1. Healthcare

RAS AL KHAIMAH CEMENT COMPANY – P.S.C.
(A PUBLIC SHAREHOLDING COMPANY)
RAS AL KHAIMAH
UNITED ARAB EMIRATES
FINANCIAL STATEMENTS AND
INDEPENDENT AUDITOR’S REPORT
FOR THE YEAR ENDED
DECEMBER 31, 2014
RAS AL KHAIMAH CEMENT COMPANY – P.S.C.
RAS AL KHAIMAH
UNITED ARAB EMIRATES
FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR’S REPORT
FOR THE YEAR ENDED DECEMBER 31, 2014
TABLE OF CONTENTS
Page
Exhibit
Independent Auditor’s Report
1
--
Statement of Financial Position
2
A
Statement of Income
3
B
Statement of Comprehensive Income
4
C
Statement of Changes in Equity
5
D
Statement of Cash Flows
6
E
7 – 34
--
Notes to the Financial Statements
RAS AL KHAIMAH CEMENT COMPANY – P.S.C.
RAS AL KHAIMAH
UNITED ARAB EMIRATES
STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2014
EXHIBIT B
Notes
Revenue
Costs of revenue
4.15 & 16
17
Gross profit
Other income
Marketing expenses
Administrative expenses
Finance costs
Finance income
Share in profit in an associate
18
19
20
4.16 & 21
4.16 & 21
6
PROFIT FOR THE YEAR – EXHIBIT C
Basic earnings per share
4.19 & 22
2014
AED
2013
AED
231,964,359
(203,577,806)
219,918,568
(198,704,546)
28,386,553
21,214,022
1,814,609
(1,319,286)
(16,289,017)
(415,998)
496,673
1,501,747
345,456
(1,309,515)
(13,774,060)
(402,627)
1,131,096
672,636
14,175,281
7,877,008
0.025
0.014
The notes on pages 7 to 34 are an integral part of these financial statements.
-3-
RAS AL KHAIMAH CEMENT COMPANY – P.S.C.
RAS AL KHAIMAH
UNITED ARAB EMIRATES
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31, 2014
EXHIBIT C
Notes
Profit for the year – Exhibit B
2014
AED
2013
AED
14,175,281
7,877,008
(11,192,898)
4,431,757
(7,984,417)
--
(6,761,141)
(7,984,417)
7,414,140
(107,409)
Other comprehensive income / (loss)
Net change in fair value of investments at fair value
through other comprehensive income
Profit on sale of investments
Other comprehensive loss
TOTAL COMPREHENSIVE INCOME/(LOSS)
FOR THE YEAR – EXHIBIT D
7
The notes on pages 7 to 34 are an integral part of these financial statements.
-4-
RAS AL KHAIMAH CEMENT COMPANY – P.S.C.
RAS AL KHAIMAH
UNITED ARAB EMIRATES
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED DECEMBER 31, 2014
EXHIBIT D
Share
capital
AED
Description
Balance at January 1, 2013
484,000,000
Profit for the year 2013 – Exhibit B
Other comprehensive loss
Total comprehensive loss for the year – Exhibit C
Bonus shares transferred to capital
Dividend paid
Transferred to reserves – Note 12 (b)
Balance at December 31, 2013 – Exhibit A
Profit for the year 2014 – Exhibit B
Other comprehensive loss
Total comprehensive income for the year – Exhibit C
----
Statutory
reserve
AED
63,117,004
Voluntary
reserve
AED
62,150,438
----
----
24,200,000
---
--787,701
--787,701
508,200,000
63,904,705
62,938,139
----
Bonus shares transferred to capital
Dividend paid
Transferred to reserves – Note 12 (b)
Transferred to retained earnings on sale of
investment at FVTOCI
50,820,000
---
Balance at December 31, 2014 – Exhibit A
559,020,000
--
----
----
--1,417,528
--
--1,417,528
--
65,322,233
64,355,667
Fair value
reserve
AED
Total
AED
(22,541,496)
132,822,046
719,547,992
-(7,984,417)
(7,984,417)
7,877,008
-7,877,008
7,877,008
(7,984,417)
(107,409)
(24,200,000)
(24,200,000)
(1,575,402)
-(24,200,000)
--
(30,525,913)
90,723,652
695,240,583
-(11,192,898)
(11,192,898)
14,175,281
4,431,757
18,607,038
14,175,281
(6,761,141)
7,414,140
----
(50,820,000)
(25,410,000)
(2,835,056)
-(25,410,000)
--
13,284,000
(13,284,000)
(28,434,811)
16,981,634
----
The notes on pages 7 to 34 are an integral part of these financial statements.
-5-
Retained
earnings
AED
-677,244,723
RAS AL KHAIMAH CEMENT COMPANY – P.S.C.
RAS AL KHAIMAH
UNITED ARAB EMIRATES
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2014
EXHIBIT E
2014
AED
2013
AED
Cash Flows from Operating Activities
Profit for the year – Exhibit B
Adjustments for:
Depreciation
Finance costs
Finance income
(Gain)/loss on disposal of property, plant and equipment
Share of profit in an associate
Provision for end of service benefits
Profit before working capital changes
Changes in inventories
Changes in due from an associate
Changes in trade and other receivables
Changes in trade and other payables
Net cash generated from operations
Finance costs paid
End of service benefits paid
Net cash from operating activities
14,175,281
7,877,008
29,206,196
415,898
(496,673)
(44,000)
(1,501,747)
584,705
42,339,660
3,695,966
12,843,089
(11,926,564)
(1,327,662)
45,624,489
(415,898)
(653,667)
44,554,924
29,084,607
402,627
(1,131,096)
115,311
(672,636)
618,119
36,293,940
10,473,211
(3,911,048)
16,375,314
(14,220,271)
45,011,146
(402,627)
(302,822)
44,305,697
Cash Flows from Investing Activities
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Fixed deposits
Investment made during the year
Proceeds on sale of investments
Dividend received from an associate
Interest received
Net cash used in investing activities
(5,312,338)
44,000
(15,000,000)
(94,277,665)
44,980,366
100,000
479,659
(68,985,978)
(1,176,970)
44,293
----1,109,318
(23,359)
Cash Flows from Financing Activities
Dividend paid to shareholders
Short-term borrowings from bank
Net cash used in financing activities
(26,358,653)
(5,561,597)
(31,920,250)
(23,319,018)
9,031,599
(14,287,419)
(56,351,304)
81,521,190
29,994,919
51,526,271
25,169,886
81,521,190
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
CASH AND CASH EQUIVALENTS AT THE END OF THE
YEAR – Notes 4.9 &11
The notes on pages 7 to 34 are an integral part of these financial statements.
-6-
RAS AL KHAIMAH CEMENT COMPANY – P.S.C.
RAS AL KHAIMAH
UNITED ARAB EMIRATES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2014
1. REPORTING ENTITY:
Ras Al Khaimah Cement Company – P.S.C. (“the Company”) is a public shareholding
company incorporated in 1995 by Amiri decree No. 4 issued by H.H. the Ruler of the Emirate
of Ras Al Khaimah. The Company started its commercial production in April 2000. The
Company is listed on the Abu Dhabi Securities Exchange.
