Annual R eport 2013 ٢٠١٣ يﻮـﻨﺴﻟا ﺮﻳﺮـﻘــﺘﻟا يﻮﻨـﺴﻟا ﺮﻳﺮـــﻘﺘﻟا Annual Report 2013

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1 Annual Report 2013

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4 His Royal Highness Prince Khalifa Bin Salman Al Khalifa The Prime Minister of the Kingdom of Bahrain His Royal Majesty King Hamad Bin Isa Al Khalifa The King of the Kingdom of Bahrain His Royal Highness Prince Salman Bin Hamad Al Khalifa The Crown Prince, Deputy Supreme Commander and First Deputy Prime Minister of the Kingdom of Bahrain 1

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6 CONTENTS Board of Directors 4-5 Chairman s Report 6-7 General Information 10 The Management 11 Corporate Governance Independent Auditors Report to the Shareholders 21 CONSOLIDATED FINANCIAL STATEMENTS Consolidated Statement of Financial Position 22 Consolidated Statement of Comprehensive Income 23 Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows 26 Notes to the Consolidated Financial Statements

7 BOARD OF DIRECTORS Farouk Yousuf Almoayyed Chairman Abdulla Buhindi Managing Director 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. 4 ANNUAL REPORT 2013

8 Shaikh Mohammed bin Ali bin Mohammed Al Khalifa Director Jalal Mohamed Jalal Director Mohammed Al Khan Director Ghassan Al Sabbagh Director Jawad Al Hawaj Director Nabeel Al Zain Director Jassim Mohammed Al Shaikh Director Mazen Abdulkarim Director 5

9 CHAIRMAN S REPORT On behalf of the board of directors at Bahrain Duty Free, it gives me great pleasure to present the twenty third annual report incorporating the consolidated financial statements of the group for the year ended 31st December While 2013 proved to be a tough and challenging year, I am proud to say that Bahrain Duty Free achieved resilient financial results and made important strategic progress in many areas to ensure continued success of our company. It was a year where our sales declined by 5% due to a fall in passengers travelling through the airport. Despite this, net income in 2013 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 produce solid results for the company. Reviewing some milestones achieved in 2013, the Company s new headquarters in Muharraq was opened in September. The building is strategically located beside our core business at the airport to better serve and support our customers, suppliers and sales staff. The Arrivals shop was upgraded and refurbished to give a brighter and more spacious shopping experience to passengers as well as a greater product range. For the full year 2013, the Group reported Gross Revenues of BD 26M (BD 27.5M in 2012). Net Profits recorded were BD 6.4M. At December year end, total shareholder s equity stood at BD 41.6M an increase of 10.7% compared to BD 37.6M in 2012, while total assets stood at BD 49.3M reflecting the ever increasing performance and strength of our financial position. 6 ANNUAL REPORT 2013

10 Our investment portfolio now totals BD 22.2M growing by 21.5% due to several investments made during the year. Investment income growth of 14.9% was achieved recording over BD 2.1M in investment income during The portfolio remains strong and well balanced. Operationally, 2013 was a challenging year with passenger volume reduced by 8.2% compared to last year and the sales mix changed slightly which affected the gross margin. To boost sales, several successful marketing campaigns were run in 2013 and these helped to push up our passenger spend and the average transactional value. Major increases in some product categories were achieved despite the reduction in our customer penetration rates. Customer focus and satisfaction remains our top priority as we strive to continue to bring new product offerings to Bahrain. The company implemented many improvements from the strategy plan particularly in the area of Information Technology. The network infrastructure was upgraded giving better and more efficient performance. The actions we have taken over the past year, both in streamlining our operations and planning for future growth will ensure that the Group continues to provide shareholders with good dividend returns. In this regard, Bahrain Duty Free s Board of Directors will recommend to the Annual General Meeting of Shareholders in March 2014, the following appropriations from the 2013 net profit: 1) Full year dividend of 55 fils per share of which 20 fils was distributed during the financial year. Khalifa the Prime Minister, His Royal Highness Prince Salman bin Hamad Al Khalifa, Crown Prince & Deputy Supreme Commander and His Highness Shaikh Ali bin Khalifa Al Khalifa, Deputy Prime Minister for their continuing support. Thank you to our Shareholders, Stakeholders, Teams and Customers To our shareholders I thank you for the confidence placed in the Board and the continued support for our strategic plans. I also extend my gratitude to the staff and management of Bahrain Duty Free for their continued loyalty and support. 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. A final thank you to all our customers for their continued patronage and for choosing to shop at Bahrain Duty Free. Looking to the Future My role as Chairman is made much easier due to the tremendous support I receive from my colleagues on the Board. Having a strong team is a great advantage and I am very grateful to each of them for the efforts and contributions during The continuing focus by all our people on improving the way we serve our customers coupled with strong financial discipline will enable us to pursue growth and meet our long term objectives. 2) Transfer to charity fund 2%. On behalf of my colleagues on the Board, may I extend my sincere gratitude and appreciation to His Majesty King Hamad bin Isa Al Khalifa, His Royal Highness Prince Khalifa bin Salman Al Farouk Yousuf Almoayyed Chairman 18 February

