annual report 2012 - bahrain duty free 2013 annual...7 o n behalf of the board of directors at...
TRANSCRIPT
Annual Report
2012
1
H.R.H. Prince Khalifa bin Salman al Khalifa
Prime Minister of the Kingdom of Bahrain
H.M. King Hamad bin Isa al Khalifa
King of the Kingdom of Bahrain
H.R.H. Prince Salman bin Hamad bin Isa al Khalifa
Crown Prince and Deputy Supreme Commander of the Kingdom of Bahrain
2 3
Contents
Board of Directors .......................................................................................................................... 4 - 5
Chairman’s Report .......................................................................................................................... 6 - 7
General Information ........................................................................................................................... 10
The Management ............................................................................................................................... 11
Corporate Governance .................................................................................................................. 14-19
Independent Auditors’ Report to the Shareholders ........................................................................... 23
Consolidated Financial Statements
Consolidated Statement of Financial Position .................................................................................... 24
Consolidated Statement of Comprehensive Income .......................................................................... 25
Consolidated Statement of Changes in Equity .............................................................................. 26-27
Consolidated Statement of Cash Flows .............................................................................................. 28
Notes to the Consolidated Financial Statements ......................................................................... 29-47
4 5
The Board of Directors provides the leadership and strategies that directs the on-going
activities of the company in the realisation of its objectives. The primary responsibility of the
board is to provide effective governance over the affairs of Bahrain Duty Free for the benefit
of its shareholders and to balance the interests of its customers, employees, suppliers, local
communities and all other correspondents. In all actions taken by the Board, the directors
are expected to exercise sound business judgement in the best interests of the Company. In
discharging its obligations, directors may rely on the honesty and professional integrity of
the management of the company, outside advisors and auditors.
Board of Directors
Farouk Yousuf AlmoayyedChairman
Abdulla BuhindiManaging Director
Nabeel Al ZainDirector
Mohammed Al KhanDirector
Jassim Mohammed Al ShaikhDirector
Jawad Al HawajDirector
Mazen AbdulkarimDirector
Shaikh Mohammed bin Ali bin Mohammed Al Khalifa
Director
Jalal Mohamed JalalDirector
Ghassan Al Sabbagh Director
7
On behalf of the board of directors at Bahrain Duty Free, it gives me great pleasure to present the twenty-second annual
report incorporating the consolidated financial statements of the group for the year ended 31st
December 2012.I am pleased to tell you that in 2012, Bahrain Duty Free Shop produced another solid financial performance as well as achieving
many of our strategic goals. It was a year where our sales edged ahead by a small percentage and good initiatives in
managing our supplier and operating costs as well as healthy investment returns all contributed to a solid result producing double digit growth on our bottom line.
Consolidated sales for the year 2012 amounted to BD 27,517,130
representing an increase of 2.7% over last year. Gross Profits improved by 6.0% year on year and the gross margin percentage edged up by 3.2%. Operating costs reduced by
6.4% resulting in operating profits of BD 6,020,259 an increase of 22.5% on
prior year. Non-operating income declined by 2.1%. Net profits after royalties and
impairment charges stands at BD 6,394,731 up on 2011 by 17.4%. At December year end, shareholder’s equity stood at BD 37.6 million compared to BD 35.5 million in 2011, while total assets of BD 44.7 million increased by 6.6% reflecting the ever increasing performance and strength of our financial position.
Our investment portfolio now totals BD 18.3 million due to several investments totalling BD 5.5 million purchased during 2012. The Company also disposed of some
mature investments for BD 829,600. Investment income during 2012 was BD 2.2 million representing an increase of 8% on last year. Impairment provisions of BD 415,827 were also made in 2012 and fair value adjustments to our investment portfolio had a positive effect by BD 480K. The portfolio remains strong and well balanced. Also in 2012, an investment of BD 2.5 million was made to purchase land.
Operationally, 2012 was a good year with passenger volume increasing by 8.8% compared to 2011. The return of the F1 Grand Prix in April was very welcome and once again contributing to our business. As stated above, the company implemented many improvements from the strategy plan in 2012 which included the purchase and roll out of new IBM cash registers, Microsoft Navision software upgrade, business process improvements, the upgrade of our warehouse facility, new HR ERP system and product category management to mention a few. These changes have had a profound impact on improved performance and efficiencies within the organization. Training also featured heavily in 2012 and all employees were trained on customer service and living our core values in early 2012. Many other programs continued throughout the year.
Our subsidiary company, Bahrain International Retail Development Centre (BIRD) recorded revenues of BD 920,803 down 22.9% on prior year. This reflects the difficult market it operates in, however we are optimistic that the business plan cycle will produce better results in the coming years.
The Board proposes the following appropriations from the 2012 net profit;1) Dividend distribution of 50 fils per share, of which 20 fils
was distributed during the financial year. 2) Bonus share issue of 10%. 3) Transfer to charity fund 2%.
On behalf of my colleagues on the Board, may I extend my sincere gratitude and appreciation to His Majesty the King, Shaikh Hamad bin Isa Al Khalifa, His Highness the Prime Minister Shaikh Khalifa bin Salman Al Khalifa, His Highness the Crown Prince and Deputy Supreme Commander of the Kingdom of Bahrain, Shaikh Salman bin Hamad Al Khalifa and His Highness Shaikh Ali bin Khalifa Al Khalifa, Deputy Prime Minister for their continuing support.
My thanks goes to Aer Rianta International Middle East WLL, our management company, whose expertise and contribution at senior management level has contributed significantly to the financial results of 2012. I also extend my gratitude to the staff and management of Bahrain Duty Free for their continued loyalty and support.
I offer my sincere thanks also to Bahrain Airport Company and Civil Aviation Authority for their continued guidance, support and assistance at the airport. I thank also the other concerned bodies whose objectives are to promote and market Bahrain International Airport.
Finally, I would like to thank all of our customers for their continued patronage and for choosing to shop at Bahrain Duty Free.
Farouk Yousuf AlmoayyedChairman17 February 2013
Chairman’s Report
At December year end, shareholder’s
equity stood at BD 37.6 million compared to
BD 35.5 million in 2011
6
8 9
10 11
The Management
Garrett CooganGeneral Manager
Dominic CarrollHead of Finance
Ross McMahonHead of Purchasing & Logistics
Domnick O’ReillyHead of Operations
Abdul Wahid NoorCompany Secretary
Bassam AlwardiHead of HR and Marketing
Bahrain Duty Free Shop Complex BSC, a joint stock company governed by the Bahrain Commercial Companies Law 2001, was registered under commercial registration number 23509 on 15 July 1990. The company is a 80% shareholder in Bahrain International Retail Development Centre WLL, which was established in July 2000 and a 25% shareholding in Bahrain International Airport Development Co. W.L.L (BIADCO).
SHARE CAPITAL Authorised : BD 9,717,365 (2011: BD 8,833,968) divided into 97,173,648 shares (2011: BD 88,339,680 shares) of 100 fils each Issued and fully paid-up : BD 9,717,365 (2010: BD 8,833,968)
THE BOARD OF DIRECTORS : Farouk Yousuf Almoayyed (Chairman) : Abdulla Buhindi (Managing Director) : Jalal Mohamed Jalal : Jassim Mohammed Al Shaikh : Shaikh Mohamed bin Ali bin Mohamed Al Khalifa : Jawad Al Hawaj : Nabeel Al Zain : Mohammed Al Khan : Ghassan Al Sabbagh : Mazen Abdulkarim
INVESTMENT COMMITTEE : Farouk Yousuf Almoayyed Abdulla Buhindi Shaikh Mohamed bin Ali bin Mohamed Al Khalifa AUDIT COMMITTEE : Jawad Al Hawaj Mohammed Al Khan Nabeel Al Zain Mazen Abdulkarim Ghassan Al Sabbagh MANAGING AGENT : Aer Rianta International (Middle East) WLL
MANAGEMENT : Garrett Coogan, General Manager Dominic Carroll, Head of Finance Bassam Alwardi, Head of HR & Marketing Ross McMahon, Head of Purchasing & Logistics Domnick O’Reilly, Head of Operations COMPANY SECRETARY : Abdul Wahid Noor
OFFICES : Building 261, Al Shabab Avenue, Juffair Telephone 17 723100, Fax 17 725511 Bahrain International Airport, P.O. Box 1714 Telephone 17 321330, Fax 17 321910
AUDITORS : KPMG Fakhro
BANKERS : BBK BSC Ahli United Bank BSC National Bank of Bahrain BSC
REGISTRARS : Fakhro Karvy Computershare WLL P.O. Box 514, Manama, Kingdom of Bahrain
General Information
12 13
14 15
Corporate Governance Corporate GovernancePOLICYSound corporate governance principles are the foundation of trust for every Company. These principles are critical in maintaining the reputation the Company has built up over the last twenty years. Bahrain Duty Free Shop is committed to aspire to the highest standards of corporate governance, which as a key factor ensures fairness to all stakeholders of the company. The board’s adherence to best practice in corporate governance is underlined by various principles such as transparency, integrity, independence, accountability, responsibility fairness and social responsibility. The board has adopted a Board of Directors Charter, together with the Company’s Memorandum and Articles of Association as well as the charters of Board Committees that provide the authority and practices for corporate governance at Bahrain Duty Free. The corporate structure was developed and based on the HC module and corporate governance code and guidelines of the company.
