consolidated services such as
finance and human resources, granting the company greater flexibility in
negotiations in addition to providing a strong support for the continuity of
sales and profits future growth.
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7. Strong, Long-term Historical Performance:
Despite the various and diverse crises that rocked the markets, some of which were economic while others
were political and health-related issues such as Avian Flu, the Mad Cow Disease and other crises. Thank God,
Americana always deals with such crises and emerged even more safer and stronger there after. As a result, the
experience curve of all company employees have risen as evidenced by the operational performance record
as the company’s sales rose in 2014 by 4.6 times in their value compared to 2004 (from US $ 709 million in
2004 to US $ 3.2 billion in 2014).
8. Very Sound Financial Position:
The strong financial position of the company has been its strongest supporting element in face of the tough
competition in the markets. For this reason, the company seeks to maximize shareholders’ equity and to
strengthen the financial position and financing structure in order to increase its future ability to achieve
expansion and spread.
- The company’s total Assets amounted to KD 688 million (US $ 2.4 billion) and the Net Book Value of the
Fixed Assets stood at KD 247 million (US $ 846 million).
- Net shareholders’ equity after cash dividends amounted to KD 329 million (US $ 1.1 billion).
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- The company has an excellent cash conversion ratio and therefore
liquidity, as it may need to fulfill its obligations in a timely manner.
Balance Sheet
Footings
2.4
Average daily cash sales of the Company’s restaurants amount to
2014
Billion US dollars
enjoys a strong position that enables it to provide adequate level of
US $ 5 million, while the balance sheet as at the end of 2014
shows that total debts declined by 18% during the year reached
to KD 67.4 million, and only 10% of company’s total assets are
financed through bank debts, which provides good opportunity for
the company to finance future expansions.
Shareholders’
Equity
2014
1.1
Billion US dollars
9. Attractive Strong Growth Prospects:
The eight advantages possessed by Americana as outlined above
definitely placed the company in a better position than its competitors
to continue expanding its existing activities and markets. This should
help achieve the company’s outlook to double the size of its turnover
and profits in the future through the unique quality of its existing
activities, this vision will come true through new restaurants opening,
new restaurant chains and also expanding the FMCG activities by
adding new production lines, offering new products and increasing its
access to new segments of customers in the local markets.
10. Platform for Further Growth beyond Existing Businesses and
Markets:
The previous elements of excellence serve as the core pillars that provide
a platform for moving ahead toward greater expansion and growth
of the Company’s business outside the existing scope of activity. For
example, the strong and successful business relations with the franchisors
qualifies the company to launch new expansion which drives beyond
the limits of the present markets, such as expanding into new markets for
the Company’s restaurants in Europe and North Africa. The Company
also has the necessary material and human capabilities to expand its
FMCG activities through new acquisitions or establishing industries that
complement the existing activities at the domestic or regional levels, and
to export their products to new markets.
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Key Performance Indicators for 2014:
Maintaining a stable operational performance under the ever-changing external circumstances while achieving
a steady growth in sales and market share, is basically based on creating an added value for our customers and
controlling the negative impact of adverse inter-related external economic, geo-political and social factors beyond
the company’s control. The company can, however, draw plans and set procedures to ensure dealing with such
factors in a manner that minimizes their negative impacts on the business results.
The company has succeeded in recent years to overcome many of the challenges faced in the markets in which
it operates through efficient risk management, careful & conservative study of the investment opportunities,
diversification of investments, improving the quality of products, expanding the customer and consumer base. The
following table shows the Key Performance Indicators of the company during the past five years:
Description
2010
2011
2012
2013
2014
Sales
(KD million)
680.7
720.8
809.6
866.9
922.4
Net Profits
(KD million)
46.2
48.0
45.9
50.6
52.0
Shareholders’ Equity after Dividends
(KD million)
307.7
266.0
287.9
302.3
328.6
16%
17%
17%
17%
16%
Return on Average Equity
The above table reflects the stability of the company’s profits during the years 2010 to 2012 despite being affected
by the inconsistent performance of the company’s Available for Sale (AFS) portfolio during those years under the
impact of the global financial crisis on the region’s stock markets. It also reflects the company’s resilience by its
ability to compensate such negative impact of the crisis through a higher focus on the operating performance.
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UÊ Sales:
The Company’s sales for the year amounted to KD 922.4 million at a
growth rate of 6% YoY, with an average annual growth rate of 7% in
the past five years.
Sales (KD Million)
680.7
2010
720.8
2011
809.6
2012
866.9
2013
922.4
2014
The above graph reflects the Company success in achieving sustained
sales growth driven by the continuous expansion of its customer base
through a plan to add new production lines, opening of new restaurants
chains having ”New Concepts” and expanding into new markets and
new cities.
UÊ Profits:
The Company’s profits in 2014 including the results of AFS portfolio,
amounted to KD 52 million compared to KD 50.6 million in 2013, with
a growth rate of 3%.
Net Profit (KD Million)
46.2
48.0
2010
2011
45.9
2012
50.6
52.0
2013
2014
The above graph reflects the success of the company in mitigating the
negative effects of the global financial crisis that broke out in 2008,
and then the effect of the fundamental political changes witnessed by
the Arab region since 2011 in what is so called the “Arab Spring”
Revolutions. The impact of which shook many of the markets in which
the company operates or in which its products are present, all of which
had an adverse effect on the operating profits and on the performance
of the AFS portfolio.
19
UÊ Shareholders’ Equity:
The interest of the Company’s shareholders is the major priority of the Board of Directors on both long and
short term. Hence, the Board focuses on the ways to consolidate and strengthen the Company’s financial
position, diversify the sources of income and strengthen its financing structure in order to fulfill shareholders
expectations of increased business volume and profits. Net shareholders’ equity at the end of 2014 (after the
proposed dividends) amounted to KD 328.6 million with a growth rate of 9% over KD 302.3 million at the
end of the previous year.
400
300
Net Equity (KD Million)
307.7
266.0
287.9
302.3
328.6
200
100
0
2010
2011
2012
2013
2014
The previous graph reflects the impact of the global financial crisis and the political changes witnessed by the
region in the past few years on the Kuwait Stock Exchange and the resulting decline in the Fair Value Reserves
component within the shareholders’ equity in 2011. It shows the Company’s ability to absorb this decline and
continue to build up the shareholders’ equity through its operating profits.
The activities of Kuwait Food Company (Americana) are divided into the Restaurants and Retail activities, Food
Processing & Trading activities and the Financial Portfolio Investment. Each activity will be briefly discussed in
this report.
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First:
The Restaurants and Retail
Activities:
2014 was yet another year of achievements for the restaurants and retail
activities of the company during which the sector’s sales exceeded half a
billion Kuwaiti Dinars to reach KD 531 million (US $ 1.9 billion), with a
9% growth rate over the previous year as 94 new restaurants and outlets
were added indicating that the company opened a new restaurant at an
average rate of every 4 days during 2014. The first Americana restaurant
was opened in the Kurdistan Province of Iraq this year, where the company
has an ambitious plan to expand its investments.
Sales of
Restaurants
Sector
2014
Number of
Restaurants
2014
1.9
Billion US dollars
1,556
The following table shows the development of the restaurants and retail
activities over the past five years:
Description
2010
2011
2012
2013
2014
365.3
397.5
452.2
489.1
531.4
1,233
1,301
1,366
1,462
1,556
Number of Chains
20
21
22
23
23
Number of Cities
87
91
98
100
105
175
195
220
230
250
Sales
(KD million)
Number of Restaurants
Number of Meals
(million)
The following graph illustrates the development of Americana’s restaurants
and retail division sales and number of restaurants and outlets operated by
the company over the past five years:
Restaurants & Retail Sales (KD Million)
365.3
2010
397.5
2011
452.2
2012
489.1
2013
No. of Outlets
531.4
2014
1233
1301
1366
2010
2011
2012
1462
2013
1556
2014
Both the previous table and graphs explains how the company succeeded
in maintaining its leadership position as the largest company in the fields of
its activities in the Arab region by relying on the confidence of its customers
as is evident from the graph which shows that 323 restaurants have been
added since the end of 2010.
21
It is worth mentioning that the company’s restaurant activity may be divided into five “Clusters”:
- The Kuwait Restaurants
- The Saudi Restaurants
- The Emirates Restaurants
-The Egypt Restaurants
- The Restaurants in the other countries (Qatar, Bahrain, Oman, Jordan, Lebanon, Morocco, Iran, Kazakhstan, and
the Province of Kurdistan in Iraq).
The following Graph illustrates the number of restaurants and outlets in each cluster at the end of 2014:
No. of Outlets by Cluster -2014
KSA
405
EGYPT
396
Other Branches
282
UAE
284
Kuwait
189
The Company’s restaurants may be divided according to their respective chain activities into two main groups: Fast
Food Restaurants and Casual Dining Restaurants.
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Fast Food:
By the end of 2014, the number of fast food restaurants reached to 1,473
restaurants outlets compared to 1,181 restaurants outlets at the end of 2010,
an increase of 292 restaurants and outlets. The fast food chains are divided
Number of
Fast Food
Restaurants
2014
1,473
Number of
Casual Dining
Restaurants
2014
83
into four main groups:
- Quick Service Restaurant chains, which include Kentucky and Hardee’s.
- Semi-Fast Food, such as Pizza Hut (UAE, Egypt, Bahrain, Jordan and
Kazakhstan), Sbarro (Kuwait) and Tikka.
- Café Concept, which consists of Costa Coffee (Egypt, Jordan, Lebanon and
Kazakhstan) and Grand Café (Egypt and Morocco).
- Confectionary Chains for the sale of Doughnuts, Ice creams, Oriental
and Western sweets, including Krispy Kreme and Baskin Robbins
(Kuwait and Egypt), Al-Samadi Sweets (Kuwait and Egypt) and the
Maestro chain (Egypt).
Casual Dining:
Americana’s casual dining restaurants offer a selection of food to a class of
discerning clientele through its chains of world-class restaurants and local
chains established and developed by the company and acclaimed by the
Company’s customers.
- By the end of 2014, the Company had 83 casual dining restaurants
compared to 52 restaurants at the end of 2010, with an increase of 31
restaurants. This is an excellent rate of growth for this class of restaurants,
given the high investment involved and the special nature of these
restaurants.
- The company manages a range of reputed branded casual dining restaurants
chains such as TGI Friday’s and Red Lobster, which offer sea food,
Olive Garden restaurants chain offers Italian food in the American style,
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Longhorn Steakhouse restaurants offer the famous steak dishes, Fish Market restaurants offer a superb variety
of food for fish & seafood lovers, and many other such chains.
- In 2014, the Company added 4 TGI restaurants to raise the number to 52 such restaurants compared to 36 at
the end of 2010.
- At the end of 2014, the total number of Red Lobster, Olive Garden and Longhorn Steakhouse restaurants
amounted to 14, following the opening of 10 new restaurants in the past two years.
Performance Indicators of the Restaurants and Retail Activities during 2014:
UÊ The total number of restaurants rose to 1,556 with the addition of 94 restaurants during the year. It is worth
mentioning that the Company doubled the number of its restaurants during the past eight years.
UÊ By the end of 2014, the Company had 23 chains, of which 14 were international franchisee chains and
9 of its own chains developed and operated by Americana. The Company has restaurants in 13 countries
spread across Asian and African continents with its presence in 105 cities compared to 87 cities at the
end of 2010.
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The following graph illustrates the development of the number of cities in
where the Company’s restaurants are found over the past five years:
No. of Cities
87
2010
91
2011
98
2012
105
100
2013
2014
Number
of Meals
2014
Number of
Restaurants
Chains
2014
250
Million
23
UÊ For the first time in the Company’s history, the sales of the Kentucky
chain exceeded one billion US Dollars. Its worth noting that the Kentucky
restaurants achieved an 8% increase in daily sales compared with
2010, while the Hardee’s chain achieved a 13% increase.
UÊ Underlining its ability to identify and cater for the desires and expectations
of its restaurant customers, in 2014 the Company served more than
250 million meals to its restaurant customers compared to 230 million
means in the previous year, with an increase rate of 9%.
The following graph shows the number of meals served by the Company’s
restaurants and outlets during the past five years:
No. of Meals (Million)
195
220
230
2012
2013
250
175
2010
2011
2014
UÊ The number of the Company’s chains in Kuwait reached 14 operating
through 189 restaurants that cover all the governorates and most of its
areas. The Company plans to expand into the new residential areas such
as Jaber Al-Ahmed and Saad Al-Abdullah. A distinctive feature of the
restaurants in the Kuwait market is the increase in the “Home Delivery”
sales, which have recorded the highest increase at Company level. In
2014, the Company launched the service of on-line ordering through
the website www.kfc-kw.com especially for Kentucky food lovers, which
is expected to increase sales at lower order-taking costs.
25
UÊ The total number of the Company’s restaurants and outlets in Kingdom of Saudi Arabia rose to 405 by the end
of 2014 with the addition of 23 new restaurants during the year. Saudi Arabia is witnessing a boom in new
shop openings with 128 new restaurants have been opened since the end of 2010. Furthermore, expansion
within new cities and areas has achieved excellent results.
UÊ The UAE branch continued to implement its ambitious new openings plan by adding 23 restaurants during
2014, representing a 9% increase over the previous year. The Emirates market is one of the most promising
markets in the next few years as the market is expected to benefit from hosting the “Expo 2020” exhibition
as the Dubai Emirate won the right to host the exhibition last year in addition to numerous mega development
projects being executed in the Emirates and expected to reflect positively on the economy of the UAE and the
companies operating in that country. It is worth mentioning that the year 2014 witnessed the opening of the
first restaurant of “The Counter” chain in the Emirate of Dubai that achieved good results.
UÊ In Egypt, 11 new restaurants were added compared with the previous year that raises the total of the Company’s
restaurants to 396 by the end of 2014. The restaurants in Egypt succeeded in achieving 98% of the targeted
sales and a growth of 19% compared with the previous year in the local currency. For the first time, the
sales exceeded 2 billion Egyptian Pounds. The Company professionally tackled the numerous difficulties and
challenges in Egypt, such as the electricity outage, lack of political stability and security, rising costs of raw
materials and energy and higher taxes. Despite all these challenges, the Egypt restaurants achieved a 13%
increase in net profits during 2014 in local currency compared to the previous year. The Egypt branch will be
facing the challenges in 2015 with a well-studied plan designed to achieve a balanced increase in sales and
profits for the year by the will of God.
