Now

Transcription

Now

Thirty
seventh
2011
ANNUAL
REPORT
Meat Processing Department
Sulaibiah, Block 2
Tel: 24676101 - 24676156
24676178 - 24676200 - 24376211
Fax: 24676113
Processed / Products Sales
Department
Sulaibiah, Block 2
Tel: 24676101 - 24676156
24676178 - 24676200 - 24376211
Fax: 24676113
The Farm Department
Sulaibiah, Block 2
Tel: 24674903 - 24673797 - 24674644
24673796 - 24674781
Fax: 24674812
Butcheries Dept. Local Sales Dept.
& Slaughter House Dept.
Shuwaikh 3rd Industrial Area, Blk D, Plot 139
Tel: 24844212 - 24844463
Home Delivery: 1888822
Butcheries Dept. Facsimile: 24838402
Emirates Livestock & MeaT Product Trading Co.
P.O Box 55540 Dubai - UAE
Jabal Ali Complex - Al Ain Road
Tel: 009714 - 8801118 - Fax: 009714 - 8801119
E-mail: [email protected]
Rural Export & Trading (W.A) Pty.
LTD. Australia / P.O Box 1362 West Perth 6872
Western Autralia
Tel: 6189 - 3226649 (3lines) - Telex: AA 94036 Retwa
Facsimile: 6189 - 3221240
about the company
A Kuwait Shareholding Company established under Amiri decree
issued on 28th November 1973 and was incorporated pursuant to
a memorandum of association of Shareholding Company. It was
authentucated at the Ministry of Justice Authertication and Real Estate
Deaprtment under Ref. 701/D/file 2 on 24th November 1973.
The founder’s general assembly meeting held 20th January 1974
formally declared the company legally formed.
Head Office
Salhiya Commercial Complex
Entrance No. 3, 2nd Floor & 4th Floor
Telephone: 22455700
Facsimile: 22438970- 22402109
P.O. Box 23727 Safat, Code 13098 Kuwait
Email: [email protected]
H.H Shiekh
Sabah Al Ahmad Al Jaber Al Sabah
The Amir of the State of Kuwait
H.H Shiekh
Jaber Al Mubarak Al Sabah
The Prime Minister of the State of Kuwait
H.H Shiekh
Nawaf Al Ahmad Al Jaber Al Sabah
The Crown Prince of the State of Kuwait
CONTENTS
Board of Directors
PAGE
8
Board of Director’s Report
9 - 13
Independent Auditor’s Report
14 - 15
Consolidated Statement of Financial Position
16
Consolidated Statement of Income
17
Consolidated Statement of Comprehensive Income
18
Consolidated Interim Statement of Changes in Equity
19
Consolidated Statement of Cash Flows
20
Notes to the Consolidated Financial Statements
21 - 47
board of directors
Bader Sulaiman Jarallah Al Jarallah
Mohammed Hamad Hassan Al Ibrahim
Chairman & Managing Director
Vice Chairman
Abdulkarim Mohammed Abdulkarim Al Saeed
Rasha Fahad Ahmad Al Amir
Ahmed Faisal Saoud Al-Zabin
Member of the Board
Member of the Board
Member of the Board
Mohammed Saoud Mohammed Al-Osaimi
Marzouk Fajhan Hilal Al Mutairi
Member of the Board
Member of the Board
8
Board of Director’s Report
In the Name of Allah
The Beneficent the Merciful
Peace be upon you.
Dear shareholders,
We are honored and pleased to present to you the 37th annual fiscal and administrative report
for all the operations and activities of the Livestock Transport & Trading Company for the fiscal year
ended on 31 December 2011, which we hope to be at your expectations and confidence in us. It is
necessary to be a clear and honest documentation of the conditions and articulated events which will
draw the forthcoming future of the company.
The year 2011 acted as a main stop in the progress of your company throughout its history, crowned
with remarkable achievements. The company management had to deal with several decisive and
tricky files which constituted a nightmare and concern for the company’s future, the most significant
of which was the file of endeavors to amend the financial conditions of the company and reform its
financial flows by endeavoring to discontinue the bleeding of its losses in the local market, resulting
from the continued persistence to commit the company to provide massive quantities of sheep to
fulfill the company’s needs, in concurrence with non compensation of the company for the difference
in the costs it shouldered. As for the second nightmare, it is represented in the intention of the
Australian government to impose a package of new controls and requirements on the process of
exporting sheep and livestock from Australia. This has affected the company’s business as Australia is
the main available source for importing the required quantities of sheep. As for the most significant
obsession, it is underlined by dealing with relevant authorities in order to fulfill the interests of the
company and its shareholders, and finally the obsession of continuing maintaining the company’s
elements, activities, material and human assets, which represent the backbone of the company.
As for the continuation of the obligation to sell in the local market less at the cost and exposing
the company to illogical and unjustified losses. Since more than two years, the company continued its
relentless endeavors and efforts to convince the concerned government authorities of the necessity
of putting an end to this matter, in order to maintain the company’s assets from erosion and collapse,
subject to the possibility of the company’s discontinuation of practicing its main activity represented
in transport, and if this happens, it will cause catastrophic conditions for the supplies of sheep to
the country. Meanwhile, this matter is concurrent with the government’s intention and desire to
maintain the prices of meat at a certain level which keeps abreast of the strategic policy of the
state towards non encroachment upon the basic needs of citizens and avoiding charging them with
additional living burdens, whether raising the prices of meat or liberating them. Therefore, the
9
company presented a logical and fair proposal to maintain the interests of all parties and fulfill the
government’s commitment towards the citizen, and most significantly to enable the company to
continue performing its service and role, and that is having the government compensate the company
for the certain and audited real cost it incurs for the purchasing processes of sheep and the expenses
of insuring and transporting them up to Kuwait’s port, and mandate the Ministry of Commerce and
Industry- in agreement with the Livestock Transport & Trading Company to lay down the required
mechanism and cost for management of the huge and continuous quantities throughout the year of
sheep, caring for them, slaughtering and marketing their meat as per any method or way deemed by
the government, according to a basic objective of supporting and assisting the company to continue
its significant role under the umbrella of food security system and as an indirect interest of the
government as being the main owner of the company.
This was crowned, with the praise of the Almighty God, with the passing of the Council of Ministers
decree No.1308 of 11/9/2011 for reinforcement of the financial status of the Livestock Transport &
Trading Company, in a historical step which will assist the company to execute all its future plans on
a clear and strong foundation. For integrity, the great and supportive role of the company by His
Excellency Mr. Mustafa Jassim Al Shamali, deputy premier and minister of finance, for the passing of
this resolution is noteworthy. However, optimism after the passing of this decree was shocked through
an irresponsible and questionable attitude. The decree was escorted by disregard and attempts to
distract its enforcement on part of the entity entrusted to enforce it, i.e. the Ministry of Commerce
and Industry, through its incomprehensible and unjustified attitude act, despite all the attempts of
the company management for interaction with the Ministry officials and disregarding the knowledge
that the Ministry at the highest level, through the minister of commerce and industry at that time,
has contributed and participated in the approval and enactment of the said decree, whether in the
economic and financial committee of the Council of Ministers or the council itself. Regretfully, this has
forced the company management to take the required administrative and judicial measures to reserve
the rights of the company and its shareholders and avoid exposing the company management for
accountability for complacency in this claim. However, the company hopes that with the formation of
the new cabinet that this matter would be regarded with responsibility and addressed in a prompt and
fair manner with national sense for the goodness of our beloved country and this national company.
Dear shareholders,
As you know, the company and its management is exerting constant efforts since the past years
to find sources for sheep to dismiss the company’s need for relying on limited sources. However, the
current availability as per the available quantities required to be continued of sheep and availability
of the infrastructure related to the transport of sheep from Australia, has made it the main source
for this matter. However, by the middle of 2011, the Australian government, in a sovereign move –
has imposed a package of procedures and requirements under the name of Exporter Supply Chain
Assurance Systems (ESCAS) which will cause more complication and distraction for the processes of
importing sheep, under the umbrella of preventing their export, except the expected increase in cost.
10
This has necessitated the company to clarify its viewpoint officially to the Australian government
through an official letter during a meeting with the Australian minister of agriculture, as well as
coordination with the relevant government authorities (Kuwait Municipality- Public Authority for
Agriculture Affairs & Fish Resources) to postpone the implementation of these procedures in order
to subject them to more study, and out of concern for the sheep supplies to Kuwait. The company
met great cooperation on part of His Excellency the minister of municipality, while the company
management has a great hope that this phase will be overcome satisfactorily without exposing
Kuwait’s supplies of sheep to stumbling. It is our obligation to inform you that since 1/12/2011
“Kuwait” vessel and “Messilah” vessel stopped sailing as they are incompatible with the conditions
required for sailing to Australia after this date due to several reasons, the most significant of which
are the conditions which the company underwent, unclear view in connection with the decision to
modernize the fleet and the required finance to do so, and in view of the conditions of continuing
the operation of the ships throughout 2011 in order to satisfy the increasing demand for sheep,
other than the feasibility for the processes of modernizing these ships due to their old age and the
expensive costs for doing so. However, the company has taken a decision which will permit the return
of Messilah ship to service by April 2012, and continuing the study of options to deal with Kuwait ship
due to its old age and complicated condition.
