qatar national cement (q.s.c.) doha - qatar … · qatar national cement company ... ifrs 8:...

QATAR NATIONAL CEMENT (Q.S.C.)

DOHA - QATAR

INTERIM CONDENSED

FINANCIAL STATEMENTS

AND INDEPENDENT AUDITOR’S

REVIEW REPORT

FOR THE SIX MONTH PERIOD ENDED

JUNE 30, 2015

QATAR NATIONAL CEMENT COMPANY (Q.S.C.)

INTERIM CONDENSED FINANCIAL STATEMENTS

For the six month period ended June 30, 2015

INDEX Page

Independent auditor’s review report --

Interim condensed statement of financial position 1

Interim condensed statement of profit or loss 2

Interim condensed statement of profit or loss and other comprehensive income 3

Interim condensed statement of changes in equity 4

Interim condensed statement of cash flows 5

Notes to the interim condensed financial statements 6 to 13


INTERIM CONDENSED STATEMENT OF PROFIT OR LOSS


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE INTERIM CONDENSED

FINANCIAL STATEMENTS.

2

Six month period ended June 30,

2015 2014

Notes (Reviewed) (Reviewed)

QR’000 QR’000

Revenue 583,459 536,984

Cost of revenue (352,999) (297,048)

Gross profit 230,460 239,936

Other income 15 33,794 19,236

Selling and distribution expenses (3,159) (2,953)

General and administrative expenses (19,914) (17,901)

Share of profit / (loss) from associates 1,435 (468)

Profit for the period 242,616 237,850

Earnings per share

Basic earnings per share (QR.) 16 4.49 4.40

Diluted earnings per share (QR.) 16 4.49 4.40


INTERIM CONDENSED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE

INCOME



FINANCIAL STATEMENTS

3

Six month period ended June 30,

2015 2014

Notes (Reviewed) (Reviewed)

QR’000 QR’000


Other comprehensive income

Items that may be reclassified subsequently to

statement of profit or loss

Net changes in fair value of available-for-sale

financial assets 10 1,161

1,839

Net changes in associates’ share of fair value reserves 2,198 2,375

Other comprehensive income for the period 3,359 4,214

Total comprehensive income for the period 245,975 242,064


INTERIM CONDENSED STATEMENT OF CHANGES IN EQUITY


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE INTERIM CONDENSED FINANCIAL STATEMENTS.

4

Cumulative share in

fair value reserves

Share

capital

Legal

reserve

Development

reserve

Available

for sale

Investment

in associates

Retained

earnings

Total

QR’000 QR’000 QR’000 QR’000 QR’000 QR’000 QR’000

Balance at January 1, 2014 (Restated) 491,006 245,503 406,589 55,688 6,407 1,269,282 2,474,475

Profit for the period -- -- -- -- -- 237,850 237,850

Other comprehensive income for the period -- -- -- 1,839 2,375 -- 4,214

Dividends distribution (Note 17) -- -- -- -- -- (294,604) (294,604)

Balance at June 30, 2014 (Reviewed) 491,006 245,503 406,589 57,527 8,782 1,212,528 2,421,935

Balance at January 1, 2015 (Audited) 491,006 245,503 406,589 60,234 8,782 1,384,508 2,596,622

Profit for the period -- -- -- -- -- 242,616 242,616

Issue of bonus shares 49,101 -- -- -- -- (49,101) --

Other comprehensive income for the period -- -- -- 1,161 2,198 -- 3,359

Dividends distribution (Note 17) -- -- -- -- -- (196,402) (196,402)

Balance at June 30, 2015 (Reviewed) 540,107 245,503 406,589 61,395 10,980 1,381,621 2,646,195


INTERIM CONDENSED STATEMENT OF CASH FLOWS



FINANCIAL STATEMENTS.

