Now

Transcription

Now

Head Office
Al Salhiya Commercial Complex
Entrance No.3, 2nd & 4th floor
Telephone: 22455700
Facsimile: 22438970 - 22402109
P.O.Box 23727 Safat, code 13098 Kuwait
E-mail: [email protected]
Meat Processing / Department
Sulaibiah, Block 2
Tel: 24676101 - 24676156
24676178 - 24676200 - 24676211
Fax: 24676113
Processed / Products Sales Department
Sulaibiah, Block 2
Tel: 24676101 - 24676156 - 24676178
24676200 - 24676211
Fax: 24676113
The Farm Department
Sulaibiah, Block 2
Tel: 24674903 - 24673797 - 24674644
24673796 - 24674781
Fax: 24674812
Butcheries Dept. & Local Sales Dept.
Shuwaikh 3rd industrial Area, Block D, Plot 139
Tel: 24844212 - 24844463
Home Delivery: 1888822
Facsimile: 24835076
Butcheries Dept. Facsimile: 24838402
Emirates Livestock & Meal Product
Trading Co.
P.O.Box 55540 Dubai - UAE
Jabal Ali Complex - Al Ain Road
Tel: 009714-8801118 - Fax: 009714-8801119
Rural Export & Trading (W.A) Pty.
LTD. Australia / P.O. Box 1362 West Perth 6872
Western Australia
Tel: 6189-3226649 (3 lines) - Telex: AA 94036 Retwa
Facsimile: 6189 - 3221240
Company Establishment
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 Department unde r 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
Livestock
Transport
& Trading
Company
K.S.C.
36 years of
Commitment to
food security
Development and maintaining all the
achievements and accomplishments
since the company incorporation till now,
despite the great events and changes
witnessed by the world. nevertheless
your company - thanks to the efforts of
the faithful personnel-kept abreast of
them with full confidence and capability
to prove its distinction in:
The achievements it presented
The achievements it is presenting
and all achievements it will present in
the future
CONTENTS
Board of Directors
10
Chairman’s report
11-13
Independent Auditors’ Report
14 - 15
Consolidated Financial Position
16
Consolidated Statement of Income
17
Consolidated Statement of Comprehensive Income
18
Consolidated Statement of Changes in Equity
19
Consolidated Statement of Cash Flows
20
Notes to the Consolidated Financial Statements
21 - 45
Board of Directors
10
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
Board of Director’s message
Dear valuable shareholders
We are pleased and honored to present to you the 36th annual report for all the operations
and activities of the Livestock Transport & Trading Company for the fiscal year ended on 31
December 2010, in which we take pride in the businesses and results accomplished, despite
the events and circumstances to which the company was exposed in 2010.
The year 2010 contained significant and turning points which will have a visible impact
on the company’s future in the forthcoming years, the most significant of which was the
manifestation and indication of the extent and volume of the impact of the continued demand
from the company to supply massive quantities of livestock and meat to fulfill the need of
the Kuwaiti market and selling according to the imposed price. This led the company to
use up all its profits realized from all other activities, whether investment or from external
sales. Moreover, they increased to cause gross losses in which the management had no
hand, which were covered by assets and reserves assumed to be directed to developing the
company’s future activities and operations and the unacceptable depletion it is facing from
such reserves and assets. This has driven the company to move, illustrate and explain this
dilemma to all the concerned government authorities, on the highest level in an constant
and serious attempt to end and put a limit to this, which we hope to be resolved as soon as
possible to avoid its catastrophic effects in the future.
Dear shareholders sisters and brothers
The world did not witness in its modern history conditions related to the livestock and meat
activity as it is today due to the severe reduction in the livestock supplies, particularly from
main source such as Australian, with the increase in the global demand rates for livestock
and meat tremendously, as confirmed by all reports and studies published by the World
Food Organization of the UN and all the authorities concerned with global food. This has
been assisted and contributed by the exposure of our world to natural catastrophes such as
floods and droughts affecting all the world continents. Therefore, the activity of the Livestock
Transport and Trading Company is undergoing a decisive turn, which your company worked
to keep abreast of by constantly searching for alternative sources to provide the company’s
needs of livestock and sheep. Several serious attempts were undertaken to import from
Georgia, Uruguay and Sudan and other countries, while continuing all development and
modernization plans of the company operations and fleet, in anticipation of the future.
11
Shareholding sisters and brothers,
The Livestock Transport and Trading Company imported 1,697,266 heads of sheep in
2010, of which the Kuwaiti market’s share was 1,059,899 heads of sheep compared with
974,156 in 2009. further, it sold 625,210 heads of sheep in the external market, to continue
maintaining our market share there.
The management continued to follow up the collection of the company dues through the
cases filed in favor of the company in the United Arab Emirates and Sultanate of Oman,
and anticipate the results of such cases. Further, the management continued following
up the amounts of the subsidy determined for the company which only covers a part of
the losses resulting from the sales in the Kuwaiti market, while continuing efforts with the
concerned authorities to implement the Council of Ministers resolutions in connection with
the company’s entitlement to obtain fodder at subsidized prices.