Dear shareholders,
According to the unclear financial conditions of the company in 2011, routine and administrative
procedures helped in delaying the company’s projects complementing its activities, the most
significant of which is the capital slaughterhouse project, its administrative building and the processes
for modernizing and developing the company farm, despite the continuation of the company
management to follow up all these matters on the hope that the execution of these projects will
start respectively in the event of availability of the required cash flow and availability and completion
of the required licenses.
As regards the company’s claims and the cases filed in the UAE and the Sultanate of Oman, the
company is still following up such cases. Several judgments were passed in favor of the company
which we hope would be upheld in the final litigation degrees.
In 2011, the company imported 1,707,598 heads of sheep compared with 1,697,266 in 2010, of
which the share of the local market was 894367 sheep. As you know, all the cost factors relevant to the
purchase and transport of sheep, whether their prices, cost of required fuel, currency differences and
other expenses increased in a record manner, which contributed in increasing the expenses. On the
level of external markets, and in view of the company’s concern to maintain its share in the external
markets. In 2011, we sold 719375 heads of sheep (625,210 sheep in 2010), i.e. an increase by 15%.
The following is a review of the results of operations:
11
Operation and activities accounts:
The total revenues realized amounted to KD 75,157,191 (KD 59,744,705 in 2010), i.e. an increase
by 25.7% and cost of sales KD 86,904,671 (KD 64,188,709 in 2010), i.e. an increase in deficit rate by
(35.40%), and a realized loss margin by 15.60% (loss margin 7.5% in 2010).
Further, the administrative, general and marketing expenses amounted to KD 3,423,282. The
company realized operational losses by KD 4,796,217 (KD 3,290,071 in 2010), and increase in deficit by
45.78%. The most part of these losses is attributed to the increase in the prices of sheep in Australia
by 23% compared to 2010, the increase in the cost of transport and operation of ships, as the price
of fuel increased by 44.64% compared to 2010, as well as the exchange rate of the Australian dollar
which increased by 9% compared to 2010.
It is noteworthy that the external sales activity realized profits of KD 2636922 (KD 2,448,756 in
2010) i.e. an increase by 7.68%, while the local activities realized losses by KD 7,426,186 despite
enjoyment a government subsidy by KD 10,727,466, i.e. the losses without government subsidy is KD
18,153,652 (local activity losses in 2010 amounted to KD 6,223,040 with government subsidy of KD
4720240, i.e. the losses amounted to KD 10,943,280 without subsidy.)
Profits and losses:
The company realized net losses of KD 5,387,319 (Losses of KD 2,205,145 for the same period in
2010), while the share loss amounted to 25.65 fils, (10.46) fils in 2010).
The board of directors proposes non distribution of profits for 2011, following approval of the
general assembly.
Finally :
With all these unaccounted conditions which your company was forced to deal with and despite
their complications and reflections on the overall activities of the company and the delay they caused
to all its future plans and aspirations, we bring you the good news that 2011 will be the last years
of losses, with God’s will, for a single reason which is the stop of losses of Kuwait’s sector for which
the company is not accountable in the event of the end of its obligation to sell less than the costs
following its efforts for passing a decree from the Council of Ministers for reinforcing its financial
status and the great understanding expressed by the esteemed Council of Ministers of this issue.
It is our duty to point to the great role and sincere cooperation of the members of the board of
12
directors and all staff of the company for their constructive efforts and dedication in performing their
responsibilities.
During these beloved days to our hearts and in the midst of our celebrations of our national days,
we are pleased to present our heartfelt greetings to our Amir, His Highness Sheikh Sabah Al Ahmad
Al Jaber Al Sabah, may God protect him, and His Highness Sheikh Nawaf Al Ahmad Al Jaber Al Sabah,
the Crown Prince, and to His Highness Sheikh Jaber Al Mubarak Al Sabah, the prime minister, the wise
government and the honorable people of Kuwait, as well as all expatriates in our beloved country.
With the confidence bestowed upon Mr. Ans Khalid Al Saleh, the minister of commerce and industry,
we have great hopes of his understanding of this situation, particularly that he is one of the elements
of the economic and commercial body of Kuwait.
Bader Sulaiman Al Jarallah
Chairman and managing director
13
Dr. Saud Al-Humaidi & Partners
Public Accountants
PKF Bouresli & Co.
Accountants & Business Advisers
P.O Box 20986 Safat, 13070 Kuwait
Tel : (965) 22655777
Fax : (965) 22659100
Web Site : www.pkf-kuwait.com
Sharq Area, Omar Bin Khattab St.
Shawafat Bldg, Block No. 5, 1st floor
Tel : (965) 22442333 / 22443222
Fax : (965) 22659100
www.bakertillykuwait.com
Livestock Transport & Trading Co. K.S.C. and its subsidiaries
State of Kuwait
Independent Auditors’ Report to the Shareholders
Report on the Financial Statements
We have audited the accompanying consolidated financial statements of Livestock Transport & Trading
Company (K.S.C.), “the parent company” and its subsidiaries (collectively referred to as “The Group”)
which comprise the consolidated statement of financial position as of 31 December 2011, the consolidated
statements of income, comprehensive income, changes in equity, and cash flows for the year then ended as
well as a summary of significant accounting policies and other explanatory notes.
Management’s Responsibility for the Financial Statements
The parent company’s management is responsible for the preparation and fair presentation of these
consolidated financial statements in accordance with International Financial Reporting Standards.
This responsibility includes: designing, implementing and maintaining internal control relevant to the
preparation and fair presentation of consolidated financial statements that are free from any material
misstatement, whether due to fraud or error. It also includes selecting and applying appropriate accounting
policies, and making accounting estimates that are reasonable in the circumstances.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
Except for the matter described in “Basis of qualified opinion” paragraph mentioned below, 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 whether the
consolidated financial statements are free from material misstatement. An audit involves performing
procedures to obtain audit evidence about the amounts and disclosures included in the consolidated
financial statements. The procedures selected depend on the auditors’ professional 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 the
appropriate audit procedures, but not for the purpose of expressing an opinion on the effectiveness of the
parent company’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by the 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
opinion on the consolidated financial statements.
14
Dr. Saud Al-Humaidi & Partners
Public Accountants
PKF Bouresli & Co.
Accountants & Business Advisers
Tel : (965) 22655777
Fax : (965) 22659100
Web Site : www.pkf-kuwait.com
Sharq Area, Omar Bin Khattab St.
Shawafat Bldg, Block No. 5, 1st floor
Tel : (965) 22442333 / 22443222
Fax : (965) 22659100
www.bakertillykuwait.com
Basis for qualified opinion
With reference to what is stated in notes (9 ، 20) of these consolidated financial statements where the Group
has recorded income from government subsidy for the period from September 2011 to December 2011
in an amount of KD 7,728,801 based on the Council of Ministers Resolution No.1308 dated 11 September
2011. The Ministry did not approve the amount of subsidy. This subsidy includes an amount of KD 1,915,160
exceeds the value of subsidy in accordance with the Ministerial decision. We could not do audit procedures
to verify the completeness and validity of the balance of the government subsidy as at 31 December 2011.
Qualified Opinion
In our opinion, except for the matter described in the “Basis of qualified opinion” paragraph mentioned
above, the consolidated financial statements present fairly, in all material respects, the consolidated financial
position of the Group, as at 31 December 2011, its financial performance and cash flows for the financial
year then ended, in accordance with International Financial Reporting Standards.
Report on Other Legal and Regulatory Requirements
Furthermore, in our opinion that proper books of account have been kept by the parent company and
the consolidated financial statements, together with the contents of the report of the parent company’s
board of directors relating to these consolidated financial statements, are in accordance therewith. We
further report that we obtained the information that we required for the purpose of our audit and that the
consolidated financial statements incorporate information that is required by the Commercial Companies
Law of 1960, as amended, and by the parent company’s Articles of Association, that an inventory was duly
carried out and that, to the best of our knowledge and belief, no violations of the Commercial Companies
Law of 1960, as amended, nor of the parent company’s Articles of Association have occurred during the
year ended 31 December 2011 that might have had a material effect on the business of the Group or on its
financial position, except as provided in Note No. (10) on the parent company’s investment in lands which is
of disagreement with its purposes.
Dr.: Saud Hamad AL-Humaidi
Tareq Majid Bouresli
License No. 51 (A)
Member of Baker Tilly International
Kuwait: 22 February 2012
License No. 75 (A)
PKF Bouresli & Co.