OWNERSHIP STRUCTURE
BOARD STRUCTUREThe Board has the final responsibility for the overall conduct of the Company’s business, providing direction by exercising objective judgement on all matters independent from management. The Board of Directors is accountable to shareholders for the code of conduct of the business and also for ensuring the effectiveness of and reporting on the corporate governance framework in place. The Board comprises of 10 directors. There are 2 executive directors, 8 non-executive directors and 2 directors who are independent.
DIRECTORSHIPS ON OTHER BOARDS
Shareholders owning more than 5%Names and nationalities of the major equity holders (defined as a holding in excess of 5% of the issued and fully paid capital) and the number of equity shares held:
Share Ownership by Nationality
Nationality No. of shareholders Shares % to Equity
Bahraini 555 90,294,995 92.9
GCC 25 6,506,458 6.7
Other 7 372,195 0.4
Total 587 97,173,648 100.0
Name Nationality Shares (%)
Esterad Investment Co. BSC Bahraini 11,041,212 11.36
Global Express Bahraini 7,864,528 8.09
Rouben’s Stores Bahraini 6,327,789 6.51
Farouk Yousuf Almoayyed Bahraini 4,903,031 5.05
Ownership Categories
Categories* Number of shares Shareholders % total issued shares
Less than 1% 24,361,213 557 25.05
1% up to less than 5% 42,675,875 26 43.93
5% up to less than 10% 19,095,348 3 19.66
10% up to less than 20% 11,041,212 1 11.36
20% up to less than 50% - - -
50% and above - - -
Total 97,173,648 587 100.00
Government Owned
Name Shares % to Equity
Social Insurance Organization – Pension 643,820 .66
Social Insurance Organization – GOSI 500,393 .51
Directors Executive or Non-Executive Independent or Non-Independent
Farouk Yousuf Almoayyed Non-Executive Non-Independent
Abdulla Buhindi Executive Non-Independent
Mohammed Al Khan Executive Non-Independent
Jawad Al Hawaj Non-Executive Non-Independent
Nabeel Al Zain Non-Executive Non-Independent
Ghassan Al Sabbagh Non-Executive Independent
Jalal Mohammed Jalal Non-Executive Non-Independent
Mazen Abdulkarim Non-Executive Non-Independent
Shaikh Mohamed Al Khalifa Non-Executive Non-Independent
Jassim Mohd. Al Shaikh Non-Executive Independent
Directors Position held Company
Farouk Yousuf Almoayyed Chairman Y.K. Almoayyed & Sons BSC, YK Almoayyed & Sons Property WLL, Almoayyed International Group
Chairman Ashrafs, Gulf Hotel Group, Ahlia University, Bahrain National Holding
Chairman National Finance House, National Bank of Bahrain, IBN Khuldoon National School
Director Investcorp
Abdulla Buhindi Chairman National Investment Company, Buhindi Group, Aer Rianta International Middle East
Chairman Banz Group, Bahrain Kuwait Insurance Co., BEMCO, BMMI, United Paper Industries, Computel
Chairman Copyright Company WWL, Lona Real Estate Development, Banadar Hotel Company
Director Bahrain Gulf Distribution Co.
Director Bahrain & Emirates Electrical & Mechanical Contracting U.A.E., Vertical Space LLC U.A.E.
Director Oasis Capital Bank, Arab Insurance Group (Beirut) Iqarat Lubnan (Beirut)
Mohamed Al Khan Managing Director Bahrain International Retail & Development Co. (BIRD)
Jalal Mohammed Jalal Chairman Bahrain Airport Services, Gulf Business Machines, Bahrain Business Machines
Director Awal Readymix Concrete Co., BANZ Company, Aer Rianta International Middle East
Director Bahrain Tourism Company, Bahrain Cinema Company
Managing Director Awal Printing Press, Bahrain International Airport Development Company WLL
Nabeel Al Zain Director Al Zain Trading Company WLL
Mazen Abdulkarim Director Esterad Investment Company, Bahrain International Retail & Development Company
Jawad Al Hawaj Chairman Bahrain International Retail & Development Company
Ghassan Al Sabbagh Director Bahrain International Retail & Development Company
Shaikh Mohamed Al Khalifa Director None
Jassim Mohd. Al Shaikh Director None
16 17
Corporate Governance Corporate GovernanceBOARD MANDATEThe Board of Directors provides the leadership and strategies that directs the on-going activities of the company. The principle responsibilities of the Board, as set out in its charter, are as follows:• Chartering the direction and strategy of the Company.• Monitoring compliance with all related laws and regulations. • Ensure regulatory compliance and reviewing the adequacy and integrity of internal controls.• Review and approve the Financial Statements of the Company.• Approval of the operating Business Plan.• Oversight, performance evaluation and succession planning of directors and executive management• Approving the financing and borrowings of the Company.• Recommending appointment of Auditors at the annual general meeting.• Appointment of Sub Committees• Approve policies and procedures.• Approving Compensating and Benefits Policy.• Approving the establishment of new banking relationships.• Approving major Financial investments.
BOARD MEETINGSAs per the Board Charter, the directors are required to meet at least 4 times in a given financial year to discharge its responsibilities effectively. A meeting of the Board of Directors is deemed valid if attended by more than half of the members in person. There were five board meetings in 2012. Director attendance is shown below.
Board Meetings 2012
Directors 07-Feb 19-Feb 14-Mar 08-May 11-Nov
Farouk Yousuf Almoayyed P P P P P
Abdulla Buhindi P P P P P
Nabeel Al Zain P P P P P
Jawad Al Hawaj P P P P
Mohammed Al Khan P P P P P
Ghassan Al Sabbagh P P P P P
Jalal Mohammed Jalal P P P
Mazen Abdulkarim P P P P P
Shaikh Mohamed Al Khalifa P P P
Jassim Mohd. Al Shaikh P P P P P
ELECTION OF DIRECTORSThere are formal and transparent procedures for the appointment of new directors to the Board. Candidates are identified and selected on merit against objective criteria and with due regard to the benefits of diversity on the Board. The current directors of the Company are appointed by the general Shareholders meeting from among candidates proposed by the Board. Currently, the size of the Board is 10 directors.
BOARD TERMS The Board terms run for three years. The current term is for the period 2010 to 2012. All Directors were appointed and elected to the Board at the Annual General Meeting with the exception Mazen Abdulkarim who was appointed on June 30 2010. The next three year term will be 2013 to 2015.
DIRECTOR APPOINTMENT LETTERAs a member of the Board, each Director has signed a formal written appointment letter which covers among other things, the Director’s duties and responsibilities in serving on the Board, the terms and conditions of their directorship, the annual remuneration and entitlement to reimbursement of expenses and access to independent professional advice when needed.
DIRECTOR’S INDUCTION & TRAININGThe Director’s Board Charter recommends formal and tailored Director’s induction. The Secretary to the Board shall annually include briefing sessions on current developments in areas of corporate governance, industry sector, accounting standards etc. for all Directors. Newly appointed Directors undergo an induction program covering, amongst other things:• The business of the Company.• Briefings and presentations from executive management.• Opportunities to visit business operations.• Their legal and regulatory responsibilities as directors.
Throughout their period in office, all directors are continually updated on the Company’s business and regulatory environment.
RESIGNATION OF DIRECTORSHIPIn 2012, Mr. Faieq Al Zayani submitted his resignation which was approved by the Board.
PERFORMANCE EVALUATIONPerformance evaluation of the Board, Board Committees and executive management is vital to ensure that the strategy and goals of the Company are achieved. It gives the chance for each Board member and each member of the management team to be assessed in relation to their individual performance and contribution to the success of the Company. The performance evaluation of the Board, and its committees, is scheduled for 2013.
DIRECTORS OWNERSHIP OF SHARES
Director No. of Shares % to Equity
Farouk Yousuf Almoayyed 4,903,031 5.05%
Abdulla Buhindi 1,876,290 1.93%
Shaikh Mohamed bin Ali Al Khalifa 1,457,603 1.50%
Mohammed Al Khan 485,868 0.50%
Jassim Mohammed Al Shaikh 459,806 0.47%
Jalal Mohamed Jalal 376,060 0.39%
Ghassan Al Sabbagh 337,868 0.35%
Mazen Abdulkarim 46,426 0.05%
Nabeel Al Zain 5,652 0.01%
Total 9,948,604 10.24%
No Directors traded in shares in 2012.