Shareholding sisters and brothers:
The company management is still working to overcome all the government administrative
routine hurdles, in order to initiate the procedures for establishing the company
slaughterhouse, long awaited fro, which is hoped to start working with the amendment of the
company financial conditions in view of its assumed capital cost. Further, the management
continued to encourage Kuwaiti national manpower, which increased by 5% compared with
2009 in an attempt on part of the company to qualify and train its need of national manpower
who now constitute 78% of the total leadership of the company.
Operation and activities accounts:
The total revenues realized amounted to KD 59,744,704 and sales cost KD 64, 188,709 with
a realized profit margin of 7.5% (profit margin 9% in 2009). Further, general, administrative
and marketing expenses amounted to KD 3,169,021. The company realized operational
costs of KD 3,290,071 (operational profits KD 6,453,924 in 2009). The most important
reasons for such losses are attributed to the rise in the prices of sheep in Australia by
55% compared with 2009, the rise in transport and operation costs of ships as fuel price
increased to 60% compared with 2009, as well as the exchange rate of Australian dollar by
50% compared with 2009.
It is noteworthy that the external sales activity realized profits of KD 2,448,756, while the
other local activities – although they enjoyed a government subsidy of Kd 4,720,240- realized
12
losses of KD 6,223,040 during the year. This raised a persistent need for considering and
reconsidering the extent of sufficiency and coverage by the subsidy amount of the company
activity and future plans in light of the constant increase in the prices of livestock and
operational costs.
Profits and losses:
The company realized net losses of KD 2,205,145 (profits of KD 6,662,619 for the same
period in 2009) for the above reasons.
The board of directors proposes non distribution of profits for 2010, following approval of the
general assembly.
Finally, and as the Livestock Transport and Trading Company is a primary foundation of
the food security foundations in our beloved country by providing such massive quantities
of livestock to fulfill the need of the local market, and according to its commitment towards
its responsibilities and despite all the conditions explained above, according to the trust of
confidence bestowed on us, we would like to confirmed to you our sincere commitment to
foster and reinforce the financial and administrative position of the company and exert all
the efforts and required measures to correct all matters related to this. This is supported
by the sincere efforts of all the company personnel in all its sectors who played a big
role in translating all the company directions. We do not miss during these days in our
country’s celebration of national events which are dear to our hearts to extend our heartfelt
congratulations and greetings to our leader, His Highness the Amir of Kuwait, Sheikh Sabah
Al Ahmad Al Jaber Al Sabah, may God protect him, and to His Highness Sheikh Nawaf Al
Ahmad Al Jaber Al Sabah, the crown prince, and to Sheikh Nasser Al Mohammed al Sabah,
the prime minister, as well as the wise government, our kind Kuwaiti people and all those
concerned in our beloved land.
Board of directors
13
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
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 and its subsidiaries (K.S.C.), “the parent company” and its subsidiaries (collectively referred to as
“The Group”) which comprise the consolidated financial position as of 31 December 2010 and the consolidated
statements of income, comprehensive income, cash flows and changes in equity for the year then ended and
a summary of significant accounting policies and other explanatory notes.
Management’s Responsibility for the Consolidated 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 material misstatement, whether
due to fraud or error, 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. 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 in the consolidated financial
statements. The procedures selected depend on the auditors’ 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 auditors’ 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
for 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 parent company’s 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 on the consolidated financial statements.
14
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
Opinion
In our opinion based on our audit and the report of other auditor the consolidated financial statements present
fairly, in all material respects, the financial position of the group, as of 31 December 2010, and its financial
performance and its cash flows for the year then ended, in accordance with International Financial Reporting
Standards.
Report on Other Legal and Regulatory Requirements
Furthermore, in our opinion proper books of account have been kept by the 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 and explanations 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 Articles of Association have occurred during the year ended 31 December 2010 that might have had a
material effect on the business of the group or on its financial position , except for what was mentioned in Note
No. (10) of Consolidated Financial statements on the investment by the Parent Company in land which is of
disagreement with its purposes.
Dr: Saud AL-Humaidi
License No. 51 (A)
Member of Baker Tilly International
Tareq Majid Bouresli
License No. 75 (A)
PKF Bouresli & Co.