Member of PKF International
15
Consolidated Statement of Financial Position as at 31 December 2011
(All amounts are in Kuwaiti Dinar)
Note
31 December
2011
31 December
2010
ASSETS
Non - Current Assets
Property, plants and equipment
5
9,051,480
11,632,431
Investments in associates
6
1,195,993
1,239,280
Available for sale investments
7
1,752,383
2,048,075
11,999,856
14,919,786
Current Assets
Inventories
8
5,105,006
7,497,623
Receivables and other debit balances
9
13,965,880
9,528,199
Investment properties
10
174,336
174,336
Investments at fair value – Income Statement
11
7,174,462
7,909,684
Cash and Cash Equivalents
12
TOTAL ASSETS
8,844,010
13,214,623
35,263,694
38,324,465
47,263,550
53,244,251
EQUITY AND LIABILITIES Equity
Equity
Share capital
13
21,659,057
21,659,057
Treasury shares
14
(1,574,143)
(1,321,129)
4,967,805
4,967,805
Share premium
Statutory reserve
15
11,825,560
11,825,560
Voluntary reserve
16
10,758,595
10,758,595
Other reserves and changes in fair values
17
1,003,347
1,034,112
Accumulated losses
(7,047,366)
(1,660,047)
Total equity
41,592,855
47,263,953
1,802,516
1,640,895
3,868,179
4,339,403
5,670,695
5,980,298
47,263,550
53,244,251
Non-current Liabilities
Employee’s end-of-service indemnity
Current Liabilities
Payables and other credit balances
18
Total liabilities
TOTAL EQUITY AND LIABILITIES
The accompanying Notes are an integral part of this Consolidated Financial Statements
Bader Sulaiman Al Jarallah
Mohammed Hamad Hasan Al Ibrahim
Chairman & Managing Director
Vice Chairman
16
Consolidated Statement of Income for the Year Ended 31 December 2011
31 December
2011
31 December
2010
75,157,191
59,744,705
Operating cost
(86,904,671)
(64,188,709)
GROSS LOSS
(11,747,480)
(4,444,004)
10,727,466
4,720,240
352,049
226,098
Marketing expenses
(1,389,691)
(1,422,061)
General and administrative expenses
(2,033,591)
(1,746,960)
(704,970)
(623,384)
(4,796,217)
(3,290,071)
136,909
435,517
Note
Operating revenues
19
Governmental subsidy
20
Other operating income
Other operating expenses
21
OPERATING LOSS
Interest on deposits, call accounts
(Loss)/Gain from investments at fair value – Income
Statement
22
(682,583)
1,235,051
Net gain/(loss) from investments available for sale
23
6,073
(297,701)
Share in business result of investments in associates
6
207,274
40,713
Impairment of investments in associates
6
(69,448)
(70,000)
(51,852)
(162,691)
(5,249,844)
(2,109,182)
(109,475)
(67,963)
(5,359,319)
(2,177,145)
(28,000)
(28,000)
(5,387,319)
(2,205,145)
(25.65)
(10.46)
Foreign exchange differences
NET LOSS BEFORE SUBSIDIARIES TAX AND DEDUCTIONS
Income tax on subsidiaries
NET LOSS AFTER SUBSIDIARIES TAX AND BEFORE
DEDUCTIONS
Board of Directors’ remuneration
24
NET LOSS FOR THE YEAR
LOSS PER SHARE (FILS)
25
17
Consolidated Statement of Income for the Year Ended 31 December 2011
31 December
2011
31 December
2010
(5,387,319)
(2,205,145)
(48,996)
(59,949)
-
(167,028)
Transferred to retained earnings from share in associates’
reserve
23,913
-
Foreign currency translation differences
(5,682)
349,056
(30,765)
122,079
(5,418,084)
(2,083,066)
Loss for the year
Other comprehensive income
Changes in fair value of available for sale investments
Changes in the share of associates’ reserve
Total other comprehensive (loss)/ income for the year
Total comprehensive loss for the year
18
Consolidated Statement of Changes in Equity for the Year Ended 31 December 2011
Cash dividends
Total comprehensive income for
the year
Total other comprehensive income
for the year
Loss of the year
-
-
-
-
-
21,659,057
Capital
Share
(1,321,129)
(246,886)
-
-
-
-
(1,074,243)
Treasury
Shares
4,967,805
-
-
-
-
-
4,967,805
Share
Premium
11,825,560
-
-
-
-
-
11,825,560
Statutory
Reserve
10,758,595
-
-
-
-
-
10,758,595
Voluntary
Reserve
1,034,112
-
-
122,079
122,079
-
912,033
Other
Reserves
and
Changes in
Fair Value
(Note 17)
(1,660,047)
-
(3,169,248)
(2,205,145)
-
(2,205,145)
3,714,346
(Accumulated
Loss) /
Retained
Earnings
47,263,953
(246,886)
(3,169,248)
(2,083,066)
122,079
(2,205,145)
52,763,153
Total
Balance as at 31 December 2009
Purchase of treasury shares
21,659,057
Total comprehensive income for
the year
Total other comprehensive income
for the year
Loss of the year
-
-
-
-
21,659,057
(1,574,143)
(253,014)
-
-
-
(1,321,129)
4,967,805
-
-
-
-
4,967,805
11,825,560
-
-
-
-
11,825,560
10,758,595
-
-
-
-
10,758,595
1,003,347
-
(30,765)
(30,765)
-
1,034,112
(7,047,366)
-
(5,387,319)
-
(5,387,319)
(1,660,047)
(41,592,855)
(253,014)
(5,418,084)
(30,765)
(5,387,319)
47,263,953
21,659,057
19
Consolidated Statement of Financial Position as at 31 December 2011
(All amount are in Kuwait Dinar)
31 December
2011
31 December
2010
(5,387,319)
(2,205,145)
Depreciation
3,159,728
3,025,051
Interest on deposits and call accounts
(136,909)
(435,517)
Share in business result of associates
(207,274)
(40,713)
69,448
70,000
Operating activities
Net loss before adjustments
Adjustments for:
Impairment of investments in associate
Impairment of receivables
204,163
(loss)/Profit from available for sale investments
(6,073)
297,701
Net disposal of property, plants and equipment
(4,905)
6,110
682,583
(1,235,051)
Gain/(Loss) from investments at fair value–Income Statement
Employees’ end-of-service indemnity
Operating loss before changes in working capital
Inventories
Receivables and other debit balances
Investments at fair value – Income Statement
Payables and other credit balances
Cash generated from operating activities
Employees’ end of service indemnity - paid
Net cash used in operating activities
222,576
182,186
(1,403,982)
(335,378)
2,392,617
(2,016,070)
(4,660,133)
1,360,563
52,639
(1,466,080)
(420,245)
629,174
(4,039,104)
(1,827,791)
(60,955)
(61,634)
(4,100,059)
(1,889,425)
(602,413)
(2,350,686)
6,075
125,201
Investing activities
Purchase of property, plants and equipment
Proceeds from sale of property, plants and equipment
Proceeds from sale of available for sale investments
276,682
-
Dividends received
216,620
263,501
-
10,936,281
Deposits at financial institutions
Interest received on deposits and call accounts
Net cash generated from investment activity
155,198
468,685
52,162
9,442,982
Financing activities
(253,014)
(246,886)
(69,702)
(3,176,154)
(322,716)
(3,423,040)
(Decrease) / Increase in cash and cash equivalents
(4,370,613)
4,130,517
Cash and cash equivalents at the beginning of the year
13,214,623
9,084,106
8,844,010
13,214,623
Dividends paid
Net cash used in finance activities
Cash and cash equivalent at the end of the year
20
Note to Consolidated Statement for the year ended 31 December 2011
(All amounts are in Kuwaiti Dinar unless otherwise stated)
1.INCORPORATION AND ACTIVITIES
Livestock Transport and Trading Co. K.S.C. (the parent company) was incorporated pursuant to a
memorandum of association of a Kuwait shareholding company authenticated by the Ministry of
Justice - Real Estate Authentication and Registration Department under Ref. No. 70/D volume 2
on 24 November 1973. The founder’s general assembly meeting held on 20 January 1974 formally
declared the formation of the parent company. The parent company’s registered head office is at
Al-Salhiya Complex - Al Salhyia - Kuwait. The principal shareholder of the parent company is Kuwait
investment authority in the State of Kuwait.
The main objectives of the parent company and its subsidiaries (The Group) are as follow:
carrying out all operations of producing transporting and trading in all kinds of meat throughout
the State of Kuwait and abroad including food industries and opening the related restaurants; the
construction and purchase of farms, pastures, land and real estate necessary to achieve the Group’s
objectives within the State of Kuwait or abroad; the import, export and manufacture of all cattle
fodders and organic fertilizers; the possession, purchase and use of all means of marine and land
transport necessary to achieve the Group’s objectives; the import and export of the related necessary
equipment; and investment in portfolios managed by specialized entities for the Group’s interest.