REMUNERATION POLICY DIRECTORSThe Company follows a transparent process with regards to the remuneration policy for all members of the Board. The remuneration for services rendered is based principally on attendance at Board meetings and are reduced on a pro rata basis depending on attendance at the meetings in the calendar year. In addition, directors are entitled to out of pocket expenses, accommodation and travelling expenses incurred during the term of their appointment. In 2012 director fees totalling BD144,000 were paid. Sitting fees for the Audit Committee were paid also in 2012 and this amounted to BD 3,400
MANAGEMENT REMUNERATIONThe remuneration principles of the Company are based on the following:• Attract and retain human resources with ability, talent, skill and knowledge to deliver.• Align the reward with the return of the shareholders.• Implement incentive framework which challenges employees to deliver sustained high quality consistent performance at
all times.
18 19
Corporate Governance Corporate GovernanceIn addition to this, the Company has also a framework in place to monitor and evaluate the performance of the executive management and the employees of the Company in line with market trends and performance linked bonus is paid on the basis of their individual performance which is evaluated at the end of the year.
MANAGEMENT OWNERSHIP OF SHARESNo members of the senior executive management team own any shares in the Company. There is no stock option program in place for senior management.
BUSINESS CODE OF ETHICSAll Directors and employees shall act ethically at all times and adhere to the Company’s code of conduct. Where a potential conflict of interest arises for a Director, the Director shall promptly inform the Board for clarification and resolution as necessary. Such declarations shall be duly minuted. All Directors shall excuse themselves from any discussions or decision affecting their business interests.
COMMITTEESConsistent with Industry best practice, the Board has established the following committee with defined roles and responsibilities. The current committees are the Audit Committee and the Investment Committee.
AUDIT COMMITTEEThe Company’s internal audit function reports to the Audit Committee. The Audit Committees primary duties and responsibilities are as follows:• Ensure the integrity of the Company’s Financial Statements.• Ensure a sound financial reporting process.• Internal Audit and Risk Management.• Compliance with internal and external regulatory frameworks.• The appointment of internal auditors.• Act as a liaison between the internal auditors, external auditors and the Board.
As per the charter of the Audit Committee, the committee are required to meet at least 4 times in a given financial year to discharge its responsibilities effectively. In 2012, the Audit Committee met 4 times at the Company’s Head Office in Juffair. No issues deemed significant arose during 2012.
Audit Committee Meetings 2012
Directors 07-Feb 06-May 12-Aug 11-Nov
Jawad Al Hawaj P P P
Mohammed Al Khan P P P P
Ghassan Al Sabbagh P P P P
Mazen Abdulkarim P P P P
Nabeel Al Zain P P P
Investment Committee Meetings 2012
Directors 19-Feb 14-Mar 08-May 07-Nov
Farouk Yousuf Almoayyed P P P P
Abdulla Buhindi P P P P
Shaikh Mohamed Al Khalifa P P P
INVESTMENT COMMITTEEThe investment committee is responsible for managing the investment portfolio and surplus funds ensuring optimum yield returns by investing in a controlled and managed portfolio. The primary duties and responsibilities are as follows:• Formulate the investment policy and guidelines subject to Board approval.• Review investment policy every three years and update as appropriate.• Review and monitor the investment portfolio on a quarterly basis.• Approval of selected fund managers, mutual funds, investments/funds, brokers and custodian firms.• Identify investment opportunities that will return sufficient yields to maximize shareholder equity.• Engage suitably qualified members from Management to monitor the investment portfolio.
AUDITORSThe Audit Committee reviews the appointment of the external auditors, as well as their relationship with the Company, including monitoring the Company’s use of the Auditors for non-audit services and the balance of audit and non-audit fees paid to the auditors.
CONFLICT OF INTERESTSDirectors have a duty to avoid circumstances which may result in interests that conflict with those of the Company, unless the conflict is duly approved by the Board. It is the obligation of the Board to assess, determine and authorize any such potential conflicts, taking all circumstances into account. This includes potential conflicts that may arise when a Director takes up a position with another Company or enters into transactions or agreements in respect of which a director or executive officer has a material interest. During the year 2012, no issues of conflict of interest were experienced or authorized by the Board and no director of the Board abstained from voting due to this reason.
COMMUNICATION WITH SHAREHOLDERSTo encourage transparency, the Board strives to maintain an open communication channel with its investors and shareholders at all times. The Board is committed to communicate its strategy and activities clearly and maintains an active dialogue with stakeholders through planned activities. The main communication channels includes the annual report, quarterly publications of financial results, a corporate website and announcements in the local media where necessary.
CODE OF CONDUCT AND WHISTLE BLOWING POLICYThe Board has adopted a formal code of conduct and Whistle Blowing Policy that applies to Directors and all employees of the Company to guide them in their conduct and promote ethical behaviour, honestly and integrity in their normal daily activities in order to safeguard and uphold the reputation of the Company at all times. The code of conduct and Whistle Blowing Policies have been developed and implemented in accordance with the applicable regulations and leading industry practice.
RELATED PARTY TRANSACTIONSIt is the policy of the Company that all related party transactions are done on an arm’s length basis in the ordinary course of business and are approved by the management of the Company. As a public Company, the Directors, management and all employees are eligible to trade in the shares of the Company and are monitored by the relevant authority in the Company to ensure that no trade is made with the material information still not made public. Please refer to note 17 (Transactions with Related Parties) of the financial statements for the details of related party transactions.
INTERNAL CONTROLSThe Board has overall responsibility to ensure that management maintains an effective system of internal control. There are clear processes for monitoring internal control and reporting any significant control failings or weaknesses together with corrective action solutions. Management is required to apply judgement in evaluating risks, the likelihood of the risks materializing and the ability to reduce the exposure and impact on the business.
Throughout 2012, and to date, the Company has operated a system of internal control which provides reasonable assurance of effective and efficient operations covering all controls including financial and operational controls and compliance with laws and regulations. The Board regularly reviews these processes through its Audit Committee.
CORPORATE SOCIAL RESPONSIBILITY Bahrain Duty Free is committed to its role as a responsible corporate citizen. It maintains a charity and community welfare account and in 2012 contributions to worthy causes were made.
Audit Fees for 2012 BD 21,000
Non-Audit Fees for 2012 BD 46,750
20 21
22 23
Report on the consolidated financial statementsWe have audited the accompanying consolidated financial statements of Bahrain Duty Free Shop Complex BSC (“the Company”) and its subsidiary (together the “Group”), which comprise the consolidated statement of financial position as at 31 December 2012, and the consolidated statements of comprehensive income, cash flows and changes in equity for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information.
Responsibility of the board of directors for the consolidated financial statementsThe board of directors of the Company is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as the board of directors determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ responsibilityOur responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our 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, we consider internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at 31 December 2012, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards.
Report on other regulatory requirementsAs required by the Bahrain Commercial Companies Law, we report that the Company has maintained proper accounting records and the consolidated financial statements are in agreement therewith; the financial information contained in the Chairman’s report is consistent with the consolidated financial statements; we are not aware of any violations of the Bahrain Commercial Companies Law, or the terms of the Company’s memorandum and articles of association having occurred during the year that might have had a material adverse effect on the business of the Company or on its financial position; and satisfactory explanations and information have been provided to us by the management in response to all our requests.
Independent Auditors’ Report to the Shareholders
17 February 2013
KPMG Fakhro, Audit5th Floor, Chamber of Commerce Building
P.O. Box 710, Manama, Kingdom of BahrainTel: +973 17 224807 Fax: +973 17 227443
Internet: www.kpmg.com.bhC.R. No. 6220
24 25
The consolidated financial statements, which consist of pages 24 to 47 were approved by the Board of Directors on 17 February 2013 and signed on its behalf by:
Farouk Yousuf Almoayyed Abdulla BuhindiChairman Managing Director
The accompanying notes 1 to 23 form an integral part of these consolidated financial statements.
The consolidated financial statements, which consist of pages 24 to 47 were approved by the Board of Directors on 17 February 2013 and signed on its behalf by:
Farouk Yousuf Almoayyed Abdulla BuhindiChairman Managing Director
The accompanying notes 1 to 23 form an integral part of these consolidated financial statements.