Member of PKF International
Kuwait :
State of Kuwait
15
Consolidated Statement of Finincial Position as at 31 December 2010
(All amounts are in Kuwait Dinars)
Note
ASSETS
Non - Current Assets
31 December
2010
31 December
2009
Property, plants and equipment
5
11,632,431
12,190,899
Available for sale investments
7
2,048,075
2,405,725
Investments in associates
Current Assets
6
Inventories
8
Investment properties
10
Receivables and other debit balances
Investments at fair value – Income Statement
Deposits with financial institutions
Cash and Cash Equivalents
16,169,061
7,497,623
5,481,553
11
7,909,684
5,248,468
12
13,214,623
174,336
-
10,936,281
38,324,465
41,846,674
21,659,057
21,659,057
53,244,251
13
174,336
9,084,106
58,015,735
14
(1,321,129)
(1,074,243)
Statutory reserve
15
11,825,560
11,825,560
Other reserves and changes in fair values
17
Treasury shares
Share premium
Voluntary reserve
(Accumulated loss)/ Retained earnings
16
Total equity
Non-current Liabilities
Employee’s end-of-service indemnity
Current Liabilities
Payables and other credit balances
Total liabilities
18
4,967,805
4,967,805
10,758,595
10,758,595
(1,660,047)
3,714,346
1,034,112
912,033
47,263,953
52,763,153
1,640,895
1,520,343
4,339,403
3,732,239
5,980,298
53,244,251
TOTAL EQUITY AND LIABILITIES
16
14,919,786
10,921,930
EQUITY AND LIABILITIES
Share capital
1,572,437
9,528,199
9
TOTAL ASSETS
Equity
1,239,280
5,252,582
58,015,735
Bader Sulaiman Al Jarallah
Mohammed Hamad Hasan Al Ibrahim
Chairman & Managing Director Vice Chairman
Consolidated Statement of Income for period Ended 31 December 2010
Operating revenues
Operating cost
GROSS (LOSS)/ PROFIT
Governmental subsidy
Other operating income
Note
31 December
2010
31 December
2009
19
59,744,705
59,391,465
20
Marketing expenses
General and administrative expenses
Other operating expenses
OPERATING (LOSS)/ PROFIT
21
(54,032,260)
4,720,240
4,475,580
(1,422,061)
(1,343,598)
(623,384)
(548,805)
(4,444,004)
226,098
(1,746,960)
(3,290,071)
435,517
Interest on deposits, call accounts
Gains from investments at fair value
– Income Statement
(64,188,709)
22
1,235,051
Net loss from investments available for sale
23
(297,701)
Impairment of associates
6
(70,000)
5,359,205
207,367
(1,695,825)
6,453,924
688,370
(458,692)
(34,378)
40,713
109,721
NET (LOSS)/ PROFIT BEFORE SUBSIDIARIES
TAX AND DEDUCTIONS
(162,691)
373,946
(2,109,182)
7,102,891
NET (LOSS)/ PROFIT AFTER SUBSIDIARIES
TAX AND BEFORE DEDUCTIONS
(2,177,145)
Share of result of associates
Foreign exchange differences
6
(67,963)
Income tax on subsidiaries
(30,000)
(126,153)
6,976,738
Contribution to Kuwait Foundation for the Advancement of Sciences
-
(42,915)
Zakat
-
-
(174,419)
National Labor Support Tax
Board of Directors’ remuneration
24
(LOSSES)/ EARNINGSE PER SHARE (FILS)
25
NET (LOSS)/ PROFIT FOR THE YEAR
(28,000)
(2,205,145)
(10.46)
(68,785)
(28,000)
6,662,619
31.48
17
Consolidated Statement of comprehensive Income
For the year Ended 31 December 2010
(loss)/ profit for the year
31 December
2010
31 December
2009
(2,205,145)
6,662,619
(59,949)
39,308
(167,028)
(39,392)
-
39,392
349,056
524,434
122,079
563,742
(2,083,066)
7,226,361
Other comprehensive income
Changes in fair value of available for sale investments
Changes in the share of associates’ reserve
Transferred to retained earnings from share in associates›
reserve
Foreign currency translation differences
Total other comprehensive income for the year
Total comprehensive (loss)/ income for the year
18
19
4,967,805
(1,074,243)
(1,074,243)
(246,886)
(1,321,129)
21,659,057
21,659,057
-
21,659,057
Balance as at 31 December 2009
Total comprehensive loss for the year
Cash dividends (Note 26)
Purchase of treasury shares
-
-
4,967,805
-
-
-
4,967,805
-
Transfer to reserves
(303,386)
-
-
4,967,805
Share Premium
(770,857)
Treasury
Shares
-
21,659,057
Capital
Share
Total comprehensive income for the period
11,825,560
-
-
-
11,825,560
11,825,560
498,634
-
-
11,326,926
Statutory
Reserve
10,758,595
-
-
-
10,758,595
10,758,595
498,634
-
-
10,259,961
Voluntary
Reserve
1,034,112
-
-
122,079
912,033
912,033
-
-
524,350
387,683
Other Reserves and
Changes in
Fair Value
(Note 17)
Consolidated Statement of Changes in Equity for the year Ended 31 December 2010
(1,660,047)
-
(3,169,248)
(2,205,145)
3,714,346
3,714,346
)997,268(
-
6,702,011
(1,990,397)
(Accumulated Loss)
/ Retained
Earnings
47,263,953
(246,886)
(3,169,248)
(2,083,066)
52,763,153
52,763,153
-
(303,386)
7,226,361
45,840,178
Total
Consolidated Statement of Cash Flows for the year Ended 31 December 2010
Operating activities
Net (loss)/ profit before adjustments
Adjustments for:
Depreciation
Interest on deposits and call accounts
Share of result of associates
Impairment of associate
loss from available for sale investments
Net disposal of property, plants and equipment
Gain from investments at fair value–Income Statement
Employees’ end-of-service indemnity
Operating (Loss)/ profit before changes in working capital
31 December
2009
(2,205,145)
6,662,619
3,025,051
3,509,511
(40,713)
(109,721)
(435,517)
70,000
297,701
6,110
(688,370)
30,000
34,378
(1,387)
(1,235,051)
457,437
(335,378)
10,044,121
1,360,563
(3,936,047)
629,174