The Group operates in three countries; i.e. Kuwait, United Arab Emirates and Australia, and transports
and sells livestock to some countries in the Middle East.
The consolidated financial statements include the financial statements of Livestock Transport and
Trading Co. K.S.C. (parent company) and its wholly owned subsidiaries as follows:Company
Rural Export and Trading (WA)
PTY Ltd.
Emirates Livestock and Meat
Products Trading Company
(W.L.L)
Country
Activity
Share percentage
31 December
2011
31 December
2010
Australia
Trade in livestock
and meat
100%
100%
UAE
Trade in livestock
and meat
100%
100%
- Emirates Livestock & Meat Product, Trading Co, (Under Management) which is licensed in the United
Arab Emirates and conducts its activities through an associate (Emirates Livestock & Meat Products
Trading Company L.L.C) based on an agreement concluded between the two companies.
- The financial statements for Rual Export Trading (WA) has been consolidated under financial
statements prepared by management of the subsidiary company as at 31 December 2011. The
subsidiary’s total assets is KD 5,571,966 as at 31 December 2011 (5,770,134 as at 31 December
2010), and its net profit is KD 297,892 as at 31 December 2011 (103,931 as at 31 December 2010)
- The financial statements of Emirates Livestock and Meat Products Trading Company (under
management) has been consolidated under audited financial statements of the company as at 31
December 2011. The subsidiary’s total assets is KD 755,828 as at 31 December 2011 (948,574 as at
31 December 2010), and its net loss is KD 389,155 as at 31 December 2011 (54,434 net profit as at
31 December 2010).
21
The Consolidated Financial Statements for the year ended 31 December 2011 were authorized for
issuance by the Board of Directors’ resolution on 22 February2012.
The General Assembly of shareholders has the authority to amend these consolidated financial
statements after issuance.
2.
BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES
2.1
Basis of preparation
The financial statements have been prepared in accordance with the International Financial
Reporting Standard (IFRS) on the historical cost basis except for certain financial instruments that
are measured at fair values.
2.2
Significant Accounting Policies
The accounting policies used in the preparation of these consolidated financial statements are
identical to that standards used in the previous year except for:
Standards applied as of the current year
• IAS 1 Presentation of Financial Statements: the amendment clarifies that each item of equity may
be presented in the statement of changes in equity or in the notes to the financial statements.
• IAS 24: “disclosure of transactions with related parties” (amended): This amended standard
shows the definition of a related party. There is no material effect on the consolidated financial
statements as a result of application of this standard.
• IAS 32: Financial instruments (amended): No effect of this amendment to the consolidated financial
statements of the Group.
Standards and interpretations issued but not yet in force:
Standards have been issued for the group but it’s not mandatory and haven’t been yet applied by
the group:
• IFRS 7: Financial Instruments: Disclosures (Revised) (start of periods beginning on or after July 1,
2011).
• IAS 1: Presentation of Financial Statements – presentation of the terms of other income (amended)
(starts for periods beginning on or after July 1, 2012).
• IFRS 10: Consolidated financial statements (starts for periods beginning on or after January 1,
2013).
• IFRS 11: Joint ventures (starts for periods beginning on or after January 1, 2013).
22
• IFRS 12: Disclosure of equities in other facilities (starts for periods beginning on or after January
1, 2013).
• IFRS 13: Measuring other fair value (starts for periods beginning on or after January 1, 2013).
• IFRS 9: Financial Instruments: Classification and Measurement (starts for periods beginning on
or after January 1, 2013). This standard reflects the first phase of the work of the International
Accounting Standards Board to replace IAS 39 and is applicable to the classification and
measurement of financial assets and liabilities as defined in International Accounting Standard
No. 39. The International Accounting Standards Board addresses in later stages the classification
and measurement of financial liabilities, hedge accounting and lack of verification. The application
of the first phase of the International Financial Reporting Standard 9 will have an impact on the
classification and measurement of financial assets of the Group. The Group will determine the
effect in relation to other stages after issuance for comprehensive presentation.
2.3
Basis of Consolidation of Financial Statements
Subsidiaries
The consolidated financial statements incorporate the financial statements of the parent Company
and the companies under its control (subsidiaries). Control is achieved where the Company has the
power to control the financial and operating policies of an entity so as to obtain benefits from its
activities.
Income and expenses of subsidiaries acquired or disposed of during the year are included in the
consolidated statement of comprehensive income from the effective date of acquisition and up
to the effective date of disposal, as appropriate. Total comprehensive income of the subsidiaries is
distributed to the owners of the Company and to the non-controlling entities even if this results in
a deficit in the rights of the non-controlling entities.
When necessary, adjustments are made to the financial statements applied in the subsidiaries to be
in line with those used by the Group.
All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.
Changes in the Group’s ownership shares in the subsidiaries that do not result in the Group losing
control over the subsidiaries are considered as equity transactions. The carrying amounts of the
Group’s interests and the non-controlling 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 paid or received amount is directly included in equity
and made available to owners of the Company.
When the Group loses control on a subsidiary, the profit or loss on disposal 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.
23
Any related accumulated items in equity will be accounted for as if the Company had directly disposed
of the relevant assets (reclassified to profit or loss or transferred directly to retained earnings). 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.
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 recognized in profit or
loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognized at
their fair value at the acquisition date.
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 recognized immediately in
profit or loss 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 recognized 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 acquire is re-measured to fair value at the acquisition date (the date when the Group obtains
control) and the resulting gain or loss, if any, is recognized in profit or loss. Amounts arising from
interests in the acquire prior to the acquisition date that have previously been recognized in other
comprehensive income are reclassified to profit or loss where such treatment would be appropriate
if that interest were disposed of.
Goodwill
Goodwill arising on an acquisition of a business 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. Any impairment loss for goodwill is recognized directly in profit or loss. An impairment
loss recognized for goodwill is not reversed in subsequent periods.
24
Investments in associates
An associate is an entity over which the Group has significant influence. Significant influence is the
power to participate in the financial and operating policy decisions of the investee but is not control
or joint control over those policies.
The assets and liabilities of associates are incorporated in these consolidated financial statements
using the equity method. Under the equity method, an investment in an associate is initially
recognized in the consolidated statement of financial position at cost and adjusted thereafter to
recognize the Group’s share of the profit or loss and other comprehensive income of the associate.
When the Group’s share of losses of an associate exceeds the Group’s interest in that associate, the
Group discontinues recognizing its share of further losses. Additional losses are recognized only to
the extent that the Group has incurred legal or constructive obligations or made payments on behalf
of the associate.
Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable
assets, liabilities and contingent liabilities of an associate recognized at the date of acquisition is
recognized as goodwill, which is included within the carrying amount of the investment. Any excess
of the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities
over the cost of acquisition, after reassessment, is recognized immediately in profit or loss.
When necessary, the entire carrying amount of the investment (including goodwill) is tested for
impairment as a single asset by comparing its recoverable amount (higher of value in use and fair
value less costs to sell) with its carrying amount. Any impairment loss is recognized immediately in the
profit or loss. Any reversal of that impairment loss is recognized to the extent that the recoverable
amount of the investment subsequently increases.
When a group entity transacts with its associate, profits and losses resulting from the transactions
with the associate are recognized in the Group’ consolidated financial statements only to the extent
of interests in the associate that are not related to the Group.
2.4Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and impairment
losses. Cost comprises its purchase price and any directly attributable costs of bringing the asset to its
working condition and location for its intended use. Expenditures incurred after the property, plant
and equipment have been placed into operation, such as repairs and maintenance and overhaul
costs, are normally charged to the consolidated statement of income for the period in which the costs
are incurred. In situations where it is clearly demonstrated that the expenditures have resulted in
an increase in the future expected economic benefits from the use of an item of property, plant and
equipment beyond its originally assessed standard of performance, the expenditures are capitalized.
The estimated current cost of major vessels maintenance occurring at regular intervals (dry-dock) is
capitalized as inherent components of the related vessels. This component is treated as a separate
asset from the original cost of the vessels, as its useful lives is different from that of the vessel to
which it relates. All other expenditure is expensed when incurred.
Property, plant and equipment, except for land, are depreciated on a straight-line basis over their
estimated useful lives as follows:
25
Year
12 – 15
5 – 20
3 – 10
3–5
2–5
Vessels
Constructions, buildings and livestock sheds
Machinery and equipment
Vehicles
Other assets
The useful lives and depreciation method are reviewed periodically to ensure the compliance of the
method and depreciation period with the expected economic benefits from these assets. In case of
change in the estimated useful lives, these lives are changed from the beginning of the financial
year in which the change takes places.
Cost of inherent components (major maintenance of vessels) is depreciated over 24-30 months.
Gains or losses resulting on disposal of property, plant and equipment are recognized in the
consolidated statement of income by the difference between the selling price and net book value
of these assets.
Projects under construction are included in property, plant and equipment in the balance sheet until
they are completed and ready for their intended use. At that time, they are reclassified under similar
assets and depreciation commences.