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13 GENERAL INFORMATION REGISTRATION Bahrain Duty Free Shop Complex BSC, a joint stock company governed by the Bahrain Commercial Companies Law 2001, was registered under commercial registration number on 15 July 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. SHARE CAPITAL Authorised : BD 10,689,102 (2012: BD 9,717,365) divided into 106,891,020 shares (2012: BD 97,173,650 shares) of 100 fils each Issued and fully paid-up : BD 10,689,102 (2012: BD 9,717,365) 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 Mazen Abdulkarim AUDIT COMMITTEE : Jawad Al Hawaj Mohammed Al Khan Nabeel Al Zain Ghassan Al Sabbagh Mazen Abdulkarim NOMINATION, REMUNERATION AND : Farouk Yousuf Almoayyed GOVERNANCE COMMITTEE Abdulla Buhindi Jalal Mohamed Jalal MANAGING AGENT : Aer Rianta International (Middle East) WLL MANAGEMENT : Fadi Allam General Manager Dominic Carroll Head of Finance Bassam Alwardi Head of HR & Marketing Deirdre Spillane Head of Purchasing Domnick O Reilly Head of Operations COMPANY SECRETARY : Abdul Wahid Noor OFFICES : Al Barsha a Building, Bldg No. 145, Road 2403, Muharraq 224 Telephone , Fax Bahrain International Airport, P.O. Box 1714 Telephone , Fax AUDITORS : KPMG Fakhro BANKERS : BBK BSC Ahli United Bank BSC National Bank of Bahrain BSC Kuwait Finance House BSC (c) REGISTRARS : Fakhro Karvy Computershare WLL P.O. Box 514, Manama, Kingdom of Bahrain 10 ANNUAL REPORT 2013

14 MANAGEMENT Fadi Allam General Manager Dominic Carroll Head of Finance Bassam Alwardi Head of HR and Marketing Abdul Wahid Noor Company Secretary Domnick O Reilly Head of Operations Deirdre Spillane Head of Purchasing 11

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17 CORPORATE GOVERNANCE POLICY Sound 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 three 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. OWNERSHIP STRUCTURE Share Ownership by Nationality Nationality No. of shareholders Shares % to Equity Bahraini ,775, GCC 22 6,608, Other , Total ,891, Government Owned Name Shares % to Equity Social Insurance Organization Pension 708, Social Insurance Organization GOSI 605, Shareholders owning more than 5% Following are the 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: Name Nationality Shares (%) Esterad Investment Co. BSC Bahraini 9,854, Global Express Bahraini 8,650, Rouben s Stores Bahraini 6,960, Farouk Yousuf Almoayyed Bahraini 5,393, Ownership Categories Categories* Number of shares Shareholders % total issued shares Less than 1 % 24,459, % up to less than 5 % 51,572, % up to less than 10 % 30,858, Total 106,891, BOARD STRUCTURE The 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 the Management. The Board of Directors is accountable to the 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 ten Directors. There are two executive Directors, eight non-executive Directors and two Directors who are independent. 14 ANNUAL REPORT 2013

18 CORPORATE GOVERNANCE Board Member Position Executive/Non Executive, Independent / Non-Independent Farouk Yousuf Almoayyed Chairman Non-Executive / Non-Independent Abdulla Buhindi Managing Director Executive / Non-Independent Nabeel Al Zain Director Non-Executive / Non-Independent Jawad Al Hawaj Director Non-Executive / Non-Independent Mohammed Al Khan Director Executive / Non-Independent Ghassan Al Sabbagh Director Non-Executive / Independent Jalal Mohammed Jalal Director Non-Executive / Non-Independent Mazen Abdulkarim Director Non-Executive / Non-Independent Shaikh Mohamed Al Khalifa Director Non-Executive / Non-Independent Jassim Mohd. Al Shaikh Director Non-Executive / Independent DIRECTORSHIPS ON OTHER BOARDS Board Member 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 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 Chairman Copyright Company WLL, Lona Real Estate Development, Banadar Hotel Company Director Bahrain Gulf Distribution Co., Oasis Capital BSC (c) Director 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 Managing Director Awal Printing Press, Bahrain International Airport Development Company WLL Director Awal Readymix Concrete Co., BANZ Company, Aer Rianta International Middle East Director Bahrain Tourism Company, Bahrain Cinema Company 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 N/A - Jassim Mohd. Al Shaikh N/A

19 CORPORATE GOVERNANCE BOARD MANDATE The Board of Directors provides leadership and the strategy 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 annual Business Plan. 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 MEETINGS As per the Board Charter, the Directors are required to meet at least four 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 six Board meetings in Director attendance is shown below. Board Member 21-Jan 17-Feb 12-Mar 14-May 6-Oct 10-Nov Farouk Yousuf Almoayyed ü ü ü ü ü ü Abdulla Buhindi ü ü ü ü ü ü Nabeel Al Zain ü ü ü ü Jawad Al Hawaj ü ü ü ü ü ü Mohammed Al Khan ü ü ü ü ü ü Ghassan Al Sabbagh ü ü ü ü ü ü Jalal Mohammed Jalal ü ü ü ü Mazen Abdulkarim ü ü ü ü ü Shaikh Mohamed Al Khalifa ü ü ü ü Jassim Mohd. Al Shaikh ü ü ü ü ü ELECTION OF DIRECTORS There 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. BOARD TERMS The Board terms run for three years. The current term is for the period 2013 to With the exception of Ghassan Al Sabbagh who is appointed by the Government and Mazen Abdulkarim who is appointed by Esterad Investment Co., all other Directors were appointed and re-elected to the Board effective January 1, 2013 at the Annual General Meeting of DIRECTOR APPOINTMENT LETTER As 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. 16 ANNUAL REPORT 2013