The Company is domiciled at Ras Al Khaimah, United Arab Emirates and is engaged in
manufacturing and marketing of various types of portland cement (except white cement)
worldwide primarily through direct sales to distributors and resellers.
The production plant and all other facilities of the Company are situated at Khor Khwair area
of the Emirate of Ras Al Khaimah and the registered address of the Company is P.O. Box
2499, Ras Al Khaimah, UAE.
The Company owns 20% investment in capital of Reem Readymix LLC which is an associate
of the Company.
2. ADOPTION OF NEW AND REVISED STANDARDS:
In the current year, the Company has adopted the new and revised International Financial
Reporting Standards (IFRSs) including the International Accounting Standards (IASs) and
their interpretation that are relevant to its operations and effective on the current financial
statements.
The directors anticipate that all of the new and revised International Financial Reporting
Standards (IFRSs) and interpretation as applicable will be adopted in the Company’s financial
statements for the period commencing January 1, 2015 or as and when it is applicable.
3. BASIS OF PREPARATION:
3.1 Statement of compliance:
These financial statements of the Company have been prepared in accordance with the
International Financial Reporting Standards (“IFRSs”) and the requirements of UAE
Federal Law No. 8 of 1984 (as amended).
3.2 Basis of measurement:
These financial statements have been prepared on the historical cost basis except in
respect of the following which are measured at fair value:
• Financial instruments classified as investment at fair value through other
comprehensive income; and
• Financial instruments classified as investment in available for sale financial assets.
The methods used to measure fair values are discussed in notes 3 and 4.
-7-
RAS AL KHAIMAH CEMENT COMPANY – P.S.C.
RAS AL KHAIMAH
UNITED ARAB EMIRATES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2014 (continued)
3. BASIS OF PREPARATION: (continued...)
3.3 Functional and presentation currency:
These financial statements are presented in UAE Dirhams (“AED”) which is the
functional currency of the Company.
3.4 Use of estimates and judgments:
The preparation of financial statements in conformity with IFRSs requires management
to make judgments, estimates and assumptions that affect the application of policies and
reported amounts of assets and liabilities, income and expenses. Actual results may
differ from these estimates.
Estimates and underlying assumption are reviewed on an ongoing basis. Revisions to
accounting estimates are recognized in the period in which the estimates are revised and
in any future period affected.
The Company makes estimates and assumptions that affect the reported amounts of
assets and liabilities within the next financial year. Estimates and judgments are
continually evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under circumstances.
Estimates and judgments with significant risk of material adjustments in the future year
mainly comprise of the following:
Impairment loss and trade receivables
The Company reviews its receivables to assess impairment at least on an annual basis.
The Company's credit risk is primarily attributable to its trade receivables. In
determining whether impairment losses should be recorded in the profit or loss, the
Company makes judgments as to whether there is any observable data indicating that
there is a measurable decrease in the estimated future cash flows. Accordingly, an
allowance for impairment is made where there is an identified loss event or condition
which, based on previous experience, is evidence of a reduction in the recoverability of
the cash flows.
Estimating useful lives of property, plant and equipment
The Company estimates the useful lives of property, plant and equipment based on the
period over which the assets are expected to be available for use. The estimated useful
lives are reviewed periodically and are update if expectations differ from previous
estimates due to physical wear and tear, technical or commercial obsolescence and legal
or other limits on the use of assets. In addition, estimation of the useful lives of property
and equipment is based on collective assessment of industry practice, internal technical
evaluation and on the historical experience with similar assets. It is possible, however
that future results of operations could be materially affected by changes in estimates
brought about by changes in factors mentioned above. The amounts and timing of
recorded expenses for any period would be affected by changes in these factors and
circumstances. The Company has carried out review of the residual values and useful
lives of property, plant and equipment as at December 31, 2014.
-8-
RAS AL KHAIMAH CEMENT COMPANY – P.S.C.
RAS AL KHAIMAH
UNITED ARAB EMIRATES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2014 (continued)
3. BASIS OF PREPARATION: (continued...)
3.4 Use of estimates and judgments: (continued...)
Impairment loss on property, plant and equipment
The Company reviews its property, plant and equipment to assess impairment, if there is
an indication of impairment. In determining whether impairment losses should be reported
in profit or loss, the Company makes judgments as to whether there is any observable data
indicating that there is a reduction in the carrying value of property, plant and equipment.
Accordingly, provision for impairment is made where there is an identified loss event or
condition which, based on previous experience, is evidence of a reduction in the carrying
value of property, plant and equipment.
Provision for slow moving and obsolete inventories
The Company reviews its inventory to assess loss on account of slow moving inventories
on a regular basis. In determining whether provisions for slow moving and obsolete
inventories should be recorded in the profit or loss, the Company makes judgments' as to
whether there is any observable data indicating that there are future adverse factors
affecting the sale ability of the product and the net realizable value for such product.
Accordingly, provision for impairment is made where the net realizable value is less than
cost based estimates by the management, ageing of inventories and historical movement of
the inventories.
4. SIGNIFICANT ACCOUNTING POLICIES:
The accounting policies set out below have been applied consistently to all period presented in
these financial statements.
4.1 Property, plant and equipment:
Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation
and accumulated impairment losses. Cost includes expenditures that are directly
attributable to the acquisition of the asset. The cost of self-constructed assets includes the
cost of materials and direct labour, any other costs directly attributable to bringing the
assets to a working condition for its intended use.
-9-
RAS AL KHAIMAH CEMENT COMPANY – P.S.C.
RAS AL KHAIMAH
UNITED ARAB EMIRATES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2014 (continued)
4. SIGNIFICANT ACCOUNTING POLICIES: (continued...)
4.1 Property, plant and equipment: (continued...)
When parts of an item of property, plant and equipment have different useful lives, they
are accounted for as separate items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment (calculated as the
difference between the net proceeds from disposal and the carrying amount of the item) is
recognized in profit or loss.
Subsequent costs
Subsequent expenditure is capitalized only when it is probable that the future economic
benefits associated with the expenditure will flow to the Company. Ongoing repairs and
maintenance are expensed as incurred.
Depreciation
Depreciation is based on the cost of an asset less its residual value. Significant
components of individual assets are assessed and if a component has a useful life that is
different from the remainder of that asset, that component is depreciated separately.
Depreciation is recognized in the profit or loss on a straight-line basis over estimated
useful lives of each part of an item of property, plant and equipment. Land is not
depreciated.
The estimated useful lives for the property, plant and equipments are as follows:
Assets
Factory buildings
Plant and equipments
Motor vehicle and mobile equipment
Office furniture and equipments
Land improvements
Specialized tools
Capital spare parts
Life ( years)
28-30
15-30
4-10
3-10
4-5
4-5
30
Depreciation methods, useful lives and residual values are reviewed at each reporting date
and adjusted if appropriate.
4.2 Government grants:
Lands granted to the Company by the Government of Ras Al Khaimah are recognized in
the statement of financial position at nominal value.