2.5
Financial Assets
Classification
The Group classifies its financial assets upon acquisitions based on the purpose of acquiring these
investments. The Group classifies its financial assets as “at fair value through profit and loss”,
“receivables” and “available for sale investments”.
Financial assets at fair value – income statement
Financial assets are classified as financial assets at fair value through income statement in the event
that they were kept for the purpose of trading or have been identified as well at the acquisition.
Financial assets are recognized at fair value through the income statement at fair value, and gains
and losses resulting from re-measurement are recognized in the income statement. The profits
recognized in the income statement include cash distributions and the benefits gained from the
financial asset.
Receivables
These are non-derivative financial assets with fixed or determinable payments that are not quoted in
an active market. These arise when the Group provides goods or services directly to customers with
no intention for trading these debts.
26
Assets available for sale
These are non-derivative financial assets that are not included in any of the above categories and are
principally, those acquired to be held for indefinite period of time and could be sold when liquidity
is needed or upon changes in profit rates.
Recognition and de-recognition
All regular purchase and sale of financial assets are recognized on the trade date, on which the
Group commits to buy or sell the asset. A financial asset is de-recognized when the Group’s right to
the cash flows from the financial assets expires or, when the Group transfers substantially all the risks
and rewards related to the assets ownership.
Measurement
Financial assets are initially recognized at fair value plus transaction costs, other than investments at
fair value through profit or loss, whose related costs recorded in the statement of income.
Subsequently, available for sale financial assets and financial assets at fair value through profit
and loss are re-measured at fair value. Receivables are carried at amortized cost using the effective
interest method.
Realized and unrealized gains and losses arising from changes in the fair value of the financial assets
at fair value through profit or loss are included in the statement of income for the year in which they
arise. Changes in fair value of financial assets classified as available for sale are recognized directly
in equity. When available-for sale financial assets are sold or impaired, the accumulated changes in
fair value recognized in equity are transferred to the statement of income.
Fair value
The fair values of quoted investments are based on the latest bid prices.
The fair value of unquoted investments is determined by reference to the market value of a similar
investment or discounted cash flows, adjusted to reflect the specific conditions of the issuer.
Available for sale investments that their market values cannot be determined are recorded at cost
less impairment in value.
Impairment in value
The Group assesses at each balance sheet date whether there is objective evidence that a financial
asset or group of similar financial assets is impaired. In the case of equity investments classified as
available for sale, a “significant” or “prolonged” decline in fair value is considered as an indicator
for impairment. If any such evidence exists, the cumulative losses are measured as the difference
between the acquisition cost and the fair value, less any previously recognized impairment losses to
be taken from equity to the statement of income. Impairment losses on equity instruments are not
reversed through the statement of income.
27
Financial liabilities
The financial liabilities are initially recognized “including payables and other credit balances” at fair
value after deducting the transaction cost incurred and are re-measured at amortized cost using the
effective yield method. The difference between the proceeds is included (after deducting the cost of
transaction) and the value that must be met in the income statement over the period of borrowings
using the effective interest rate.
De-recognition
The financial obligation is de-recognized only upon fulfillment of the obligation or has been
completed. The difference between the carrying amount of the obligation and the paid consideration
and payables is recognized in the income statement.
2.6
Inventory
Inventory is stated at the lower of cost and net realizable value. Cost is determined based on the first
in first-out method. Livestock cost is determined based on the cost of acquisition plus costs of raising.
The cost of finished goods includes raw materials, wages and overheads incurred. Net realizable
value is based on the selling price less the estimated cost till completion and sale of inventory.
2.7
Investment properties
Properties unutilized by the Group, but held for lease over long term period or for capital appreciation
are classified as investment properties.
Investment properties are stated at cost and re-measured at fair value. Fair value is determined by
an independent registered assessor at the balance sheet date. The resulted gains and losses resulting
from changes in fair value are included in the statement of income.
2.8Cash and cash equivalents
Cash and cash equivalents are carried on the consolidated balance sheet at cost. Cash and cash
equivalents represent cash on hand and at banks, term deposits and placements, whose original
maturities do not exceed three months from the date of placement.
2.9
Treasury Shares
Treasury shares are the Parent Company’s own shares that have been issued, subsequently acquired
by the Parent company and not yet reissued or cancelled. Treasury shares are accounted for using
cost method of accounting, under which the cost of share acquired is charged to a contra account
in equity. When the shares are reissued, gains are credited to a separate account in shareholders’
equity (gain on sale of treasury shares), which is not distributable. Any realized losses are charged to
the same account to the extent of the credit balance on that account. Any excess losses are charged
to retained earnings then reserves. Gains realized subsequently on the sale of treasury shares are
28
first used to offset any previously recorded losses in the order of reserves, retained earnings and the
gain on sale of treasury shares account. No dividends are paid on the treasury shares. The issue of
bonus shares increases the number of treasury shares proportionately and reduces the average cost
per share without affecting the total cost of treasury shares.
2.10Provisions
Provisions are recognized only when the Group has a current or expected obligation as a result
of past events, and it is assessable with a reliable degree, and it is probable that an outflow of
economic benefits will be required to settle that obligation. Provisions are reviewed at each balance
sheet date and adjusted to reflect the best current estimate of the obligation.
2.11 Employee End of service indemnity
The Group is liable under Kuwaiti Labor Law, to make payments to the employees for past
employment benefits through defined benefits plan. These amounts are paid to employees on a
lump sum basis upon service termination. As for the employees in other countries, end of service
indemnity is calculated as per the applicable laws of these countries. This liability, which is unfunded,
represents the amount payable to each employee as a result of involuntary termination on the
consolidated balance sheet date. The management expect that the application of this method will
provide an appropriate estimation of the present value of the obligation.
2.12 Revenue recognition
• Revenues from sale of goods are recognized when the significant risks and rewards of ownership
have been transferred to the buyer. These risks and rewards are transferred to the buyer on
delivery.
• Services revenues are recognized when the service is rendered.
• Dividend income is recognized when the right to receive payments is established.
• Interest income from deposits is recognized on a time proportion basis using the effective interest
method. Other revenues and expenses are recognized on an accrual basis.
2.13 Taxes and deductions
Taxes and deductions are represented in the followings:
• Income taxes on subsidiaries.
• Contribution to Kuwait Foundation for Advancement of Science on the Parent company.
• Tax due from the company in accordance of Law No. 19 of 2000 concerning Support and
Encouragement of National Manpower to Work in Private Sector.
• Zakat in accordance with Kuwait Law NO.46 of 2006.
29
2.14 Foreign currencies
The financial statements of each subsidiary are measured at the currency of the economic environment
under which this subsidiary operates. The Group’s consolidated financial statements are presented in
Kuwaiti Dinars, which is the functional currency of the Parent Company.
Transactions and Balances
Foreign currency transactions are recorded at the rate of exchange prevailing at the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the
year- end rate of exchange. All differences are taken to the consolidated statement of income.
Non–monetary assets and liabilities denominated in foreign currencies, which are stated at historical
cost or amortized cost are translated at the foreign exchange rate prevailing at the date of transaction.
Non–monetary assets and liabilities stated at fair value and denominated in foreign currencies are
translated to Kuwaiti Dinar at the foreign exchange rate prevailing at the date of identified value.
Translation of the Financial Statements
Assets and liabilities of associates and subsidiaries are translated at the rate of exchange prevailing
at the balance sheet date, income and expenses are translated at the average rate of exchange
during the year. All differences are taken to a separate account in equity.
3.
FINANCIAL RISK MANAGEMENT
3.1
Financial Risk
The activities of the group expose it to a group of financial risks which are market risks, including
(foreign currency risks and risks of change in fair value resulting from the change in interest rates,
and risks of fluctuations in cash flows resulting from changes in interest rates, and risks of market
prices) in addition to credit risk and liquidity risks.
The Group’s management of these financial risks consists in the continuous evaluation of market
conditions and trends and the assessment of the changes in market factors for the long and shortterm.
Market Risk
- Foreign currency risks
The Group is exposed to the risk of foreign currency resulting primarily from dealing in financial
instruments with US$ and Australian Dollar. The risk of foreign exchange results from future
transactions on financial instruments in foreign currency recognized in the financial statements of
the group which are represent mainly in the available for sale investments, receivable, investments
at fair value through profit and loss, deposits at financial institutions, cash and cash equivalent and
the creditors.
The group has set policies for the management of foreign exchange risk which require each company
in the group to manage the foreign risk against its currency of operation. The separate managements
of the Group companies manage foreign exchange risks through the careful monitoring of the
30
changes in currency rates in addition to monitoring their impact on the financial position of the
Group, throughout the year.
In the case of high / low foreign currency referred to above, at 5% against the Kuwaiti dinar with the
stability of all other variables, the net profit \ Equity of the group will be affected by the following
positive values and the same negative values.