20 CORPORATE GOVERNANCE DIRECTOR S INDUCTION & TRAINING The 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. TERMINATION OF DIRECTORSHIP Termination of Directorship is upon expiry of the term upon which he/she needs to be subject to re-election. Termination can also take effect if any Director is in breach of the applicable governing laws and requirements of the articles of association. PERFORMANCE EVALUATION Performance evaluation of the Board, Board Committees and executive management is vital to ensure that the strategy and goals of the Company are achieved. Performance management appraisal was carried out in 2013 on the Board, Board Committees and executive management. DIRECTORS OWNERSHIP OF SHARES Board Member No. of Shares % to Equity Farouk Yousuf Almoayyed 5,393, % Abdulla Buhindi 2,063, % Shaikh Mohamed bin Ali Bin Mohammed Al Khalifa 1,603, % Mohammed Al Khan 534, % Jassim Mohd. Al Shaikh 505, % Jalal Mohamed Jalal 413, % Ghassan Al Sabbagh 371, % Mazen Abdulkarim 51, % Nabeel Al Zain 6, % Total Director Shares 10,943, % Total Shares 106,891, % No Directors traded in shares in REMUNERATION POLICY DIRECTORS The 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 performance review. In addition, Directors are entitled to out of pocket expenses, accommodation and travelling cost incurred during the term of their appointment. In 2013 Director fees totalling BD 168,000 were paid. Sitting fees for the Audit Committee were paid also in 2013 and this amounted to BD 4,000. MANAGEMENT REMUNERATION The 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. 17

21 CORPORATE GOVERNANCE In 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 SHARES No members of the senior executive management team own any shares in the Company. BUSINESS CODE OF ETHICS All 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. COMMITTEES Consistent with Industry best practice, the Board has an established Audit Committee and an Investment Committee. In 2013, the Nomination, Remuneration and Corporate Governance Committee was established. AUDIT COMMITTEE The 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 four times in a given financial year to discharge its responsibilities effectively. In 2013, the Audit Committee met four times at the Company s Headquarters. No issues deemed significant arose during Mazen Abdulkarim resigned from the Audit Committee on 17th February, Audit Committee 03-Feb 23-Apr 4-Aug 3-Nov Jawad Al Hawaj ü ü ü ü Mohammed Al Khan ü ü ü ü Ghassan Al Sabbagh ü ü ü ü Nabeel Al Zain ü ü ü Mazen Abdulkarim ü INVESTMENT COMMITTEE The 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. Approval of 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. Meetings held in 2013 Investment Committee 17-Feb 14-May 10-Nov Farouk Yousuf Almoayyed ü ü ü Abdulla Buhindi ü ü ü Mazen Abdulkarim ü ü ü Shaikh Mohamed Al Khalifa ü ü Note: Mazen Abdulkarim joined the Investment Committee on 17th February, ANNUAL REPORT 2013

22 CORPORATE GOVERNANCE NOMINATION, REMUNERATION & CORPORATE GOVERNANCE COMMITTEE NRGC Committee Farouk Yousuf Almoayyed Abdulla Buhindi Jalal Mohammed Jalal 6-Oct ü ü ü This new Committee was established in the second quarter of 2013 and met once in October. The committee will meet as a minimum once a year or more as deemed necessary. AUDITORS The 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. The Committee also approves the appointment of the internal auditors. Fees paid in 2013 were as follows: External Audit BD 22,900 Internal Audit BD 18,650 Non-Audit Fees BD 9,075 CONFLICT OF INTERESTS Directors 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 2013, no issues of conflict arose and no Director of the Board abstained from voting due to this reason. COMMUNICATION WITH SHAREHOLDERS To 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 POLICY The 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 TRANSACTIONS It 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. INTERNAL CONTROLS The 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 2013, 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 2013 contributions to worthy causes were made. 19

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24 INDEPENDENT AUDITORS REPORT TO THE SHAREHOLDERS 18 February 2014 KPMG Fakhro, Audit 5th Floor, Chamber of Commerce Building P.O. Box 710, Manama, Kingdom of Bahrain Tel: Fax: Internet: C.R. No Report on the consolidated financial statements We 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 2013, 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 statements The 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 responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance 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. Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at 31 December 2013, 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 requirements As 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. 21