(834,858)
182,186
149,654
Inventories
(2,016,070)
Investments at fair value – Income Statement
(1,466,080)
Cash generated from operating activities
(1,827,791)
3,528,916
Net cash generated from operating activities
(1,889,425)
3,311,539
Purchase of property, plants and equipment
(2,350,686)
(2,783,446)
-
1,570,778
10,936,281
(10,936,281)
9,442,982
(11,426,682)
(246,886)
(303,386)
(3,423,040)
(303,386)
Receivables and other debit balances
Payables and other credit balances
Employees› end of service indemnity - paid
Investing activities
Proceeds from sale of property, plants and equipment
Proceeds from sale of available for sale investments
Dividends received
Deposits at financial institutions
Interest received on deposits and call accounts
Net cash generated from / (used in) investment activity
Financing activities
Dividends paid
Net cash used in finance activities
Increase/ (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalent at the end of the year
20
31 December
2010
(61,634)
125,201
263,501
468,685
(3,176,154)
(212,719)
(1,531,581)
(217,377)
3,193
30,704
688,370
-
4,130,517
(8,418,529)
13,214,623
9,084,106
9,084,106
17,502,635
Notes to consolidated Finanical Statements for the Year Ended 31 December 2010
(All Amounts are in Kuwait 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 estates 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 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
Australia
Trade in
livestock and
meat
UAE
Trade in
livestock and
meat
Share percentage
31 December
2010
31 December
2009
%100
%100
%100
%100
Emirates Livestock & Meat Product, Trading Company, (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 company as at 31 December 2010. The subsidiary’s total assets is KD
3,321,400 as at 31 December 2010, and its net profit is KD 103,931
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 2010. The
subsidiary’s total assets is KD 948,574 as at 31 December 2010, and its net profit is KD 54,434
The Consolidated Financial Statements for the year ended 31 December 2010 were authorized for issuance
by the Board of Directors› resolution on 24 March 2011.
The General Assembly of shareholders has the authority to amend these consolidated financial statements
after issuance.
21
2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these consolidated financial statements are set
out below. These policies have been consistently applied to all years presented in these financial statements
unless otherwise stated.
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.
2.1.1 The standards and interpretations applied in the current year.
The Group has adopted the new standards, interpretations and amendments to (IFRS) issued by International
Accounting Standards Board (IASB), which are effective for the financial statements for the financial period
beginning on or after January 1, 2009.
Annual improvements on accounting standards:
IASB has issued improvements for IFRS. The application of these new and revised IFRSs has not had any
material impact on the amounts reported for the current and prior years but may affect the accounting for future
engagements and transactions.
The new requirements applied to the Group in respect of these amendments are summarized below:
Amendments to IAS 1 Presentation of Financial Statements
Effective on 1 January 2010, the revised standard is concerned with the classification of convertible instruments
into current and non-current.
IFRIC 17 Distributions of Non-cash Assets to Owners
Effective on 1 July 2009, the Interpretation provides guidance on the appropriate accounting treatment when
an entity distributes assets other than cash as dividends to its shareholders.
Amendments to IFRS 5 (Non-current Assets Held for Sale and Discontinued Operations)
Effective on 1 January 2010, the amendments to IFRS 5 clarify that the disclosure requirements in IFRSs other
than IFRS 5 do not apply to non-current assets classified as held for sale or discontinued operations.
Amendments to IAS 7 Cash Flows
Effective on 1 January 2010, the amendments of IAS 7 (as a part of improvements to IFRSs (2009)) specify
that only expenditures that result in a recognized asset in the statement of financial position can be classified
as investing activities in the statement of cash flows.
IFRS 8 “Operating Segments”
Effective on 1 January 2010, the amendment is concerned with the disclosure of information about segment
assets.
Amendments to IFRS 7: Financial Instruments: Disclosures
Effective on 1 January 2010, the amendments provide future clarifications for the required disclosures.
22
2.1.2 New and revised IFRSs in issue but not yet effective:
The Group has not applied the following new and revised IFRS that have been issued but are not yet effective.
The amendments applicable to the Group are:
Amendments to IAS 1
Effective on or after 1 July 2010, The amendment requires more disclosures of Presentation for analysis of
items of other comprehensive income
Amendments to IFRS 7: Disclosures:
Effective for the periods beginning on or after 1 July 2011, The amendments provide additional disclosure for
transactions involving transfers of financial assets.