Impact on income statement
2011
Impact on Equity
2010
2011
2010
-
-
46,001
47,259
Receivables
investments at fair value – income
statement
175,332
251,858
-
-
113,420
117,313
-
-
Cash and cash equivalent
111,388
94,980
Payables
(15,023)
)12,702(
-
-
- Fair Value Risks
The Group is exposed to the price risk in its investments classified as available for sale. And investments
at fair value through profit and loss.
To manage this risk, the group diversifies its portfolio on the basis of predetermined allocation of
the assets on. Diversification of the portfolio takes place in accordance with the limits set by the
Group and the continuous monitoring of market prices and the management’s estimates of long
term changes in fair value. In addition, the group keeps its investments at specialized investment
companies which manage these investments.
The following sensitivity analysis shows the impact of the decline of the index of the Kuwait Stock
Exchange on the Group’s net profit for the year. This analysis is based on the decline of the index of
the Kuwait Stock Exchange by 5% with the stability of all other variables.
Impact on net profit
Investments at fair value - income statement
2011
2010
-
(70,166)
(11,369)
(11,369)
- Interest rate risks
The Group is exposed to the interest rate risk due to the deposits at fixed interest rate. The Group is
not exposed to the cash flow risk as the interest rate is fixed.
The Group manages this risk by transacting with institutions with good reputation. In addition,
the Group periodically studies the data on interest rates to assess the potential usefulness of the
possibility of reduction or increase in interest rates for future periods, the impact on cash flows
and the company’s profits along with taking the corrective action to address the potential of such
possibilities.
31
Credit Risks
The credit risk is the risk that the group will incur a loss as a result of its customers’ or, counterparties’
failure to discharge their contractual obligation. The credit risk is highly concentrated in trade
receivables and cash and cash equivalents, the group manages and follows up the credit risk as
follows:
- Transacting with customers with good reputation and strong financial positions and with
government parties.
- Diversifying its customer base and avoiding centralization of customers
- Focusing on cash sales. The credit sales are held only for the contractual agreements and external
sales with obtaining a bank guarantee from the customers issued from high credit reputation
banks, as well as obtaining a irrevocable letters of credit and tangible warranties.
- Transacting with financial institutions with high credit reputation.
The Group Management’s opinion is that the maximum credit risk as at 31 December is as follows:
Impact on net profit
Trade receivable
Cash and cash equivalents
2011
2010
14,124,767
9,432,934
8,844,010
13,214,623
Liquidity Risks
The liquidity risk is the risk that the Group becomes unable to repay its liabilities when due, to
minimize this risk the management has secured different financing resources and monitors the
liquidity of assets on a regular basis.
The responsibility of managing the liquidity risk is kept with the Board of Director which developed
an appropriate framework to manage the liquidity. The Group manages the liquidity by keeping
appropriate reserves as well as through the continuous monitoring of the expected and actual cash
flows and the maturity dates of financial assets and liabilities.
The table below shows the breakdown of the non-derivative liabilities for the year ended as of the
financial position date up to the contractual due dates.
The balances which mature within 12 month equal its carrying value as the effect of discount will
be insignificant.
The maturity dates of financial liabilities as at 31 December 2011:
Liabilities
Creditors and other credit balances
Employee end-of-service indemnity
Total
During 1
month
Between
1 and 3
months
From 3
months
and 1 year
Between 1
and 5 years
Total
613,611
613,611
723,644
723,644
2,530,924
5,530,924
1,802,516
1,802,516
3,868,179
1,802,516
5,670,695
32
The maturity dates of financial liabilities as at 31 December 2010:
Liabilities
Creditors and other credit balances
Employee end-of-service indemnity
Total
During 1
month
Between
1 and 3
months
From 3
months
and 1 year
Between 1
and 5 years
Total
1,305,600
1,305,600
1,182,065
1,182,065
1,851,738
1,851,738
1,640,895
1,640,895
4,339,403
1,640,895
5,980,298
3.2Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a
going concern in order to provide returns for shareholders and benefits for other stakeholders and
to maintain an optimal capital structure to reduce the costs of capital.
In order to maintain or adjust the capital structure, the group adjusts the dividends paid to the
shareholders or repays a part of the capital to the shareholders or issues new shares or sells assets
to reduce its debits. The Group monitors capital on the basis of gearing ratio. The ratio is calculated
as net debt divided by total capital. Net debt is calculated as total borrowings (including facilities
and other creditors as shown in the consolidated balance sheet) less cash and cash equivalents. Total
capital is calculated as equity (as shown in the consolidated balance sheet) plus net debt.
3.3
Fair value estimation
The fair values of financial assets and financial liabilities are determined as follows:
• The fair values of financial assets and financial liabilities with standard terms and conditions and
traded on active markets are determined with reference to quoted market prices.
• The fair values of other financial assets and financial liabilities are determined in accordance with
generally accepted pricing models based on discounted cash flow analysis.
The following table provides an analysis of financial instruments that are measured subsequent to
initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair
value is observable.
• Level one: Quoted prices in active markets for identical assets or liabilities.
• Level two: quoted prices included within level I that are observable for the asset or liability from
the managers of the funds invested in or other methods of quotation that are not based on
observable market date, either directly or indirectly.
• Level three: Inputs for the asset or liabilities that are not based on observable market data.
The table below represents the analysis of financial instruments that are recorded at fair value on
the levels above mentioned:
33
Level one
2011
Level two
Total
227,378
1,166,942
1,091,462
6,007,520
1,318,840
7,174,462
Level one
2010
Level two
Total
227,374
1,403,320
1,386,925
6,506,364
1,614,299
7,909,684
Assets
Investment at fair value – income statement
Assets
Investment at fair value – income statement
4.CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS
According to the accounting policies included in the International Financial Reporting Standard (IFRS)
which are adopted by the group, these IFRS require from the management to make the following
estimates and assumptions which may affect the assets and liability book value.
Critical accounting estimates and assumptions
Fair value of unquoted equity investments
Valuation techniques for unquoted equity investments in which estimates are used representing the
expected cash flows discount rates, return rates, credit risks, and other valuation techniques used by
market participants. The Group calibrates the valuation techniques periodically and tests these for
validity using either prices from observable current market transactions in the same instrument or
other available methods.
Impairment of fixed assets and inventory
The Group reviews the fixed assets and inventories on a continuous basis to determine whether a
provision for impairment should be recorded in the statement of income. In particular, a considerable
judgment by the 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 resulting in future changes to such provisions.
Impairment of receivables
The group is studying the accounts receivable on a regular basis. An estimate of the impairment is
conducted based on assumptions based on a combination of factors. Actual results may differ from
the estimates set.
Critical Judgments in applying the entity’s accounting policies:
Impairment of available for sale investment
The Group determines whether an available-for-sale investment is impaired. This determination
requires significant judgment by the management. The Group makes this judgment based on many
factors, such as whether the duration and extent to which the fair value of an investment is less
than its cost, and the financial solvency of the Company including factors such as industry and sector
performance, changes in technology and operational and financing cash flow.
34
5.
35
At 31 December 2011
Net book value:
5,563,073
42,786,374
-
Foreign currency translation
differences
At 31 December 2011
-
2,617,138
40,169,236
48,349,447
Disposals
Depreciation for the year
At 1 January 2011
Accumulated depreciation
and impairment losses:
At 31 December 2011
830,565
6,996,549
-
-
182,160
6,814,389
7,827,114
-
-
differences
-
7,827,114
-
13,380
48,336,067
275,270
2,603,698
-
(65,465)
59,326
2,609,837
2,878,968
-
(66,295)
41,813
2,903,450
Machinery
Lands,
constructions,
and
& buildings equipment
Disposals during the year
Additions during the year
At 1 January 2011
Cost:
Vessels
PROPERTY, PLANT AND EQUIPMENT
221,457
1,712,598
-
(31,716)
96,164
1,648,150
1,934,055
-
(31,716)
117,490
1,848,281
Vehicles
2011
70,937
771,306
-
(59,929)
37,442
793,793
842,245
-
(60,269)
41,742
860,772
Other
Assets
1,615,742
3,304,866
(34,300)
-
167,498
3,171,668
4,920,608
(56,766)
-
61,698
4,915,676
Assets of
subsidiary
companies
Total
(56,766)
(158,280)
602,413
(34,300)
(157,110)
3,159,728
474,434
9,051,480
- 58,175,391
-
-
-
- 55,207,073
474,434 67,226,871
-
-
326,290
148,144 66,839,504
Projects in
progress
5.