26
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UÊ The company has strengthened its position as the world leader in the
Kazakhstan market by adding 17 new restaurants to raise the number
at the end of 2014 to 42 restaurants and outlets through the Kentucky,
Hardee’s, Costa Coffee and Pizza Hut chains. Net Profits rose by more
than 40% over the previous year. Americana was the first company
to introduce the “Home Delivery” service in the restaurants sector in
the country.
UÊ The Company’s restaurants in the Sultanate of Oman and the Kingdom
of Bahrain achieved good results during 2014. Profits in Oman have
doubled during 2014 compared with the previous year while net profits
in Bahrain rose by 25% over the previous year (after deducting the
minority interests share).
UÊ Commercial operations of the Company’s branch in the Province of
Kurdistan in Iraq started in September 2014 with the opening of the first
Hardee’s restaurant, followed by 2 other restaurants of the same chain,
to increase the number to 3 at the end of the year. The first Kentucky
restaurant will be opened during the first quarter of 2015. Preparations
are being made for opening the first TGI Friday’s restaurant during
the second quarter of 2015. Hence, the total number of restaurants is
expected to reach 12 by the end of 2015.
UÊ In recognition of Americana’s success and excellence, the Company’s
restaurants won many awards from several franchisors. These included
the “KFC-Yum 5 Star Performance Award”, and the “KFC-World Class
Recognition Pin Award” from Yum. Hardee’s International awarded
the Company with the “Restaurant of the Year Award- Middle East /
Europe” in addition to the “Star Sales Award - Highest Restaurant Sales
Volume Award” and “FY 2014 Licensee of the Year Award – Middle
East / Europe” and “$ 1.5 Million $$ Club Award”. The Company also
received from Costa Coffee International the “Unbeatable Customer
Experience Award”, and from Krispy Kreme the “Certificate of Hospitality
Award - Hospitality Hero”, and from TGI Friday’s the “Friday’s Facilitator
Award” along with many other awards.
27
UÊ The Company continued to provide new offerings for the loyal customers of its restaurants, seeking to satisfy
various customer tastes. In 2014, the Company introduced many new products that were well received and
lauded by customers as Kentucky introduced the “Grilled Chicken Twister” and the “Rice Chicken Meal”
varieties while Hardee’s introduced the “Caesar Angus”, Steak Loader” and “Angus Bacon” varieties, and
Pizza Hut introduced its “Pizza Mia” and “Pizza Cheesy Toast”. TGI offered a new selection of rib meals in
a variety of flavors.
UÊ The Company continued to use modern technology in its business operations. These included computer systems
at the restaurants, new decorations and equipment, with a view to keeping abreast with global developments,
improve service efficiency, and increase operation control in order to attain higher levels of customer satisfaction
and gaining competitive advantage.
UÊ The Company continued to focus on its human resources as it is one of the most important factors of improving
products and services and achieving customer satisfaction as the restaurants sector directly employs 42,000
persons. The Company continued to offer latest development & training programs for its employees in order to
enhance the performance levels of its restaurants.
UÊ The company continued to focus on its social responsibilities to the communities in which it operates in all areas
that serve the community by contributing to the creation of job opportunities for improving the quality of life
of the citizens of the country in which the company’s restaurants operates. Also, by providing work training
programs at the restaurants to the school and university students and by employing deaf and dumb persons
in restaurants while interacting with all the segments of society, in addition to supporting excellence in all
educational, cultural and sports fields.
28
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Restaurants Future outlook:
UÊ Strive continuously to cater for the desires of customers of all age groups
by seeking the help of international expertise in conducting specialized
market studies in identifying customer preferences and their opinions
of the Company’s restaurants service and products in order to provide
all the desired new products at appropriate prices with high quality that
ensures maximum satisfaction with proper value for the prices of our
products offered in our restaurants.
UÊ To continue focus on offering high quality products and services, using
the best raw materials, observe the highest levels of hygiene and
providing our services in line with the highest professional service
standards in order to cater for customer wishes and provide an overall
happy ambience at our restaurants.
UÊ To increase focus on introducing effective means of marketing and
promotional tools that would enable us to reach and interact with new
segments of customers, launch promotional offers, present prizes and
gifts at the Company’s restaurants, as these proved to have a strong
attraction effect on customers of all age groups, thereby increase further
the popularity of the Company’s name and chains resulting in increased
sales and profits.
UÊ To continue introducing new technological means in the operational
work, be it in the area of operating machines and equipment, restaurant
decoration or information technology to keep abreast with global trends
and ensure that the Company maintains its leadership and position
to achieve continuous control of operation by providing high quality
products and achieve customer satisfaction which eventually gives the
company a competitive edge.
UÊ The Company will continue its quest to achieve optimum results through
a strategic vision that emphasizes the achievement of additional savings
in the various aspects of expenditure including enhancing negotiation
efficiency with suppliers and contractors to obtain the best prices without
compromising the quality and safety standards set by the Company.
UÊ To improve the supply chain efficiency and achieve more benefits
from the efficient strategic buying operations of raw materials, reduce
storage time for catering for the needs of the restaurants at the right
time, develop the online bidding system used in connection with the
tenders for the development of new locations and the service contracts.
This should help achieve the desired surpluses during 2015.
29
UÊ To expand vertically and horizontally by increasing proliferation and diversification of the existing chain of
restaurants by introducing new chains, expanding into new markets for maximizing revenues and profits while
increasing investments in the restaurant activity, focusing on high cash revenue projects on the short term that
supports the Company’s liquidity position.
UÊ To maximize return on the existing activities by increasing the number of transactions, thereby leading to
increased profits in that sector without the need to inject significant additional investments.
UÊ In the coming period, the Company will continue to implement the policy of ongoing evaluation and review of
the restaurants that do not achieve the expected return, and relocating them in order to achieve a more efficient
utilization of the fixed assets and improve their productivity.
UÊ The Company will continue to train and enhance the skills of all employees in the Restaurants division at
all layers within the structure. Simultaneously, the Company will emphasize the roles and responsibilities
of the specialized management for each of the main functions within the division namely; KFC chain, other
fast food chains, Casual-Dining chains, the supply chain and logistics, construction and renovation work of
the restaurants locations. That would achieve a quality focus on each of the aforementioned functions and
consequently will improve the performance of the division.
UÊ The Company will continue to develop its efforts in the field of social responsibility in the communities in all the
areas of its operations. This responsibility is well appreciated and well received by the official bodies and civil
action organizations in order to strengthen the interaction among the company, its customers and all segments
of society.
30
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Second:
Food Processing Activities
Sales of
Industrial
Sector
2014
1.5
Billion US dollars
Since the early seventies of the last century spanning over more than 4
decades, the Industrial and Trading Sector of the Company has been the
leading sector in the field of food industries in the region and one of the
leading and largest foodstuffs manufacturer in the Arab world and the
Middle East. Year after year, the sector continued to develop this industry
and achieved considerable success in the markets where the products of
the Company are offered. The Industrial Sector of the Company offered a
Number of
Industrial
Activities
2014
25
unique variety of products of high quality at appropriate prices that gained
customer appreciation and satisfaction. This success led to preserve the
reputation name of Americana in the markets as a synonym of excellence in
the field of food industries.
Total sales of the food processing activities during 2014 amounted to KD
430.6 million (which includes sales to the Company’s restaurants sector,
amounting to KD 39.7 million) compared to KD 413.7 million in the previous
year, with an increase of 4%.
The following graph shows the development of the sales of the food
processing activities during the past five years (including sales to the
Company’s restaurants):
Industries Sales (KD Million)
2010
2011
2012
2013
338.9
353.4
391.7
413.7
2014
430.6
There are 25 units in the Industrial, Commercial and Agricultural units activities.
Their products are present in 25 countries around the world, 17 of which are
Arab countries, in addition to several other foreign countries. The number
of employees in the Industrial Sector exceed 23 thousand direct employees.
The main industrial activities of the company are geographically distributed
among 4 Arab countries: Kuwait, Saudi Arabia, UAE and Egypt
31
The food processing activities of the company are divided manly into 5 clusters based on the nature of the activity
and the place where these activities are carried out. These clusters are supervised by regional departments that
play an effective role in achieving synergy among them in order to achieve savings and apply the best practices
in maximizing experience. In this, the Company’s management relies on highly competent and experienced
professional employees.
The industrial activities in the company divided to the following manner:
Gulf industrial activities which include two managerial clusters:
−
The Meat Processing Activities cluster in Saudi Arabia and Kuwait.
−
The California Garden, Gulfa Mineral Water, Cake and Pastry Products and Commercial Agencies.
The Industrial, Agricultural and Poultry activities in Egypt consists of three clusters:
−
The potato chips, snacks, dairy and cheese products activities group (Senyorita Company Group and
Greenland Company)
−
The agricultural Food products processing group (Farm Frites, Potato cultivation, frozen vegetable
products and olive products).
−
32
The Cairo Poultry Group of Companies and the Egyptian Starch and Glucose Company.
5bbiU`FYdcfh
The following graph shows the contribution of each cluster to the sales of the
Food Processing Sector in 2014 amounting to KD 430.6 million (including
the sales to the Company’s restaurants amounting to KD 39.7 million):
Sales Contribution by Cluster - 2014
Meat Cluster
24%
Cairo Poultry
Cluster 26%
California Garden
Cluster 20%
Senyorita & Greenland
Cluster 18%
Farm Frites
Cluster 12%
The following is a brief outline of each cluster:
The Industrial Activities in the Gulf:
The Meat Processing Activities in Saudi Arabia and Kuwait:
The Meat Factory at National Food Industries Company in the Kingdom
of Saudi Arabia is the largest and most sophisticated in the Middle
East. It is equipped with the most advanced production lines and stateof-the-art technology in food processing equipment. It is one of the most
important factories in the Arab World for the processing and sale of
meat, poultry and fish products.
The Company’s share of the frozen meat products amounted to 42% of
the Saudi market, with an increase of 2% over the previous year, 23%
of the Bahrain market with an increase of 2% over the previous year, in
addition to 15% of the UAE market. The company plans to expand into
the Pakistani market in 2015.
In 2014, the company offered a new variety of products that gained
customer satisfaction. These included “spicy crispy chicken fillet”,
“calamari rings”, “crab fingers” and “shrimp cocktail”. The Company
plans to offer other new products during 2015.
33
Building on its success and emphasizing its commitment to offer high-quality products, the Company was
successful in renewing the global certificates of standards of food quality and safety such as the “Global
Standard for Food Safety – BRC” and the “OHSAS 18001” in addition to the “ISO 9001”, “ISO 14001”
and “NS-EN ISO 22000” certifications.
As usual, the Meats Sector in Kuwait continued its excellent performance during 2014 with excellent sales
and profits growth while maintaining its leadership of the Kuwaiti market with a substantial increase in market
share that reflected growing consumer demand for the products of the processed and frozen meat products of
high quality and competitive price.
During 2014, the Meats Sector succeeded in increasing its total market share of meat products in the Kuwaiti
market by 6% to reach 55%. The market share for hamburger meat this year rose to 62% from 57%, the
chicken hamburger to 37% from 30%, the minced meat to 51% from 45%, with a 30% higher difference from
the nearest competitor and the Fillet products rose to 52% from 38%. Meantime, the Sector maintained its
market share of 63% of the mortadella segment of the market.
The Company is currently studying the possibility of further increases of its production capacity to cater to
the increasing demand from our customers. The increased demand reflects their continuous confidence in the
excellent products of the company.
In 2014, the Company offered a variety of quality products: Marinated beef slices and Marinated shrimp with
mushroom. In 2015, the Company plans to offer new chicken products, including chicken fillet with herbs and
with lemon and butter.
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The California Garden, Gulfa Mineral Water, Cake and Pastry
Activities:
Gulf Food Industries Company – California Garden:
California Garden is a leading canned food processing companies in
Frozen Meat
Market Share
in Kuwait
2014
55%
Canned Beans
Market
Share in
UAE 2014
84%
the region. It owns and manages several prestigious brands such as
“California Garden”, “Americana” and others. The company offers
all kinds of canned cereals such as beans in various mixes and flavors
produced daily by using the most advanced technologies in the field
of canned food processing, imports and distributes canned tuna in
different flavors.
Despite the effect of the civil strife events witnessed in several Arab
markets such as Iraq, Syria and Libya on the sales, the company absorbed
the impact of these events by strengthening its presence in other Arab
countries and intensifying its footprint in other markets through steppedup export efforts. As a result, it succeeded in increasing its UAE market
share of canned beans products to 84% while enjoying 73% of the
Kuwaiti market and 63% of the Saudi market in addition to raising its
share in the Egypt market to 52%.
In 2014, the company introduced its canned Fava beans with ghee
product, white meat tuna gourmet Gold product, Solid Tuna Gold, White
meat Tuna albacore Gold products. Americana is currently considering
offering new products during 2015, including Indian recipe of fava
beans and chickpeas.
Emphasizing its dedication to quality, the company maintained its
international certifications for quality while ensuring its products
complying with the highest international standards through renewing
certificates such as “EN-ISO 9001”, “EN-ISO 14001”, “EN-ISO 22000”
and “BS OHSAS 18001”.
California Garden’s regional management oversees the work of Gulfa
Mineral Water and Processing Industries Company in the UAE. Gulfa
offers mineral water under the “Gulfa” trademark, which has a strong
presence, is several Arab countries, in addition to its neighboring countries
such as Kuwait, Qatar and Iraq, other than the domestic UAE market.
California Garden’s regional management also oversees the commercial
agencies sector in the State of Kuwait. The sector distributes products
under several well-known international brands in Kuwait. These include
“Heinz”, “Divella” Italian pasta products in addition to “Americana”,
“California Garden” and several other brands.