-10-
RAS AL KHAIMAH CEMENT COMPANY – P.S.C.
RAS AL KHAIMAH
UNITED ARAB EMIRATES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2014 (continued)
4. SIGNIFICANT ACCOUNTING POLICIES: (continued...)
4.3 Investment in associates:
Associates are those entities in which the Company has significant influence, but not
control, over the financial and operating policies. Significant influence is presumed to exist
when the Company holds between 20 and 50 percent of the voting power of another entity.
Investments in associates are accounted for using the equity method and are recognized
initially at cost. The cost of the investment includes transaction cost. The Company’s
investment includes goodwill identified on acquisition, net of any accumulated impairment
losses. The financial statements include the Company’s share of the profit or loss and other
comprehensive income of equity accounted investees, after adjustments to align the
accounting policies with those of the Company, from the date that significant influence
commences until the date that significant influence ceases.
When the Company’s share of losses exceeds its interest in an equity accounted investee,
the carrying amount of that interest, including any long-term interests that form part
thereof, is reduced to nil, and the recognition of further losses is discontinued except to the
extent that the Company has an obligation or has made payments on behalf of the investee.
4.4 Financial instruments:
Non-derivative financial assets
The Company initially recognises financial assets on the trade date at which the Company
becomes a party to the contractual provisions of the instrument.
Financial assets are initially measured at fair value. If the financial asset is not
subsequently measured at fair value through profit or loss, then the initial measurement
includes transaction costs that are directly attributable to the asset’s acquisition or
origination. The Company subsequently measures financial assets at either at amortised
cost or fair value.
The Company derecognises a financial asset when the contractual rights to the cash flows
from the asset expire, or it transfers the rights to receive the contractual cash flows in a
transaction in which substantially all risks and rewards of ownership of the financial asset
are transferred. Any interest in such transferred financial assets that is created or retained
by the Company is recognized as a separate asset or liability.
Financial assets and liabilities are offset and the net amount is presented in the statement of
financial position when, and only when, the Company has a legal right to offset the
amounts and intends either to settle them on a net basis or to realize the asset and settle the
liability simultaneously.
-11-
RAS AL KHAIMAH CEMENT COMPANY – P.S.C.
RAS AL KHAIMAH
UNITED ARAB EMIRATES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2014 (continued)
4. SIGNIFICANT ACCOUNTING POLICIES: (continued...)
4.4 Financial instruments: (continued...)
Non-derivative financial assets: (continued…)
On initial recognition, the Company classifies its financial assets as subsequently
measured at either amortised cost or fair value, depending on its business model for
managing the financial assets and the contractual cash flow characteristics of the financial
assets. In accordance with the transitional provisions of IFRS 9, the classification of
financial assets that the Company held at the date of initial application was based on the
facts and circumstances of the business model in which the financial assets were held at
that date.
Financial assets measured at amortised cost
A Financial asset is subsequently measured at amortised cost using the effective interest
method and net of any impairment loss, if:
• The asset is held within business model with an objective to hold assets in order to
collect contractual cash flows; and
• The contractual terms of the financial asset give rise, on specified dates, to cash flows
that are solely payments of principal and interests.
The Company’s policy on impairment is the same as applied in its financial statements for
the reporting period ended on December 31, 2013 for loans and receivables.
Financial assets measured at fair value
Financial assets other than those classified as financial assets measured at amortised cost
are subsequently measured at fair value with all changes in fair value recognized in profit
or loss.
However, for investments in equity instruments that are not held-for-trading, the Company
may elect at initial recognition to present gains and losses in other comprehensive income.
For instruments measured at fair value through other comprehensive income, gains and
losses are never reclassified to profit or loss and no impairments are recognized in profit or
loss. Dividends earned from such investments are recognized in profit or loss unless the
dividends clearly represent a repayment of part of the cost of the investment.
-12-
RAS AL KHAIMAH CEMENT COMPANY – P.S.C.
RAS AL KHAIMAH
UNITED ARAB EMIRATES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2014 (continued)
4. SIGNIFICANT ACCOUNTING POLICIES: (continued...)
4.4 Financial instruments: (continued...)
Non-derivative financial liabilities
The Company initially recognizes debt securities issued and subordinated liabilities on the
date that they are originated. All other financial liabilities are recognized initially on the
trade date, which is the date that the Company becomes a party to the contractual provisions
of the instrument.
The Company derecognizes a financial liability when its contractual obligations are
discharged, cancelled or expire.
The Company classifies all other non-derivative financial liabilities into the amortised cost
measurement category. Such financial liabilities are recognized initially at fair value less
any directly attributable transaction costs. Subsequent to initial recognition, these financial
liabilities are measured at amortised cost using the effective interest method,
Other financial liabilities comprise trade and other payable and bank overdraft.
4.5 Impairment:
Non-derivative financial assets
A financial asset not carried at fair value through profit or loss is assessed at each reporting
date to determine whether there is objective evidence that it is impaired. A financial asset is
impaired if objective evidence indicates that a loss event had occurred after the initial
recognition of the asset, and that the loss event had a negative effect on the estimated future
cash flows of that asset can be estimated reliably.
Objective evidence that financial assets (including equity securities) are impaired can
include default or delinquency by a debtor, restructuring of an amount due to the Company
on terms that the Company would not consider otherwise, indications that a debtor or issuer
will enter bankruptcy, adverse changes in the payment status of borrowers or issuers in the
Company, economic conditions that correlate with defaults or the disappearance of an active
market for a security. In addition, for an investment in an equity security, a significant or
prolonged decline in its fair value below its cost is objective evidence of impairment.
Financial assets measured at amortised cost
The Company considers evidence of impairment for financial assets measured at amortised
cost (loans and receivables) at both a specific asset and collective level. All individually
significant receivables are assessed for specific impairment. All individually significant
assets not found to be specifically impaired are then collectively assessed for any
impairment that has been incurred but not yet identified. Assets that are not individually
significant are collectively assessed for impairment by grouping together with similar risk
characteristics.
-13-
RAS AL KHAIMAH CEMENT COMPANY – P.S.C.
RAS AL KHAIMAH
UNITED ARAB EMIRATES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2014 (continued)
4. SIGNIFICANT ACCOUNTING POLICIES: (continued...)
4.5 Impairment: (continued…)
In assessing collective impairment, the Company uses historical trends for the probability of
default, timing of recoveries and the amount of loss incurred, adjusted for management’s
judgment as to whether current economic and credit conditions are such that the actual
losses are likely to be great or less as suggested by historical trends.
An impairment loss in respect of financial asset measured at amortised cost is calculated as
the difference between its carrying amount and the present value of the estimated future
cash flows discounted at the original effective interest rate. Losses are recognized in profit
or loss and reflected in an allowance account against receivables. When a subsequent event
causes the amount of impairment loss to decrease, the decrease in impairment loss is
reversed through profit or loss.
Non-financial assets
The carrying amount of the Company's non-financial assets, other than inventories, are
reviewed at each reporting date to determine whether there is any indication of impairment.