25 CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 31 December 2013 Bahraini Dinars Note ASSETS Non-current assets Property and equipment 4 2,845,660 2,646,931 Investment in associate 5 210, ,990 Investment property 6 2,537,230 2,473,091 Available-for-sale investments 7 22,246,931 18,310,625 Total non-current assets 27,840,143 23,622,637 Current assets Inventories 8 2,476,104 2,076,625 Receivables and other assets 9 3,128,824 1,750,411 Cash and cash equivalents 10 15,830,721 17,224,876 Total current assets 21,435,649 21,051,912 Total assets 49,275,792 44,674,549 EQUITY AND LIABILITIES Equity Share capital 11 10,689,102 9,717,365 Statutory reserve 6,919,764 6,279,076 Investments fair value reserve 6,462,726 3,681,750 Property revaluation reserve 270, ,535 Retained earnings 17,154,120 17,525,126 Equity attributable to owners of the company 41,496,664 37,488,852 Non-controlling interest 123, ,582 Total equity 41,620,492 37,602,434 Liabilities Non-current liablities Provision for employees s leaving indemnities , ,814 Total non-current liabilities 559, ,814 Current liabilites Payables and other liablilites 13 4,500,947 3,728,409 Royalty payable 14 2,498,993 2,728,149 Management fees 95,494 53,743 Total current liablilities 7,095,434 6,510,301 Total liabilities 7,655,300 7,072,115 Total equity and liablilities 49,275,792 44,674,549 The consolidated financial statements were approved by the Board of Directors on 18 February 2014 and signed on its behalf by: Farouk Yousuf Almoayyed Chairman Abdulla Buhindi Managing Director The accompanying notes 1 to 23 form an integral part of these consolidated financial statements 22 ANNUAL REPORT 2013

26 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for year ended 31 December 2013 Bahraini Dinars Note REVENUE 26,042,449 27,517,130 Cost of sales (14,211,689) (15,339,861) Gross profit 11,830,760 12,177,269 Other income 15 3,669,067 3,694,553 Administrative expenses 16 (4,559,281) (4,492,839) Royalty 14 (2,690,994) (2,920,150) Other operating expenses (1,011,894) (1,145,379) Selling expenses (658,105) (518,792) Impairment of investments 7 (150,000) (415,826) Share of profit from associate 5 18,332 15,895 Profit for the year 6,447,885 6,394,731 Other comprehensive income Items that are or may be reclassified subsequently to profit or loss Fair value changes on available-for-sale securities 2,879, ,137 Transferred to profit or loss on sale of available-for-sale securities (98,744) (246,003) Other comprehensive income for the year 2,780, ,134 Total comprehensive income for the year 9,228,861 6,874,865 Profit attributable to: Owners of the company 6,406,882 6,350,792 Non-controlling interest 41,003 43,939 Profit for the year 6,447,885 6,394,731 Total comprehensive income attributable to Owners of the company 9,187,858 6,830,926 Non-controlling interest 41,003 43,939 Total comprehensive income for the year 9,228,861 6,874,865 Basic and diluted earnings per share (in fils) Farouk Yousuf Almoayyed Chairman Abdulla Buhindi Managing Director 23

27 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 31 December 2013 Bahraini Dinars Equity attributable to owners of the company Share Statutory Investments Property Retained Total Non Total Capital reserve fair value revaluation earnings controlling equity reserve reserve interest At 1 January ,717,365 6,279,076 3,681, ,535 17,525,126 37,488, ,582 37,602,434 Profit for the year ,406,882 6,406,882 41,003 6,447,885 Other comprehensive income Items that are or may be reclassified subsequently to profit or loss Fair value changes on available-for-sale securities - - 2,879, ,879,720-2,879,720 Transferred to investment income on sale of available - for- sale securities - - (98,744) - - (98,744) - (98,744) Total other comprehensive income - - 2,780, ,780,976-2,780,976 Total comprehensive income for the year - - 2,780,976-6,406,882 9,187,858 41,003 9,228,861 Bonus share issue 971, (971,737) Transfer of net depreciation on revalued property (14,583) 14, Transfer to statutory reserve - 640, (640,688) Final dividend (2012) (2,915,210) (2,915,210) (30,757) (2,945,967) Interim dividend paid (2013) (2,137,820) (2,137,820) - (2,137,820) Charity contributions declared (2012) (127,016) (127,016) - (127,016) At 31 December ,689,102 6,919,764 6,462, ,952 17,154,120 41,496, ,828 41,620,492 Note: Statutory reserve includes share premium of BD 1,952, ANNUAL REPORT 2013

28 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for year ended 31 December 2013 (continued) Bahraini Dinars Equity attributable to owners of the company Share Statutory Investments Property Retained Total Non Total Capital reserve fair value revaluation earnings controlling equity reserve reserve interest At 1 January ,833,968 5,643,997 3,201, ,264 17,323,912 35,329, ,546 35,483,303 Profit for the year ,350,792 6,350,792 43,939 6,394,731 Other comprehensive income Items that are or may be reclassified subsequently to profit or loss Fair value changes on available-for-sale securities , , ,137 Transferred to investment income on sale of available - for- sale securities - - (246,003) - - (246,003) - (246,003) Total other comprehensive income , , ,134 Total comprehensive income for the year ,134-6,350,792 6,830,926 43,939 6,874,865 Bonus share issue 883, (883,397) Transfer of net depreciation on revalued property (70,000) 70, Revaluation of property ,271-29,271-29,271 Transfer to statutory reserve - 635, (635,079) - - Final dividend (2011) (2,650,190) (2,650,190) (83,903) (2,734,093) Interim dividend paid (2012) (1,943,473) (1,943,473) - (1,943,473) Charity contributions declared (2011) (107,439) (107,439) - (107,439) At 31 December ,717,365 6,279,076 3,681, ,535 17,525,126 37,488, ,582 37,602,434 Note: Statutory reserve includes share premium of BD 1,952,