IFRS 9 (As amended in 2010):
Effective for annual periods beginning on or after 1 January 2013 with earlier application permitted, IFRS
9 provides additional requirements for the classification and measurement of financial assets and financial
liabilities and for recognition.
IAS 24 (revised in 2009):
Effective for annual periods beginning on or after 1 January 2011, IAS 24 Related Party Disclosures modifies
the definition of a related party and simplifies disclosures for government-related entities.
Amendments to IAS 32:
Effective for annual periods beginning on or after 1 February 2010, Classification of Rights issues.
IFRIC 19:
Effective for annual periods beginning on or after 1 July 2010, IFRIC 19 provides guidance regarding the
accounting for the extinguishment of a financial liability by the issue of equity instruments.
The management anticipates that the new standards and interpretations will be adopted in the Company’s
accounting policies for the period beginning on or after the effective date of the pronouncement. Certain other
new standards and interpretations have been issued but are not relevant to the Company’s operations and
therefore not expected to have a material impact on the Company’s financial statements.
2.2 Basis of Consolidation
Subsidiaries
The consolidated financial statements incorporate the financial statements of the Company and entities
controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern
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 attributed to the owners of the
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 the subsidiaries to bring their accounting
policies into line with those used by other members of the Group.
All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.
Changes in the Group’s ownership interests in the 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 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 consideration paid or received is recognized directly in equity and attributed to owners of the Company.
23
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 noncontrolling interests.
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 acquisitiondate 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. Acquisitionrelated costs are generally recognised in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised 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 noncontrolling 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 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 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 acquire
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 acquire prior to the
acquisition date that have previously been recognised 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 recognised directly in profit or loss. An impairment loss recognised 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 recognised in the consolidated
statement of financial position at cost and adjusted thereafter to recognise 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 recognising its share of further losses.
Additional losses are recognised 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 recognised at the date of acquisition is recognised 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 recognised 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.
2.3 Property, 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:
Year
Vessels
12 – 15
Constructions, buildings and livestock sheds
5 – 20
Machinery and equipment
3 – 10
Vehicles
3–5
Other assets
2–5
25
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.
2.4 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
This category has two sub-categories: financial assets held for trading, and those designated at fair value
through profit and loss at inception. Financial assets held for trading are those assets acquired principally for
the purpose of selling in the short term.
The financial assets designated at fair value through profit and loss at inception are classified in this category, if
they are managed and their performance is evaluated and internally reported on a fair value basis in accordance
with a documented investment strategy approved by management.
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.
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 way 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.
26
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 availablefor sale financial assets are sold or impaired, the accumulated changes in fair value recognized in equity are
transferred to the statement of income.
Fair values
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.
2.5 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.
2.6 Trade receivable
Trade receivables are stated at their nominal value, less an allowance for any doubtful debts. The management
determines the adequacy of the allowance based upon reviews of individual customers, current economic
conditions, past experience and other related factors.
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 remeasured at fair value. Fair value is determined by an
independent registered value at the balance sheet date. The resulted gains and losses are included in the
statement of income.
2.8 Cash 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.
27
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 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.
2.10 Provisions
Provisions are recognized when the Group has a legal or constructive obligation as a result of past events,
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 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 Payables and accrued expenses
Liabilities are recorded against amounts to be paid in future for goods and services received and stated at cost
on the consolidated balance sheet.
2.13 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.
2.14 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.
28
2.15 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.
Translation differences are reported as part of the fair value gain or loss.
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 short-term.
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 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.
29
Impact on income
statement
2010
Impact on Equity
2009
2010
2009
‫ـ‬
‫ـ‬
47,259
48,240
Receivable
251,858
319,783
‫ـ‬
‫ـ‬
investments at fair value – income statement loss
117,313
44,598
‫ـ‬
‫ـ‬
94,980
7,436
‫ـ‬
‫ـ‬
)12,702(
(24,249)
‫ـ‬
‫ـ‬
Cash and cash equivalent
Creditors
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
2010
Investments at fair value - income statement
2009
)70,166(
(55,503)
The following sensitivity analysis shows the impact of the decline of the indexes of other financial markets on
the Group’s equity. This analysis is based on the decline of the other market index by 5% with the stability of
all other variables.
Impact on equity
2010
)11,369(
2009
)28,088(
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.