If any such indication exists, then the asset's recoverable amount is estimated. An
impairment loss is recognized if the carrying amount of an asset or its related cash
generating unit ("CGU") exceeds its estimated recoverable amount.
The recoverable amount of an asset or CGU is the greater of its value in use and its fair
value less costs to sell. In assessing value in use, the estimated future cash flows are
discounted to their present value using a discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset or CGU. For the
purpose of impairment testing, assets that cannot be tested individually are grouped together
into the smallest group of assets that generates cash inflows from continuing use that are
largely independent of the cash inflows of other assets or CGU.
Impairment losses are recognized in profit or loss. An impairment loss is reversed only to
the extent that the assets carrying amount does not exceed the carrying amount that would
have been determined, net of depreciation or amortization, if no impairment loss had been
recognized.
-14-
RAS AL KHAIMAH CEMENT COMPANY – P.S.C.
RAS AL KHAIMAH
UNITED ARAB EMIRATES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2014 (continued)
4. SIGNIFICANT ACCOUNTING POLICIES: (continued...)
4.6
Inventories:
Inventories are measured at the lower of cost and net realisable value. Net realizable value
is the estimated selling price in the ordinary course of business, less the estimated costs of
completion and selling expenses. Cost for each category of inventories is determined as
follows:
(i) Raw materials and consumable stores and spare parts
The cost of raw material and consumable stores and spare parts is determined on
weighted average cost basis and includes insurance, freight and other incidental
charges incurred in bringing the inventories to the present location and condition.
(ii) Finished products and semi finished products
The cost of finished products and semi finished products comprises of cost of raw
materials, labour charges and appropriate portion of production overheads based on
normal operating capacity.
4.7 Related party transactions:
The Company, in its normal course of business, conducts transactions with other enterprises
or individuals being considered related party as defined by International Financial Reporting
Standards. These transactions are comprised of selling and purchasing cement and clinker
and rendering or receiving services.
The transactions with related parties are normally consummated at similar prices quoted
to/from third parties.
4.8 Trade and other receivables:
Trade and other receivables are measured at net realizable value. An appropriate allowance
for doubtful accounts is provided when an objective evidence indicate that the receivables
are impaired. Changes required in the carrying amount of the allowance account are
recognized in the statement of income.
4.9 Cash and cash equivalents:
Cash represents cash on hand plus balances of bank checking accounts less bank overdraft
balances that fluctuate from debit to credit during the year (if any). Cash equivalents
represent the entire highly liquid investments which are readily convertible into known
amounts of cash and which are exposed to an insignificant risk of changes in value. Cash
equivalents include call deposits and term deposits with original maturity of three months or
less from the date of placement.
-15-
RAS AL KHAIMAH CEMENT COMPANY – P.S.C.
RAS AL KHAIMAH
UNITED ARAB EMIRATES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2014 (continued)
4. SIGNIFICANT ACCOUNTING POLICIES: (continued...)
4.10 Share capital:
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue
of ordinary shares are recognized as a deduction from equity.
4.11 Staff terminal benefits:
For employees eligible for the UAE National Pension Plan, the Company recognizes
employer's contributions on an accrual basis determined in accordance with the National
Pension and Social Security Law.
For all other employees, the provision for staff terminal benefits is calculated in accordance
with the provisions of the UAE Labour Law and is based on the liability that would arise if
the employment of all staff were to be terminated at the reporting date.
4.12 Employees' short-term benefits:
Employees' short-term benefits obligation consists of the provision for leave salaries and
air passage tickets. Provision for leave is accounted for on the basis of one month of basic
salary plus house allowance for every completed year of service. The provision for air
passage tickets is provided for as per the terms and conditions of the underlying
employment contracts for which the computation is effected based on current market prices
of air tickets as of the financial statements date.
4.13 Trade accounts payable:
Trade accounts payable are measured at the supplier invoice amount.
4.14 Provisions:
A provision is recognized if, as a result of a past event, the Company has a present legal or
constructive obligation that can be estimated reliably, and it is probable that an outflow of
economic benefits will be required to settle the obligation. Provisions are determined by
discounting the expected future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and the risks specific to the liability. The
unwinding of the discount is recognized as finance cost.
4.15 Revenue:
Revenue from the sale of goods in the course of ordinary activities is measured at the fair
value of the consideration received or receivable, net of return, trade discounts and volume
rebates. Revenue is recognized when significant risks and rewards of ownership have been
transferred to the customer, recovery of the consideration is probable, the associated costs
and possible return of goods can be estimated reliably, there is no continuing management
involvement with the goods, and the amount of revenue can be measured reliably, then the
discount is recognized as a reduction of revenue as the sales are recognized.
-16-
RAS AL KHAIMAH CEMENT COMPANY – P.S.C.
RAS AL KHAIMAH
UNITED ARAB EMIRATES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2014 (continued)
4. SIGNIFICANT ACCOUNTING POLICIES: (continued...)
4.16 Finance income and expenses:
Finance income comprises interest on short-term deposits with banks. Interest income is
recognized in profit or loss as it accrues, using the effective interest method.
Finance expenses mainly comprise interest paid to banks and bank charges, and are
recognized in profit or loss as it accrues, using the effective interest method. All borrowing
costs are recognized in profit or loss except for those costs that are directly attributable to
the acquisition, construction or production of qualifying assets that are capitalized as part of
the cost of that asset when it is probable that they will result in future economic benefits to
the Company and the costs can be measured reliably. The capitalization of borrowing costs
commences from the date of incurring the expenditure relating to the qualifying asset and
ceases when all the activities necessary to prepare the qualifying asset for its intended use or
sale are complete. Borrowing costs relating to the period after acquisition, construction or
production are immediately recognized as expense.
4.17 Dividend income:
Dividend income is recognized in the profit or loss when the right to receive dividend is
established.
4.18 Foreign currency transactions:
Transactions in foreign currencies are translated to the respective functional currencies of
Company at exchange rates at the dates of the transactions. Monetary assets and liabilities
denominated in foreign currencies at the reporting date are retranslated to the functional
currency at the exchange rate at that date. The foreign currency gain or loss on monetary
items is the difference between amortised cost in the functional currency at the beginning of
the year, adjusted for effective interest and payments during the year and the amortised cost
in foreign currency translated at the exchange rate at the end of the year.
Non-monetary assets and liabilities that are measured at fair value in a foreign currency are
retranslated to the functional currency at the exchange rate at the date that the fair value was
determined. Non-monetary items that are measured based on historical cost in a foreign
currency are translated using the exchange rate at the date of the transaction.
Foreign currency differences arising on retranslation are generally recognized in profit or
loss.
-17-
RAS AL KHAIMAH CEMENT COMPANY – P.S.C.
RAS AL KHAIMAH
UNITED ARAB EMIRATES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2014 (continued)
4. SIGNIFICANT ACCOUNTING POLICIES: (continued...)
4.19 Earnings per share:
The Company presents basic and diluted earnings per share data for its ordinary shares.