Consolidated Statement of Financial Position Consolidated Statement of Comperehensive Incomeas at 31 December 2012 for the year ended 31 December 2012Bahraini dinars Bahraini dinars
Note 2012 2011REVENUE 27,517,130 26,784,553
Cost of sales (15,339,861) (15,292,776)
Gross profit 12,177,269 11,491,777
Other income 15 3,694,553 3,774,857Administrative expenses 16 (4,492,839) (4,811,512)Royalty 17 (2,920,150) (2,377,803)Other operating expenses (1,145,379) (1,191,544)Selling expenses (518,792) (575,108)Impairment of investments 7 (415,826) (881,252)Share of profit from associate 5 15,895 19,306
Profit for the year 6,394,731 5,448,721
Other comprehensive income Available-for-sale securities:
Net change in fair value 480,134 (910,446)
Other comprehensive income for the year 480,134 (910,446)
Total comprehensive income for the year 6,874,865 4,538,275
Profit attributable to: Owners of the company 6,350,792 5,371,961Non-controlling interest 43,939 76,760
Profit for the year 6,394,731 5,448,721
Total comprehensive income attributable to: Owners of the company 6,830,926 4,461,515Non-controlling interest 43,939 76,760
Total comprehensive income for the year 6,874,865 4,538,275
Basic and diluted earnings per share (in fils) 19 65 55
Note 2012 2011ASSETS Non-current assets Property and equipment 4 2,646,931 2,642,531Investment in associate 5 191,990 176,095Investment in property 6 2,473,091 -Available-for-sale investments 7 18,310,625 13,443,546
Total non-current assets 23,622,637 16,262,172
Current assetsInventories 8 2,076,625 2,158,488Receivables and other assets 9 1,750,411 1,194,456Cash and cash equivalents 10 17,224,876 22,287,653
Total current assets 21,051,912 25,640,597
Total assets 44,674,549 41,902,769
EQUITY AND LIABILITIES Equity Share capital 11 9,717,365 8,833,968Statutory reserve 6,279,076 5,643,997Investments fair value reserve 3,681,750 3,201,616Property revaluation reserve 285,535 326,264Retained earnings 17,525,126 17,323,912Equity attributable to owners of the company 37,488,852 35,329,757Non-controlling interest 113,582 153,546
Total equity (pages 7 and 8) 37,602,434 35,483,303
Liabilities Non-current liabilities Provision for employees’ leaving indemnities 12 561,814 421,291
Total non-current liabilities 561,814 421,291
Current liabilities Payables and other liabilities 13 3,728,409 3,753,463Royalty payable 14 2,728,149 2,185,803Management fees 53,743 58,909
Total current liabilities 6,510,301 5,998,175
Total liabilities 7,072,115 6,419,466
Total equity and liabilities 44,674,549 41,902,769
26 27
Consolidated Statement of Changes in Equity Consolidated Statement of Changes in Equityfor the year ended 31 December 2012 for the year ended 31 December 2012 (continued)Bahraini dinars Bahraini dinars
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792
6,35
0,79
2 43
,939
6,
394,
731
Oth
er c
ompr
ehen
sive
inco
me
Net
cha
nge
in fa
ir va
lue
-
- 48
0,13
4 -
- 48
0,13
4 -
480,
134
Tota
l oth
er
com
preh
ensi
ve in
com
e -
- 48
0,13
4 -
- 48
0,13
4 -
480,
134
Tota
l com
preh
ensi
ve
inco
me
for t
he y
ear
- -
480,
134
- 6,
350,
792
6,83
0,92
6 43
,939
6,
874,
865
Bonu
s sh
are
issu
e 88
3,39
7 -
- -
(883
,397
) -
- -
Tran
sfer
of n
et d
epre
ciati
on
on re
valu
ed p
rope
rty
- -
- (7
0,00
0)
70,0
00
- -
-
Reva
luati
on o
f pro
pert
y -
- -
29,2
71
- 29
,271
-
29,2
71
Tran
sfer
to s
tatu
tory
rese
rve
- 63
5,07
9 -
- (6
35,0
79)
- -
-
Fina
l div
iden
d (2
011)
-
- -
- (2
,650
,190
) (2
,650
,190
) (8
3,90
3)
(2,7
34,0
93)
Inte
rim d
ivid
end
paid
(201
2)
- -
- -
(1,9
43,4
73)
(1,9
43,4
73)
- (1
,943
,473
)
Char
ity
cont
ributi
ons
de
clar
ed (2
011)
-
- -
- (1
07,4
39)
(107
,439
) -
(107
,439
)
At 3
1 D
ecem
ber 2
012
9,71
7,36
5 6,
279,
076
3,68
1,75
0 28
5,53
5 17
,525
,126
37
,488
,852
11
3,58
2 37
,602
,434
Not
e: S
tatu
tory
rese
rve
incl
udes
sha
re p
rem
ium
of B
D 1
,952
,560
.
Equi
ty a
ttri
buta
ble
to o
wne
rs o
f the
com
pany
N
on-
Tota
l
Sh
are
Stat
utor
y In
vest
men
ts
Prop
erty
Re
tain
ed
Tota
l co
ntro
lling
eq
uity
capi
tal
rese
rve
fair
val
ue
reva
luati
on
earn
ings
inte
rest
rese
rve
rese
rve
At 1
Janu
ary
2011
6,
795,
360
4,57
2,37
3 4,
112,
062
396,
264
18,9
15,9
71
34,7
92,0
30
150,
081
34,9
42,1
11
Profi
t for
the
year
-
- -
- 5,
371,
961
5,37
1,96
1 76
,760
5,
448,
721
Oth
er c
ompr
ehen
sive
inco
me
Net
cha
nge
in fa
ir va
lue
-
- (9
10,4
46)
- -
(910
,446
) -
(910
,446
)
Tota
l oth
er c
ompr
ehen
sive
inco
me
- -
(910
,446
) -
- (9
10,4
46)
- (9
10,4
46)
Tota
l com
preh
ensi
ve in
com
e
for t
he y
ear
- -
(910
,446
) -
5,37
1,96
1 4,
461,
515
76,7
60
4,53
8,27
5
Bonu
s sh
are
issu
e 2,
038,
608
- -
- (2
,038
,608
) -
- -
Tran
sfer
of n
et d
epre
ciati
on
on re
valu
ed p
rope
rty
- -
- (7
0,00
0)
70,0
00
- -
-
Tran
sfer
to s
tatu
tory
rese
rve
- 1,
071,
624
- -
(1,0
71,6
24)
- -
-
Fina
l div
iden
d (2
010)
-
- -
- (2
,038
,608
) (2
,038
,608
) (7
3,29
5)
(2,1
11,9
03)
Inte
rim d
ivid
end
paid
(201
1)
- -
- -
(1,7
66,7
94)
(1,7
66,7
94)
- (1
,766
,794
)
Char
ity
cont
ributi
ons
de
clar
ed (2
010)
-
- -
- (1
18,3
86)
(118
,386
) -
(118
,386
)
At 3
1 D
ecem
ber 2
011
8,83
3,96
8 5,
643,
997
3,20
1,61
6 32
6,26
4 17
,323
,912
35
,329
,757
15
3,54
6 35
,483
,303
Not
e: S
tatu
tory
rese
rve
incl
udes
sha
re p
rem
ium
of B
D 1
,952
,560
.
28 29
Consolidated Statement of Cash Flows Notes to the Consolidated Financial Statementsfor the year ended 31 December 2012 for the year ended 31 December 2012Bahraini dinars
Note 2012 2011OPERATING ACTIVITIES
Cash generated from sales 26,305,700 25,488,513Receipts from training services 786,630 1,449,723Receipts from car promotions 68,030 127,420Other receipts 1,168,883 2,169,648
28,329,243 29,235,304
Payments for purchases (15,417,750) (15,849,907)Car promotion expenses (62,068) (84,295)Payments for management fees (697,483) (671,803)Payments of royalty 13 (2,377,804) (3,049,639)Payments to charities (5,939) (9,425)Payments for other operating expenses (4,919,652) (4,427,984)Directors’ remuneration paid (144,000) (160,000)
(23,624,696) (24,253,053)
Cash flows from operating activities 4,704,547 4,982,251
INVESTING ACTIVITIES
Interest income 297,995 378,272Investment income 1,921,624 1,742,896Acquisition of property and equipment 4 (427,116) (190,072)Acquisition of available-for-sale investments (5,487,274) (2,185,173)Acquisition of investment property (2,473,091) -Proceeds from sale of available-for-sale investments 1,092,228 1,000,826Proceeds from sale of property and equipment 12,208 4,286
Cash flows (used in) / from investing activities (5,063,426) 751,035
FINANCING ACTIVITIES
Dividend paid (4,703,898) (3,741,355)
Cash flows used in financing activities (4,703,898) (3,741,355)
Total cash flows for the year (5,062,777) 1,991,931
Cash and cash equivalents at 1 January 22,287,653 20,295,722
Cash and cash equivalents at 31 December 9 17,224,876 22,287,653
1 STATUS AND OPERATIONS
Bahrain Duty Free Shop Complex BSC (the “Company”) is a Bahrain registered joint stock company and was registered under commercial registration number 23509 on 15 July 1990. The Company operates the Bahrain Airport duty free shops and Bahrain Sea Port duty free shops and markets its duty free goods on airlines.
The Company owns 80% of the shares of Bahrain International Retail Development Centre WLL (the “Subsidiary”), which provides training services in the Kingdom of Bahrain. The consolidated financial statements for the year ended 31 December 2012 comprise the financial statements of the Company and its Subsidiary (together referred to as the “Group”) and the Group’s interest in associates. The Group owns 25% of associate interest in Bahrain International Airport Development Company (BIADCO) (2011: 25%).