30
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:
Trade receivable
2010
2009
9,166,472
10,219,261
-
Deposit in financial institutions
10,936,281
13,214,623
Cash and cash equivalents
9,084,106
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 2010:
Between 1
and 3
Months
During
1 month
From 3
months and
one year
Between 1
and 5 years
Total
Liabilities
Creditors and other credit balances
Indemnity
Total
1,305,600
1,182,065
1,851,738
-
4,339,403
-
-
-
1,640,895
1,640,895
1,305,600
1,182,065
1,851,738
1,640,895
5,980,298
31
The maturity dates of financial liabilities as at 31 December 2009:
Between 1
and 3
Months
During
1 month
From 3
months and
one year
Between 1
and 5 years
Total
Liabilities
Creditors and other credit balances
746,448
1,119,671
1,866,120
‫ـ‬
3,732,239
-
-
-
1,520,343
1,520,343
746,448
1,119,671
1,866,120
1,520,343
5,252,582
Indemnity
Total
3.2 Capital 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 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 creditors) 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:
2010
Level one
Level two
Total
Assets
Investment at fair value through profit or loss
32
227,374
1,386,925
1,614,299
1,403,320
6,506,364
7,909,684
2009
Level one
Level two
Total
Assets
Investment at fair value through profit or loss
561,750
1,409,321
1,971,071
1,110,066
4,138,402
5,248,468
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.
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.
33
34
At 31 December 2010
Net book value:
8,166,831
40,169,236
-
Foreign currency translation
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
5. PROPERTY, PLANT AND EQUIPMENT
1,012,725
6,814,389
-
-
181,058
6,633,331
7,827,114
-
-
-
60,126
7,766,988
Lands,
constructions, and
buildings
293,613
2,609,837
-
(189,046)
66,501
2,732,382
2,903,450
-
-
(189,107)
138,731
2,953,826
Machinery
and equipment
200,131
1,648,150
-
(291,237)
100,814
1,838,573
1,848,281
-
-
(313,095)
95,347
2,066,029
Vehicles
66,979
793,793
-
(138,651)
26,740
905,704
860,772
-
-
(139,483)
52,405
947,850
Other assets
2010
1,744,008
3,171,668
111,284
(179,883)
156,724
3,083,543
4,915,676
258,492
-
(179,883)
171,685
4,665,382
Assets of
subsidiary
companies
148,144
-
-
-
-
‫ـ‬
148,144
-
(1,819,016)
(8,560)
1,832,392
143,328
Projects in
progress
11,632,431
55,207,073
111,284
(798,817)
3,025,051
52,869,555
66,839,504
258,492
-
(830,128)
2,350,686
65,060,454
Total
35
At 31 December 2009
Net book value:
8,841,029
37,676,022
‫ـ‬
differences
At 31 December 2009
‫ـ‬
3,049,918
34,626,104
46,517,051
‫ـ‬
Disposals
Depreciation for the year
At 1 January 2009
Accumulated depreciation and
impairment losses:
At 31 December 2009
differences
4,540,711
‫ـ‬
Disposals during the year
Transfer from project in progress
‫ـ‬
41,976,340
Additions during the year
At 1 January 2009
Cost:
Vessels
1,133,657
6,633,331
‫ـ‬
‫ـ‬
179,297
6,454,034
7,766,988
‫ـ‬
‫ـ‬
‫ـ‬
71,765
7,695,223
Lands,
nstructions,
and
buildings
221,444
2,732,382
‫ـ‬
‫ـ‬
52,167
2,680,215
2,953,826
‫ـ‬
‫ـ‬
‫ـ‬
124,755
2,829,071
Machinery
and
equipment
227,456
1,838,573
‫ـ‬
(14,878)
86,748
1,766,703
2,066,029
‫ـ‬
‫ـ‬
(14,878)
65,450
2,015,457
Vehicles
2009
42,146
905,704
‫ـ‬
(7,116)
25,694
887,126
947,850
‫ـ‬
‫ـ‬
(7,646)
24,769
930,727
Other
assets
1,581,839
3,083,543
381,497
(19,025)
115,687
2,605,384
4,665,382
588,358
‫ـ‬
(19,025)
637,599
3,458,450
Assets of
subsidiary
companies
143,328
‫ـ‬
‫ـ‬
‫ـ‬
‫ـ‬
‫ـ‬
143,328
‫ـ‬
(4,541,987)
‫ـ‬
1,859,108
2,826,207
Projects in
progress
12,190,899
52,869,555
381,497
(41,019)
3,509,511
49,019,566
65,060,454
588,358
(1,276)
(41,549)
2,783,446
61,731,475
Total
6. INVESTMENT IN ASSOCIATES
Country of
Incorporation
Share
%
Kuwait
Emirates Livestock and Meat Products
Trading Company L.L.C
Portland Pellet Suppliers (Partnership)
Company
31 December
2010
31 December
2009
40%
650,863
926,624
UAE
49%
60,552
62,282
Australia
50%
527,865
583,531
1,239,280
1,572,437
National Tannery Co. (K.S.C.C.)
The Group’s share in the result of the National Tannery Company (K.S.C.C) operations for the year ended
31 December 2010 is recorded based on financial statements prepared by the management of associate
company as at 30 September 2010.
During the year ended 31 December 2010, the parent company recorded impairment losses for its investment
in National Tannery Company K.S.C.C of KD 70,000 (31 December 2009 - KD 30,000).
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 2010 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
2010
National Tannery company
Emirates Livestock & Meat Products Trading Co.