5

For the six months period ended

June 30,

2015 2014

(Reviewed) (Reviewed)

QR’000 QR’000

OPERATING ACTIVITIES


Adjustments for:

Depreciation and amortization 73,154 70,619

Dividend income (8,634) (9,024)

Interest income (3,606) (2,216)

Share of (profit) / loss from associates (1,435) 468

Provision for employees’ end of service benefits 1,257 925

303,352 298,622

Working capital changes:

Inventories (1,226) (12,201)

Accounts and other receivables (7,822) 12,285

Accounts and other payables 5,365 4,039

Cash from operations 299,669 302,745

Employees’ end of service benefits paid (383) (257)

Net cash from operating activities 299,286 302,488

INVESTING ACTIVITIES Additions in property, plant and equipment (130,212) (62,493) Advances paid for construction of plant (221) (143,475) Dividend income received 8,634 9,024 Interest income received 3,606 2,216

Net cash used in investing activities (118,193) (194,728)

FINANCING ACTIVITIES

Dividend distribution (196,402) (294,604)

Net cash used in financing activities (196,402) (294,604)

Net decrease in cash and cash equivalents (15,309) (186,844)

Cash and cash equivalents at the beginning of the period 568,187 512,372

Cash and cash equivalents at the end of the period 552,878 325,528


NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS


6

1 CORPORATE INFORMATION

Qatar National Cement Company (Q.S.C.) (the “Company”) was incorporated in the State of Qatar

as a Qatari Shareholding Company, under the Emiri Decree No. 7 of 1965 with Commercial

Registration No. of 25. The Company’s head office is located in Doha, State of Qatar.

The Company is primarily engaged in the production and sale of cement, washed sand and lime at

its plants located in Ummbab and Al Rakiya in the State of Qatar.

2 BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation

The interim condensed financial statements for the six months ended June 30, 2015 have been

prepared in accordance with International Accounting Standard 34 “Interim Financial Reporting”.

The interim condensed financial statements do not include all the information and disclosures

required in the annual financial statements, and should be read in conjunction with the annual

financial statements as at December 31, 2014. In addition, results for the six month period ended

June 30, 2015 are not necessarily indicative of the results that may be expected for the financial

year ending December 31, 2015.

The interim condensed financial statements are prepared in Qatari Riyal (“QR”), which is the

Company’s functional and presentation currency and all values are rounded to the nearest thousands

(QR’000), except otherwise indicated.

2.2 Significant accounting policies

The accounting policies adopted in the preparation of the interim condensed financial statements

are consistent with those followed in the preparation of the annual financial statements for the year

ended December 31, 2014 except for the adoption of new and revised standards and interpretations

effective as of January 1, 2015. However, they do not impact the interim condensed financial

statements of the Company.

In the current financial period, the Group has adopted certain new and revised standards and

interpretations, mainly including:

IAS 19 (Amended) Defined Benefit Plans: Employee Contributions

Annual Improvements

2010 - 2012 Cycle

IFRS 2: definition of 'vesting condition’.

IFRS 3: accounting for contingent consideration.

IFRS 8: aggregation of segments, reconciliation of segment assets.

IAS 16: proportionate restatement of accumulated depreciation on

revaluation.

IAS 24: management entities

IAS 38: proportionate restatement of accumulated depreciation on

revaluation

Annual Improvements

2011 - 2013 Cycle

IFRS 3: scope exception for joint ventures. IFRS 13: scope of the portfolio exception in paragraph 52.

IAS 40: interrelationship between IFRS 3 and IAS 40.




7

3. CRITICAL JUDGMENTS AND KEY SOURCES OF ESTIMATION

UNCERTAINTY

In the application of the Company’s accounting policies, the directors are required to make

judgments, estimates and assumptions about the carrying amounts of assets and liabilities that

are not readily apparent from other sources. The estimates and associated assumptions are based

on historical experience and other factors that are considered to be relevant. Actual results may

differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to

accounting estimates are recognized in the period in which the estimate is revised if the revision

affects only that period, or in the period of the revision and future periods if the revision affects

both current and future periods.

4. SEGMENT REPORTING

The Company is organized into one business segment, which comprises the manufacture and sale

of cement, sand and other by products. Geographically, the Company’s entire business operations

are concentrated in State of Qatar. The Chief Operating Decision Maker evaluates the results of

the Company for this overall segment.