2 BASIS OF PREPARATION
a) Statement of compliance The consolidated financial freehold statements have been prepared in accordance with International Financial Reporting
Standards (“IFRS”), the requirements of the Bahrain Commercial Companies Law, 2001. b) Basis of measurement The consolidated financial statements have been prepared under the historical cost convention, except for revaluation
of freehold land and buildings and available-for-sale investments, which are stated at their fair values.
c) Functional and presentation currency Items included in the financial statements of the Group are measured using the currency of the primary economic
environment in which the Group operates (the functional currency). The financial statements are presented in Bahraini Dinars, which is the Group’s functional and presentation currency. Except where otherwise stated, all financial information presented has been rounded off to the nearest Dinars.
d) Use of estimates and judgments The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions
that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
The Group makes estimates and assumptions that affect the reported amounts of assets and liabilities within the next financial year. The estimates and underlying assumptions are reviewed on an ongoing basis based on historical experience and other factors, including expectation of future events that are believed to be reasonable under the circumstances. Revisions to accounting estimates are recognised in the period in which the estimates are revised, if the revision affects only that period or in the period of the revision and any future period, if the revision affects both current and future periods.
(i) Impairment of inventories The Group reviews the carrying amounts of the inventories at each reporting date to determine whether the inventories
have been impaired. The Group identifies the inventories, which have been impaired based on the age of the inventory and their estimate of the future demand for the inventory. If any impairment indication exists, the inventories recoverable amount is estimated based on past experience relating to disposal of such inventory.
(ii) Impairment of receivables The Group reviews the carrying amounts of the receivables at each reporting date to determine whether the receivables
have been impaired. The Group identifies the receivables, which have been impaired based on the financial condition of the counterparty and estimated future cash flows. If any impairment exists, the recoverable amount of the impaired receivable is estimated based on the future cash flows estimated.
30 31
(iii) Useful life and residual value of property and equipment The Group reviews the useful life and residual value of the property and equipment at each reporting date to determine
whether an adjustment to the useful life and residual value is required. The useful life and residual value is estimated based on the similar assets of the industry, and future economic benefit expectations of the management.
e) New standards, amendments and interpretations effective from 1 January 2012 There following standards, amendments and interpretations, which became effective as of 1 January 2012, are relevant
to the Group:
(i) Improvements to IFRSs (2011) Improvements to IFRS issued in 2011 contained numerous amendments to IFRS that the IASB considers non-urgent
but necessary. ‘Improvements to IFRS’ comprise amendments that result in accounting changes to presentation, recognition or measurement purposes, as well as terminology or editorial amendments related to a variety of individual IFRS standards. There were no significant changes to the current accounting policies of the Group as a result of these amendments.
f) New Standards and interpretations issued but not yet adopted A number of new standards, amendments to standards and interpretations are effective for annual periods beginning
after 01 January 2013, and have not been applied in preparing these consolidated financial statements. Those which may be relevant to the Group are set out below. The Group does not plan to adopt these standards early in 2012.
(i) IAS 1 - Presentation of items of other comprehensive income The amendments to IAS 1 require that an entity present separately the items of other comprehensive income that would
be reclassified to profit or loss in the future if certain conditions are met from those that would never be reclassified to profit or loss. The amendment is effective for annual periods beginning after 1 July 2012 with an option of early application.
The Group is not expecting a significant impact from the adoption of this amendment. (ii) IAS 28 (2011) – Investment in Associates and Joint ventures IAS 28 (2011) supersedes IAS 28 (2008). IAS 28 (2011) makes the following amendments;
• Associates held for sale: IFRS 5 Non-current Assets Held for Sale and Discontinued Operations applies to an investment, or a portion of an investment, in an associate or a joint venture that meets the criteria to be classified as held for sale. For any retained portion of the investment that has not been classified as held for sale, the entity applies the equity method until disposal of the portion held for sale. After disposal, any retained interest is accounted for using the equity method if the retained interest continues to be an associate or a joint venture, and
• On cessation of significant influence or joint control, even if an investment in an associate becomes an investment in a joint venture or vice versa, the entity does not re-measure the retained interest.
The standard is effective for annual periods beginning on or after 1 January 2013 and is applied retrospectively. The Group is not expecting a significant impact from the adoption of this amendment.
(iii) IFRS 7 and IAS 32 - Offsetting financial assets and financial liabilities (2011) Disclosures – Offsetting Financial Assets and Financial Liabilities (amendments to IFRS 7) introduces disclosures about
the impact of netting arrangements on an entity’s financial position. The amendments are effective for annual periods beginning on or after 1 January 2013 and interim periods within those annual periods. Based on the new disclosure requirements the Group will have to provide information about what amounts have been offset in the statement of financial position and the nature and extent of rights of set off under master netting arrangements or similar arrangements.
Offsetting Financial Assets and Financial Liabilities (amendments to IAS 32) clarify the offsetting criteria IAS 32 by explaining when an entity currently has a legally enforceable right to set off and when gross settlement is equivalent to net settlement. The amendments are effective for annual periods beginning on or after 1 January 2014 and interim periods within those annual periods. Earlier application is permitted.
The Group is not expecting a significant impact from the adoption of these amendments.
(iv) IFRS 9 - Financial Instruments IFRS 9 (2009) introduces new requirements for the classification and measurement of financial assets. IFRS 9 (2010)
introduces additions relating to financial liabilities. The IASB currently has an active project to make limited amendments to the classification and measurement requirements of IFRS 9 and add new requirements to address the impairment of financial assets and hedge accounting.
The IFRS 9 (2009) requirements represent a significant change from the existing requirements in IAS 39 in respect of financial assets. The standard contains two primary measurement categories for financial assets: amortised cost and fair value. A financial asset would be measured at amortised cost if it is held within a business model whose objective is to hold assets in order to collect contractual cash flows, and the asset’s contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal outstanding. All other financial assets would be measured at fair value. The standard eliminates the existing IAS 39 categories of held to maturity, available-for-sale and loans and receivables.
For an investment in an equity instrument which is not held for trading, the standard permits an irrevocable election, on initial recognition, on an individual share-by-share basis, to present all fair value changes from the investment in other comprehensive income. No amount recognised in other comprehensive income would ever be reclassified to profit or loss at a later date. However, dividends on such investments are recognised in profit or loss, rather than other comprehensive income unless they clearly represent a partial recovery of the cost of the investment. Investments in equity instruments in respect of which an entity does not elect to present fair value changes in other comprehensive income would be measured at fair value with changes in fair value recognised in profit or loss.
The standard requires that derivatives embedded in contracts with a host that is a financial asset within the scope of the standard are not separated; instead the hybrid financial instrument is assessed in its entirety as to whether it should be measured at amortised cost or fair value.
IFRS 9 (2010) introduces a new requirement in respect of financial liabilities designated under the fair value option to generally present fair value changes that are attributable to the liability’s credit risk in other comprehensive income rather than in profit or loss. Apart from this change, IFRS 9 (2010) largely carries forward without substantive amendment the guidance on classification and measurement of financial liabilities from IAS 39.
IFRS 9 is effective for annual periods beginning on or after 1 January 2015 with early adoption permitted. The IASB decided to consider making limited amendments to IFRS 9 to address practice and other issues. The Group has commenced the process of evaluating the potential effect of this standard but is awaiting finalisation of the limited amendments before the evaluation can be completed.
(v) IFRS 10 - Consolidated financial statements and IAS 27 - Separate Financial Statements (2011) IFRS 10 introduces a single control model to determine whether an investee should be consolidated. The Group is not
expecting a significant impact from the adoption of this amendment (see Notes 3 (a)). The standard is effective for annual periods beginning on or after 1 January 2013.
(vi) IFRS 12 - Disclosures of interests in other entities IFRS 12 brings together into a single standard all the disclosure requirements about an entity’s interests in subsidiaries,
joint arrangements, associates and unconsolidated structured entities. It requires the disclosure of information about the nature, risks and financial effects of these interests.
Notes to the Consolidated Financial StatementsNotes to the Consolidated Financial Statementsfor the year ended 31 December 2012for the year ended 31 December 2012
2 BASIS OF PREPARATION (continued) 2 BASIS OF PREPARATION (continued)
32 33
Notes to the Consolidated Financial StatementsNotes to the Consolidated Financial Statementsfor the year ended 31 December 2012for the year ended 31 December 2012
2 BASIS OF PREPARATION (continued) 3 SIGNIFICANT ACCOUNTING POLICIES (continued)
The standard is effective for annual periods beginning on or after 1 January 2013. The Group is currently assessing the disclosure requirements for interests in subsidiaries in comparison with existing disclosures.
(vii) IFRS 13 - Fair value measurement IFRS 13 provides a single source of guidance on how fair value is measured, and replaces the fair value measurement
guidance that is currently dispersed throughout IFRS. Subject to limited exceptions, IFRS 13 is applied when fair value measurements or disclosures are required or permitted by other IFRSs. Although many of the IFRS 13 disclosure requirements regarding financial assets and financial liabilities are already required, the adoption of IFRS 13 will require the Group to provide additional disclosures. These include fair value hierarchy disclosures for non-financial assets/liabilities and disclosures on fair value measurements that are categorised in Level 3.
IFRS 13 is effective for annual periods beginning on or after 1 January 2013 with an option of early adoption. The Group is currently assessing the disclosure requirements for interests in subsidiaries in comparison with existing disclosures.