Portland Pellet Suppliers
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
1,390,536
433,912
108,142
(70,380)
74,352
12,070
45,089
33,335
680,289
96,758
849,123
146,766
2,145,177
542,740
1,002,354
109,721
2009
National Tannery company
Emirates Livestock & Meat Products Trading Co.
Portland Pellet Suppliers
36
7. AVAILABLE FOR SALE INVESTMENTS
31 December
2010
31December
2009
Investments in local securities (quoted)
227,374
561,750
Investments in local securities (unquoted)
658,091
649,433
Investments in foreign securities (unquoted)
914,642
941,095
Investments in foreign funds (unquoted)
247,968
253,447
2,048,075
2,405,725
- Available for sale investments include an amount of KD 1,386,925 as of 31 December 2010 represent
unquoted investments in securities (KD 1,409,321 at 31 December 2009) 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 433,776 as of 31 December 2010 represent
unquoted investments in securities (KD 434,654 as of 31 December 2009) 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.
- During the year, the Group’s management has recorded an impairment of investment in quoted local
securities amounted to KD 297,701.
- Investments available for sale are dominated into the following currencies as of 31 December:
2010
2009
Kuwaiti Dinar
885,465
1,211,183
US Dollar
945,172
963,125
Sterling Pound
217,438
231,417
2,048,075
2,405,725
8. INVENTORIES
31 December
2010
31 December
2009
3,242,662
1,728,116
98,452
259,741
Gut
8,976
40,411
Medicines, fertilizers and others
6,228
16,575
3,356,318
2,044,843
Goods in transit
2,584,135
1,990,409
Production materials and spare parts
1,557,170
1,446,301
7,497,623
5,481,553
Livestock and meat (net)
Fodder
37
9. RECEIVABLES AND OTHER DEBIT BALANCES
31 December
2010
31 December
2009
9,432,934
10,485,723
(266,462)
(266,462)
9,166,472
10,219,261
151,606
111,614
Accrued income
20,871
54,039
Refundable deposits
59,571
59,692
Tax assets
27,160
24,999
Staff receivables
21,906
5,144
Others
80,613
447,181
9,528,199
10,921,930
Trade receivables
Doubtful debts
Prepaid expenses
- Trade receivables include an amount of KD 983,850 as of 31 December 2010 (KD 1,005,549 as at 31
December 2009 – 1,004,850 as at 30 June 2009), 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 disputant has
challenged the verdict at the supreme court which partially accepted the challenge. In 19 May 2010 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 22 March 2011. The company›s management believes that there is no need to
provide a provision during the period as the case is still under deliberation with the concerned authorities.
- 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 8,849,860 as of 31 December 2010 (KD 6,853,040
as of 31 December 2009).
- The total trade receivables that are past due but not collected or impaired amounted to KD 316,612 as of
31 December 2010 (KD 3,366,221 as of 31 December 2009).
- Trade receivables which are impaired and provided for amounted to KD 266,462 as of 31 December 2010
(KD 266,462 as of 31 December 2009).
38
10. INVESTMENT PROPERTIES
This item represents lands located in the United Arab Emirates.
- The Parent Company did not revalue the investment properties as of 31 December 2010.
- 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
31 December
2010
1,403,320
31 December
2009
1,110,066
87,465
87,465
Foreign unquoted investments
2,346,253
890,405
Investments in funds
4,072,646
3,160,532
7,909,684
5,248,468
Local quoted investments
Local unquoted investments
All unquoted and foreign investments have been valued by the Investment Portfolio’s Manager as at 31
December 2010.
12. CASH AND CASH EQUIVALENTS
Cash on hand and at banks
Time deposits
Cash at investment portfolio
31 December
2010
2,040,029
31 December
2009
1,114,068
11,116,982
7,937,251
57,612
32,787
13,214,623
9,084,106
The actual average interest rate on deposits amounted to 1.892 % as at 31 December 2010 (2.686 % as at 31
December 2009).
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 2010.
39
14. TREASURY SHARES
Numbers of shares - share
Percentage to issued shares (%)
Market Value
31 December
2010
31 December
2009
6,057,383
5,307,383
%2.80
%2.45
1,786,928
1,751,436
The treasury shares have been recorded at cost amounted to KD 1,321,129 as at 31 December 2010 (1,074,243
as at 31 December 2009)
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.