35
The Cake and Pastry Activity in Saudi Arabia and Kuwait:
The Cake Sector of National Food Industries Company in the Kingdom of Saudi Arabia is the leading cake
manufacturer in the Arab region and offers an excellent selection of cake, cookies and biscuits products under
the American trademark.
During 2014, the Sector achieves a remarkable growth in sales and now seeks to promote this growth by
expanding into other markets. It is worth mentioning that the Sector covers 28% of the Saudi market for quality
cookies. The Company’s products are also available in several Arab countries including Egypt, UAE, Kuwait,
Bahrain and Qatar in addition new products were introduced during 2014. These include the Brownie Cake
with chocolate chips, plain and stuffed cupcakes in a variety of flavors and oatmeal cookies.
The Sector maintains a high standard of quality in the manufacturing process in terms of both raw materials and
adopting modern and sophisticated production techniques and advanced quality control methods throughout
the entire production stages. It is worth mentioning that the Galaxy International Company manufactures its
cake products at the Cake Sector’s factory in Saudi Arabia, thereby underscoring the high level of confidence
they have in the production processes of this Sector which is further supported by the consumer confidence the
Sector gained from the time it first started production in the mid-1970s.
In 2014, the Cake Sector in Saudi Arabia succeeded in renewing the quality certificates it had obtained in
previous years. These include the “ISO 9001” and the Food Safety Standards Certificate “ISO 22000” as well
as the Laboratory Quality Guarantee Certificate “ISO/IEC 17025”.
36
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The Cake and Pastry Sector in the State of Kuwait achieved a growth
in its sales by 8% during 2014. The Sector offers a rich variety of
croissants, salads, sandwiches in various flavors and kinds that have
become highly popular in the Kuwait market. The Sector’s products are
available as light meals at government institutions such as schools and
government ministries. In 2014, the Sector introduced several new
products such as pizza paté, apple paté along with premium quality
grilled shrimp sandwiches, chicken fajita, chicken or beef with mushroom
that have been well received by the Kuwaiti market.
The Pastry Sector produces the coleslaw salad for all KFC restaurants in
Kuwait having obtained the approval of YUM International Corporation
and passed the relevant tests with the results of which were highly lauded
by YUM. In addition, the quality of the product has been positively
received by the customers of KFC. The Sector is currently preparing for
processing and supplying all the vegetables needed by the KFC chain.
It is worth mentioning that the Pastry Sector in Kuwait continues to
develop the Croissant products specifications in order to maintain the
Company’s predominant position in the pastry market with a current
share of 34% in the Kuwait market.
To underline its commitment to food quality and safety standards, the
Company maintained its quality certificates obtained during previous
years. These included “ISO 9001”, “ISO 22000” and “ISO 14001”.
Industry, Agriculture and Poultry Activities in Egypt:
Potato Chips, Snacks Processing and Dairy Products and
Cheese Production Activities:
Senyorita Group for Food Industries Company:
Since the time Senyorita Group for Food Industries Company joined the
Americana Group in 2006, Senyorita has achieved continuous success
through the endless efforts designed to achieve an on-going growth of
the company’s business. Year after year, the company has been reaping
the fruits of those efforts reflected by the remarkable growth in sales
and profits Senyorita Group for Food Industries Company offers a wide
variety of snacks & potato chips products, biscuits and chewing gum in
addition to its chocolate products.
37
Senyorita Group owns several factories that have variety of production lines, foremost among which are
the snacks production line, the biscuits production line and the crispy potato chips production line. This is in
addition to the carton factory, frozen and refrigerated products stores services, all of which comply with the
highest standards in the industry.
Despite the tremendous challenges the company encountered in the Egyptian market in 2014 due to the
political and security instability in the Egyptian market and the impact thereof on economic conditions in Egypt,
Senyorita Group for Food Industries Company achieved record sales during the year, amounting to 1.2 billion
Egyptian Pounds, with an impressive growth of 12% in local currency over the previous year.
The success achieved by Senyorita Group year after year reflects the confidence consumers have in the quality
of the company’s high quality products offered at competitive prices that have never failed to achieve customer
satisfaction. The company has succeeded in providing a wide variety of products that cater for the different
tastes of consumers and the company’s efforts to reach every area within the Egyptian markets by deploying
large fleet consisting of 950 distribution vehicles that call on villages and cities in all of Egypt’s governorates,
in addition to 70 distribution outlets in all areas of the Arab Republic of Egypt and beyond. This impressive
performance has been achieved through careful planning and development and massive efforts by all the
company’s personnel to attain the prominence Senyorita Group has attained.
It is worth mentioning that Senyorita Group has successfully maintained its ISO certifications it had obtained
in previous years. These include “ISO 22000” and “ISO 9001”.
38
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Greenland Group for Food Industries Company:
Greenland Group Company offers its customers in the Arab Republic
of Egypt a wide range of fresh and health dairy products under the
trademark of “Greenland” and “Americana”, using the premium quality
natural milk in its production.
The company’s white cheese products are a huge success in Egypt and
so is the wide collection of natural & healthy fresh fruit juices, processed
cheese products, mozzarella cheese and natural margarine & ghee
products. The company is one of the largest supplier and distributor
of white cheese and mozzarella cheese in the Egyptian market and its
products are available in the markets of several other Arab countries.
Greenland complies with the highest international standards and
health specifications in production in accordance with HACCP and the
standard specifications prescribed by the “ISO 9001”, “ISO 14001”,
“ISO 22000” and “BS OHSAS 18001” certifications.
During 2014, Greenland Company faced significant challenges in
the domestic market because of the lack of security and political Egypt
stability, which affected the cost effectiveness due to rising raw materials
prices, rising dollar value against the pound as the company heavily
depended on the import of significant quantity of the raw materials from
abroad in addition to difficult conditions in export markets such as Libya
and Syria and all those factors negatively impacted the results of the
company’s revenues & profits.
Under those circumstances Americana Management felt the need to
develop and restructure some of the Greenland company’s departments
and systems processes to make a quantum leap in operational
performance as well as raise the administrative system efficiency to cope
with the unprecedented challenges in the dairy market in particular, and
the many other prevalent challenges in Egyptian market in general and
also to provide all the elements to stimulate the company’s business for
achieving the goals and aspirations of Americana and its shareholders
in the coming years.
39
Food Manufacturing & Agricultural Products Group in Egypt:
The International Company for Agricultural Development (Farm Frites) – Egypt:
Americana signed an agreement with Farm Frites Company in Holland to use their world famous trademark
in this field. Since its beginning in 1990, Farm Frites Company- Egypt has been operating and continuously
evolving its activities to provide a wide range of unique products of frozen and half-fried potatoes and frozen
vegetables of the highest quality. Today, Farm Frites is the leading company in the production of frozen potato
in the Arab world and is the main supplier to the Company’s restaurants and a large number of world class
restaurants and hotels in and out of Egypt, in addition to catering for the Egyptian market’s needs for frozen
vegetables which constitutes a basic and important part of the consumers needs.
Through Farm Frites Company in the Arab Republic of Egypt, Americana offers frozen, half-fried potatoes
while the company owns the largest plant in the Middle East for the production of this kind of potato products.
The plant adopts the latest potato processing technology in order to optimize product quality. Farm Frites
potato products are the leading brand in this kind of products in the Egyptian market. The company exports its
products to several Arab countries notably Kuwait, UAE, and Saudi Arabia, as well as several other markets
in African continent.
40
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Farm Frites relies heavily on its agricultural activity for its raw potato
requirements needed for production all year round. A key characteristic
of Farm Frites agricultural activity is that there are two seasons of potatoes
cultivation every year. The winter crop is planted during September and
October and harvested in December to March, and the summer crop is
planted in December and January and harvest in April to June.
The company has maintained its BS OHSAS 18001 and ISO 22000
certifications during the year.
International Company for Agricultural Production and
Processing (ICAPP):
ICAPP started operations more than nine years ago with modest sales
that did not exceed 52 million Egyptian Pounds, and continued to
develop its products and expand its operations and sales year after
year until its sales exceeded 296 million Egyptian Pounds in 2014.
ICAPP offers frozen vegetables and fruits under the “Americana” and
“Farm Frites” trademarks in the Egyptian market. The high quality of its
products and their success in the Egyptian market enabled the company
to export its products to many other neighboring Arab countries mainly
Kuwait, Saudi Arabia, UAE, Bahrain and Oman. The company has
started exports to several European countries in pursuit of its plans to
expand into new markets in the coming years.
The company is committed to applying the international standards for food
safety in its processing, production and packaging of frozen vegetables
and fruits according to the Global Standards for Food Safety organizations
requirements – and has maintained its “ISO 22000”, “BS OHSAS 18001”,
“ISO 14001”, and “Global Standard for Food Safety” certifications in
order to strengthen customer confidence in the quality of its products
and consequently increase sales and profits.
41
Agriculture and Land Reclamation Activities:
The primary objective of the agriculture and land reclamation activities is the reclamation and cultivation of
lands to be suitable for growing fruits and vegetables, using modern irrigation methods depending on the
operational feasibility. The agricultural activity in the Arab Republic of Egypt provides part of the Egyptian
industrial companies’ needs of agricultural raw materials such as potatoes, olives and other agricultural
crops. The activity comprises three companies: Al-Hashimiya for Land Reclamation & Cultivation Company,
Americana for Land Reclamation and Cultivation Company and Karwin Land Reclamation Company. By the
end of 2014, the total area under cultivation was more than 6,900 acres. The products of the reclaimed lands
are supplied to the International Agricultural Development Company – Farm Frites (the potato crop) and the
Egyptian Canning Company (the olives crop).
Egyptian Canning Company – Americana:
Americana offers the premium quality Olive products through the Egyptian Canning Company in the Arab
Republic of Egypt. High quality of Olives is maintained by the selection of the best quality of raw olive and
employing the most advanced and efficient production techniques to process various types of unique Olive
products. The company has built an excellent reputation as a prime producer of quality canned artichokes that
have been well received by consumers. The company’s products are quite popular in the Egyptian market and
are exported to several Arab and other international markets.
During 2014, the company maintained its “ISO 9001” certification and the “OHSAS 18001” certification
which were obtained in previous years.
42
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Cairo Poultry Group & Egyptian Company for Starch
and Glucose:
The poultry industry in Egypt continued to face challenges brought about
by the security and political instability and the company’s management
had to step up efforts to face the situation and continued to seek to
improve productivity and efficiency in all operating units and devise
innovative methods to reduce product prices in the market in order to
maintain its market share and improve competitiveness against other
local companies.
During 2014, the Poultry Group’s sale maintained its sales at 2.3 billion
Egyptian Pounds. This is a relatively good performance under the present
market circumstances due to the Management’s continued attempts to
minimize the negative effects of the changes in the Egyptian market
that have severely dented the profits of the company. The following
is a brief account of the three main activities of the Group, namely the
Poultry, slaughterhouses and animal feed production activities.
The Poultry Activity: The poultry activity relies on the white meat
production cycle. The production phases include the farming of
grandparents to hatch parents then breeding and fattening them for sale
as broilers. In its production activities, the company relies on two types
of international breeds, “Arbor Acres” and “Hubbard” which are famous
for their hereditary strength and high productivity, resulting in high rates
of food conversion to produce quality meat chickens. In pursuance of its
efforts, the company keep abreast with the latest development related
to the best breeds and in order to absorb part of the increase in the
international prices of animal feed ingredients. The Hubbard F15 breed
was introduced because of its smaller size, lower feed consumption and
bountiful egg production, all of which allow the breeding of a larger
number of chicken parents per square meter, thereby achieving a high
economic efficiency till the slaughtering stage.
The Poultry Processing Activity: Cairo Poultry Group, through
Cairo Poultry Processing Company (CPPC), Koki at the 10th of Ramadan
City, and through the Nubaria Factory carries on white meat product
processing operations in addition to slaughtering poultry according to
the Islamic Shariah law to ensure halal chicken meat products. The
Group benefits from production waste material to produce certain kinds
of agricultural fertilizers. Both factories are equipped with sophisticated
equipment and use highly advanced techniques in their operations, and
43
both of them obtained “ISO 9001” certifications. Sales of this sector amounted to 38 thousand tons during
2014, with an increase of 7% over the previous year. This performance reflected positively on the profits of
the sector.
The Feed Production Activity: The feed production activity within the poultry group is a key activity that
complements the chicken breeding and fattening activity. This activity caters for the needs of the company’s
poultry farms for the right type and quality of feed. The group recognizes the importance of proper nutrition for
the quality of chicken production. For this reason, it produces its own feed in order to provide the best nutrition
elements for its farms.
The Egyptian Starch and Glucose Production Company:
In addition to the above activities, the Cairo Poultry Group also manages the activities of the Egyptian Starch
and Glucose Production Company, which, through its own factories produces starch, glucose, corn oil and
animal feed and related by-products of this type of industry. In 2010, the company started producing dry feed,
and by the end of 2012, the new eco-friendly glucose production line was commissioned. This line depends on
the addition of enzymes instead of acids in line with the latest production techniques in this industry.
The starch and glucose products have a leading ranking in the Egyptian market. The company also exports to
several countries such as Tunisia, Libya, Syria, Algeria, Sudan and several other African countries.
44
5bbiU`FYdcfh
Food Processing Division Future Outlook:
The company continuously seeks to maintain its position and leadership
in the field of food processing in the Arab region. This requires the
development of plans and the setting of ambitious goals year after
year, then proceeding to implement them efficiently and effectively.
The following is a brief outline of the main aspirations with regard
to the company’s future in the area of the Factories, Trading and
Agricultural Sector:
UÊ
To develop the products on an on-going basis by using modern
technology in the production process, and continuously improve
the production lines, adding new production lines, maintaining
the high quality standards required through the adoption of worldclass tools used in measuring the product quality, thereby leading
to expanding the product consumer base through an efficient
diversification of product availability.
UÊ
To continuously seek to achieve integration synergy and
cooperation among all activities with a view to maximizing the
ability to achieve the common goals among them, benefit from
consolidation of requirements for an increased negotiation power
provided by large-scale transactions.
UÊ
Continuous seeking of alternatives and solutions for facing global
phenomenon of rising prices for the materials needed for the
production operations by continuous negotiation with existing
suppliers while seeking to expand the supplier base by identifying
new alternate competitive sources of supply.