3 SIGNIFICANT ACCOUNTING POLICIES
The significant accounting polices applied in the preparation of these consolidated financial statements are set out below. These accounting policies have been consistently applied by the Group and are consistent with those used in the previous year.
a) Basis of consolidation (i) Subsidiaries Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the financial
and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.
Upon the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently it is accounted for as an equity-accounted investee or as an available-for-sale financial asset depending on the level of influence retained.
(ii) Associates Associates are those enterprises in which the Group has significant influence, but not control, over the financial and
operating policies. Significant influence is presumed to exist when the group holds between 20% and 50% of the voting power of another entity. Associates are accounted for using the equity method (equity accounted investees).
The consolidated financial statements include the Group’s share of the income and expenses of equity accounted investees, after adjustments to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases. When the Group’s share of losses exceeds its interest in the equity accounted investee, the carrying amount of that interest (including any long-term investments) is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee.
(iii) Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised gains arising from intra-group transactions, are eliminated
in preparing the consolidated financial statements. Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group’s interest in the enterprise. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
b) Foreign currency translation Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into Bahraini
Dinars at foreign exchange rate prevailing 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 denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured in terms of historical cost are translated using the exchange rate at the date of the transaction. Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising on the retranslation of available-for-sale equity investments which are recognised in other comprehensive income.
c) Inventories Inventories are stated at the lower of cost and estimated net realisable value. Net realisable value is the estimated selling
price in the ordinary course of business, less estimated selling expenses. The cost of inventory is based on the weighted average basis. The cost includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition.
d) Investment property Investment properties are those which are held by the Group to earn rental income or for capital appreciation or both.
Investment properties are stated at cost less accumulated depreciation and any impairment losses. Depreciation is calculated on cost by the straight-line method at annual rates, which are intended to write off the cost of the investment property over their estimated useful lives of 10-20 years.
e) Property and equipment (i) Owned assets Items of property, plant and equipment held for use in the provision of service, or for administrative purposes on a
continuing basis and not intended for sale in the ordinary course of business, are carried at cost less accumulated depreciation and impairment losses, if any, except for freehold land and buildings which are carried at their professionally determined fair market value, less accumulated depreciation and impairment losses, if any. The surplus arising on revaluation was credited to a revaluation reserve in equity, which is non-distributable.
(ii) Subsequent expenditure Subsequent costs are included in the assets carrying amount or are recognized as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the consolidated profit or loss during the financial period in which they are incurred.
(iii) Depreciation Depreciation is calculated on cost by the straight-line method at annual rates, which are intended to write off the cost of
the items of property, plant and equipment over the following estimated useful lives:
Categories Estimated used life in years
Freehold buildings 25
Leasehold buildings 25
Premises improvement 10
Furniture and fixtures 7
Computer, other equipment and vehicles 5
34 35
The assets residual values and useful lives are reviewed, and revised if appropriate, at each reporting date. All depreciation is charged to the consolidated profit or loss. When an asset is sold or otherwise retired, the cost and related accumulated depreciation are removed and any resultant gain or loss is taken to the consolidated profit or loss.
The estimated useful working lives of the assets are periodically reviewed by the management. No depreciation is charged on freehold land.
f) Financial instruments (i) Available-for-sale investments Available-for-sale investments are those investments that are not classified at fair value through profit or loss or held to
maturity. These include investments in quoted and unquoted securities.
The Group recognises these investments initially at fair value of consideration given, plus attributable transaction costs and subsequently re-measured to fair value as at the reporting date. Fair value changes are recognised in a separate fair value reserve in equity and when the investments are sold, impaired, collected or otherwise disposed of, the cumulative gain or loss previously recognised in the fair value reserve is transferred to the consolidated profit or loss.
The fair values of quoted investment in active markets are based on bid prices.
Available-for-sale investments that are not quoted in active market and for which there are no other appropriate methods from which to derive fair value are carried at cost less impairment allowance.
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or where the Group has transferred substantially all risk and rewards of ownership. Purchases and sales of investment securities are recognised on the trade date, i.e. the date that the Group commits to purchase or sell the investment.
(ii) Receivables Trade receivables are stated at their cost, being the fair value, less impairment allowances.
(iii) Cash and cash equivalents Cash and cash equivalents comprise cash and bank balances and short-term bank deposits maturing within 90 days.
(iv) Trade and other payables Trade and other payables are stated at amortized cost.
g) Employee benefits Pension rights (and other social benefits) for Bahraini employees are covered by the General Organisation for Social
Insurance scheme to which employees and employers contribute monthly on a fixed-percentage-of-salaries basis. The Group’s share of contributions to this scheme, which is a defined contribution scheme under IAS 19 – Employee Benefits, is recognised as an expense in the consolidated profit or loss.
Expatriate employees are entitled to leaving indemnities payable under the Bahraini Labour Law for the Private Sector 1976, based on length of service and final remuneration. Provision for this, which is unfunded, and which represents a defined benefit plan under IAS 19 – Employee Benefits, has been made by calculating the notional liability had all employees left at the statement of financial position date. The charge for the year is recognised as an expense in the consolidated profit or loss.
h) Provisions A provision is recognised in the statement of financial position when the Group has a legal or constructive obligation as
a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation.
Notes to the Consolidated Financial StatementsNotes to the Consolidated Financial Statementsfor the year ended 31 December 2012for the year ended 31 December 2012
3 SIGNIFICANT ACCOUNTING POLICIES (continued) 3 SIGNIFICANT ACCOUNTING POLICIES (continued)
i) Impairment (i) Non-financial assets The carrying amounts of the Group’s assets are reviewed at each reporting date to determine whether there is any
indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. All impairment losses are recognised in the consolidated profit or loss.
(ii) Financial assets The Group assesses at each reporting date whether there is objective evidence that a financial asset is impaired.
In the case of quoted equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered in determining whether the assets are impaired. The Group considers that a 20% decline in the value of investments as compared to its cost as a significant reduction and that a period of six months as prolonged. Where fair values are not readily available and the investments are carried at cost, the recoverable amount of such investment is estimated to test for impairment. In making this judgment, the Group evaluates among other factors, evidence of deterioration in the financial health of the investee, industry and sector performance, changes in technology and operational and financing cash flows.
If any such evidence exists for available-for-sale investments, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss – is removed from equity and recognised in the consolidated profit or loss. Impairment losses recognised on equity instruments are not subsequently reversed through the consolidated profit or loss.
For financial assets carried at amortised cost, impairment is measured as the difference between the carrying amount of the financial assets and the present value of estimated cash flows. When a subsequent event causes the amount of impairment loss to decrease, the impairment loss is reversed through the profit and loss.
j) Statutory reserve In accordance with Bahrain Commercial Companies Law 2001, the Company is required to appropriate 10 percent of the
net profit to a statutory reserve, which is normally distributable only on dissolution. Appropriations may cease when the reserve reaches 50% of the share capital.
k) Dividends Dividends are recognised as a liability in the period in which they are declared.
l) Royalty Royalty is paid to the Civil Aviation Authority based on an agreement and is computed based on 50% of the net operating
profit of airport operations.
m) Revenue recognition (i) Sales of goods – Income from sale of goods are recognised when the significant risks and rewards of ownership
have been transferred to the buyer. Significant risks and rewards are transferred to the buyer at the time of delivery. Sales are usually in cash or by credit card.
(ii) Training services – revenue generated from providing training services is recognised on a time apportioned basis over the period of the training course.
(iii) Advertisement income – is the income received from suppliers for advertising their products in the premises operated by the Group. This revenue is based on contracts and is time-apportioned over the period of the contracts.
(iv) Interest income – Interest income on bank deposits is recognised on time-proportioned basis. (v) Dividend Income – is recognized in the profit or loss on the date the dividend is declared.
36 37
Notes to the Consolidated Financial StatementsNotes to the Consolidated Financial Statementsfor the year ended 31 December 2012
Summarised financial information of the associate, not adjusted for percentage ownership held by the Group:
The Company purchased lands during the year. As at 31 December 2012, the market value of the land approximates its cost.
The fair values are determined based on their market value as at 31 December 2012. The Group’s investment in certain funds and equity securities amounting to BD 5,726,514 (2011: BD 2,521,704) are carried at cost, less impairment allowances, if any, as these are not quoted and no other appropriate methods are readily available from which to derive a reliable fair value. For unquoted equity investments, the exit strategy is via a trade sale or IPO.