Basic earnings per share is calculated by dividing the profit or loss attributable to ordinary
shareholders of the Company by the weighted average number of ordinary shares
outstanding during the year, adjusted for own shares held (if any). Diluted earnings per
share is determined by adjusting the profit or loss attributable to ordinary shareholders and
the weighted average number of ordinary shares outstanding, adjusted for own shares held
(if any), for the effects of all dilutive potential ordinary shares.
4.20 Segment information:
A business segment is a group of assets and operations engaged in providing products or
services that are subject to risks and returns that are different from those of other business
segments. A geographical segment is engaged in providing products or services within a
particular economic environment that are subject to risks and return that are different from
those of segments operating in other economic environment. The Company has disclosed its
segment information in Note 16 and 24.
-18-
RAS AL KHAIMAH CEMENT COMPANY – P.S.C.
RAS AL KHAIMAH
UNITED ARAB EMIRATES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2014 (continued)
5.
PROPERTY, PLANT AND EQUIPMENT:
a) Property, plant and equipment have been stated at cost less accumulated depreciation up to the financial statements’ date as follows:
Cost:
At January 1, 2014
Additions
Disposals
Factory
buildings
AED
24,117,628
60,000
--
Plant &
equipments
AED
739,076,948
2,181,124
--
Motor
vehicle &
mobile
equipment
AED
4,665,289
666,120
(83,000)
At December 31, 2014
24,177,628
741,258,072
5,248,409
3,465,047
806,190
21,000,682
Accumulated Depreciation:
At January 1, 2014
Additions
Disposals
11,397,689
779,470
--
315,228,533
26,988,227
--
2,412,208
707,930
(83,000)
3,259,665
42,460
--
806,190
---
4,018,493
688,109
--
----
----
337,122,778
29,206,196
(83,000)
At December 31, 2014
12,177,159
342,216,760
3,037,138
3,302,125
806,190
4,706,602
--
--
366,245,974
Carrying Amount:
At December 31, 2013 – Exhibit A
12,719,939
423,848,415
2,253,081
113,452
--
16,982,189
--
At December 31, 2014 – Exhibit A
12,000,469
399,041,312
2,211,271
162,922
--
16,294,080
Office
furniture &
equipments
AED
3,373,117
91,930
--
Land
improvements
AED
806,190
---
-19-
Capital
spare parts
AED
21,000,682
---
Computer
software
ERP work
in progress
AED
-2,196,761
--
Capital
work-inprogress
AED
239,562
116,403
--
Total
AED
793,279,416
5,312,338
(83,000)
2,196,761
355,965
798,508,754
2,196,761
239,562
456,156,638
355,965
432,262,780
RAS AL KHAIMAH CEMENT COMPANY – P.S.C.
RAS AL KHAIMAH
UNITED ARAB EMIRATES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2014 (continued)
________
_____________________________________________________________________
5. PROPERTY, PLANT AND EQUIPMENT: (Continued)
b) The Company's plant and factory building is constructed on the land granted by the
Government of Ras Al Khaimah.
c) Depreciation is allocated as follows:
2014
AED
28,670,031
536,165
29,206,196
Costs of revenue – Note 17
Administrative expenses – Note 20
Total – 5 (a) above
2013
AED
28,555,919
528,688
29,084,607
6. INVESTMENT IN AN ASSOCIATE:
a)
Investment in an associate represents 20% investment in the capital of Reem Readymix LLC,
an entity registered in Abu Dhabi, UAE. The total number of shares acquired is 6,000 shares
of AED 1,000/- each. Investment in an associate is accounted for using the equity method.
The details are as follows:
2013
2014
AED
AED
Balance at January 1 – Note 6 (b)
52,647,638
53,320,274
Share in profit of an associate – Exhibit B
672,636
1,501,747
Dividend received
-(100,000)
53,320,274
Total – Exhibit A
54,722,021
b) Balance at January 1, 2014 comprises cost of acquisition of shares amounting to AED
40,000,000 including goodwill on acquisition of shares amounting to AED 34,000,000.
c)
Summary financial information of Reem Readymix LLC as at December 31 (100%)
is follows:
Assets
AED
Liabilities
AED
Equity
AED
Revenue
AED
Profit/(loss)
AED
December 31, 2014
– Exhibit A
198,196,745
85,556,558
112,640,187
167,147,038
7,508,741
December 31, 2013
– Exhibit A
213,136,403
108,704,957
104,431,446
142,079,544
3,363,174
-20-
RAS AL KHAIMAH CEMENT COMPANY – P.S.C.
RAS AL KHAIMAH
UNITED ARAB EMIRATES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2014 (continued)
_____________________________________________________________________________
7. INVESTMENT AT FAIR VALUE THROUGH OTHER COMPREHENSIVE
INCOME:
a) The movements over these investments are as follows:
2013
2014
AED
AED
Balance at January 1
21,622,675
13,638,258
Investment made during the year
-94,277,665
Investment sold during the year
-(40,548,609)
Change in fair value – Exhibit C
(7,984,417)
(11,192,898)
13,638,258
Net – Exhibit A
56,174,416
b) The above investments are classified as follows:
2013
2014
AED
AED
Unquoted investments – Note 7 (e)
13,569,893
9,697,576
Quoted investments – Note 7 (f)
68,365
46,476,840
13,638,258
Total – Note 7 (a) above
56,174,416
c) Investments at fair value through other comprehensive income are classified into the
following business segments:
2013
2014
AED
AED
Investment in banking companies
-36,176,244
Investment in financing companies
9,697,576
9,697,576
Investment in petroleum company
3,940,682
4,039,400
Investment in gas company
-6,261,196
13,638,258
Total – Note 7 (a) above
56,174,416
d) The entire investments at fair value through other comprehensive income amounting to
AED 56,174,416 as shown above have been invested in the local companies of United
Arab Emirates.
e) Unquoted investments at fair value through other comprehensive income amounting to
AED 9,697,576 as shown in Note 7 (b) are carried at cost less impairment loss.
f) Quoted investments amounting to AED 46,476,840 comprise investments listed in
local stock markets in UAE of AED 42,437,440 and investment in a petroleum
company amounting to AED 4,039,400 which is listed on the Oslo Børs in Norway.
8.
INVENTORIES:
a) The details of this item are as follows:
Cement and raw materials – Note 8 (b)
Spare parts and consumables – Note 8 (c)
Total – Exhibit A
-21-
2014
AED
23,901,295
33,923,479
57,824,774
2013
AED
26,337,334
35,183,406
61,520,740
RAS AL KHAIMAH CEMENT COMPANY – P.S.C.
RAS AL KHAIMAH
UNITED ARAB EMIRATES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2014 (continued)
8. INVENTORIES: (continued….)
b) Cement and raw materials:
This item consists of the following:
Finished cement
Semi-finished cement
Raw materials
Total – Note 8 (a) above
2014
AED
5,249,746
14,111,491
4,540,058
23,901,295
2013
AED
4,771,913
18,526,425
3,038,996
26,337,334
2014
AED
32,349,034
3,120,717
35,469,751
(1,546,272)
33,923,479
2013
AED
33,360,170
3,129,508
36,489,678
(1,306,272)
35,183,406
c) Spare parts and consumables:
This item consists of the following:
Spare parts
Consumables
Total
Provision for obsolete and slow moving inventories
Net – Note 8 (a) above
9.