36
At 31 December 2010
Net book value:
8,166,831
40,169,236
-
differences
At 31 December 2010
-
2,493,214
37,676,022
48,336,067
-
Disposals
Depreciation for the year
At 1 January 2010
Accumulated depreciation
and impairment losses:
At 31 December 2010
differences
1,819,016
-
Disposals during the year
Transfer from project in
progress
-
46,517,051
Additions during the year
At 1 January 2010
Cost:
Vessels
PROPERTY, PLANT AND EQUIPMENT
1,012,725
6,814,389
-
-
181,058
6,633,331
7,827,114
‫ـ‬
-
-
60,126
7,766,988
293,613
2,609,837
-
(189,046)
66,501
2,732,382
2,903,450
-
(189,107)
138,731
2,953,826
Machinery
Lands,
constructions,
and
& buildings equipment
200,131
1,648,150
‫ـ‬
(291,237)
100,814
1,838,573
1,848,281
‫ـ‬
-
(313,095)
95,347
2,066,029
Vehicles
2010
66,979
793,793
‫ـ‬
(138,651)
26,740
905,704
860,772
‫ـ‬
-
(139,483)
52,405
947,850
Other
Assets
1,744,008
3,171,668
111,284
(179,883)
156,724
3,083,543
4,915,676
258,492
Total
(8,560)
1,832,392
258,492
111,284
(798,817)
3,025,051
148,144 11,632,431
‫ ـ‬55,207,073
‫ـ‬
-
-
‫ ـ‬52,869,555
148,144 66,839,504
‫ـ‬
-
(830,128)
2,350,686
143,328 65,060,454
Projects in
progress
- (1,819,016)
(179,883)
171,685
4,665,382
Assets of
subsidiary
companies
6.INVESTMENT IN ASSOCIATES
Company
Share
%
31
December
2011
31
December
2010
Kuwait
40%
581,415
650,863
UAE
49%
60,128
60,552
Australia
50%
554,450
527,865
1,195,993
1,239,280
Country of
Incorporation
National Tannery Co. (K.S.C.C.)
Emirates Livestock and Meat
Products Trading Company L.L.C
Portland Pellet Suppliers
(Partnership)
- The Group’s share in the result of the National Tannery Company (K.S.C.C) operations for the
year ended 31 December 2011 is not recorded based on financial statements prepared by the
management of associate company as at 30 September 2010. During the year ended 31 December
2011, the parent company recorded impairment losses for its investment in National Tannery
Company K.S.C.C of KD 69,448 (31 December 2010 - KD 70,000).
- The Group’s share in the result of the Emirates Livestock and Meat Products Trading Company
(LLC) operations and the operations of Portland Pellet Suppliers – Partnership (Associate of Rural
Export and Trading –WA PTY Ltd), for the year ended at 31 December 2011 is recorded based on
the financial statements prepared by the management of these associates.
- The Group’s share in the assets, liabilities, revenues, and net (loss)/ gain of the unlisted associates
is as follows:
Assets
Liabilities
Revenues
Net Profit
1,122,765
371,902
-
-
71,852
11,724
44,411
(11,519)
655,987
101,537
1,155,005
218,793
1,850,604
485,163
1,199,416
207,274
1,122,765
371,902
289,394
)38,733(
72,363
11,811
45,061
)11,753(
599,556
71,691
1,527,073
91,199
1,794,684
455,404
1,861,528
40,713
2011
National Tannery company
Emirates Livestock & Meat Products
Trading Co
2010
National Tannery company
Emirates Livestock & Meat Products
Trading Co
37
7.AVAILABLE FOR SALE INVESTMENTS
31 December
2011
31 December
2010
Investments in local securities (quoted)
227,378
227,374
Investments in local securities (unquoted)
604,981
658,091
Investments in foreign securities (unquoted)
920,024
914,642
Investments in foreign funds (unquoted)
-
247,968
1,752,383
2,048,075
- Available for sale investments include an amount of KD 1,091,462 as of 31 December 2011 represent
unquoted investments in securities (KD 1,386,925 at 31 December 2010) have been evaluated by the
portfolio’s manager. Available for sale investments are managed by local investment companies.
- Available for sale investments include an amount of KD 433,543 as of 31 December 2011 represent
unquoted investments in securities (KD 433,776 as of 31 December 2010) recorded at cost as its
fair value cannot reliably measured. The Group’s management believes that no indication of any
impairment in respect of these investments.
- Investments available for sale are dominated into the following currencies as of 31 December:
2011
2010
Kuwaiti Dinar
832,359
885,465
US Dollar
704,465
945,172
Sterling Pound
215,559
217,438
1,752,383
2,048,075
31 December
2011
31 December
2010
3,519,942
3,242,662
270,568
98,452
13,032
8,976
8.INVENTORIES
Livestock and meat (net)
Fodder
Gut
Medicines, fertilizers and others
Goods in transit
Production materials and spare parts
38
24,637
6,228
3,828,179
3,356,318
93,521
2,584,135
1,183,306
1,557,170
5,105,006
7,497,623
9.RECEIVABLES AND OTHER DEBIT BALANCES
Trade receivables
Doubtful debts
Prepaid expenses
Accrued income
31 December
2011
31 December
2010
14,124,767
9,432,934
(470,625)
(266,462)
13,654,142
9,166,472
150,250
151,606
2,582
20,871
Refundable deposits
57,922
59,571
Tax assets
36,905
27,160
Staff receivables
14,227
21,906
Others
49,852
80,613
13,965,880
9,528,199
- Trade receivables include an amount of KD 7,728,801 as at 31 December 2011, represents a balance
due from the Ministry of Commerce & Industry as subsidy to support the company to meet the
increasing prices of some foodstuffs and consumer goods, in accordance to the Council of Ministers
Resolution 1308 dated 11 September 2011. This balance represents the due subsidy for the period
from September 2011 to December 2011. The Company did not collect this balance to date, and
the Ministry did not approve the methodology of subsidy calculation (note 20). The company’s
management believes that there is no doubt in the possibility of collecting those amounts.
- Trade receivables include an amount of KD 976,675 as at 31 December 2011 (KD 983,850 as at
31 December 2010), a balance due from a delinquent customer. The Parent Company did not
provide a provision for this Balance due to the existence of guarantees represented in checks at
the amount of US$3,500,000 representing the full value of the debt in addition to a first degree
real estate mortgage over collaterals, and also a power of attorney to sell those collaterals, whose
fair value amounted to KD 1,331,737 based on an evaluation by independent evaluators dated 21
June 2006. The Company has got an initial verdict in its favor and it has been supported in appeal
stage. The litigant has challenged the verdict at the supreme court which partially accepted the
challenge. In 19 May 2011 session, the Supreme Court ruled for referral of the case to the court of
appeal for which a court session has been scheduled to be held on 14 June 2011, for which a ruling
has been issued to accept the appeal in form and reject it in substance. The litigant challenged
the ruling at the Supreme Court and the case is still pending until the date of issuance of these
financial statements. The company’s management believes that there is no need to provide a
provision for this balance.
- The book value of receivables and other debit balances is approximately equal their fair value.
- The policy of the group to start providing a provision for debts which are past due for more than
6 months.
- Trade receivables which are not due amounted to KD 13,538,847 as at 31 December 2011 (KD
8,849,860 as of 31 December 2010).
39
- Trade receivables that are past due but not collected or impaired amounted to KD 427,033 as at 31
December 2011 (KD 316,612 as of 31 December 2010).
- Trade receivables which are impaired and provided for amounted to KD 470,625 as at 31 December
2011 (KD 266,462 as of 31 December 2010).
10.INVESTMENT PROPERTIES
This item represents lands located in the United Arab Emirates.
- The Parent Company did not valuate the investment properties as at 31 December 2011.
- The Parent Company’s investment in lands is contradicted with its objectives as stated in Article no.
(5) of its memorandum of association and Article no. (4) of Articles of Association thereof.
11.INVESTMENTS AT FAIR VALUE – INCOME STATEMENT
Local quoted investments
31 December
2011
31 December
2010
1,166,942
1,403,320
Local unquoted investments
87,465
87,465
Foreign unquoted investments
2,206,228
2,346,253
Investments in funds
3,713,825
4,072,646
7,174,462
7,909,684
All unquoted and foreign investments have been valued by the Investment Portfolio’s Manager as
at 31 December 2011.
12.CASH AND CASH EQUIVALENTS
31 December
2011
31 December
2010
Cash on hand and at banks
2,011,840
2,040,029
Term deposits
6,734,909
11,116,982
Cash at investment portfolio
97,261
57,612
8,844,010
13,214,623
The actual average interest rate on deposits amounted to 1.66 % as at 31 December 2011 (1.892 %
as at 31 December 2010).
40
13.SHARE CAPITAL
The issued and paid capital of the Parent Company is KD 21,659,057 divided into 216,590,575 shares
with a nominal value of 100 Fils each as at 31 December 2011.