UÊ
The company seeks to achieve geographical expansion during
2015 in order to maximize the number of customers and interact
with them, cater for the different tastes and needs, study the
feasibility of expanding into new markets, increasing distribution
channels and sales offices in order to achieve further geographical
outreach, thereby leading to larger revenues and profits for the
company.
UÊ
The company is keen to add new products that suit the tastes of
consumers and commensurate with their different income levels.
It will continue to focus on product quality in all the company’s
plants, using the best raw materials while complying with all health
and safety regulations for the benefit of its customers. This means
continuous attention to quality control and ensuring the right choice
of raw material sources for all the company’s processing operations
in order to maintain the world-class standard of its products.
45
UÊ The company will continue to look after all its resources, foremost among which is the human element. It will
develop training programs for them in order to ensure the career development of all personnel, with a view to
fine-tune their existing skills and increasing their capabilities. In addition, the company will continue striving
to attract and hire the best available talented individuals who can be instrumental in enabling the company to
achieve its objectives and realize its goals & ambitions.
UÊ The company will strive to optimize the use of its available experience in the field of marketing in order to
maintain its existing customers, reach new consumers for its products through effective marketing schemes with
a view to provide an added value to the customers and increase the company’s market share.
UÊ The company will continue to optimize the use of its available assets and resources. This has been a key
priority of the management during the past few years and will continue to be so in the coming years in order
to maximize their efficiency and effectiveness.
UÊ The company will continue to discharge its social responsibilities in the countries where its factories and
products are located. This responsibility involves continuous support to economic activity, employment of
indigenous manpower in order to contribute to alleviating the unemployment problems, in addition to an
effective contribution to social work such as charity, healthcare, education, culture and sports. The Company
will also implement the concept of investment that takes social responsibility into consideration with regard to
the environment and offering products of high quality that complies with the best health control standards
46
5bbiU`FYdcfh
Third:
The Financial Portfolio
(Available for Sale investment):
This portfolio is being managed by specialized investment firms and
it’s worthy to mention that all the shares selected within the portfolio are
well-established and blue-chip shares that enjoy sound financial positions,
operational and managerial stability, and above all have ambitious growth
plans and promising future. More importantly, the industries of these stocks
have high growth potential, thereby providing a high level of assurance and
confidence to our shareholders.
Towards the end 2014, all share prices in Kuwait and Egypt stock markets,
like many other stock markets in the region, were deeply impacted by the
drop in oil prices and political instability in several Arab countries. This had
a negative impact on the financial portfolio and incurred share in losses
amounted to KD 17.7 million, compared to KD 16.4 million in 2013.
The Fair value of the financial portfolio amounted to KD 79.8 million at the
end of 2014, and the Fair Value Reserve was amounted to KD 6.2 million
compared to a negative KD 1.3 million in 2013.
Shareholders’ Equity and the Proposed Dividend Distribution
Management is always keen to safeguard the interest of the shareholders
on the long term as well as in the short term, particularly amid the current
challenges in most markets. The way management addressed those challenges
resulted in mitigating their negative impacts thanks to the excellent focus on
the operating performance of the company.
The following table depicts the development of the book value per share and
the retained earnings (after dividends) during the period from 2010 to 2014.
Description
Book Value Per Share
Retained Earnings
(Fils)
(KD million)
2010
2011
2012
2013
2014
787
680
736
773
840
186.7
210.7
231.2
248.5
261.3
47
The following graph shows the development of the retained earnings after dividends over the past five years:
Retained Earnings (KD Million)
300
231.2
200
186.7
248.5
261.3
2013
2014
210.7
100
0
2010
2011
2012
The table and chart show that the book value per share (after the proposed dividends) rose to 840 Fils at the end
of 2014. In 2011, the book value per share declined because of the decline in the Fair Value Reserve within the
shareholders’ equity due to the drop in share prices in Kuwait Stock market. In the following years, the company
was able to absorb that decline and continue to support the shareholders’ equity through the profits. The chart
shows that the retained earnings rose to KD 261.3 million at the end of 2014, at an annual growth rate of 8% in
the past five years.
48
5bbiU`FYdcfh
Esteemed Shareholders,
The dividends policy of the company is based on achieving the required
balance between the requirements of the shareholders to obtain rewarding
dividends on the one hand and the ambition of the company to expand
Retained
Earnings After
Dividends
2014
895
Million US dollars
and grow on the other. The dividends and profits obtained by the company
from its subsidiaries are the source to provide the cash needed for the
dividends.
The Board of Directors proposed a cash dividend of 90% of the capital (90
Earning
Per Share
2014
133
Fils
Fils per share) for the year ended 31 December 2014, the highest dividend
ever paid by the company since its incorporation.
The following table and graph show the earnings per share and the dividend
rates during the five years from 2010 to 2014:
Description
2010
2011
2012
2013
2014
118
123
117
129
133
65%
65%
65%
85%
90%
(KD million)
25.4
25.4
25.4
33.2
35.2
Dividends / Earnings Per Share
(Pay-out Ratio)
55%
53%
56%
66%
68%
Earnings Per Share
(Fils)
Dividends Rate
Dividends Amount
Earnings Per Share (Kuwaiti Fils)
118
123
2010
2011
117
2012
129
133
2013
2014
The foregoing shows that the company distributed annual cash dividends out
of the profits made during the past five years (Pay-out Ratio) at an average
rate of 60% while continuing to achieve horizontal and vertical expansion
of its activities and strengthening its financial position.
49
Esteemed Shareholders,
The Board of Directors wishes to express its deepest thanks and appreciation to all the countries in which the
company operates through its branches, subsidiaries or associate companies. In particular, we wish to thank all the
official and government authorities and entities and banking and financial institutions for their continuous support
and confidence in the company.
The Board of Directors expresses its appreciation and thanks to all its esteemed shareholders and customers for
their steadfast and endless support to the company, and seizes this opportunity to assure them that the company
will continue to grow and develop in the years to come.
The Board of Directors also would like to thank the company’s managers, employees and workers for their
tremendous efforts and determination in the face of all challenges in order to achieve the outstanding results, in a
one-family spirit, setting an excellent example of successive collective teamwork.
Most importantly, the Board of Directors presents its thanks and appreciation to His Highness the Amir of Kuwait,
Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah, and pray to Allah Almighty to bestow on him the blessing of good
health and enable him to continue to lead the country’s efforts toward national progress and development. We also
thank and are indebted to His Highness Sheikh Nawwaf Al-Ahmad Al-Jaber Al-Sabah, the Crown Prince, and His
Highness, Sheikh Jaber Al-Mubarak Al-Hamad Al-Sabah, the Prime Minister. Our thanks and appreciation goes
to the venerable government and our public institutions for their valuable support and patronage of our national
companies.
The Board of Directors
50
5bbiU`FYdcfh
Consolidated Financial Statements and
Independent Auditors’ Report
For The Year Ended 31 December 2014
51
Independent Auditors’ Report to the Shareholders
Report on the Consolidated Financial Statements
We have audited the accompanying consolidated financial statements of Kuwait Food Company (Al Americana) K.S.C.P.
“the Parent Company” and its subsidiaries (collectively “the Group”), which comprise the consolidated statement of
financial position as at 31 December 2014, and the consolidated statement of income, consolidated statement of
comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the
year then ended, and a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in
accordance with International Financial Reporting Standards, and for such internal control as management determines
is necessary to enable the preparation of consolidated financial statements that are free from material misstatement,
whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted
our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the consolidated financial statements in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the
consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial
position of the Group as at 31 December 2014, and its financial performance and its cash flows for the year then ended
in accordance with International Financial Reporting Standards.
52
5bbiU`FYdcfh
Report on Other Legal and Regulatory Requirements
Furthermore, in our opinion, proper books of accounts have been kept by the Parent Company and the consolidated
financial statements, together with the contents of the report of the Board of Directors relating to these consolidated
financial statements, are in accordance therewith. We further report that, we obtained the information that we deemed
necessary for the purpose of our audit and that the consolidated financial statements incorporate all information that is
required by the Companies Law no. 25 of 2012, as amended and its executive regulation and by the Parent Company’s
Memorandum and Articles of Association as amended, that an inventory was duly carried out and that to the best of our
knowledge and belief, no violations of the Companies Law no. 25 of 2012, as amended and its executive regulation or
by the Parent Company’s Memorandum and Articles of Association as amended have occurred during the financial year
ended 31 December 2014 that might have had a material effect on the business of the Group or on its consolidated
financial position.
Bader A. Al-Wazzan
Abdullatif A. H. Al-Majid
Licence No. 62A
Licence No. 70A
Deloitte & Touche - Al Wazzan & Co.
Of Parker Randall (Allied Accountants)
Kuwait 2 March 2015
53
Consolidated Statement of Financial Position
as at 31 December 2014
Assets
2014
2013
Note
KD ‘000
KD ‘000
5
6
7
8
233,981
26,986
13,078
79,767
2,466
356,278
220,301
17,021
12,949
96,826
2,385
349,482
9
10
11
12
109,451
62,290
44,994
115,179
331,914
688,192
104,957
56,474
40,800
94,382
296,613
646,095
13
40,200
25,687
(1,080)
20,100
3,010
(26,902)
6,214
296,550
363,779
41,754
405,533
40,200
25,687
(1,080)
20,100
3,010
(32,819)
(1,335)
281,780
335,543
40,799
376,342
18
13,050
39,190
52,240
25,904
33,429
59,333
18
19
54,303
176,116
230,419
282,659
688,192
56,723
153,697
210,420
269,753
646,095
Non-current assets
Property, plant and equipment
Investment properties
Intangible assets
Available for sale investments
Other assets
Current assets
Inventories
Trade receivables
Other receivables
Cash on hand and at financial institutions
Total assets
Equity and liabilities
Equity attributable to shareholders of the Parent Company
Share capital
Share premium
Treasury shares
Statutory reserve
Voluntary reserve
Foreign currency translation reserve
Change in fair value reserve
Retained earnings
14
15
16
Non-controlling interests
Total equity
17
Non-current liabilities
Borrowings and bank facilities
End of service indemnity
Current liabilities
Borrowings and bank facilities
Trade and other payables
Total liabilities
Total equity and liabilities
Ahmed Mohamed Hassan
Al-Moataz Adel Al-Alfi
Bader Mohamed Al-Jouan
Marzouk Nasser Al-Kharafi
Chief Financial Officer
General Manager
Vice Chairman
Chairman
The accompanying notes form an integral part of these consolidated financial statements.
54
5bbiU`FYdcfh
Consolidated Statement of Income
for the year ended 31 December 2014
2014
2013
KD ‘000
KD ‘000
922,358
866,904
(749,516)
(704,770)
Gross profit
172,842
162,134
Selling and marketing expenses
(80,106)
(70,622)
(5,650)
(6,001)
Note
Sales
Cost of sales
General and administrative expenses
Other operating expenses
20
(1,442)
(1,342)
Investment properties income
21
8,557
6,731
Net losses from available for sale investments
22
(17,614)
(16,290)
Finance costs
(6,903)
(8,479)
Profit before income tax of subsidiaries
69,684
66,131
Income tax of subsidiaries
(9,586)
(6,025)
Net profit before other deductions
60,098
60,106
Contribution to Kuwait Foundation for Advancement of Science
(534)
(489)
National Labour Support Tax
(897)
(856)
Zakat
(418)
(353)
(72)
(72)
58,177
58,336
52,021
50,598
6,156
7,738
58,177
58,336
133
129
Board of Directors’ remuneration
Net profit for the year
Attributable to:
Shareholders of the Parent Company
Non-controlling interests
Earnings per share (fils)
23
The accompanying notes form an integral part of these consolidated financial statements.
55
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2014
2014
2013
KD ‘000
KD ‘000
58,177
58,336
6,371
(9,238)
(17,359)
(16,408)
1,409
-
19,038
20,484
3,088
4,076
Total other comprehensive income items
9,459
(5,162)
Total comprehensive income for the year
67,636
53,174
61,484
47,613
6,152
5,561
67,636
53,174
Net profit for the year
Other comprehensive income items
Items that may be reclassified subsequently to statement of income:
Foreign currencies translation differences
Available for sale investments:
Change in fair value during the year
Reclassification adjustments related to disposal during the year
Losses from impairment in value
Attributable to:
Shareholders of the Parent Company
Non-controlling interests
The accompanying notes form an integral part of these consolidated financial statements.
56
5bbiU`FYdcfh
Consolidated Statement of Changes in Equity
for the year ended 31 December 2014
Non-
Equity attributable to the shareholders of the parent Company
Share
capital
Balance as at 31 December 2012
Treasury Statutory Voluntary
reserve
shares reserve
Share
premium
Foreign
Change in
currency
fair value
translation
reserve
reserve
40,200
25,687
(1,080)
20,100
3,010
(24,786)
Net profit for the year
-
-
-
-
-
-
Total other comprehensive income items
-
-
-
-
-
(8,033)
Changes in non-controlling interests (note 17)
-
-
-
-
-
Cash dividends
-
-
-
-
Balance as at 31 December 2013
40,200
25,687
(1,080)
Balance as at 31 December 2013
40,200
25,687
Net profit for the year
-
Total other comprehensive income items
Total
controlling equity
Retained
earnings
256,607
313,355
37,528
350,883
50,598
50,598
7,738
58,336
5,048
-
(2,985)
(2,177)
(5,162)
-
-
-
-
(2,290)
(2,290)
-
-
-
(25,425)
(25,425)
-
(25,425)
20,100
3,010
(32,819)
(1,335)
281,780
335,543
40,799
376,342
(1,080)
20,100
3,010
(32,819)
(1,335)
281,780
335,543
40,799
376,342
-
-
-
-
-
-
52,021
52,021
6,156
58,177
-
-
-
-
-
5,917
7,549
(4,003)
9,463
(4)
9,459
Changes in non-controlling interests (note 17)
-
-
-
-
-
-
-
-
-
(5,197)
(5,197)
Cash dividends (note 24)
-
-
-
-
-
-
-
(33,248)
(33,248)
-
(33,248)
40,200
25,687
(1,080)
20,100
3,010
(26,902)
6,214
296,550
363,779
41,754
405,533
Balance as at 31 December 2014
(6,383)
interests
Total
-
All amounts in 000’ Kuwaiti Dinars
The accompanying notes form an integral part of these consolidated financial statements.