DUE FROM AN ASSOCIATE:
Due from an associate amounting to AED 24,449,856 (AED 37,292,945 for the year 2013)
as shown in Exhibit A represents amount due from Reem Readymix LLC as of the
financial statements’ date.
The movements over this account are as follows:
2014
AED
37,292,945
20,104,340
(32,947,429)
24,449,856
Balance at January 1
Sales
Payments received
Net – Exhibit A
2013
AED
33,381,897
18,435,340
(14,524,292)
37,292,945
10. TRADE AND OTHER RECEIVABLES:
a) This item consists of the following:
Trade accounts receivable – Note 10 (b)
Advances to suppliers
Other receivables – Note 10 (c)
Total – Exhibit A
-22-
2014
AED
41,143,437
955,609
2,981,280
45,080,326
2013
AED
32,459,188
19,203
658,357
33,136,748
RAS AL KHAIMAH CEMENT COMPANY – P.S.C.
RAS AL KHAIMAH
UNITED ARAB EMIRATES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2014 (continued)
10. TRADE AND OTHER RECEIVABLES: (continued…)
b) Concentration of credit:
The Company’s customer base is dispersed across a relatively small number of resellers
and distributors. As of December 31, 2014, the total accounts receivable balance include
an amount of AED 27,907,141 being due from seven customers only, which constitutes
68% of the total balance of accounts receivable. However, these receivables are partially
covered by collaterals in the form of bank guarantees received from the customers
amounting to AED 16,630,206 as of the financial statements’ date.
c) Other receivables:
This item consists of the following:
2014
AED
609,932
17,014
2,354,334
2,981,280
Prepaid expenses
Accrued interest
Others
Total – Note 10 (a) above
2013
AED
591,974
21,778
44,605
658,357
11. CASH AND BANKS:
a) This item consists of the following:
2014
AED
Cash on hand
48,145
Petty cash account
37,500
Current account with bank
39,602
Dividend payment deposit account
44,639
Fixed deposits with maturity of three months or less 25,000,000
Cash and cash equivalents – Exhibit E
25,169,886
Fixed deposits with maturity exceeding three months 15,000,000
Cash and banks – Exhibit A
40,169,886
2013
AED
14,640
37,500
561,389
907,661
80,000,000
81,521,190
-81,521,190
b) Fixed deposits amounting to AED 40,000,000 are placed with local banks in UAE and
carry interest at normal commercial rates.
-23-
RAS AL KHAIMAH CEMENT COMPANY – P.S.C.
RAS AL KHAIMAH
UNITED ARAB EMIRATES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2014 (continued)
12. SHARE CAPITAL AND RESERVES:
a) Share capital:
The details of this item are as follows:
2014
AED
Issued and fully paid up:
559,020,000 ordinary shares as of December 31,
2014 (508,200,000 ordinary shares as of December
31, 2013) at par value of AED 1 each.
559,020,000
2013
AED
508,200,000
In its meeting held on March 13, 2014, the shareholders’ general assembly approved
the increase of the Company’s capital by 50,820,000 shares (from 508,200,000 to
559,020,000 shares) through the issuance of bonus shares at 10% capital. Further, the
above general assembly approved 5% cash dividend to the shareholders for the year
ended December 31, 2013.
b) Reserves:
i) Statutory reserve
In accordance with the Company’s Articles of Association and UAE Commercial
Companies Law No.8 of 1984 (as amended), a minimum of 10% of the profit for the
year is to be allocated annually to a non-distributable statutory reserve account and such
appropriation shall be suspended when the reserve balance reaches an amount equal to
50% of the Company’s paid-up capital. Such appropriation will be resumed whenever
the reserve balance becomes less than 50% of the Company’s paid-up capital.
ii) Voluntary reserve
Another 10% of the profit for the year is to be transferred for the creation of an voluntary
reserve account. This appropriation will be suspended by a resolution from the ordinary
general assembly meeting based on a proposal put forward by the Board of Directors, or
if such reserve amounts to 20% of Company’s paid-up capital. This reserve can be
utilized by the Company for the objects as determined by the ordinary general assembly
meeting on proposals submitted by the Board of Directors.
-24-
RAS AL KHAIMAH CEMENT COMPANY – P.S.C.
RAS AL KHAIMAH
UNITED ARAB EMIRATES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2014 (continued)
12. SHARE CAPITAL AND RESERVES: (continued…)
b) Reserves: (continued…)
iii) Movements over reserves during the year are as follows:
Description
Balance at December 31, 2012
Additions during 2013
Balance at December 31, 2013 – Exhibit A
Additions during 2014
Balance at December 31, 2014 – Exhibit A
Statutory
reserve
AED
63,117,004
Voluntary
reserve
AED
62,150,438
Total
AED
125,267,442
787,701
787,701
1,575,402
63,904,705
62,938,139
126,842,844
1,417,528
1,417,528
2,835,056
65,322,233
64,355,667
129,677,900
c) Proposed Dividends:
Board of directors proposed to the General Assembly Meeting:
-
To approve 5% cash dividend to shareholders for the year 2014 (5% cash dividend for
2013) to be distributed from profit for the year in addition to part of voluntary reserve.
-
To approve NIL bonus shares to shareholders for the year 2014 (10% bonus shares for
2013).
13. END OF SERVICE BENEFITS OBLIGATION:
Movements over this account during the year are as follows:
2014
AED
3,152,613
584,705
(653,667)
3,083,651
Balance at January 1
Provision made during the year
Payments made during the year
Balance at December 31 – Exhibit A
-25-
2013
AED
2,837,316
618,119
(302,822)
3,152,613
RAS AL KHAIMAH CEMENT COMPANY – P.S.C.
RAS AL KHAIMAH
UNITED ARAB EMIRATES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2014 (continued)
14. TRADE AND OTHER PAYABLES:
a) The details of this item are as follows:
2014
AED
14,363,859
12,521,824
26,885,683
Trade accounts payable – Note 14 (b)
Other payables – Note 14 (c)
Total – Exhibit A
2013
AED
17,703,523
11,458,475
29,161,998
b) Trade accounts payable:
Trade accounts payable as shown above include an amount of AED 6,052,604 being due to
three suppliers only, which constitutes 53% of the total balance of trade accounts payable.
c) Other payables:
This item consists of the following:
Accrued electricity and water
Accrued expenses – others
Advances from customers
Unclaimed dividend
Interest received in advance
Provision for short-term employees benefits – Note 4.12
Provision for staff bonus
Provision for executive compensation
Others
Total – Note 14 (a) above
2014
AED
4,117,300
1,139,553
55,358
4,363,521
-1,525,923
666,892
-653,277
12,521,824
2013
AED
2,825,700
581,946
1,303,052
3,813,449
452,669
1,121,516
554,047
300,000
506,096
11,458,475
2014
AED
3,470,002
2013
AED
9,031,599
15. SHORT TERM BORROWINGS FROM BANK:
This item consists of the following:
Bank Overdraft – Exhibit A
The overdraft facility is unsecured, and carries interest at normal commercial rates.