5. PROPERTY, PLANT AND EQUIPMENT

The movements during the period/year were as follows:

June 30, 2015

(Reviewed)

Dec. 31, 2014

(Audited)

(QR ‘000) (QR ‘000)

Cost

Balance at beginning of the period/year 3,136,841 3,030,878

Additions during the period/year 130,212 94,232

Transferred from advances for construction of plant 13,330 10,149

Reclassified from intangible assets -- 1,582

Balance at end of the period/year 3,280,383 3,136,841

Accumulated Depreciation

Balance at beginning of the period/year 1,556,345 1,412,380

Depreciation charge for the period/year 71,424 143,692

Reclassified from intangible assets -- 273

Balance at end of the period/year 1,627,769 1,556,345

Net book value at end of the period/year 1,652,614 1,580,496




8

6. INVESTMENT PROPERTIES

a) The movements during the period/year were as follows:

June 30, 2015

(Reviewed)

Dec. 31, 2014

(Audited)

(QR ‘000) (QR ‘000)

Cost

Balance at beginning of the period/year 42,557 42,557

Balance at end of the period/year 42,557 42,557

Accumulated Depreciation


Depreciation charge for the period/year 760 1,533


Net book value at end of the period/year 6,922 7,682

b) The interim condensed statement of profit or loss includes a sum of QR. 3.55 million as rental

income from investment properties for the six month period ended June 30, 2015 (June 30,

2014: QR. 4.25 million). As per Management’s estimation, the fair value of the investment

properties as at June 30, 2015 is QR. 535 million (December 31, 2014: QR. 535 million).

7. INTANGIBLE ASSETS

a) The movements during the period/year were as follows:

June 30, 2015

(Reviewed)

Dec. 31, 2014

(Audited)

(QR ‘000) (QR ‘000)

Cost


Reclassified to property, plant and equipment -- (1,582)


Accumulated Amortization


Amortization charge for the period/year 970 1,824

Reclassified to property, plant and equipment -- (273)


Net book value at end of the period/year 1,526 2,496

b) Intangible assets represent the cost of software development – SAP ERP. The software

development cost is amortized on straight line basis over the estimated useful life of three

years.




9

8. ADVANCES FOR CONSTRUCTION OF PLANT

The advances for capital nature assets are as follows:

June 30, 2015

(Reviewed)

Dec. 31, 2014

(Audited)

(QR ‘000) (QR ‘000)

Construction of Plant V 130,521 143,475

Construction of New Sub- Station for Plant V 4,876 4,953

Supply of Slip ring/ Induction Motors 2,056 2,056

Other advances 59 137

Total 137,512 150,621

10. AVAILABLE-FOR-SALE FINANCIAL ASSETS

The available-for-sale financial assets comprise of investments in shares of companies listed on

Qatar Exchange. The fair value of the quoted equity shares is determined by reference to published

price quotations in Qatar Exchange.

The movements during the period/year were as follows:

June 30, 2015

(Reviewed)

Dec. 31, 2014

(Audited)

(QR ‘000) (QR ‘000)


Net changes in fair value for the period/year 1,161 4,546


9. INVESTMENT IN ASSOCIATES

Ownership

Country of

Incorporation June 30, 2015

(Reviewed)

Dec. 31, 2014

(Audited)

2014 (QR ‘000) (QR ‘000)

Qatar Saudi Gypsum

Industries Co. (W.L.L.) 33.325% Qatar 29,837 26,924

Qatar Quarries & Building

Materials Co. (P.Q.S.C.) 20.000% Qatar 23,110 22,390

52,947 49,314




10

11. INVENTORIES

This item consists of the following:

June 30, 2015

(Reviewed)

Dec. 31, 2014

(Audited)

(QR ‘000) (QR ‘000)

Work in progress 49,026 82,968

Raw materials 67,701 71,633

Finished goods 11,940 9,878

Spare parts 110,009 113,970

Fuel, oil and lubricants 1,157 1,685

Other miscellaneous stocks 2,733 1,481

Sub Total 242,566 281,615

Provision for obsolete and slow moving inventories (14,943) (14,943)

Net 227,623 266,672

Goods in transit 42,327 2,052

Total 269,950 268,724

12. ACCOUNTS AND OTHER RECEIVABLES


June 30, 2015

(Reviewed)

Dec. 31, 2014

(Audited)

(QR ‘000) (QR ‘000)

Accounts receivable 180,479 178,931

Provision for doubtful debts (1,986) (1,986)

Net 178,493 176,945

Advances to suppliers 10,946 4,618

Prepayments and other receivables 6,247 6,301

Total 195,686 187,864

13. OTHER PAYABLES

June 30, 2015

(Reviewed)

Dec. 31, 2014

(Audited)

(QR ‘000) (QR ‘000)

Other payables 114,210 --

Other payables pertains to the long-term portion of take or pay claim on the consumption of

natural gas payable to Qatar Petroleum recognized in 2014. During the current year, the parties

agreed to pay the amount in instalment on a five (5) year term starting July 2015. Current portion

of the liability is recorded under “Accounts payable and accruals” amounting to QR. 32,615

thousand.