14.TREASURY SHARES
Numbers of shares - share
Percentage to issued shares (%)
Market Value
31 December
2011
31 December
2010
6,997,383
6,057,383
%3.23
%2.80
1,553,419
1,786,928
The treasury shares have been recorded at cost amounted to KD 1,574,143 as at 31 December 2011
(KD 1,321,129 as at 31 December 2010)
15.STATUTORY RESERVE
In accordance with the Commercial Companies Law and the Parent Company’s Articles of Association,
10% of the net profit for the year before contribution to Kuwait Foundation for the Advancement
of Science, National Labor Support Tax, Board of Directors’ remuneration and Zakat is transferred to
the statutory reserve. The General Assembly may resolve to discontinue such annual transfers when
the statutory reserve reaches 50% of the Parent Company’s paid up share 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
As required by the Parent Company’s articles of association, a percentage of the net profit for the
year proposed by the Board of Director and approved by the General Assembly is transferred to
the voluntary reserve. The General Assembly may resolve to discontinue such transfer based on a
recommendation by the Board of Directors.
41
17.OTHER RESERVES AND CHANGES IN FAIR VALUES
Accumulated
changes in
fair market
value of
available
for sale
investments
Foreign
currency
translation
reserve
Share in
associates’
reserve
Total
(178,100)
630,798
581,414
1,034,112
)48,996(
-
-
)48,996(
23,913
-
-
23,913
-
)5,682(
-
)5,682(
)203,183(
625,116
581,414
1,003,347
Balance as at 1 January 2010
(118,151)
281,742
748,442
912,033
Changes in the fair value of
available for sale investments
(59,949)
-
-
(59,949)
Changes in the company’s share of
associate’s reserve
-
-
(167,028)
(167,028)
differences
-
349,056
-
349,056
(178,100)
630,798
581,414
1,034,112
Balance as at 1 January 2011
Changes in the fair value of
available for sale investments
Transferred to the retained earnings
from associate reserves
differences
18.
PAYABLES AND OTHER CREDIT BALANCES
31 December
2011
31 December
2010
Trade payables
609,647
1,217,239
Dividends accrued to shareholders
335,335
405,037
Cost of accrued marine expenses
1,515,269
1,546,423
Accrued expenses
1,029,550
815,937
231,067
216,685
28,000
28,000
119,311
110,082
3,868,179
4,339,403
Staff leave
Board of directors’ remuneration
Other credit balances
42
19.OPERATING INCOME
Sales
Transportation revenue
2011
2010
73,313,550
58,252,104
1,843,641
1,492,601
75,157,191
59,744,705
20.GOVERNMENTAL SUBSIDY
In accordance with the Ministerial Resolution No. 580 dated 31 December 2008 and the Council of
Ministers’ Resolution No. 1308 dated 11 September 2011, the management recorded in the statement
of income an amount of KD 10,727,466 for the year ended 31 December 2011 (KD 4,475,580 as at 31
December 2010) as a financial subsidy from the Ministry to support the company dealing with the
increasing prices of some foodstuffs and consumer goods. The resolution No. 580 sets out to provide
a financial support by five Kuwaiti dinars per head of live sheep entering into the country through
seaports by the licensed national companies. On 11 September 2011, the Council of Ministers issued
Resolution 1308 regarding the company purchasing and transporting of livestock to the Kuwait port
and selling the same to the state at cost plus a 15% profit margin.
The revenues of government subsidy includes an amount of KD 1,915,160 represents the amount
recorded by the management which exceeds that stated in the Council of Ministerial Resolution
No.1308, dated 11 September 2011. As per the Management’s opinion, This increase is to cover all
costs incurred for clearance, transportation, medical care, nutrition, dead livestock, transportation to
slaughterhouse, selling & marketing expenses and other expenses of livestock, which is incompliance
with the mentioned Council of Ministers’ Resolution No.1308, which provides that the company shall
purchase and transport livestock to the Kuwait port (CIF) and sell them to the state at cost plus a
15% profit margin. The Management’s opinion is that these amounts will be approved and collected
from the ministry.
21.OTHER OPERATING EXPENSES
This item represents the total vessel expenses during the stoppage and repair durations, amounting
to KD 704,970 during the year ended 31 December 2011 (KD 623,384 - 31 December 2010).
22.
(LOSSES)/GAINS FROM INVESTMENTS AT FAIR VALUE – INCOME STATEMENT
(losses) / Gains from change in fair value
Realized gains / (losses)
Portfolios management fees
43
2011
2010
(665,217)
1,177,225
-
86,265
(17,366)
(28,439)
(682,583)
1,235,051
23.NET GAIN/( LOSS) FROM INVESTMENTS AVAILABLE FOR SALE
2011
Loss from sale of available for sale investments
Impairment
24.
2010
6,073
-
-
(297,701)
6,073
(297,701)
BOARD OF DIRECTORS REMUNERATION
The board of directors remuneration exceeds the limit allowed by Article No. (150) of the Commercial
Companies Law.
This remuneration is subject to the approval of the Shareholders General Assembly meeting.
25.LOSS PER SHARE
Basic loss per share are calculated based on dividing the net loss of the year by the weighted average
number of common shares outstanding during the year as follows:
Net loss for the year
Number of issued shares
Less: weighted average of treasury shares
Weighted average number of outstanding shares
Loss per share (fils)
2011
2010
(5,387,319)
(2,205,145)
216,590,575
216,590,575
(6,555,684)
(5,715,493)
210,034,891
210,875,082
(25.65)
(10.46)
26.
DIVIDENDS
On 25 April 2011, the Shareholder’s General Assembly approved the consolidated financial
statements for the year ended 31 December 2010, and remuneration for the members of the Board
of Directors amounting to KD 28,000 for the year ended 31 December 2010 in accordance with the
recommendation of the Board of Directors meeting held on 24 March 2011. It is agreed also not to
distribute dividends for shareholders for the year ended at 31 December 2010.
Based on the Boards of Directors meeting held on 22 February 2012, the BOD suggested not to
distribute dividends for the year ended 31 December 2011, and suggested remuneration for the
members of the Board of Directors amounting to KD 28,000 for the year ended 31 December 2011.
This suggestion is subject to the approval of the General Assembly of shareholders.
44
27.STAFF COST
Staff salaries and benefits
Employees’ end of service indemnity
Leaves
2011
2010
1,921,113
1,863,154
215,787
182,186
120,552
91,565
2,257,451
2,136,905
28.CONTINGENT LIABLITITIES AND CAPITAL COMMITMENTS
31 December
2011
31 December
2010
Letters of Guarantee
966,343
841,746
Lease contract obligations
264,480
258,080
2011
2010
264,480
258,080
Lease Contract commitments are as follows:
Payments within a year
29.RELATED PARTIES TRANSACTIONS
The Related Parties are represented in main shareholders, member of Board of Directors, senior
management and associate companies.
In the ordinary course of business, the Group entered into transactions with related parties during
the period. These transactions are detailed below as follows:
2011
Management fees paid to associate companies
Sales for related parties
45
2010
89,582
90,898
210,321
1,405,799
31 December
2011
31 December
2010
Key management long term benefits
610,154
563,420
Key management short term benefits
61,095
57,819
Transactions with related parties are subject to the Shareholders’ General Assembly approval.
30.SEGMENTAL FINANCIAL INFORMATION
Primary segment - Geographical segments
The Group conducts its activities through two main geographical segments: the first is in Kuwait
through Livestock Transport and Trading Company K.S.C. (Parent Company) and the other in the
United Arab Emirates through Emirates Livestock and Meat Products Trading Company (L.L.C. –
Under management), a subsidiary. All intra-company transactions are recognized at cost plus all
administrative costs. The parent company did not classify Rural Export Company, Australia, as a
separate geographical segment due to the fact that the main activity of this company is to provide
services of storage, care and shipping of livestock for the Parent Company and the UAE subsidiary.
The following is the geographical segments information:
A. For year ended 31 December 2011
Thousand Kuwait Dinar
Kuwait
UAE
Total
Operating revenues
70,608
4,549
75,157
Segment Results
(4,791)
(246)
(5,037)
Undistributed revenues
521
521
Undistributed expenses
(871)
(871)
Net Profit for the Year
(5,387)
Other Information
Segment Assets
36,957
Other undistributed assets
6,882
3,424
43,839
3,424
47,263
Segment Liabilities
5,092
579
5,671
602
Depreciation
3,160
46
B. For year ended 31 December 2010
Kuwait
UAE
Total
Operating revenues
54,144
5,600
59,744
Segment Results
)3,300(
10
)3,290(
Undistributed revenues
1,711
Undistributed expenses
)626(
Net Profit for the Year
)2,205(
Other Information
Segment Assets
48,488
949
49,437
Other undistributed assets
3,807
53,244
Segment Liabilities
5,734
246
5,980
2,350
Depreciation
Sub-Segment – Segments of activities
The main activities of the Group are the sale of live and slaughtered sheep and the sale of meat
either produced only or manufactured in different products. There are, as well, other sub-activities
represented in sales of fodder, leather, gut and fertilizers. The company sells its products in Kuwait,
UAE and some other Gulf Countries only.
The following is an analysis of sales by business segments:
2011
2010
Livestock sales
59,326
45,948
Meat sales
11,897
9,492
3,934
4,305
75,157
59,745
Others
47

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