40
17. OTHER RESERVES AND CHANGES IN FAIR VALUES
Accumulated
changes in fair
market value
of available
for sale
investments
Balance as at 1 January 2009
Foreign
currency
translation
reserve
Share in
associates›
reserve
Total
(157,459)
(242,692)
787,834
387,683
39,308
-
-
39,308
Transferred to the retained earnings
from associate reserves
-
-
)39,392(
)39,392(
differences
-
524,434
-
524,434
(118,151)
281,742
748,442
912,033
Balance as at 1 January 2010
(118,151)
281,742
748,442
912,033
(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
Changes in the fair value of available
for sale investments
Changes in the fair value of available
for sale investments
18. PAYABLES AND OTHER CREDIT BALANCES
31 December
2010
31 December
2009
1,217,239
1,333,466
405,037
411,943
1,546,423
711,456
Accrued expenses
815,937
233,418
Staff leave
216,685
198,894
28,000
28,000
110,082
815,062
4,339,403
3,732,239
Trade payables
Dividends accrued to shareholders
Cost of accrued marine expenses
Board of directors› remuneration
Other credit balances
41
19. OPERATING INCOME
Sales
Transportation revenue
2010
2009
58,252,104
57,404,691
1,492,601
1,512,448
-
474,326
59,744,705
59,391,465
Revenue from rent of vessels
20. GOVERNMENTAL SUBSIDY
In accordance with the Ministerial Resolution No. 580 dated 31 December 2008 and the Council of Ministers’
Resolution No 844 dated 14 August 2008, the management recorded in the statement of income an amount of
KD 4,720,240 for the year ended 31 December 2010 (KD 4,475,580 as at 31 December 2009) as a financial
subsidy from the ministry to support the company dealing with the increasing prices of some foodstuffs and
consumer goods. The resolution 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.
21. OTHER OPERATING EXPENSES
This item represents the total vessel expenses during the stoppage and repair durations, amounting to KD
623,384 during the year ended 31 December 2010 (KD 548,805 - 31 December 2009).
22. GAINS/ (LOSSES) FROM INVESTMENTS AT FAIR VALUE – INCOME STATEMENT
2010
Gains/ (losses) from change in fair value
Realized gains/ (losses)
Portfolios management fees
2009
1,177,225
)431,083(
86,265
)26,354(
(28,439)
)1,255(
1,235,051
23. NET LOSS FROM INVESTMENTS AVAILABLE FOR SALE
Loss from sale of available for sale investments
Impairment
2010
)458,692(
2009
-
(297,701)
(297,701)
24. BOARD OF DIRECTORS REMUNERATION
)34,378(
(34,378)
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.
42
25. (LOSSES)/ EARNINGS PER SHARE
Basic (losses)/ earnings per share are calculated based on dividing the net (loss)/ profit of the year by the
weighted average number of common shares outstanding during the year as follows:
Net (loss)/ profit for the year
Number of issued shares
Less: treasury shares
Weighted average number of outstanding shares
2010
2009
(2,205,145)
6,662,619
216,590,575
216,590,575
(5,715,493)
(4,968,890)
210,875,082
211,621,685
(10.46)
31.48
(losses)/ Earnings per share (fils)
26. DIVIDENDS
On 31 March 2010, the Shareholders’ General Assembly approved the consolidated financial statements for
the year ended 31 December 2009; cash dividend for the year ended 31 December 2009 by 15 fils per share,
in total KD 3,169,248; and remuneration for the members of the Board of Directors amounting to KD 28,000 for
the year ended 31 December 2009 in accordance with the recommendation of the Board of Directors meeting
held on 22 February 2010.
27. STAFF COST
Staff salaries and benefits
2010
2009
1,863,154
1,654,506
182,186
149,654
91,565
81,626
Employees’ end of service indemnity
Leaves
2,136,905
28. CONTINGENT LIABLITITIES AND CAPITAL COMMITMENTS
1,885,786
31 December
2010
31 December
2009
Letters of Guarantee
841,746
1,169,105
Lease contract obligations
258,080
60,492
Lease Contract commitments are as follows:
2010
Payments within a year
258,080
2009
60,492
43
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:
2010
2009
90,898
90,152
1,405,799
1,766,519
30 December
2010
31 December
2009
Key management long term benefits
563,420
514,730
Key management short term benefits
57,819
60,119
Management fees paid to associate companies
Sales for related parties
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:
The nine months ended 31 December 2010
Operating revenues
Segment Results
Undistributed revenues
Kuwait
54,144
)3,300(
Thousand Kuwait Dinar
UAE
5,600
10
Undistributed expenses
Net Profit for the Year
Other Information
Segment Assets
Other undistributed assets
Segment Liabilities
Depreciation
44
48,488
949
5,734
246
Total
59,744
)3,290(
1,711
)626(
)2,205(
49,437
3,807
53,244
5,980
2,350
3,025
The nine months ended 31 December 2009
Kuwait
Operating revenues
Segment Results
UAE
Total
53,657
5,734
59,391
5,842
601
6,443
Undistributed revenues
1,252
Undistributed expenses
(1,033)
6,662
Net Profit for the Year
Other Information
Segment Assets
52,767
717
53,484
4,531
Other undistributed assets
58,015
Segment Liabilities
5,071
5,252
181
2,783
Depreciation
3,509
Sub-Segment – Segments of activities
The main activities of the Group are 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 the other Gulf Countries
only.
The following is an analysis of sales by business segments:
2010
2009
45,948
44,506
Meat sales
9,492
11,301
Others
4,305
3,584
59,745
59,391
Livestock sales
31. COMPARATIVE FIGURES
Certain comparative figures were reclassified to conform to the current year presentation.
45

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