-26-
RAS AL KHAIMAH CEMENT COMPANY – P.S.C.
RAS AL KHAIMAH
UNITED ARAB EMIRATES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2014 (continued)
16. REVENUE:
The geographical-wise allocation of revenue is as follows:
UAE Market
Foreign Market
Total – Exhibit B
2014
AED
180,969,209
50,995,150
231,964,359
2013
AED
163,868,368
56,050,200
219,918,568
2014
AED
102,195,618
34,224,673
6,777,133
13,999,246
28,670,031
8,372,281
9,338,824
203,577,806
2013
AED
101,849,849
33,400,747
4,872,984
11,530,824
28,555,919
9,755,156
8,739,067
198,704,546
2014
AED
5,070
44,000
1,765,165
374
1,814,609
2013
AED
421,232
(115,311)
3,195
36,340
345,456
2014
AED
1,288,176
31,110
1,319,286
2013
AED
1,301,195
8,320
1,309,515
17. COSTS OF REVENUE:
This item consists of the following:
Energy cost
Direct materials used
Paper bags consumption
Direct labour
Depreciation
Repairs and maintenance
Other manufacturing overhead
Total – Exhibit B
18. OTHER INCOME:
This item consists of the following:
Profit from sale of scrap
Gain/(loss) on disposal of property, plant & equipment
Dividend income
Miscellaneous income
Total – Exhibit B
19. MARKETING EXPENSES:
This item consists of the following:
Salaries and related benefits
Advertising and others
Total – Exhibit B
-27-
RAS AL KHAIMAH CEMENT COMPANY – P.S.C.
RAS AL KHAIMAH
UNITED ARAB EMIRATES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2014 (continued)
20. ADMINISTRATIVE EXPENSES:
This item consists of the following:
2014
AED
7,964,170
3,217,776
1,200,000
300,000
536,165
547,284
118,755
463,074
1,941,793
16,289,017
Salaries and related benefits
Environment and development cost
Board meetings attendance fees
Executive compensation charges
Depreciation
Legal and professional expenses
Travelling expense
Donations
Other administrative costs
Total – Exhibit B
2013
AED
6,229,524
3,303,956
600,000
300,000
528,688
472,667
730,243
376,131
1,232,851
13,774,060
21. FINANCE INCOME AND COST:
This item consists of the following:
2014
AED
Finance income
Interest on fixed deposits with banks – Exhibit B
Finance cost
Interest on bank overdraft
Bank charges
Total – Exhibit B
2013
AED
496,673
1,131,096
(297,178)
(118,820)
(415,998)
(297,218)
(105,409)
(402,627)
22. BASIC EARNINGS PER SHARE:
This item consists of the following:
Profit for the year – Exhibit B
Weighted average number of
outstanding shares – Note 12 (a)
Basic earnings per share - Exhibit B
2014
AED
14,175,281
2013
AED
7,877,008
Ordinary share
Ordinary share
559,020,000
559,020,000
0.025
0.014
The calculation of basic earnings per share is based on earnings for the year attributable
to shareholders and the number of shares outstanding at December 31. Basic earnings per
share for the comparative year was restated to consider the effect of the 50,820,000 bonus
shares issued during the current year.
-28-
RAS AL KHAIMAH CEMENT COMPANY – P.S.C.
RAS AL KHAIMAH
UNITED ARAB EMIRATES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2014 (continued)
23. RELATED PARTY TRANSACTIONS:
The transactions during the year and the net balance due to/from related parties were as
follows:
2013
2014
AED
AED
Sales
18,435,340
20,104,340
Receipts
14,524,292
32,947,429
Debit balances
37,292,945
24,449,856
The remuneration of members of key management during the year was as follows:
2014
AED
2,469,427
1,200,000
300,000
Short-term benefits
Board meetings attendance fee
Executive compensation charges
2013
AED
2,285,977
600,000
300,000
24. SEGMENT INFORMATION
a) Primary segment information:
For management information purpose, the Company is organised into two major
operating segments, manufacturing of cement and related products and investments.
Investment comprises investment and cash management for the Company’s own
account. These segments are the basis on which the Company reports its primary
segments information. Transactions between segments are conducted at estimated
market rates on an arm’s length basis. Segmental information is summarised below:
-29-
RAS AL KHAIMAH CEMENT COMPANY – P.S.C.
RAS AL KHAIMAH
UNITED ARAB EMIRATES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2014 (continued)
24. SEGMENT INFORMATION: (continued….)
a) Primary segment information: (continued…)
Results of manufacturing segment
Revenue
Cost of revenue
Other income
Administrative and other expenses
Net segment results
Results of investment segment
Total investment income
Net change in fair value of investments at fair
value through other comprehensive income
Profit on sale of investments
Net segment results
Total comprehensive income/(loss) for the year
2014
AED
2013
AED
231,964,359
(203,577,806)
28,386,553
219,918,568
(198,704,546)
21,214,022
2,311,282
(18,024,301)
1,591,863
(15,601,513)
12,673,534
7,204,372
1,501,747
672,636
(11,192,898)
4,431,757
(7,984,417)
--
(5,259,394)
(7,311,781)
7,414,140
(107,409)
b) Other information
December 31, 2014
Segment assets
Manufacturing
2014
AED
599,787,622
Investment
2014
AED
110,896,437
Total
2014
AED
710,684,059
Segment liabilities
33,439,336
--
33,439,336
Depreciation & impairment
29,206,196
--
29,206,196
5,312,338
--
5,312,338
Capital expenditure
December 31, 2013
Segment assets
Segment liabilities
Depreciation & impairment
Capital expenditure
Manufacturing
2013
AED
669,628,261
41,346,210
29,084,607
1,176,970
-30-
Investment
2013
AED
66,958,532
-
Total
2013
AED
736,586,793
41,346,210
29,084,607
1,176,970
RAS AL KHAIMAH CEMENT COMPANY – P.S.C.
RAS AL KHAIMAH
UNITED ARAB EMIRATES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2014 (continued)
25. FINANCIAL RISK MANAGEMENT:
Overview
The Company has exposure to the following risks from financial instruments:
•
•
•
Credit risk
Liquidity risk
Market risk
This notes presents information about the Company's exposure to each of the above risks,
the Company's objectives, policies and processes for measuring and managing risk, and the
Company's management of capital.
The management has overall responsibility for the establishment and oversight of the
Company's risk management framework and is responsible for developing and monitoring
the Company approach to risk management. The Company's senior management reports to
Board of Directors on its activities.
Credit risk
Credit risk is the risk of financial loss to the Company, if a customer or counterpart to a
financial instrument fails to meet its contractual obligations and arises principally from
trade receivables, amount due from a related party, investments at fair value through other
comprehensive income and cash at banks (including deposits with banks).