57
Consolidated Statement of Cash Flows
for the year ended 31 December 2014
2014
2013
KD ‘000
KD ‘000
58,177
58,336
38,721
35,901
8,829
6,149
(7,230)
(6,177)
2,986
(1,558)
851
377
6,903
8,479
17,298
15,956
Operating profit before changes in working capital
126,535
117,463
Trade and other receivables
(11,076)
(4,309)
Inventories
(4,565)
(5,118)
Trade and other payables
23,882
27,026
Payment of end of service indemnity
(3,068)
(3,410)
131,708
131,652
Note
Cash flows from operating activities
Net profit for the year
Adjustments for:
Depreciation and amortisation
End of service indemnity
Gain from investment properties valuation
Provide / (Reverse) impairment in value
Loss on disposal of property, plant and equipment and intangible assets
Finance costs
Net losses from available for sale investments
Net cash generated from operating activities
21
The accompanying notes form an integral part of these consolidated financial statements.
58
5bbiU`FYdcfh
Continued: Consolidated Statement of Cash Flows
for the year ended 31 December 2014
2014
2013
KD ‘000
KD ‘000
(49,878)
(47,861)
1,633
1,475
(400)
(1,993)
Payment to acquire intangible assets
(1,975)
(1,908)
Payment to acquire available for sale investments
(2,342)
-
868
-
(530)
682
(16,136)
-
4,489
4,528
(64,271)
(45,077)
(17,446)
(8,210)
Payment of finance costs
(6,910)
(8,543)
Change in non-controlling interests
(5,197)
(2,290)
Dividends to shareholders
(33,223)
(25,420)
Net cash used in financing activities
(62,776)
(44,463)
4,661
42,112
94,382
52,270
99,043
94,382
Note
Cash flows from investing activities
Payments to acquire property, plant and equipment
Proceeds from sale of property, plant and equipment
Payments to acquire investment properties
Proceeds from sale of available for sale investments
Net cash flows from other assets
Deposits for more than three months
Dividends received
Net cash used in investing activities
Cash flows from financing activities
Net payment of borrowings and banks facilities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
12
The accompanying notes form an integral part of these consolidated financial statements.
59
Notes to the Consolidated Financial Statements
for the year ended 31 December 2014
1.
Incorporation and activities
Kuwait Food Company (Al Americana) is a Kuwaiti Public Shareholding Company (the Parent Company)
incorporated in the State of Kuwait on 29 December 1963.
The Parent Company’s registered office is in the State of Kuwait, P.O. Box 5087 Safat 13051 State of Kuwait.
The principal activities of the Parent Company and its subsidiaries are importing and manufacturing of food and
beverages; sale of such items on both a retail and wholesale basis in the State of Kuwait, and other Arab countries;
and investing the surplus funds in investment portfolios managed by specialized companies.
The consolidated financial statements were approved for issue by the Board of Directors on 2 March 2015.
These consolidated financial statements include the financial statement of the Parent Company and its subsidiaries
which mentioned in note 25 referred together the Group.
2.
Basis of preparation and significant accounting policies
2.1
Basis of preparation
These consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards. These consolidated financial statements have been prepared on the historical cost basis except for
investment properties and certain financial instruments that are measured at fair values, as explained in the
accounting policies below.
2.2
New and revised standards
New and revised IFRSs issued and effective
In the current year, the Group has applied a number of new and revised IFRSs that are issued and effective for
accounting periods that begin on or after 1 January 2014.
Amendments to IFRS 10, IFRS 12 and IAS 27 Investment Entities
The Group has applied the amendments to IFRS 10, IFRS 12 and IAS 27 Investment Entities for the first time in the
current year. The amendments to IFRS 10 define an investment entity and require a reporting entity that meets the
definition of an investment entity not to consolidate its subsidiaries but instead to measure its subsidiaries at fair
value through profit or loss in its consolidated and separate financial statements.
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5bbiU`FYdcfh
Consequential amendments have been made to IFRS 12 and IAS 27 to introduce new disclosure requirements
for investment entities. The application of the amendments has had no impact on the disclosures or the amounts
recognized in the Group’s consolidated financial statements, as the Parent company is not investing entity.
Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities
The Group has applied the amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities for the first
time in the current year. The amendments to IAS 32 clarify the requirements relating to the offset of financial assets
and financial liabilities.
The amendments have been applied retrospectively. The Group has assessed whether certain of its financial assets and
financial liabilities qualify for offset based on the criteria set out in the amendments and concluded that the application
of the amendments has had no impact on the amounts recognised in the Group’s consolidated financial statements.
Amendments to IAS 36 Recoverable Amount Disclosures for Non-Financial Assets
The Group has applied the amendments to IAS 36 Recoverable Amount Disclosures for Non-Financial Assets for the
first time in the current year. The amendments to IAS 36 remove the requirement to disclose the recoverable amount
of a cash-generating unit (CGU) to which goodwill or other intangible assets with indefinite useful lives had been
allocated when there has been no impairment or reversal of impairment of the related CGU.
Furthermore, the amendments introduce additional disclosure requirements applicable to when the recoverable
amount of an asset or a CGU is measured at fair value less costs of disposal.
The application of these amendments has had no material impact on the disclosures in the Group’s consolidated
financial statements.
New and revised IFRSs in issue but not yet effective
The Group has not applied the followings new and revised IFRS that have been issued and not yet effective
For annual periods beginning on or after 1 July 2014
Amendments to IAS 19 Defined Benefit Plans: Employee Contributions
The Annual Improvements to IFRSs 2010-2012 Cycle:
UÊ
IFRS 2 Share-based Payment
UÊ
IFRS 3 Business Combinations
UÊ
IFRS 8 Operating Segments
UÊ
IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets
UÊ
IAS 24 Related Party Disclosures
61
The Annual Improvements to IFRSs 2011-2013 Cycle:
UÊ
IFRS 3 Business Combinations
UÊ
IFRS 13 Fair Value Measurement
UÊ
IAS 40 Investment Property
The Group’s management do not anticipate that the application of these amendments will have a material impact
on the Group’s consolidated financial statements.
For annual periods beginning on or after 1 January 2016
UÊ
Amendments to IFRS 11 Accounting for Acquisitions of Interests in Joint Operations
UÊ
Amendments to IAS 16 & IAS 38 Clarification of Acceptable Methods of Depreciation & Amortisation
UÊ
Amendments to IAS 16 and IAS 41 Agriculture: Bearer Plants
The Group’s management do not anticipate that the application of these amendments will have a material impact
on the Group’s consolidated financial statements.
Effective for annual periods beginning on or after 1 January 2017
IFRS 15 Revenue from Contracts with Customers
The Group’s management anticipate that the application of these IFRS 15 in the future may have a material impact
on amounts reported in respect of the Group’s financial assets and financial liabilities. However, it is not practicable
to provide a reasonable estimate of the effect until the Group undertakes a detailed review.
Effective for annual periods beginning on or after 1 January 2018
IFRS 9 Financial Instruments
The Group’s management anticipate that the application of IFRS 9 in the future may have a material impact on
amounts reported in respect of the Group’s financial assets and financial liabilities. However, it is not practicable
to provide a reasonable estimate of the effect until the Group undertakes a detailed review.
2.3
Significant Accounting Policies
2.3.1 Basis of Consolidation
Subsidiaries
The consolidated financial statements incorporate the financial statements of the Company and entities controlled
by the Parent Company and its subsidiaries. Control is achieved when the Parent Company (a) has power over the
investee (b) is exposed, or has rights, to variable returns from its involvement with the investee and (c) has the ability
to use its power to affects its returns.
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The Parent Company reassess whether or not it controls an investee if facts and circumstances indicate that there
are changes to one or more of the three components of controls listed above.
Consolidation of a subsidiary begins when the Parent Company obtains control over the subsidiary and ceases
when the Parent Company losses control over subsidiary. Specifically, income and expenses of subsidiary acquired
or disposed of during the year are included in the consolidated statement of income or other comprehensive income
from the date the Company gains control until the date when Parent Company ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income are attributed to the owners of the Parent
Company and to the non-controlling interest. Total comprehensive income of subsidiaries is attributed to the owners
of the Parent Company and to the non-controlling interests even if this results in the non-controlling interests having
a deficit balance.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies
into line with the Group’s accounting policies.
All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.
Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the
subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the noncontrolling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference
between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid
or received is recognised directly in equity and attributed to owners of the Parent Company.
When the Group loses control of a subsidiary, a gain or loss is recognized in profit or loss and is calculated as
the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any
retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the
subsidiary and any non-controlling interests. All amounts previously recognised in other comprehensive income in
relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities
of the subsidiary. The fair value of any investment retained in the former subsidiary at the date when control is lost
is regarded as the fair value on initial recognition for subsequent accounting under IAS 39, when applicable, the
cost on initial recognition of an investment in an associate or a joint venture.
63
Business combinations
Acquisitions of businesses combination are accounted for using the acquisition method. The consideration transferred
in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values
of the assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the
equity interests issued by the Group in exchange for control of the acquiree. Acquisition-related costs are generally
recognised in consolidated statement of income as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value
at the acquisition date, except deferred tax assets or liabilities, liabilities or equity instruments related to share
based payment arrangements and assets that are classified as held for sale in which cases they are accounted for in
accordance with the related IFRS.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling
interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree over the net
of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment,
the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum
of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of
the acquirer’s previously held interest in the acquiree (if any), the excess is recognised immediately in consolidated
statement of income as a bargain purchase gain.
Non-controlling interests may be initially measured either at fair value or at the non-controlling interests’ proportionate
share of the recognised amounts of the acquiree’s identifiable net assets. The choice of measurement basis is made
on a transaction-by-transaction basis.
When a business combination is achieved in stages, the Group’s previously held equity interest in the acquiree is
remeasured to fair value at the acquisition date (the date when the Group obtains control) and the resulting gain or
loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date
that have previously been recognised in other comprehensive income are reclassified to consolidated statement of
income where such treatment would be appropriate if that interest were disposed off.
Goodwill
Goodwill, arising on an acquisition of a subsidiary, is carried at cost as established at the date of acquisition of the
business less accumulated impairment losses, if any.
For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units
(or groups of cash-generating units) that is expected to benefit from the synergies of the combination.
A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently
when there is indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less
than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated
to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit.
Any impairment loss for goodwill is recognised directly in consolidated statement of income. An impairment loss
recognised for goodwill is not reversed in subsequent periods.
On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination
of the profit or loss on disposal.
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2.3.2 Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any impairment losses. Cost
includes the purchase price and directly associated costs of bringing the asset to a working condition for its intended
use. Maintenance and repairs, replacements and improvements of minor importance are expensed as incurred. In
situations, where it is clearly demonstrated that the expenditure has resulted in an increase in the future economic
benefits expected to be obtained from the use of an item of property, plant and equipment beyond its originally
assessed standard of performance, the expenditure is capitalized.
Depreciation is calculated based on estimated useful life of the applicable assets except for the land on a straight line
basis. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount
is greater than its estimated recoverable amount.
The assets’ residual values, useful lives and depreciation method are reviewed at the end of each reporting period,
with the effect of any changes in estimate accounted for on a prospective basis.
Gains or losses on disposals are determined by the difference between the sales proceeds and the carrying amount
of the asset and is recognized in the consolidated statement of income.
2.3.3 Intangible assets
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation
and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful
lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the
effect of any changes in estimate being accounted for on a prospective basis.
Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated
impairment losses.
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal.
Gains or losses arising from derecognition of measured as the difference between the net disposal proceeds and the
carrying amount of the asset, are recognised in consolidated statement of income when the asset is derecognised.
2.3.4 Impairment of tangible and intangible assets other than goodwill
At the end of each reporting period, the Group reviews the carrying amount of its tangible and intangible assets to
determine whether there is any indication that those assets have suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at
least annually, and whenever there is an indication that the asset may be impaired. Recoverable amount is the higher
of fair value less costs to sell or value in use. Impairment losses are recognised in the income statement for the period
in which they arise. When an impairment loss subsequently reverses, the carrying amount of the asset is increased to
the extent that it does not exceed the carrying amount that would have been determined had no impairment loss been
recognised for the asset in prior years. A reversal of an impairment loss is recognised immediately in consolidated
statement of income.
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2.3.5 Investment property
Investment properties are properties held to earn rentals and/or for capital appreciation (including property under
construction for such purposes). Investment properties are measured initially at cost, including transaction costs.
Subsequent to initial recognition, investment properties are measured at fair value. Gains and losses arising from
changes in the fair value of investment properties are included in consolidated statement of income in the period
in which they arise.
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn
from use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition
of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the
asset) is included in consolidated statement of income in the period in which the property is derecognised.
2.3.6 Financial instruments
Financial assets and financial liabilities are recognised when a Group entity becomes a party to the contractual
provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and
financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial
assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the
acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately
in consolidated statement of income.
Financial assets
Financial assets are classified into the following specified categories: financial assets ‘at fair value through profit or
loss’ (FVTPL), held to maturity, ‘available-for-sale’ (AFS) financial assets and ‘loans and receivables’. The classification
depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. All
regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. The
Group has determined the classification of its financial assets as follows:
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market. Loans and receivables (including trade and other receivables and cash at banks) are measured
at amortised cost using the effective interest method, less any impairment.
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Available for sale (AFS)
AFS are non-derivatives financial assets not classified as (a) loans and receivables, (b) held-to-maturity investments
or (c) financial assets at fair value through profit or loss.
The financial assets available for sale is re-measured at fair value. The fair value is determined in the manner
described in note 3.3.
Changes in the fair value of available-for-sale financial assets are recognised in other comprehensive income
and accumulated under the heading of changes in fair value reserve. When the investment is disposed of or is
determined to be impaired, the cumulative gain or loss previously accumulated in the investments revaluation
reserve is reclassified to consolidated statement of income.