29 CONSOLIDATED STATEMENT OF CASH FLOWS as at 31 December 2013 Bahraini Dinars Note OPERATING ACTIVITIES Cash generated from sales 24,726,905 26,305,700 Receipts from training services 628, ,630 Receipts from car promotions 713,650 68,030 Other receipts 1,118,372 1,168,883 27,187,156 28,329,243 Payments for purchases (14,021,441) (15,417,750) Car promotion expenses (404,420) (62,068) Payments for management fees (608,306) (697,483) Payments of royalty 14 (2,920,150) (2,377,804) Payments to charities (110,007) (5,939) Payments for other operating expenses (6,032,573) (4,919,652) Directors remuneration paid (168,000) (144,000) (24,264,897) (23,624,696) Cash flows from operating activities 2,922,259 4,704,547 INVESTING ACTIVITIES Interest income 286, ,995 Investment income 2,242,122 1,921,624 Acquisition of property and equipment 4 (615,888) (427,116) Acquisition of available-for-sale investments (2,014,004) (5,487,274) Acquisition of investment property (64,139) (2,473,091) Proceeds from sale of available-for-sale investments 708,644 1,092,228 Proceeds from sale of property and equipment - 12,208 Cash flows (used in) / from investing activities 543,268 (5,063,426) FINANCING ACTIVITIES Dividend paid (4,859,682) (4,703,898) Cash flows used in financing activities (4,859,682) (4,703,898) Total cash flows for the year (1,394,155) (5,062,777) Cash and cash equivalents at 1 January 17,224,876 22,287,653 Cash and cash equivalents at 31 December 10 15,830,721 17,224, ANNUAL REPORT 2013

30 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for year ended 31 December 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 on 15 July The Company operates the Bahrain Airport duty free shops and Bahrain Sea Port duty free shops. As of 31 January 2013, the Company s operation of sale of duty free goods in Bahrain Air on board, ceased as the contract period was over. 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 2013 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) (2012:25 %). 2 BASIS OF PREPARATION a) Statement of compliance The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ( IFRS ) and the requirements of the Bahrain Commercial Companies Law, 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 Dinar. 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. (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. 27

31 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for year ended 31 December BASIS OF PREPARATION (continued) e) New standards, amendments and interpretations effective from 1 January 2013 The following standards, amendments and interpretations, which became effective as of 1 January 2013, are relevant to the Group: (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 adoption of this amendment had no significant impact on the financial statements. (ii) IAS 28 (2011) - Investment in Associates and Joint ventures - 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 adoption of this amendment had no significant impact on the consolidated financial statements (iii) 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. IFRS 10 replaces the parts of previously existing IAS 27 Consolidated and Separate Financial Statements that dealt with consolidated financial statements and SIC-12 Consolidation Special Purpose Entities. This new control model focuses on whether the Group has power over an investee, exposure or rights to variable returns from its involvement with the investee and ability to use its power to affect those returns. The Group has amended its accounting policy on consolidation in line with requirements of IFRS 10 and has re-assessed its consolidation conclusion. The reassessment of control and consolidation requirements had no significant impact on the consolidated financial statements. (iv) 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. As a result of IFRS 12, the adoption of this amendment had no significant impact on the financial statements. (v) 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. It unifies the definition of fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It replaces and expands the disclosure requirements about fair value measurements in other IFRSs, including IFRS 7. As a result, the Group has included additional disclosures in this regard. The change had no significant impact on the measurements of the Group s assets and liabilities. (vi) Improvements to IFRS (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. 28 ANNUAL REPORT 2013

32 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for year ended 31 December BASIS OF PREPARATION (continued) f) New standards, amendments and interpretations issued but not yet effective The following standards and interpretations have been issued and are expected to be relevant to the Group in future periods, with effective dates on or after 1 January (i) IFRS 9 - Financial Instruments IFRS 9 Financial Instruments is part of a wider project to replace IAS 39 Financial Instruments: recognition and measurement. IFRS 9 (2009) introduces new requirements for the classification and measurement of financial assets. IFRS 9 (2010) introduces additions to the standard 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 (2013) introduces a new general hedge accounting standard which would align hedge accounting more closely with risk management. The requirements also establish a more principles-based approach to hedge accounting and address inconsistencies and weaknesses in the hedge accounting model in IAS 39. The new standard does not fundamentally change the types of hedging relationships or the requirements to measure and recognize ineffectiveness; however, more judgement would be required to assess the effectiveness of a hedging relationship under the new standard. The mandatory effective date of IFRS 9 is not specified but will be determined when the outstanding phases are finalised. However, application of IFRS 9 is 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. Given the nature of the Group s operations, this standard is not expected to have a significant impact on the Group s financial statements. (ii) IAS 32 -Offsetting financial assets and financial liabilities (2011) The clarify the offsetting criteria 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 to IAS 32 are effective on or after 1 January The application of these amendments will have no significant impact on the financial statements of the Group. g) Early adoption of standards The Group did not early adopt new or amended standards in