Provision for impairment in the statement of comprehensive income includes BD 415,826 (2011: BD 881,252) towards the decrease in cost of investments and BD Nil (2011: BD Nil) towards transfer of fair value reserve to profit or loss.
for the year ended 31 December 2012
4 PROPERTY AND EQUIPMENT 5 INVESTMENT IN ASSOCIATE
6 INVESTMENT PROPERTY
7 AVAILABLE-FOR-SALE INVESTMENTS
Freehold Leasehold Premises Furniture Computer, 2012 2011 land & building improve and other Total Total building ments fixtures equipment & vehicles
Cost
1 January 1,160,346 1,515,759 1,819,055 1,154,771 980,735 6,630,666 6,629,099
Additions - - 131,032 22,757 273,327 427,116 190,072
Impairment (note*) - - - - - - (185,565)
Revaluation (805,346) - - - - (805,346) -
Disposals - - - (44,672) (19,777) (64,449) (2,940)
31 December 355,000 1,515,759 1,950,087 1,132,856 1,234,285 6,187,987 6,630,666
Depreciation
1 January (761,520) (610,510) (883,177) (942,980) (789,946) (3,988,133) (3,605,740)
Charge for the year (73,097) (60,350) (139,938) (50,051) (90,735) (414,171) (467,686)
Impairment loss - - - - - - 85,192
Revaluation 834,617 - - - - 834,617 -
Disposals - - - 12,486 14,145 26,631 99
31 December - (670,860) (1,023,115) (980,545) (866,536) (3,541,056) (3,988,135)
Net book value at 31 December
2012 355,000 844,899 926,972 152,311 367,749 2,646,931 -
2011 398,826 905,249 935,878 211,791 190,789 - 2,642,531
* The net book value building and fixtures of Seaport duty free shop has been impaired and charged to income statement as the operation has been ceased at the end of the year 2011.
The fair value of the property as at 31 December 2012 was BD 355,000 (2011: BD 398,826). The fair value of the property was determined by a registered independent appraiser having an appropriate recognised professional qualification and experience in the location and category of the property being valued.
Properties used by the Company:
Property Address Description Existing use Tenure Average age of the property
Present carrying value
Juffair land & Building
Building 261, Al Shabab Avenue, Juffair
Building measuring 1,083 m2
Business Freehold 25 years 355,000
Shop Building Bahrain Airport
Building measuring 3,300 m2
Business 25 years renewable lease agreement
25 years 844,899
2012 2011
As at 1 January 176,095 -
Investment made during the year - 156,789
Share of profit for the year 15,895 19,306
At December 191,990 176,095
Total Assets Total liabilities Total Revenues Profit
2012 818,758 249,937 311,485 63,582
2011 1,040,302 534,402 318,367 77,224
2012 2011
Purchased during the year 2,473,091 -
At 31 December 2,473,091 -
2012 2011
Quoted equity shares 9,694,115 7,740,703
Unquoted equity shares 5,726,514 2,521,704
Debt instruments 2,513,996 1,874,633
Structured notes 376,000 376,000
Managed funds - 930,506
At 31 December 18,310,625 13,443,546
Bahraini dinars Bahraini dinars
38 39
Notes to the Consolidated Financial StatementsNotes to the Consolidated Financial Statementsfor the year ended 31 December 2012for the year ended 31 December 2012
8 INVENTORIES 11 SHARE CAPITAL
12 PROVISION FOR EMPLOYEES’ LEAVING INDEMNITIES
9 RECEIVABLES AND OTHER ASSETS
10 CASH AND CASH EQUIVALENTS
2012 2011
Inventories in hand 2,309,180 2,349,941
Less Impairment allowance (232,555) (191,453)
At 31 December 2,076,625 2,158,488
Movement in impairment allowance on inventories:(i) Names and nationalities of the major equity holders (defined as a holding in excess of 5% of the issued and fully paid
capital) and the number of equity shares held:
(ii) The Company has only one class of equity shares and the holders of these shares have equal voting rights.
(iii) The following is a distribution schedule of equity shares setting out the number of holders:
(iv) Total number of shares owned by the directors of the Company as at 31 December 2012 was shares 9,948,604 (2011: 9,705,119 shares).
* Expressed as a percentage of total issued and fully paid shares of the Company.
Movement in impairment allowance on trade receivables:
2012 2011
At 1 January 191,453 303,073
Provision made / (reversed) during the year 41,102 (91,586)
Provision utilised - (20,034)
At 31 December 232,555 191,453
2012 2011
Trade receivables 600,014 565,768
Other receivables and prepayments 1,044,618 522,660
Related parties (note 16) 147,045 129,352
Less Impairment allowance1,791,677
(41,266)1,217,780
(23,324)
At 31 December 1,750,411 1,194,456
2012 2011
At 1 January 23,324 21,670
Provision during the year 17,942 1,654
At 31 December 41,266 23,324
2012 2011
Short-term bank deposits 14,194,047 18,366,444
Cash at bank 2,924,807 3,819,525
Cash in hand 106,022 101,684
At 31 December 17,224,876 22,287,653
2012 2011
Authorised share capital97,173,648 (2011: 88,339,680) shares of 100 fils each 9,717,365 8,833,968
Issued and fully paid up97,173,648 (2011: 88,339,680) shares of 100 fils each 9,717,365 8,833,968
Name Nationality Number of shares Share holding (%)
Esterad Investment Co. BSC Bahraini 11,041,212 11.36
Global Express Bahraini 7,864,528 8.09
Rouben’s Stores Bahraini 6,327,789 6.51
Farouk Yousuf Almoayyed Bahraini 4,903,031 5.05
Categories* Number of shares
Number of equity holders
% of total issued shares
Less than 1% 24,361,213 557 25.05
1% up to less than 5% 42,675,875 26 43.93
5% up to less than 10% 19,095,348 3 19.66
10% up to less than 20% 11,041,212 1 11.36
20% up to less than 50% - - -
50% and above - - -
Total 97,173,648 587 100.00
2012 2011
At 1 January 421,291 359,248
Charge for the year 191,773 85,807
Paid during the year (51,250) (23,764)
At 31 December 561,814 421,291
Bahraini dinars Bahraini dinars
40 41
Notes to the Consolidated Financial StatementsNotes to the Consolidated Financial Statementsfor the year ended 31 December 2012for the year ended 31 December 2012
13 PAYABLES AND OTHER LIABILITIES
14 ROYALTY
15 OTHER INCOME
16 ADMINISTRATIVE EXPENSES
17 RELATED PARTY TRANSACTION
2012 2011
Trade payable 1,588,135 1,213,764
Related parties payable (note 16) 795,797 1,061,949
Other payables 1,344,477 1,477,750
3,728,409 3,753,463
Royalty computation 2012 2011
Profit from duty free operations before royalty 6,220,428 5,140,013
Less: profit from operations that are not subject to royalty (380,128) (384,406)
Profit for royalty computation 5,840,300 4,755,607
Royalty at 50% of the above profit 2,920,150 2,377,803
Royalty payable 2012 2011
At 1 January 2,185,803 2,857,639
Royalty for the year 2,920,150 2,377,803
Royalty paid during the year (2,377,804) (3,049,639)
At 31 December 2,728,149 2,185,803
2012 2011
Investment income 1,910,682 1,731,033
Advertising income 731,838 933,210
Beauty advisory income 419,308 452,060
Interest on bank deposits 297,995 378,398
Foreign exchange gains (net) 144,192 171,256
Others 190,538 108,900
3,694,553 3,774,857
2012 2011
Salaries and related cost 3,349,712 3,693,715
Management fee 728,956 650,111
Depreciation 414,171 467,686
4,492,839 4,811,512
Bahraini dinars Bahraini dinars
A royalty of BD 230,000 or 50% of the profit from duty free operations at Bahrain International Airport, whichever is higher is paid to the Civil Aviation Affairs of the Government of the Kingdom of Bahrain. The Civil Aviation Affairs has transferred its rights and obligations as per the royalty agreement to Bahrain Airport Company BSC (c).
Management fee relates to amounts paid to Aer Rianta International Middle East W.L.L to manage the Bahrain Duty Free Shop Complex by providing experienced managerial staff and other operational support services based on the management agreement. On 22 July 2010, the contract was renewed and is effective for another seven years from 1 January 2011 until 31 December 2017.
Parties are considered to be related if one party, directly or indirectly through one or more intermediaries, has the ability to control the other party or exercise significant influence over the other party in making financial and operating decisions. Related parties include entities over which the Group exercises significant influence, major shareholders, directors, the management company and key management personnel of the Group.
a) Transactions
d) Key management personnel
Key management personnel of the Group comprise of the Board of Directors and key members of management having authority and responsibility for planning, directing and controlling the activities of the Group. The key management personnel compensation is as follows:
Other transactions with related parties are disclosed in note 5 and 16.
2012 2011
Purchases 7,403,509 7,107,339
License fees 262,187 242,366
Other income 68,005 74,591
2012 2011
Board remuneration for the year 144,000 156,000
Salaries and other short-term benefits for the year 266,031 288,977
Post employment benefits for the year 8,634 7,537
Post employment benefits payable 21,200 12,567
2012 2011
b) Amounts due from related parties (see note 9) 147,045 129,352
c) Amounts due to related parties (see note 13) 795,797 1,061,949
42 43
Notes to the Consolidated Financial StatementsNotes to the Consolidated Financial Statementsfor the year ended 31 December 2012for the year ended 31 December 2012
18 APPROPRIATIONS
19 EARNINGS PER SHARE
20 SEGMENTAL INFORMATION
2012 2011
Interim dividends paid 1,943,473 1,766,793
Final cash dividend proposed 2,915,210 2,650,191
Bonus shares issue 10% (2011: 10%) 971,737 883,397
Charity 127,016 107,439
5,957,436 5,407,820
Basic Diluted
2012 2011 2012 2011
Profit for the year 6,350,792 5,371,961 6,350,792 5,371,961
Weighted average number of shares 97,173,648 97,173,648 97,173,648 97,173,648
Earnings per share 65.4 fils 55.3 fils 65.4 fils 55.3 fils
Bahraini dinars Bahraini dinars
The Board of Directors have proposed the following appropriations and director’s remuneration for the year 2012:
Earnings per share is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company of BD 6,350,792 (2011: BD 5,371,961) by the number of ordinary shares in issue in 2012.