AFS equity investments that do not have a quoted market price in an active market and whose fair value cannot be
reliably measured are measured at cost less any identified impairment losses at the end of each reporting period.
Dividends on AFS equity instruments are recognised in profit or loss when the Group’s right to receive the dividends
is established. Foreign exchange gains and losses are recognised in other comprehensive income items.
Impairment in value
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting
period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or
more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the
investment have been affected.
For AFS equity investments, a significant or prolonged decline in the fair value of the security below its cost is
considered to be objective evidence of impairment.
For financial assets carried at amortised cost, the amount of the impairment loss recognised is the difference
between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the
financial asset’s original effective interest rate.
For financial assets carried at cost, the amount of the impairment loss is measured as the difference between the
asset’s carrying amount and the present value of the estimated future cash flows discounted at the current market
rate of return for a similar financial asset.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the
exception of trade receivables, where the carrying amount is reduced through the use of an allowance account.
When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent
recoveries of amounts previously written off are credited to the income statement.
When an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognised in
other comprehensive income are reclassified to consolidated statement of income in the period.
67
For financial assets measured at amortised cost, if, in a subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively to an event occurring after the impairment was recognised,
the previously recognised impairment loss is reversed through consolidated statement of income to the extent that
the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised
cost would have been had the impairment not been recognised.
In respect of AFS equity securities, impairment losses previously recognised in profit or loss are not reversed through profit
or loss. Any increase in fair value subsequent to an impairment loss is recognised in other comprehensive income.
Derecognition
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire,
or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to
another party.
The difference between the asset’s carrying amount and the sum of the consideration received and receivable and
the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is
recognised in consolidated statement of income.
Financial liabilities
Financial liabilities (including borrowings and trade and other payables) are recognised initially at fair value, net
of transaction costs incurred and subsequently measured at amortised cost using the effective interest method.
Derecognition
The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged or
expired. The difference between the carrying amount of the financial liability derecognised and the consideration
paid and payable is recognised in consolidated statement of income.
2.3.7 Inventories
Inventories are stated at the lower of cost or net realisable value. Raw materials cost is determined on a weighted average
cost basis. The cost of finished goods includes direct materials, direct labour and fixed and variable manufacturing
overhead, and other costs incurred in bringing inventories to their present location and condition. Net realizable value
is the estimated selling prices less all the estimated costs of completion and costs necessary to make the sale.
2.3.8 End of service indemnity
The Group is liable under Kuwait Labour Law to make payments under defined benefit plans to employees at termination
of employment, regarding the labour in other countries; the indemnity is calculated based on law identified in these
countries. Such payment is made on a lump sum basis at the end of an employee service. Defined benefit plan is unfunded and is based on the liability that would arise on involuntary termination of all employees on the balance sheet
date. This basis is considered to be a reliable approximation of the present value of the Group’s liability.
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2.3.9 Provisions
Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events; it is
probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated.
Provisions are measured at the present value of the consideration expected to be required to settle the obligation using a
rate that reflects current market assessments of the time value of money and the risks specific to the obligation.
2.3.10 Treasury shares
Treasury shares represent the Parent Company’s own shares that have been issued, subsequently purchased by the
Group and not yet reissued or cancelled. Treasury shares are accounted for using the cost method. Under the cost
method, the total cost of the shares acquired is reported as a contra account within equity when the treasury shares
are disposed; gains are credited to a separate un-distributable account in equity “gain on sale of treasury shares”.
Any realised losses are charged to the same account in the limit of its credit balance, any additional losses are
charged to retained earnings to reserves and then to premium. Gains realised subsequently on the sale of treasury
shares are first used to offset any previously recorded losses in reserves, retained earnings and the gain on sale of
treasury shares.
2.3.11 Dividends
The dividends attributable to shareholders of the Parent Company are recognized as liabilities in the consolidated
financial statements in the period in which the dividends are approved by the shareholders.
2.3.12 Foreign currencies
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the
primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial
statements are presented in ‘Kuwaiti Dinars’ (KD).
Transactions and balances
Foreign currency transactions are translated into Kuwaiti Dinars using the exchange rates prevailing at the dates
of the transactions. At the end of e ach reporting period, monetary items denominated in foreign currencies are
retranslated at the rates prevailing at that date. Foreign exchange gains and losses are resulted from the settlement
of such transactions and from the translation at year-end in the consolidated statement of income.
Group companies
The results and financial position of all the Group entities that have a functional currency different from the
presentation currency are translated into the presentation currency as follows (other than companies which are
operating in high inflation countries):
69
UÊ
Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that
balance sheet.
UÊ
Income and expenses for each income statement are translated at average exchange rates.
UÊ
All resulting exchange differences are recognized as a separate component of equity.
2.3.13 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated
customer returns and other similar allowances.
UÊ
Revenue from sale of goods are recognized when significant risks and rewards of ownership have been
transferred to the buyer. These risks and rewards are transferred generally to the buyer on delivery and legal
title is passed.
UÊ
Service revenues are recognized when the services are rendered.
UÊ
Dividend income is recognized when the right to receive payment has been established.
UÊ
Interest income from deposits is recognized on time proportion basis using effective yield method.
2.3.14 Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and
rewards of ownership to the lessee. All other leases are classified as operating leases.
The Group as lessor
Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease.
Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the
Group’s net investment outstanding in respect of the leases.
The Group as lessee
Assets held under finance leases are initially recognised as assets of the Group at their fair value at the inception
of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the
lessor is included in the consolidated statement of financial position as a finance lease obligation. Operating lease
payments are recognised as an expense on a straight-line basis over the lease term.
2.3.15 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are
assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the
cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognised as expenses in the period in which they are incurred.
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2.3.16 Taxes
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. The Group’s liability for current tax is calculated
using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the
consolidated financial position and the corresponding tax bases used in the computation of taxable profit. Deferred
tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally
recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be
available against which those deductible temporary differences can be utilised.
Current and deferred tax for the year
Current and deferred tax are recognised in consolidated statement of income, except when they relate to items that
are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are
also recognised in other comprehensive income or directly in equity respectively. Where current tax or deferred
tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the
business combination.
3.
Financial risk management
3.1
Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest
rate risk, cash flow interest rate risk and price risk) in addition to credit risk and liquidity risk.
The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to
minimize potential adverse effects on the Group’s financial performance.
Risk management is carried out by a central treasury department (Group treasury) under general guidelines by
executive management. Group treasury identifies, evaluates and hedges financial risks in close co-operation with
the Group’s operating units and the financial institutions they are dealing with.
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(A) Market risk
Foreign exchange risk
The Group operates in various countries and undertakes transactions denominated in various currencies, other
than Kuwaiti Dinar. Foreign exchange risk arises from its future commercial transactions, recognized assets and
liabilities and net investments in foreign operations.
Foreign exchange environment is monitored on an ongoing basis to determine fluctuations of foreign currencies
against local currencies where each subsidiary need of foreign funds is identified and how such funds would be
made available. The Group treasury policy is to hedge its future needs of the major foreign currencies for subsequent
12 months. Major Banks in each country of operation that regularly provides advices to Group companies in terms
of foreign currency trends.
The Group treasury also coordinates between its subsidiaries to undergo foreign exchange transactions between
them whenever a need arises. All Group companies borrow in their local currency. Nevertheless, as a Group’s
policy, all companies borrowing in foreign currencies must have a stream of relevant foreign income to repay its
foreign currencies exposures.
The Group has certain investments in foreign countries, whose net assets are exposed to foreign currency translation
risk. Currency exposure arising from the net assets of the Group’s foreign operations is managed primarily through
borrowings denominated in the relevant foreign currencies. During 2014, 2013 the Group did not use the hedging
activities to hedge the foreign exchange risk.
The Group is mainly exposed to foreign currency risk as a result of gain or losses from translated assets and
liabilities denominated in foreign currencies, such as cash and cash equivalents, investments, receivables, creditors,
loans and bank facilities.
The carrying amount of Group’s foreign currency denominated monetary assets and monetary liabilities at the end
of the reporting period are as follows:
Assets
US Dollar
Egyptian Pound
Others
Liabilities
2014
2013
2014
2013
19,246
4,733
3,011
31,909
4,629
2,249
18,460
10,382
3,789
13,215
8,886
8,173
For a 10% changing of US Dollar, there would be comparable impact on the profit and equity as follow as of
31 December:
Profit and loss
US Dollar
2014
79
Equity
2013
1,869
2014
1,014
2013
1,048
Price risk
The Group is exposed to equity securities price risk as a result of investments held by the Group and classified
as available for sale. To manage this risk, the Group diversifies its portfolio in the light of limits set out by the
Group’s management.
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The Group also keeps its investments at specialized investments companies. A monthly report is sent to the Group
management about the investments performance in order to follow up and take the necessary action when required.
Based on the assumption that the Kuwait Stock of Exchange equity index had decreased by 5% with all other variables
held constant, net profit of the Group will be decreased by KD 3,547 thousand and change in fair value reserve
would be decreased by KD 1,032 thousand as at 31 December 2014 (the profit is decreased by KD 7,721 thousand
and change in reserve increased by KD 2,149 thousand - 2013). Assuming that there is increase in Kuwait Stock
of Exchange market by 5%, with all variables held constant, the equity will be increased by KD 4,579 thousand
(increased by KD 5,572 thousand - 2013).
Cash Flow and fair value interest rate risk
The financial assets and liabilities exposed to interest rate fluctuations are cash deposits, borrowings and bank
facilities.
The Group’s treasury ensures that deposits are maintained at the best prevailing market rate at the time of maintaining
each deposit.
The Group maintains banks contracts for all of its borrowings, whereby interest rates are linked to international and
local benchmarks.
The Group is not exposed to the fair value risk of its borrowings as all the borrowings bear variable interest rates.
The Group main risk exposure is the cash flow interest rate risk. The Group analyses its interest rate exposure on
a continuous basis where a monthly review of all facilities takes place to ensure that the Group is being granted
the possible competitive interest rates.
The Group study in regular basis all the income data related to the interest rate to determine the probability of
changes in interest rates and the effect of such changes in the cash flow of the Group and the net profit in order to
take the necessary actions in the timely manner.
At 31 December 2014, if interest rate on borrowings and bank facilities had increased by 0.5% with all other variables
held constant, net profit for the year would have decreased by KD 337 thousand (KD 413 thousand - 2013).
(B) Credit risk
Credit risk arises from cash at banks and trade receivable. Credit risk is the risk that the Group will incur a loss
because of its customer, counter party failed to discharge their contractual obligation.
The Group manages credit risk exposure arising from cash at banks by dealing with well-established banks of sound
strong standing in the countries in which it operates.
The operating unit’s managements assess the credit quality of the customers taking into account their financial positions,
past experience and other relevant factors. The utilization of credit limits is regularly monitored.
No credit limits were exceeded at the consolidated statement of financial position date and management does not
expect any losses from non-performance by its counterparties.
As the Group is working in different countries with different economic environments, the Group has set credit policies
in each subsidiary, the following are the common features of the Group credit policies:
UÊ
Sales to retail customers in restaurants business line are settled in cash or credit cards.
UÊ
The Group deals with well-known hyper markets which have strong credit position. The Group identifies the
necessary credit limit based on assessment of credit quality to each client separately.
UÊ
When necessary, the Group obtains collaterals from clients in form of deposits, letter of guarantees to reduce
the credit risk. The fair value of collaterals is disclosed in (note 10).
All amounts in 000’ Kuwaiti Dinars
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(C) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient internally generated cash, trading investments and
external funding through an adequate amount of committed credit facilities.
Subsidiaries’ annual budgets are thoroughly reviewed to ensure that proceeds and external funding are adequately
available to meet each subsidiary operational needs. During the year, the Group treasury continuously monitors its
subsidiaries actual cash flows and quickly responds to any change that might impact on the ability of the subsidiary
to meet its financing needs. As a Group’s policy, borrowings are not concentrated with a single bank in each country,
it include a mix of reputable international, local and regional banks.
The table below analyses the Group’s financial liabilities into relevant maturity Groupings based on the remaining
period at the consolidated statement of financial position to the contractual maturity date. The amounts disclosed in
the table are the contractual undiscounted cash flows.
2014
Borrowings and bank facilities
Trade and other payables
Within
1 year
More than
1 year
to 3 years
More than
3 years
59,432
11,065
3,395
176,116
-
-
Within
1 year
More than
1 year
to 3 years
More than
3 years
62,709
19,634
9,752
153,697
-
-
2013
Borrowings and bank facilities
Trade and other payables
3.2
Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as going concern while
maximising the return to stakeholders through the optimisation of the debt and equity balance.
The capital structure of the Group consists of net debt (borrowings offset by cash and cash equivalents) and equity
(comprising capital, reserves, retained earnings and non-controlling interests).
The gearing ratio as at 31 December is as follows:
Total borrowings and bank facilities
2014
2013
67,353
82,627
(115,179)
(94,382)
Net debt
(47,826)
(11,755)
Total equity
405,533
376,342
Total capital
357,707
364,587
Less: cash and cash equivalents
All amounts in 000’ Kuwaiti Dinars
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3.3
Fair value estimation
The fair values of financial assets and financial liabilities are determined as follows:
- Level one:
Quoted prices in active markets for identical assets or liabilities.
- Level two:
Quoted prices in an active market for similar instruments. Quoted prices for identical assets or
liabilities in market that is not active. Inputs other than quoted prices that are observable for assets
and liabilities.
- Level three:
Inputs for the asset or liabilities that are not based on observable market data.