33 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for year ended 31 December 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 entity controlled by the Group. The Group controls an entity if it is exposed to, or has rights to, variable returns from its involvement with the investee and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date when control ceases. (ii) Associates An associate company is an enterprise in which the Company holds, directly or indirectly, more than 20% of the voting power or exercises significant influence, but not control, over the financial and operating policies. The investment is initially recognised at cost and the carrying amount is increased or decreased to recognise the investor s share of the profit or loss of the investee after the date of acquisition. Distributions received from an investee reduce the carrying amount of the investment. When the Company s share of losses exceeds its interest in an associate, the Company s carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of an associate. (iii) Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised income and expenses (except for foreign currency transaction gains or losses) arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. 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 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 availablefor-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 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. 30 ANNUAL REPORT 2013

34 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for year ended 31 December SIGNIFICANT ACCOUNTING POLICIES (continued) e) Property and equipment (continued) (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 Leasehold buildings 25 Premises improvement 5-10 Furniture and fixtures 5-10 Computer, other equipment and vehicles 5 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) Classification Financial assets The Group classifies its financial assets into one of the following categories; - Loans and receivables; and Available-for-sale. Financial liabilities The Group classifies its financial liabilities are measured at amortised cost. (ii) Recognition The Group initially recognises loans and advances, deposits and investments on the date on which they are originated. A financial asset or financial liability is measured initially at fair value plus, for an item not at fair value through profit or loss, transaction costs that are directly attributable to its acquisition or issue. (iii) De Recognition Financial assets The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset. On de recognition of a financial asset, the difference between the carrying amount of the asset (or the carrying amount allocated to the portion of the asset derecognised) and the sum of (i) the consideration received (including any new asset obtained less any new liability assumed) and (ii) any cumulative gain or loss that had been recognised in OCI is recognised in profit or loss. Any interest in transferred financial assets that qualify for de recognition that is created or retained by the Group is recognised as a separate asset or liability. In transactions in which the Group neither retains nor transfers substantially all of the risks and rewards of ownership of a financial asset and it retains control over the asset, the Group continues to recognise the asset to the extent of its continuing involvement, determined by the extent to which it is exposed to changes in the value of the transferred asset. 31

35 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for year ended 31 December SIGNIFICANT ACCOUNTING POLICIES (continued) f) Financial instruments (continued) Financial liabilities The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire. (iv) Fair value measurement Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Group has access at that date. The fair value of a liability reflects its non-performance risk. When available, the Group measures the fair value of an instrument using the quoted price in an active market for that instrument. A market is regarded as active if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. If there is no quoted price in an active market, then the Group for which there are no other appropriate methods from which to derive fair value are carried at cost less impairment allowance. The best evidence of the fair value of a financial instrument at initial recognition is normally the transaction price i.e. the fair value of the consideration given or received. If the Group determines that the fair value at initial recognition differs from the transaction price and the fair value is evidenced neither by a quoted price in an active market for an identical asset or liability nor based on a valuation technique that uses only data from observable markets, then the financial instrument is initially measured at fair value, adjusted to defer the difference between the fair value at initial recognition and the transaction price. Subsequently, that difference is recognised in profit or loss on an appropriate basis over the life of the instrument but no later than when the valuation is wholly supported by observable market data or the transaction is closed out. The Group recognises transfers between levels of the fair value hierarchy as of the end of the reporting period during which the change has occurred. (v) Amortised cost measurement The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured at initial recognition, minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between the initial amount recognised and the maturity amount, minus any reduction for impairment. 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 2012, 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. 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. 32 ANNUAL REPORT 2013

36 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for year ended 31 December SIGNIFICANT ACCOUNTING POLICIES (continued) i) Impairment (continued) (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 Bahrain Airport Company 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. 33

37 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for year ended 31 December 2013 Bahraini Dinars 4 PROPERTY AND EQUIPMENT Freehold Leasehold Premises Furniture Computer Capital land & building improvements and other work in Total Total building fixtures equipment progress & vehicles Cost 1 January 355,000 1,515,759 1,950,087 1,132,856 1,234,285-6,187,987 6,630,666 Additions ,894 58, ,727 49, , ,116 Revaluation (805,346) Disposals (64,449) 31 December 355,000 1,515,759 2,173,981 1,191,762 1,518,012 49,362 6,803,876 6,187,987 Depreciation 1 January - (670,860) (1,023,115) (980,545) (866,536) - (3,541,056) (3,988,133) Charge for the year (20,418) (60,350) (149,079) (50,186) (137,127) - (417,160) (414,171) Revaluation ,617 Disposals , December (20,418) (731,210) (1,172,194) (1,030,731) (1,003,663) - (3,958,216) (3,541,056) Net book value at 31 December , ,549 1,001, , ,349 49,362 2,845, , , , , , ,646,931 The revaluation of the freehold land and building determined as at 31 December 2012 was BD 355,000. 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 Present carrying the property value Juffair land & Building 261, Building Business Freehold 25 years 334,582 Building Al Shabab measuring Avenue, Juffair 1,083 m 2 Shop Building Bahrain Building Business 25 years 25 years 784,549 Airport measuring renewable 2,751 m 2 lease agreement 34 ANNUAL REPORT 2013