A segment is a distinguishable component of the Company that is engaged either in providing products or services (business segment) or in providing products or services within a particular environment (geographical segment), which is subject to risks and rewards that are different from those of other segment. The Group currently primarily operates Duty free shops at Bahrain International Airport and on board in-flight in Bahrain Air flights and its revenue, expenses and results are reviewed only at a Group level and therefore no separate operating segment results and other disclosures are provided in these consolidated financial statements.
21 FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
The Group has exposure to the following risks from its use of financial instruments:• Credit risk• Liquidity risk• Market risk
This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing risk, and the Group’s management of capital. The note also presents certain quantitative disclosures in addition to the disclosures throughout the financial statements.
The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Board has established executive management committees, which assist the Board of Directors in effectively discharging their responsibilities for developing and monitoring the Group’s risk management policies.
The Group’s audit committee oversees how management monitors compliance with the Group’s risk management procedures and review the adequacy of the risk management practices in relation to the risks faced by the Group. The Group audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and adhoc reviews of risk management controls and procedures, the results of which are reported to the audit committee.
a) Credit risk
Credit risk is the risk that a customer or a counter party to a financial instrument will fail to discharge an obligation and cause the Group to incur a financial loss. The Group is exposed to credit risk primarily on its cash and cash equivalents, receivables and investment in debt instruments and structured notes.
The Group’s credit risk on cash and cash equivalents is limited as these are placed with banks in Bahrain having good credit ratings.
The Group manages its credit risk on accounts receivables by restricting its credit sales only through major credit cards and ensuring that the sales to related parties are as per the internal policies established for transactions with the related parties. Since the Group is involved in ‘over-the-counter’ retail sales there is no significant geographical or customer type concentration of credit risk involved in accounts receivable balances. The Group perceives that the account receivable balances are of good credit quality as these are primarily receivable from:
• vendors where the Group has net payable balances • well established credit card companies• related parties with good financial position
The Group establishes provision for impairment of accounts receivables when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the accounts receivable is impaired.
The Group manages credit risk on its investments by ensuring that investments are made only after careful credit evaluation. The Group limits its exposure to credit risk by mainly investing in debt instruments, structured notes and managed funds managed or promoted by established bank or financial institutions. The Group has an investment committee comprising of three board members, which is responsible for all investment related decisions. Before investing in any new securities the proposal is first placed with the investment committee for its approval. Investment committee approves the proposal after considering all merits and demerits of the proposal.
Exposure to credit riskThe carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:
21 FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)
2012 2011
Bank balances 17,118,854 22,185,968
Available-for-sale investments 2,889,996 2,250,633
Trade and other receivables 856,503 710,300
Related party receivable 147,045 129,352
21,012,398 25,276,253
44 45
Notes to the Consolidated Financial StatementsNotes to the Consolidated Financial Statementsfor the year ended 31 December 2012for the year ended 31 December 2012
2012 2011
Bahrain 14,550,666 24,821,419
Middle East 2,359,474 117,959
Others 4,102,258 192,343
21,012,398 25,131,721
2012 2011
USD 3,018,267 2,852,242
EURO (142,854) 191,222
GBP 3,916,869 101,671
6,792,282 3,145,135
2012 2011
Gross Impairment Gross Impairment
Not past due 298,518 - 307,730 -
Past due 0-90 days 132,438 - 194,778 -
Past due 91-180 days 124,170 - 65,141 -
More than 180 days 191,932 41,266 127,471 23,324
747,059 41,266 695,120 23,324
Bahraini dinars Bahraini dinars
The maximum exposure to credit risk at the reporting date based on geographical concentration was:
The ageing of trade and related party receivables at the reporting date was:
b) Liquidity riskLiquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group’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 Group’s reputation. Liquidity risk may result from an inability to sell a financial asset quickly at close to its fair value. The Group ensures that a significant amount of the funds are invested in cash and cash equivalents, which are readily available to meet liquidity requirements.
All financial liabilities are non-interest bearing and are payable within six months.
c) Market riskMarket risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk. The Group incurs financial liabilities, in order to manage market risks. All such transactions are carried out within the guidelines set by the Board of Directors.
(i) Interest rate riskInterest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. The Group’s short-term bank deposits are at fixed interest rates and mature within 90 days. The Group is not subject to significant interest rate risk sensitivity.
(ii) Currency riskCurrency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. The Group has exposure to currency risk on its purchases invoiced in foreign currency, on credit sales in foreign currency and on its certain investment in Kuwaiti dinar. Predominantly, the purchase of products is from local suppliers. The majority of the foreign currency purchases are in US dollars. The US dollar is pegged against the Bahraini dinar and therefore the Group is not exposed to any significant risk.
The Group’s net exposure to significant currency risk in the functional currency at the reporting date was:
The Group does not perceive that fluctuations in foreign exchange rates will have any significant impact on the income or equity because the exposure to currencies other than US dollar, which is pegged to Bahraini dinar, is not significant. GBP includes investment carried at cost and therefore, the impact if any, would be only on sale of the investment.
(iii) Equity price riskThe Group’s quoted equity investments are listed on Bahrain Stock Exchange (“BSE”), Kuwait Stock Exchange (“KSE”), Kingdom of Saudi Stock exchange (“Tadawul”) and Qatar Stock exchange (“QE”). A two percent increase in the equity prices at the reporting date will cause a variation of equity by BD 193,896 (2011: BD 154,814) in the equity. The analysis is performed on the same basis for 2011.
d) Capital managementThe Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the Group. The Board of Directors monitors both the demographic spread of shareholders, as well as the return on capital, which the Group defines as total shareholders’ equity and the level of dividends to shareholders. The Board seeks to maintain a balance between the higher returns and growth that might be possible by a sound capital position. There were no significant changes in the Group’s approach to capital management during the year.
e) Fair value The Group measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measures:
• Level 1: Quoted market price (unadjusted) in an active market for an identical instrument.
• Level 2: Valuation techniques based on observable inputs, either directly (i.e. as prices) or indirectly (i.e., derived from prices). This category includes instruments valued using; quoted market prices in active markets for similar instruments; quoted prices for identical or similar instruments; quoted prices for identical or similar instruments in markets that are considered less than active; or other valuation techniques where all significant inputs are directly or indirectly observable from market data.
• Level 3: Valuation techniques using significant unobservable inputs. This category includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument’s valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between the instruments.
21 FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued) 21 FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)
46 47
The table below analyses financial instruments, measured at fair value as at reporting date, by level in the fair value hierarchy into which the fair value measurement is categorized:
f) Categorization of financial instruments
The classification of financial assets and liabilities by accounting categorization is as follows:
Notes to the Consolidated Financial StatementsNotes to the Consolidated Financial Statementsfor the year ended 31 December 2012for the year ended 31 December 2012 Bahraini dinars Bahraini dinars
21 FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)
2012 Level 1 Level 2 Level 3 Total
Available-for-sale investments – carried at fair value 12,208,111 - 376,000 12,584,111
2011Available-for-sale investments – carried at fair value 9,615,336 - 1,306,506 10,921,842
2012 Loans and receivables
Available- for- sale
Other amortised cost
Total carrying amount
Available-for-sale investments - 18,310,625 - 18,310,625
Receivables & other assets 747,059 - - 747,059
Cash and cash equivalents 17,118,854 - - 17,118,854
17,865,913 18,310,625 - 36,176,538
Payable & other liabilities - - 3,728,409 3,728,409
Royalty payable - - 2,728,149 2,728,149
Management fees - - 53,743 53,743
- - 6,510,301 6,510,301
2011 Loans and receivables
Available- for- sale
Other amortised cost
Total carrying amount
Available-for-sale investments - 13,443,547 - 13,443,547
Receivables & other assets 1,194,456 - - 1,194,456
Cash and cash equivalents 22,287,653 - - 22,287,653
23,482,109 13,443,547 - 36,925,656
Payable & other liabilities - - 3,753,463 3,753,463
Royalty payable - - 2,185,803 2,185,803
Management fees - - 58,909 58,909
- - 5,998,175 5,998,175
22 COMMITMENTS
23 COMPARATIVES
Certain prior year amounts have been reclassified or regrouped to conform to the presentation in the current year. Such reclassifications do not affect previously reported profit or equity.
2012 2011
Uncalled face value of investments in unquoted equity 284,376 601,208
Property and equipment 1,112 190,610
285,488 791,818
48 49