The table below gives information about how the fair values of the financial assets and liabilities are determined:
Financial assets
Fair value as at 31 December
2014
2013
Fair value
hierarchy
Available for sale investments:
Local shares – quoted
59,479
Foreign shares – quoted
17,355
1,119
Local shares – quoted
73,883
18,466
1,127
Level one
Level one
Level two
Valuation
technique(s)
and Key
input(s)
Significant
unobservable
input(s)
Relationship of
unobservable
inputs to fair
value
Last bid price
Last bid price
Net assets value
NA
NA
NA
NA
NA
NA
Fair value of financial assets and financial liabilities that are not measured at fair value on a recurring basis (but
fair value disclosures are required):
31 December 2014
Financial assets
Trade receivables
Financial liabilities
Borrowings and bank facilities
Trade and other payables
Total
31 December 2013
Carrying
amount
Fair value
Carrying
amount
Fair value
62,290
62,290
56,474
56,474
67,353
176,116
243,469
67,353
176,116
243,469
82,627
153,697
236,324
82,627
153,697
236,324
Fair value hierarchy as at 31 December 2014
Level 1
Level 2
Level 3
Total
Financial assets
Trade receivables
-
-
62,290
62,290
Financial liabilities
Borrowings and bank facilities
Trade and other payables
Total
-
-
67,353
176,116
243,469
67,353
176,116
243,469
Fair value hierarchy as at 31 December 2013
Level 1
Level 2
Level 3
Total
Financial assets
Trade receivables
-
-
56,474
56,474
Financial liabilities
Borrowings and bank facilities
Trade and other payables
Total
-
-
82,627
153,697
236,324
82,627
153,697
236,324
The fair values of the financial assets and financial liabilities included in the level 3 category above have been
determined in accordance with generally accepted pricing models based on a discounted cash flow analysis.
All amounts in 000’ Kuwaiti Dinars
75
4.
Critical accounting estimates and assumptions
In the application of the Group’s accounting policies, the Management is required to make judgements, estimates
and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other
sources. The estimates and associated assumptions are based on historical experience and other factors that are
considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and future periods. The following are the key
assumptions concerning the future, and other key sources concerning current period, that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities within the next financial years.
Control over Bahrain & Kuwait Restaurant Company
Note 25.1 describes that Bahrain & Kuwait Restaurant is a subsidiary of the Group although the Group only owns
a 40% ownership interest in Bahrain & Kuwait Restaurant. Based on the contractual arrangements between the
Group and other investors, the Group has the power to appoint and remove the majority of the board of directors
that has the power to direct the relevant activities. Therefore, the management of the Company concluded that the
Group has the practical ability to direct the relevant activities of Bahrain & Kuwait Restaurant unilaterally and hence
the Group has control over Bahrain & Kuwait Restaurant.
Valuation of financial instruments
Some of the Group’s assets and liabilities are measured at fair value for financial reporting purposes. The Group
management determines the appropriate valuation techniques and input for fair value measurement. In estimating
the fair value of an asset at a liability the Group uses market observable data to the extent it is available.
Information about valuation techniques and input used in determining the fair value of various assets and liabilities
are disclosed in note 3.3.
Impairment of tangible and intangible assets
The Group reviews the tangible and intangible assets on a continuous basis to determine whether a provision for
impairment should be recorded in the consolidated statement of income. In particular, considerable judgment by
management is required in the estimation of the amount and timing of future cash flows when determining the
level of provisions required. Such estimates are necessarily based on assumptions about several factors involving
varying degrees of judgment and uncertainty, and actual results may differ from what is estimated resulting in future
changes to such provisions.
Evidence of impairment of investments
Management determines the impairment in equity instruments classified as available for sale when there is a significant
or prolonged decline in the fair value of these investments. Determination of what is significant or prolonged requires
judgment from management. The Group evaluates, among other factors, the usual fluctuation of listed stock prices,
76
5bbiU`FYdcfh
expected cash flows and discount rates of unquoted investments, impairment is considered appropriate when there is
objective evidence on the deterioration of the financial position for the investee, including factors such as industry and
sector performance, changes in technology and operational and financing cash flows. The impact of such impairment
on these consolidated financial statements is disclosed in note (22).
Impairment of inventory
As each financial position date, management assesses whether there is any indication that inventory is impaired. The
determination of impairment requires considerable judgment and involves evaluating factors including, industry and
market conditions. The impact of such impairment on these consolidated financial statements is disclosed in note (9).
Impairment of Receivables
The Group’s management determines impairment of receivables in the light of the Group’s previous experience
about collectability, overdue period, change in global and local economies which led the customers to default in
payment. Impairment of receivables is recorded for receivables which are matured and not settled for more than 90
days. The impact of such impairment on these consolidated financial statements is disclosed in note (10).
Valuation of investment properties
The Company carries its investment properties at fair value, with changes in fair value being recognised in the
consolidated statement of income. The Company engaged independent valuation specialists to determine fair
values and the valuers have used valuation techniques to arrive at these fair values. These estimated fair values of
investment properties may vary from the actual prices that would be achieved in an arm’s length transaction at the
reporting date (note 6).
Contingent liabilities / liabilities
Contingent liabilities are potential liabilities that arise from past events whose existence will be confirmed only
by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the
entity. Provisions for liabilities are recorded when a loss is considered probable and can be reasonably estimated.
The determination of whether or not a provision should be recorded for any potential liabilities is based on
management’s judgment (note 27).
Taxes
The Group is subject to income taxes in numerous jurisdictions. Significant judgment is required in determining the
provision for income taxes. There are many transactions and calculations for which the ultimate tax determination
is uncertain during the ordinary course of business. The Group recognizes a liability for anticipated taxes based on
estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the
amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the
period in which such determination is made.
Any changes in the estimates and assumptions may have an impact on the carrying values of the deferred tax assets.
77
5.
Property, plant and equipment
Land
Decoration Building &
& Furniture cold room
Equipment
& tools
Vehicles
Projects in
progress
Total
Cost
34,022
96,532
90,868
186,865
25,282
25,110
458,679
Additions
143
6,240
2,318
14,672
1,773
22,764
47,910
Disposals
(7)
(9,418)
(2,562)
(8,579)
(1,842)
(333)
(22,741)
(2,552)
(1,477)
(4,597)
(8,671)
(1,170)
(1,304)
(19,771)
7
10,091
1,344
5,230
333
(26,550)
(9,545)
As at 1 January 2013
Foreign currency translation
difference
Transfers
As at 31 December 2013
31,613
101,968
87,371
189,517
24,376
19,687
454,532
Additions
401
6,457
3,046
12,071
3,206
24,697
49,878
Disposals
(666)
(6,682)
(699)
(6,327)
(1,431)
(198)
(16,003)
Foreign currency translation
difference
763
2,324
2,144
4,796
619
512
11,158
Transfers
154
9,913
7,903
9,811
241
(30,379)
(2,357)
32,265
113,980
99,765
209,868
27,011
14,319
497,208
As at 1 January 2013
-
65,738
35,489
108,027
18,856
-
228,110
Depreciation for the year
-
12,304
3,830
15,387
2,636
-
34,157
Disposals
-
(9,001)
(2,472)
(7,839)
(1,726)
-
(21,038)
Foreign currency translation
difference
-
(781)
(1,044)
(4,188)
(985)
-
(6,998)
Transfers
-
(1,464)
(48)
1,616
(104)
-
-
As at 31 December 2013
-
66,796
35,755
113,003
18,677
-
234,231
Depreciation for the year
-
12,765
4,181
16,952
2,793
-
36,691
Disposals
-
(6,020)
(521)
(5,680)
(1,353)
-
(13,574)
Foreign currency translation
difference
-
1,578
867
2,970
464
-
5,879
Transfers
-
(436)
(61)
575
(78)
-
-
As at 31 December 2014
-
74,683
40,221
127,820
20,503
-
263,227
As at 31 December 2013
31,613
35,172
51,616
76,514
5,699
19,687
220,301
As at 31 December 2014
32,265
39,297
59,544
82,048
6,508
14,319
233,981
-
5-7
5-25
4-7
4
As at 31 December 2014
Accumulated depreciation
Net Book Value
Useful life (year)
The Group has capitalized borrowing costs of Nil for projects in progress during the year ended
31 December 2014 (KD 49 thousand – 2013).
Property, plant and equipment include lands and buildings amounted to KD 7,904 thousand as at
31 December 2014 (KD 7,866 thousand – 2013) owned based on initial contracts. The necessary legal procedures
to transfer these lands and buildings in name of the Group are still in progress.
All amounts in 000’ Kuwaiti Dinars
78
5bbiU`FYdcfh
6.
Investment properties
2014
Balance at 1 January
Transferred from project in progress
Additions
Gain from investment properties valuation
Foreign currency translation difference
Balance at end of the year
2013
17,021
-
2,050
8,852
400
1,992
7,230
6,177
285
-
26,986
17,021
The fair value of the Group’s investment property as at 31 December 2014 has been arrived at on the basis of a
valuation carried out on the respective dates by independent valuers not related to the Group. The independent
valuers are registered at the related governmental bodies, and they have appropriate and recent experience in the
valuation of properties in the relevant locations. The fair value of the investment property of KD 26,986 thousand as
at 31 December 2014 (KD 17,021 thousand – 2013) was determined based on the market comparable approach
that reflects recent transaction prices for similar properties (level 2).
7.
Intangible assets
Goodwill
Franchises &
agencies
Key Money
Total
Cost
Balance at 1 January 2013
Additions
Transfers from projects in progress
Disposals
Foreign currency translation difference
Balance at 31 December 2013
Additions
Transfers from projects in progress
Impairment
Disposals
Foreign currency translation difference
Balance at 31 December 2014
2,053
618
(90)
2,581
(305)
76
2,352
11,784
1,653
61
(818)
(65)
12,615
1,537
69
(262)
276
14,235
13,605
255
632
(40)
6
14,458
438
238
(41)
121
15,214
27,442
2,526
693
(858)
(149)
29,654
1,975
307
(305)
(303)
473
31,801
Amortization
Balance at 1 January 2013
Amortization
Disposals
Foreign currency translation difference
Balance at 31 December 2013
Amortization
Disposals
Foreign currency translation difference
Balance at 31 December 2014
-
7,836
874
(669)
(28)
8,013
1,133
(208)
195
9,133
7,871
870
(40)
(9)
8,692
897
(40)
41
9,590
15,707
1,744
(709)
(37)
16,705
2,030
(248)
236
18,723
2,581
2,352
4,602
5,102
5,766
5,624
12,949
13,078
Net Book Value
As at 31 December 2013
As at 31 December 2014
All amounts in 000’ Kuwaiti Dinars
79
8.
Available for sale investments
2014
2013
Local quoted shares
60,598
75,010
Foreign quoted shares
17,355
18,466
1,814
3,350
79,767
96,826
Foreign unquoted shares
8.1
Fair value of available for sale investments has been determined based on valuation basis (note 3.3).
8.2
Investments in unquoted shares were carried at cost less the impairment losses as its fair value cannot reliably
measured at the consolidated financial statements date.
9.
Inventories
2014
2013
Raw materials
53,847
53,851
Finished goods
17,885
16,407
Filling and packing materials
12,405
11,925
Other materials
12,055
10,405
5,481
5,115
101,673
97,703
Provision for slow moving items
(2,426)
(2,355)
Spare parts
10,204
9,609
109,451
104,957
Goods in transit
The cost of inventories recognised as an expense during the year was KD 440,595 thousand (KD 425,475
thousand - 2013). This amount includes KD 202 thousand during 2014 (KD 138 thousand - 2013) in respect
of write-downs of inventory to net realisable value, and has been reduced by KD 131 thousand during 2014
(KD 885 thousand - 2013) in respect of the reversal of such write-downs.
10.
Trade receivables
2014
2013
Trade receivables
55,863
48,894
Other receivables
13,428
13,872
94
89
69,385
62,855
(7,095)
(6,381)
62,290
56,474
Due from related parties (note 28)
Allowance for doubtful debts
10.1 The average credit period granted to trade receivables on sales of goods is 90 days. No interest is charged
on trade receivables. There are no customers who represent more than 10% of the total balance of trade
receivables.
10.2 Trade receivables which are not matured and not impaired amounted to KD 41,065 thousand as at
31 December 2014 (KD 39,778 thousand - 2013).
All amounts in 000’ Kuwaiti Dinars
80
5bbiU`FYdcfh
10.3 Trade receivables include KD 9,278 thousand as at 31 December 2014 (KD 4,322 thousand - 2013) that
are past due but not impaired. The aging of this amount is 3 to 6 Months.
10.4 Trade receivables include KD 5,520 thousand as at 31 December 2014 (KD 4,794 thousand - 2013) that
are past due and impaired.
10.5 The fair value of the guarantees obtained by the Group is amounted to KD 26,444 thousand as at
31 December 2014 (KD 19,639 thousand - 2013).
10.6 Movement in the allowance for doubtful debts during the year:
11.
2014
2013
Balance at 1 January
6,381
6,585
Provisions provided during the year
1,517
1,325
Written off debts
(352)
(62)
Reversal of provision no longer required
(451)
(1,467)
As at 31 December
7,095
6,381
2014
2013
21,828
18,873
Refundable deposit
5,254
5,010
Accrued income
3,503
4,095
14,409
12,822
44,994
40,800
2014
2013
Cash on hand and banks’ current accounts
36,236
33,614
Time deposits and banks’ call accounts
78,943
60,768
115,179
94,382
(16,136)
-
99,043
94,382
Other receivables
Prepaid expenses
Other
12.
Cash on hand and at financial institutions
Less: deposits more than 3 month
Cash and cash equivalent for statement of cash flows purpose
The average effective interest rate on the deposits and banks’ call accounts was 0.03% - 8.25% as at
31 December 2014 (0.03% - 7.5% - 2013).
13.
Share capital
The authorized, issued and paid up capital is KD 40,200 thousands comprising of 402,002 thousand shares with
nominal value of 100 fils each. All shares are in cash.
All amounts in 000’ Kuwaiti Dinars
81
14.
Treasury shares
Number of shares (thousand shares)
Percentage to issued share capital (%)
Market value
2014
2013
10,848
10,848
2.7
2.7
29,940
27,120
The Parent Company is required to retain reserves and retained earnings equivalent to the value of treasury shares
throughout the period, in which they are held by the company, pursuant to instructions of the relevant regulatory
authorities.
15.
Statutory reserve
In accordance with the Companies law and the Parent Company’s Articles of Association, 10% of the net profit
before KFAS, National Labour Support Tax, Board of Directors’ remuneration and Zakat expense for the year is
required to be transferred to statutory reserve. The General Assembly may resolve to discontinue such annual
transfers when the statutory reserve reaches 50% of the Company’s paid up capital. Distribution of the statutory
reserve is limited to the amount required to enable the payment of a dividend of 5% of paid up capital to be made
in years when accumulated profits are not sufficient for the payment of such dividend.