38 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for year ended 31 December 2013 Bahraini Dinars 5 INVESTMENT IN ASSOCIATE As at 1 January 191, ,095 Share of profit for the year 18,332 15,895 At December 210, ,990 Details of the associate at the end of the reporting period are as follows: Name of the entity Place of business / country Proportion of ownership Principal activities of incorporation Bahrain International Providing Ware Airport Development housing facilities at Company Bahrain 25% the Airport Bahrain International Airport Development Company Current assets 166,561 61,663 Non-current assets 693, ,241 Current liabilities (217,070) (242,421) Net assets 642, ,483 Group s share of net assets (25%) 160, ,371 Adjustments (Goodwill) 49,619 49,619 Carrying amount of interest in Associate 210, ,990 Revenue 332, ,043 Total Comprehensive Income 73,330 63,582 Group s share (25%) 18,332 15,895 Group s share of total comprehensive income 18,332 15,895 6 INVESTMENT PROPERTY At 1 January 2,473,091 - Addition during the year 64,139 2,473,091 At 31 December 2,537,230 2,473,091 Investment properties represent land owned by the Group held for capital appreciation. The fair values of land have been assessed by the external valuer as BD 4,237,000 (2012: 2,473,091). 7 AVAILABLE-FOR-SALE INVESTMENTS Quoted equity shares 13,430,429 9,694,115 Unquoted equity shares 5,726,514 5,726,514 Debt instruments 3,089,988 2,513,996 Structured notes - 376,000 At 31 December 22,246,931 18,310,

39 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for year ended 31 December 2013 Bahraini Dinars 7 AVAILABLE-FOR-SALE INVESTMENTS (continued) The fair values are determined based on their market value as at 31 December The Group s investment in certain funds and equity securities amounting to BD 5,726,514 (2012: BD 5,726,514) 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 150,000 (2012: BD 415,826) towards the decrease in cost of investments and BD 98,744 (2012: BD 246,033) towards transfer of fair value reserve to profit or loss. 8 INVENTORIES Inventories in hand 2,792,846 2,309,180 Less Impairment allowance (316,742) (232,555) At 31 December 2,476,104 2,076,625 At 1 January 232, ,453 Provision during the year 84,187 41,102 At 31 December 316, ,555 9 RECEIVABLES AND OTHER ASSETS Trade receivables 445, ,799 Other receivables and prepayments 2,639,575 1,127,944 Related parties (note 17) 110, ,056 3,195,980 1,810,799 Less Impairment allowance (67,156) (60,388) At 31 December 3,128,824 1,750,411 At 1 January 60,388 42,446 Provision during the year 6,768 17,942 At 31 December 67,156 60, CASH AND CASH EQUIVALENTS Short-term bank deposits 12,792,141 14,194,047 Cash at bank 2,931,261 2,924,807 Cash in hand 107, ,022 At 31 December 15,830,721 17,224, ANNUAL REPORT 2013

40 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for year ended 31 December 2013 Bahraini Dinars 11 SHARE CAPITAL Authorised share capital / Issued and fully paid up 106,891,020 (2012: 97,173,650) shares of 100 fils each 10,689,102 9,717,365 (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: Name Nationality Number of shares Share holding (%) Esterad Investment Co. BSC Bahraini 9,854, Global Express Bahraini 8,650, Rouben s Stores Bahraini 6,960, Farouk Yousuf Almoayyed Bahraini 5,393, (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: Categories* Number of Number of % of total shares equity holders issued shares Less than 1 % 24,459, % up to less than 5 % 51,572, % up to less than 10 % 30,858, % up to less than 20 % % up to less than 50 % % and above Total 106,891, * Expressed as a percentage of total issued and fully paid shares of the Company. (iv) Total number of shares owned by the directors of the Company as at 31 December 2013 was shares 10,943,453 (2012: 9,948,604 shares). 12 PROVISION FOR EMPLOYEES LEAVING INDEMNITIES At 1 January 561, ,291 Charge for the year 62, ,773 Paid during the year (64,381) (51,250) At 31 December 559, , PAYABLES AND OTHER LIABILITIES Trade payable 1,910,046 1,588,135 Related parties payable (note 17) 956, ,797 Other payables 1,633,953 1,344,477 At 31 December 4,500,947 3,728,

41 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for year ended 31 December 2013 Bahraini Dinars 14 ROYALTY 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). Royalty computation Profit from duty free operations before royalty 5,692,130 6,220,428 Less profit from operations that are not subject to royalty (310,142) (380,128) Profit for royalty computation 5,381,988 5,840,300 Royalty at 50 % of the above profit 2,690,994 2,920,150 Royalty payable At 1 January 2,728,149 2,185,803 Royalty for the year 2,690,994 2,920,150 Royalty paid during the year (2,920,150) (2,377,804) At 31 December 2,498,993 2,728, OTHER INCOME Investment income 2,014,817 1,648,055 Advertising income 695, ,838 Beauty advisory income 390, ,308 Interest on bank deposits 259, ,995 Gain from sale of investments 115, ,627 Others 106, ,538 Foreign exchange gains (net) 87, ,192 3,669,067 3,694, ADMINISTRATIVE EXPENSES Salaries and related cost 3,366,066 3,223,712 Management fee 776, ,956 Depreciation 417, ,171 4,559,281 4,492,839 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 RELATED PARTY TRANSACTION 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. 38 ANNUAL REPORT 2013