11

14. SHARE CAPITAL

June 30, 2015

(Reviewed)

Dec. 31, 2014

(Audited)

Authorised, issued and fully paid:

Share capital (QR’000) 540,107 491,006

No. of shares at QR. 10 nominal value 54,010,656 49,100,596

15. OTHER INCOME


Six months ended

June 30, 2015

(Reviewed)

Six months ended

June 30, 2014

(Reviewed)

(QR ‘000) (QR ‘000)

Waiver of claim by Qatar Petroleum 12,881 --

Dividend income 8,634 9,024

Interest income 3,606 2,216

Rental income 3,546 4,375

Transportation income 3,487 1,993

Others 1,640 1,628

Total 33,794 19,236

16. EARNINGS PER SHARE

a) Basic Earnings Per Share

The basic earnings per share is computed by dividing the profit for the period attributable to

ordinary shareholders of the Company by the weighted average number of ordinary shares

outstanding during the period as follows:

Six months ended

June 30, 2015

(Reviewed)

Six months ended

June 30, 2014

(Reviewed)

(Restated)

Profit attributable to ordinary shareholders of the

Company (QR. ‘000) 242,616 237,850

Weighted average number of ordinary shares

outstanding 54,011 54,011

Basic earnings per share (QR.) 4.49 4.40




12

16. EARNINGS PER SHARE (CONTINUED)

b) Diluted Earnings Per Share

Diluted earnings per share is calculated by adjusting the earnings and number of shares for the

effects of dilutive options and other dilutive potential ordinary shares.

Six months ended

June 30, 2015

(Reviewed)

Six months ended

June 30, 2014

(Reviewed)

(Restated)

Weighted average number of ordinary shares

outstanding (Note 17) 54,011 54,011

Diluted earnings per share (QR.) 4.49 4.40

On March 17, 2015, the Company issued bonus shares equivalent to 10% of outstanding ordinary

shares as at December 31, 2014 (Note 17). The issuance of these bonus shares resulted in the

restatement of basic and diluted earnings per share as of June 30, 2014.

17. DIVIDENDS

Following the approval of the Annual General Assembly held on March 17, 2015, it was decided a

cash dividend distribution of 40% and non-cash dividend of 10% of the paid-up capital amounting

to QR. 196,402 thousand and QR. 49,101 thousand, respectively, relating to the year ended

December 31, 2014 (December 31, 2013: cash dividend distribution of 60% of the paid up capital

aggregating QR. 294,604 thousand).

18. RELATED PARTY TRANSACTIONS

a) Transactions with Government of Qatar and its Agencies

The Government of Qatar holds 43% of the Company’s share capital. In the normal course of

business, the Company supplies its commodities to various Government and semi Government

agencies and companies in the State of Qatar. The Company also avails of various services

from Government and semi Government agencies and companies in the State of Qatar.

The rental income includes a sum of QR.2.5 million for the six months period ended June 30,

2015 (June 30, 2014: QR.2.5 million) from the Government of Qatar.

b) Transactions with key management personnel

Key management personnel comprise the Board of Directors and key members of management

having authority and responsibility for planning, directing and controlling the activities of the

entity.

During the period ended June 30, 2015, the Company has paid a sum of QR.1.77 million (June

30, 2014: QR.1.41 million) to members of the Committees of the Board of Directors and

salaries and benefits paid to key members of management amounted to QR.3.47 million (June

30, 2014: 3.30 million).




13

19. COMMITMENTS AND CONTINGENCIES

The following summarizes the significant contractual commitments and contingencies:

June 30, 2015

(Reviewed)

Dec. 31, 2014

(Audited)

(QR ‘000) (QR ‘000)

Capital commitments 689,478 829,667

Contingencies - Letters of credit 2,828 95,443

Capital commitments includes commitments related to the construction of Plant V at Ummbab –

State of Qatar.

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