16.
Voluntary reserve
In accordance with the Parent Company’s Articles of Association, 5% of net profit for the year is to be transferred
to the voluntary reserve. This transfer may be stopped by a resolution adopted by the ordinary assembly as
recommended by the Board of Directors. There are no restrictions on distributions from the voluntary reserve. The
transfer ceased in accordance with the ordinary General Assembly decision on 12 April 1999.
17.
Non-Controlling interests
2014
2013
40,799
37,528
6,156
7,738
Foreign currency translation differences
454
(1,205)
Reclassification related to disposals of available for sale investments during the year
(40)
-
Balance at 1 January
Share from net profit for the year
Other comprehensive income items:
Change in fair value of available for sale investments
(418)
(972)
(4)
(2,177)
740
-
(5,937)
(2,290)
(5,197)
(2,290)
41,754
40,799
Other changes in non-controlling interests:
Share from subsidiary’s capital increase
Cash dividends from subsidiaries
Balance at 31 December
All amounts in 000’ Kuwaiti Dinars
82
5bbiU`FYdcfh
18.
Borrowings and bank facilities
2014
2013
Bank overdraft
37,719
37,800
Loans
16,584
18,923
54,303
56,723
13,050
25,904
67,353
82,627
2014
2013
54,303
56,723
More than one year to three years
9,874
16,891
Over three years
3,176
9,013
67,353
82,627
Short term
Long term
Loans
Maturity of borrowings and bank facilities is as follows:
Within one year
18.1 Borrowings and bank facilities are carried at variable interest rates. The effective interest rate on the
borrowings and bank facilities was 8.15% as at 31 December 2014 (8% - 2013).
18.2 Borrowings and bank facilities are secured against issuance of promissory notes, letters of guarantee,
commercial pledge on inventory, tangible and intangible assets of some Group’s subsidiaries, insurance
policies and joint security issued by the Parent Company.
19.
Trade and other payables
2014
2013
Trade payables
46,583
42,802
Non-trade payables
43,206
41,651
Accrued expenses and salaries
33,499
27,545
Provisions
13,756
12,098
Other liabilities
10,085
5,682
Other credit balances
18,166
15,365
Deposits due to other
2,028
1,686
Accruals to staff
5,961
4,629
412
387
72
72
2,348
1,780
176,116
153,697
Dividends
Board of Directors’ remunerations
Taxes and deductions
All amounts in 000’ Kuwaiti Dinars
83
20.
Other operating expenses
2014
2013
(Provide)/ reverse of provisions
(2,467)
99
Foreign currency gain/ (losses)
1,023
(1,444)
2
3
(1,442)
(1,342)
2014
2013
Gain from investment properties valuation
7,230
6,177
Rental income
1,327
554
8,557
6,731
2014
2013
(1,625)
-
(20,162)
(20,484)
4,489
4,528
(316)
(334)
(17,614)
(16,290)
Other
21.
22.
Investment properties income
Net losses from available for sale investments
Realized losses
Impairment of available for sale investments
Cash dividends
Portfolios’ management fees
23.
Earnings per share
Earnings per share is calculated by dividing the net profit attributable to the equity shareholders of the Parent
Company by the weighted average number of the issued ordinary shares after deducting the weighted average of
treasury shares during the year as follows:
2014
2013
52,021
50,598
Weighted average number of issued shares (thousand share)
402,002
402,002
Weighted average number of treasury shares (thousand share)
(10,848)
(10,848)
Weighted average number of outstanding shares (thousand share)
391,154
391,154
133
129
Net profit for the year attributable to the shareholders of the Parent Company
Eearnings per share (Fils)
24.
Cash dividends
On 6 April 2014, the shareholders approved the Group’s consolidated financial statements for the year ended
31 December 2013, and approved cash dividends of 85% from profits of 2013.
On 2 March 2015, the Board of Directors proposed a cash dividend of 90% for the year ended 31 December 2014,
subject to the approval of the Parent Company’s shareholders and the regulatory bodies.
All amounts in 000’ Kuwaiti Dinars
84
5bbiU`FYdcfh
25.
Investments in subsidiary companies
25.1 Composition of the Group
Company’s Name
Activity
Place of
incorporation
Ownership (%)
2014
2013
Al Americana International Company (Safeway).
Retail
Kuwait
89.55
89.55
Arab Gulf Company for Food (Americana)
Food
Kuwait
99.97
99.25
Al Ahlia Restaurants Co.
Restaurants
Saudi Arabia
99.96
99.96
Al-Ahlia National Food Industries Co.
Industry
Saudi Arabia
99.96
99.96
International Fashion Co.
Retail
Saudi Arabia
100
100
Bahrain and Kuwait Restaurants Co.
Restaurants
Bahrain
40
40
International Cosmetics Co.
Retail
Saudi Arabia
100
100
United Food Co.
Food
Saudi Arabia
98
98
Kuwait Food Co.
Food
Egypt
100
100
Kuwait Food Co.
Restaurants
UAE
100
100
Americana International Company (Fashion way)
Retail
UAE
97.40
97.40
Gulf Food Industries Co. - (California Garden)
Industry
UAE
100
100
Qatar Food Co.
Restaurants
Qatar
100
100
Touristic Projects and International Restaurants Co.
Restaurants
Jordan
64.08
64.08
International Tourism Restaurants Co.
Restaurants
Oman
99
99
International Touristic Projects Lebanese Co.
Restaurants
Lebanon
98
98
Gulf and Arab World Restaurants Co.
Restaurants
Bahrain
94
94
Al Inma’a Syrian Co.
Restaurants
Syria
80
80
Gulfa for Mineral Water
Industry
UAE
92.70
92.70
The Caspian International Restaurants Co.
Restaurants
Kazakhstan
100
100
Khosh Taam International Food Company
Restaurants
Iran
90
90
International Food Company
Restaurants
Turkey
100
100
90
90
99.97
99.97
Al-Musharaka Company for Touristic Restaurant Services Restaurants
Kurdistan - Iraq
Americana Group for Food and Touristic Projects and its
subsidiaries.
Egypt
UÊ
Holding
Subsidiaries’ financial statements have been consolidation based on audited financial statements as at
31 December 2014.
85
25.2 Details of non-wholly owned subsidiaries of the Group that have material
non-controlling interests
Name of
subsidiary
Cairo Poultry
Place of incorporation
and principal place of
business
Proportion of
ownership interests
and voting rights held
by non-controlling
interests%
Egypt
Profit allocated to
non-controlling
interests
Accumulated
non-controlling interests
2014
2013
2014
2013
2014
2013
48.03
48.03
3,301
4,628
20,676
21,896
Cairo Poultry is a subsidiary of Americana Group for Food and Touristic Projects (Egypt):
Summarised financial information in respect of this subsidiary is set out below:
2014
2013
Current assets
26,153
26,363
Non-current assets
52,821
51,325
(29,217)
(24,063)
Current liabilities
Non-current liabilities
(7,218)
(8,575)
Equity attributable to shareholders of the Parent Company
21,863
23,154
Shares of non-controlling interests
20,676
21,896
2014
2013
Revenue
94,979
99,006
Expenses
(88,176)
(89,452)
Profit attributable to shareholders of the Parent Company
3,502
4,926
Profit attributable to the non-controlling interests
3,301
4,628
Profit for the year
6,803
9,554
Total other comprehensive income attributable to shareholders of the
Parent Company
(476)
(799)
Total other comprehensive income attributable to the non-controlling interests
(440)
(738)
Total other comprehensive income for the year
(916)
(1,537)
Total comprehensive income for the year attributable to shareholders of the
Parent Company
3,026
4,127
Total comprehensive income for the year attributable to the non-controlling interests
2,861
3,890
Total comprehensive income for the year
5,887
8,017
Dividends paid to non-controlling interests
3,387
-
Net cash flow from operating activities
14,792
18,739
Net cash flow used in investing activities
(8,613)
(6,350)
Net cash flow used in financing activities
(4,690)
(8,999)
1,489
3,390
Net cash inflow
All amounts in 000’ Kuwaiti Dinars
86
5bbiU`FYdcfh
26.
Segment information
26.1 Geographical and operating segments for the revenues and results
The Group activities are concentrated in two main sectors:
- Restaurants & Retail Sector which consists of subsidiaries and branches that operate in all kinds of restaurants and
representing foreign specialized foodstuff companies as well as trading in foodstuff products.
- Food Industries Sector which consists of all subsidiaries and branches that operate in the manufacturing of foodstuff
and beverages; sale of such items on both a retail and wholesale.
The results of the two sectors are reported to the top executive management in the Group. In addition, the revenue,
results, profit, assets and liabilities are being reported on geographic basis and being measured in accordance
with the same accounting bases used for the preparation of consolidated financial statements.
The following is the segment information which is consists with the internal reporting presented to management:
Restaurants & Retail
sector
2014
Revenue
Kuwait
Saudi Arabia
South Gulf
Egypt and Africa
Sham and others
Total
86,585
125,634
180,698
89,309
49,210
531,436
Food Industries
sector
2013
2014
2014
2013
2014
2013
81,107
43,489
38,822
115,018 105,630
98,552
169,209
55,017
53,579
77,282 256,625 253,464
46,434
489,050 460,761 444,417
(3,348)
(23,095)
(9,131)
(34,265)
(69,839)
(3,248)
(24,419)
(7,348)
(31,548)
(66,563)
126,726
208,169
226,584
311,669
49,210
922,358
116,681
189,151
215,440
299,198
46,434
866,904
Food Industries
sector
Total
2014
2013
2014
2013
2014
2013
9,770
15,580
19,333
7,102
2,135
53,920
10,809
14,357
17,885
6,105
1,141
50,297
5,139
9,147
4,140
10,767
29,193
3,680
8,090
4,096
17,347
33,213
14,909
24,727
23,473
17,869
2,135
83,113
14,489
22,447
21,981
23,452
1,141
83,510
8,557
(17,614)
(4,372)
69,684
6,731
(16,290)
(7,820)
66,131
Add the following:
Investment properties income
Net losses from available for sale investments
Others
Profit before income tax of subsidiaries
Restaurants & Retail
sector
Assets
Liabilities
Total
2013
Restaurants & Retail
sector
Segment results
Kuwait
Saudi Arabia
South Gulf
Egypt and Africa
Sham and others
Total
Intercompany
transactions
Food Industries
sector
Unallocated items
Total
2014
2013
2014
2013
2014
2013
2014
2013
292,557
153,288
256,350
142,229
334,017
147,520
311,080
145,685
61,618
(18,149)
78,665
(18,161)
688,192
282,659
646,095
269,753
All amounts in 000’ Kuwaiti Dinars
87
26.2 Geographical segments of assets and liabilities
2014
Kuwait
Saudi
Arabia
South
Gulf
Egypt
& Africa
Sham
& others
Total
Property, plant and equipment and
intangible assets
17,377
40,128
29,593
143,229
16,732
247,059
Investments properties
13,820
-
1,186
11,980
-
26,986
Available for sale investments
69,583
-
-
10,184
-
79,767
-
-
-
2,466
-
2,466
13,834
23,558
14,631
52,894
4,534
109,451
8,303
14,062
14,259
24,471
1,195
62,290
Assets
Other assets
Inventories
Trade receivables
3,703
7,698
10,227
21,304
2,062
44,994
58,726
20,984
10,420
21,753
3,296
115,179
185,346
106,430
80,316
288,281
27,819
688,192
302
3,001
5,489
56,137
2,424
67,353
Trade and other payables and End of
service indemnity
62,078
42,901
41,889
61,041
7,397
215,306
Total liabilities
62,380
45,902
47,378
117,178
9,821
282,659
Other receivables
Cash on hand and at financial institutions
Total assets
Liabilities
Borrowings and bank facilities
2013
Kuwait
Saudi
Arabia
South
Gulf
Egypt
& Africa
Sham
& others
Total
18,413
36,032
27,129
138,677
12,999
233,250
6,765
-
867
9,389
-
17,021
86,179
-
-
10,647
-
96,826
Assets
Property, plant and equipment and
intangible assets
Investments properties
Available for sale investments
-
-
-
2,385
-
2,385
14,650
23,095
13,239
50,752
3,221
104,957
Trade receivables
7,946
11,250
11,822
23,815
1,641
56,474
Other receivables
3,860
6,071
9,186
19,956
1,727
40,800
Other assets
Inventories
46,168
16,442
10,179
16,902
4,691
94,382
183,981
92,890
72,422
272,523
24,279
646,095
2,651
9,233
4,204
64,586
1,953
82,627
Trade and other payables and End of
service indemnity
53,273
34,529
38,709
52,906
7,709
187,126
Total liabilities
55,924
43,762
42,913
117,492
9,662
269,753
Cash on hand and at financial institutions
Total assets
Liabilities
Borrowings and bank facilities
All amounts in 000’ Kuwaiti Dinars
88
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27.
Contingent liabilities and capital commitments
2014
2013
4,753
4,048
Contingent liabilities
Letters of guarantee
There is a conflict between the group and the tax department regarding the method of calculating the deductions.
That conflict is still under legal dispute in the courts and its impact cannot be currently determined, full provisions
for this purpose have been provided.
Leased commitments
Less than one year
23,777
20,191
From two years to five years
60,313
47,702
More than five years
44,201
56,584
128,291
124,477
Capital commitments
Letters of credit
Projects in progress commitments
28.
8,171
2,159
12,175
13,175
Related parties transactions
Related parties represent shareholders who have representatives in the Boards of Directors, members of the Boards
of Directors, Senior Management and the companies who controlled by the major shareholders. In the ordinary
course of business, the Group has entered into transactions with related parties during the year. The following are
the transactions and balances resulting from these transactions:
2014
2013
Revenues
223
200
Expenses
76
69
Transactions
Portfolios’ management fees
Key management benefits
316
334
1,480
4,590
94
89
312
301
Balances
Trade receivables
Key management – termination benefits
All amounts in 000’ Kuwaiti Dinars
89
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