42 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for year ended 31 December 2013 Bahraini Dinars 17 RELATED PARTY TRANSACTION (continued) a) Transactions Purchases 7,036,564 7,403,509 License fees 243, ,187 Other income 80,047 68,005 Other transactions with related parties are disclosed in note 5 and 16. b) Amounts due from related parties (see note 9) 110, ,056 c) Amounts due to related parties (see note 13) 956, ,797 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: Board remuneration for the year 168, ,000 Salaries and other short-term benefits for the year 324, ,031 Post-employment benefits for the year 5,817 8,634 Post-employment benefits payable 4,105 21, APPROPRIATIONS The Board of Directors have proposed the following appropriations for the year 2013: Interim dividends paid 2,137,820 1,943,473 Final cash dividend proposed 3,741,186 2,915,210 Bonus shares issue 0 % (2012:10 %) - 971,737 Charity 128, ,016 6,007,144 5,957, EARNINGS PER SHARE Earnings per share is calculated by dividing the profit attributable to ordinary shareholders of the Company of BD 6,406,882 (2012: BD 6,350,792) by the number of ordinary shares in issue in Basic & Diluted Profit for the year 6,406,882 6,350,792 Weighted average number of shares 106,891, ,891,020 Earnings per share 59 fils 59 fils 39

43 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for year ended 31 December SEGMENTAL INFORMATION 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 Sea port. The 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 committee, 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 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. 40 ANNUAL REPORT 2013

44 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for year ended 31 December 2013 Bahraini Dinars 21 FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued) a) Credit risk (continued) Exposure to credit risk The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was: Bank balances 15,725,508 17,118,854 Available-for-sale investments 3,089,988 2,889,996 Trade and other receivables 2,500,042 1,136,440 Related party receivable 110, ,056 21,426,408 21,276,346 The maximum exposure to credit risk at the reporting date based on geographical concentration was: Bahrain 19,286,084 20,548,477 Middle East 359, ,071 Others 1,781, ,798 21,426,408 21,276,346 The ageing of trade and related party receivables at the reporting date was: Gross Impairment Gross Impairment Not past due 117, ,315 - Past due 0-90 days 234, ,438 - Past due days 50,436 1, ,170 - More than 180 days 154,340 65, ,932 60, ,405 67, ,855 60,388 b) Liquidity risk Liquidity 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 risk Market 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. 41

45 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for year ended 31 December FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued) c) Market risk (continued) (i) Interest rate risk Interest 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 risk Currency 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 other income 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: USD 4,019,206 2,921,621 EURO (173,968) (76,598) GBP (21,337) (15,906) 3,823,901 2,829,117 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 dinars, 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 risk The 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 one percent increase in the equity prices at the reporting date will cause a variation of equity by BD 193,896 (2012: BD 154,814) in the equity. The analysis is performed on the same basis for d) Capital management The 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. 42 ANNUAL REPORT 2013

46 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for year ended 31 December 2013 Bahraini Dinars 21 FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued) e) Fair value (continued) - 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 Level 1 Level 2 Level 3 Fair value Carrying value Investment property - 4,237,000-4,237,000 2,537,230 Available-for-sale 16,520, ,520,417 16,520,417 investments 2012 Level 1 Level 2 Level 3 Fair value Carrying value Investment property - 2,473,091-2,473,091 2,473,091 Available-for-sale 12,208, ,208,111 12,208,111 investments The fair value of other assets and liabilities approximate the carrying value at the reporting date. f) Categorization of financial instruments The classification of financial assets and liabilities by accounting categorization is as follows: 2013 Loans and Available Other Total carrying receivables for-sale amortised cost amount Available-for-sale investments - 22,246,931-22,246,931 Trade Receivables & other assets 2,718, ,718,716 Cash and cash equivalents 15,723, ,723,402 18,442,118 22,246,931-40,689,049 Payable & other liabilities - - 4,500,947 4,500,947 Royalty payable - 2,498,993 2,498,993 Management fees ,494 95, ,095,434 7,095, Loans and Available Other Total carrying receivables for-sale amortised cost amount Available-for-sale investments - 18,310,625-18,310,625 Trade Receivables & other assets 1,171, ,171,592 Cash and cash equivalents 17,118, ,118,854 18,290,446 18,310,625-36,601,071 Payable & other liabilities - - 3,728,409 3,728,409 Royalty payable - - 2,728,149 2,728,149 Management fees ,743 53, ,510,301 6,510,

47 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for year ended 31 December 2013 Bahraini Dinars 22 COMMITMENTS Uncalled face value of investments in unquoted equity 2,548, ,376 Property and equipment 21,823 1,112 2,570, , 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. 44 ANNUAL REPORT 2013