Trade receivables
The Company has established a credit policy under which new customers are analyzed
individually for creditworthiness before the Company's standard payment and delivery
terms and conditions are offered. Credit limits are established for customers, which
represent the maximum open amount without requiring further approval from the
management, these limits are reviewed periodically majority of the Company's customers
have been transacting with the Company for a number of years. The Company mainly sells
to its customers against financial guarantees, letters of credit and post-dated cheques.
The Company’s customers’ base is dispersed across a relatively small number of resellers
and distributors. The Company does not have any significant credit risk exposure to any
single counterparty or any Company of counterparties having similar characteristics.
Concentration of credit risk with respect to trade accounts receivable is discussed in
foregoing Note 10 (b). Trade accounts receivable are reviewed on an ongoing basis and
provision made for doubtful debts as and when required.
The Company establishes an allowance for impairment that represents its estimate of
incurred losses in respect of trade and retention receivables. The main component of this
allowance is a specific loss component that relates to individually significant exposures,
and a collective loss component established for group of similar assets in respect of losses
that have been incurred but not yet identified. The collective loss allowance is determined
based on historical date of payment statistics for similar financial assets.
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RAS AL KHAIMAH CEMENT COMPANY – P.S.C.
RAS AL KHAIMAH
UNITED ARAB EMIRATES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2014 (continued)
25. FINANCIAL RISK MANAGEMENT: (continued...)
Due from a related party
Amount due from a related party is considered to be fully recoverable by management.
Cash at bank
The Company's cash is placed with banks of repute. At December 31, 2014, fixed deposit
amounting to AED 40,000,000 was placed with one bank only. Management is confident that
this concentration at year end does not result in any credit risk to the Company as the said bank
are one of the major banks operating in UAE.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates
and equity prices will affect the Company's income or the value of its holdings of financial
instruments. The objective of market risk management is to manage and control market risk
exposure within acceptable parameters, while optimizing the return on risk.
Currency risk
Currency risk is the risk that the value of a financial instrument will fluctuate because of changes
in foreign exchange rates. The Company is not exposed to currency risk as the majority of its
transactions are undertaken in AED or in currencies to which AED is currently pegged at a fixed
rate.
Interest rate risk
The interest rate risk on the Company's financial assets includes fixed deposits with banks and
financial liabilities include bank overdraft. The interest rate in the Company's financial
instruments is based on market rates. During the year, the interest rate of fixed deposits and call
deposits was 1% to 1.25% per annum and interest rate on bank overdraft charged by the bank on
an effective market interest rate of EIBOR minus 1.5% per annum subject to a minimum of 7.5%
per annum.
Other market price risk
Equity prices risk arises from investments in equity securities amounting to AED 56,174,416. In
accordance with the Company's strategy, investments are designated at fair value through other
comprehensive income. Investments within the portfolio are managed on an individual basis and
buy and sell decisions are approved by the Company's management.
Capital management
The Board's policy is to maintain a strong capital base to sustain future development of the
business and maintain investor and market confidence. Capital consists of total equity. The
senior management of the Company monitors the return on capital through operating cash flow
management and also monitors the level of dividends to ordinary shareholders.
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations
associated with its financial liabilities that are settled by delivering cash or another financial
asset. Liquidity risk mainly relates to trade and other payables and bank overdraft. The
Company's approach to managing liquidity is to ensure, as far as possible, that it will always
have sufficient liquidity to meet its liabilities when due, under both normal and stressed
conditions, without incurring unacceptable losses or risking damage to the Company's reputation.
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RAS AL KHAIMAH CEMENT COMPANY – P.S.C.
RAS AL KHAIMAH
UNITED ARAB EMIRATES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2014 (continued)
25. FINANCIAL RISK MANAGEMENT: (continued…)
Liquidity risk: (continued...)
As at December 31, 2014
Financial assets:
Bank balances and cash
Trade and other receivables
Due from an associate
Investment at fair value through
other comprehensive income
Total
Financial liabilities:
Trade and other payables
Employees’ indemnity
Short-term borrowings from bank
Total
As at December 31, 2013
Financial assets:
Bank balances and cash
Trade and other receivables
Due from an associate
Investment at fair value through
other comprehensive income
Total
Financial liabilities:
Trade and other payables
Employees’ indemnity
Short-term borrowings from bank
Total
1-90
days
AED
40,169,886
41,160,451
24,449,856
91-180
days
AED
----
181-365
days
AED
----
More than
one year
AED
----
Total
AED
40,169,886
41,160,451
24,449,856
-__________
105,780,193
=========
-_________
-========
-________
-=======
56,174,416
_________
56,174,416
========
56,174,416
__________
161,954,609
=========
26,830,325
-3,470,002
___________
30,300,327
==========
---_________
-========
---_______
-=======
-3,083,651
-_________
3,083,651
=======
26,830,325
3,083,651
3,470,002
__________
33,383,978
=========
181-365
days
AED
----
More than
one year
AED
----
Total
AED
81,521,190
32,480,966
37,292,945
1-90
days
AED
81,521,190
32,480,966
37,292,945
91-180
days
AED
----
-__________
151,295,101
==========
-_________
-========
-________
-=======
13,638,258
_________
13,638,258
========
13,638,258
__________
164,933,359
=========
27,858,946
-9,031,599
___________
36,890,545
=========
---_________
-========
---_______
-=======
-3,152,613
-_________
3,152,613
=======
27,858,946
3,152,613
9,031,599
__________
40,043,158
=========
-33-
RAS AL KHAIMAH CEMENT COMPANY – P.S.C.
RAS AL KHAIMAH
UNITED ARAB EMIRATES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2014 (continued)
26. COMMITMENTS AND CONTINGENCIES:
In the ordinary course of business, the Company enters into transactions which involve
financial instruments with off-balance sheet risk. These instruments include commitments
to extend credit, standby letters of credit, bank guarantees and capital commitment, and
involve to varying degrees, elements of credit risk in excess of amounts recognized in the
accompanying financial statements. The Company applies the same credit policies in
making commitments as it does for on-balance sheet instruments.
Management does not anticipate any loss to result from these commitments and
contingencies.
The following summarizes the Company’s significant contractual
commitments and contingencies:
Bank letters of guarantee in US Dollars
2014
10,000
2013
10,000
The Company had issued two irrevocable corporate guarantees in favour of its associate,
Reem Readymix LLC – Abu Dhabi against credit facilities extended to them.
Two bank guarantees had been signed by the Company as guarantor and guaranteed sum is
up to the extent of 20% of all credit facilities and financial obligations of Reem Ready Mix
LLC.
27. BANK FACILITIES:
The Company has the following approved credit facilities from the banks as of the
financial statements date:
Facility Type
Bank overdraft in UAE Dirhams
Letters of credit in UAE Dirhams
Letters of guarantee in UAE Dirhams
.
Maximum Limit
20,000,000
28. APPROVAL OF FINANCIAL STATEMENTS:
These financial statements have been approved by the Company's Board of Directors and
authorized for issue on January 31, 2015.
29. GENERAL:
a) Comparative figures have been reclassified wherever necessary for the purpose of
comparison.
b) The figures in the financial statements are rounded to the nearest Dirham of United Arab
Emirates.
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