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Page 1: Bin Salman Al Khalifa Bin Hamad Al Khalifa - Nass · PDF fileconstruction industry. ... to His Highness Shaikh Khalifa Bin Salman Al Khalifa, the Prime Minister, to His Highness Shaikh
Page 2: Bin Salman Al Khalifa Bin Hamad Al Khalifa - Nass · PDF fileconstruction industry. ... to His Highness Shaikh Khalifa Bin Salman Al Khalifa, the Prime Minister, to His Highness Shaikh

H.H. Shaikh KhalifaBin Salman Al Khalifa

The Prime Minister

H.M. King HamadBin Isa Al Khalifa

The King of The Kingdom of Bahrain

H.H. Shaikh SalmanBin Hamad Al Khalifa

The Crown Prince andDeputy Supreme Commander

Page 3: Bin Salman Al Khalifa Bin Hamad Al Khalifa - Nass · PDF fileconstruction industry. ... to His Highness Shaikh Khalifa Bin Salman Al Khalifa, the Prime Minister, to His Highness Shaikh

Nass Corporation B.S.C.Building 453, Road 4308, Block 343Mina Salman Industrial AreaP.O. Box 669, Manama, Kingdom of BahrainTelephone: +973 17 725 522Fax: +973 177 28 184

www.nassthegroup.com.bh

Board of Directors report 12

Independent auditors’ report to the shareholders 17

Financial statements

Consolidated balance sheet 19

Consolidated income statement 20

Consolidated statement of cash flows 21

Consolidated statement of changes in equity 22

Notes to the consolidated financial statements 23 - 45

Contents

Page 4: Bin Salman Al Khalifa Bin Hamad Al Khalifa - Nass · PDF fileconstruction industry. ... to His Highness Shaikh Khalifa Bin Salman Al Khalifa, the Prime Minister, to His Highness Shaikh

Nass Corporation B.S.C., Annual Report 2008 2

Particulars (BD Millions) 2008

Gross Turnover 121.515

Profit (Before Depreciation and Finance Cost) 19.047

Net Profit 13.031

Share Capital (200 million ordinary shares of 100 fils each) 20.000

Current Assets 82.175

Current Liabilities 58.143

Current Ratio 1.41

Reserves and Surplus 20.736

Net Worth 39.139

Earnings per share in fils 66

Dividend:

Cash 14%

Bonus Share 1:10

FINANCIAL HIGHLIGHTS2008 - FINANCIAL HIGHLIGHTS

Page 5: Bin Salman Al Khalifa Bin Hamad Al Khalifa - Nass · PDF fileconstruction industry. ... to His Highness Shaikh Khalifa Bin Salman Al Khalifa, the Prime Minister, to His Highness Shaikh

Nass Corporation B.S.C., Annual Report 20083

Abdulla Ahmed NassChairman

Sameer Abdulla NassDeputy Chairman and

Managing Director

Adel Abdulla NassDirector

Ghazi Abdulla NassDirector

Fawzi Abdulla NassDirector

Sami Abdulla NassDirector

Jamal A. Al-HazeemDirector

Hisham Al SaieDirector

Saleh S. Al NashwanDirector

Khalid Al RajhiDirector

Hemant JoshiAdvisor to the Board

BOARD OF DIRECTORSBOARD OF DIRECTORS

Page 6: Bin Salman Al Khalifa Bin Hamad Al Khalifa - Nass · PDF fileconstruction industry. ... to His Highness Shaikh Khalifa Bin Salman Al Khalifa, the Prime Minister, to His Highness Shaikh

Nass Corporation B.S.C., Annual Report 2008 4

DURRAT AL BAHRAIN

Page 7: Bin Salman Al Khalifa Bin Hamad Al Khalifa - Nass · PDF fileconstruction industry. ... to His Highness Shaikh Khalifa Bin Salman Al Khalifa, the Prime Minister, to His Highness Shaikh

Nass Corporation B.S.C., Annual Report 20085

BAHRAIN MAP JUNCTION INTERCHANGE PROJECT

Page 8: Bin Salman Al Khalifa Bin Hamad Al Khalifa - Nass · PDF fileconstruction industry. ... to His Highness Shaikh Khalifa Bin Salman Al Khalifa, the Prime Minister, to His Highness Shaikh

Nass Corporation B.S.C., Annual Report 2008 6

Nass Corporation comprises of six divisions and four subsidiaries (two wholly-owned and two partly owned).

Nass Industrial Services (NIS)A division of Nass Corporation B.S.C., it primarily undertakes mechanical fabrication and maintenance contracts. The company was registered in 1978.

Nass ScafformA division of Nass Corporation B.S.C., it is one of the leading scaffolding and formwork companies in the Gulf. The division specializes in the energy and petrochemical sector, and has undertaken several projects for international and regional clients.

Nass Sand Processing Plant (NSPP)A division of Nass Corporation B.S.C., it was formed in 1977 to supply washed building sand to Bahrain’s construction industry. Currently, NSPP is the largest supplier in Bahrain with production capacity of over 2,000 tons per day.

Nass Commercial ServicesA division of Nass Corporation B.S.C., it started operations in the early 1960s as a support function for the Nass Group. However in 1986, a decision was made to convert Nass Commercial Services into a separate division. Currently, the division represents over forty international manufacturers and provides sales, distribution, spare parts and service facilities to the Company and other entities outside the Company.

Nass FoodsA division of Nass Corporation B.S.C., it was established in 1982 as an independent trading division of the Nass Group. The division is an importer and wholeseller of frozen food products. It handles a whole range of products including frozen and chilled beef, lamb, poultry and fish products, which are imported from USA, New Zealand, Europe, Brazil and India.

Nass Ice PlantA division of Nass Corporation B.S.C., owns a reverse osmosis plant with a capacity to produce over 200,000 gallons of sweet water each day and two ice plants with a production capacity of about 85 tons of ice per day, for use by industrial establishments, hotels, restaurants, cold stores and supermarkets.

NASS CORPORATION B.S.CNASS CORPORATION B.S.C

Page 9: Bin Salman Al Khalifa Bin Hamad Al Khalifa - Nass · PDF fileconstruction industry. ... to His Highness Shaikh Khalifa Bin Salman Al Khalifa, the Prime Minister, to His Highness Shaikh

Nass Corporation B.S.C., Annual Report 20087

RIFFA VIEWS GOLF COURSE PROJECT

Page 10: Bin Salman Al Khalifa Bin Hamad Al Khalifa - Nass · PDF fileconstruction industry. ... to His Highness Shaikh Khalifa Bin Salman Al Khalifa, the Prime Minister, to His Highness Shaikh

Nass Corporation B.S.C., Annual Report 2008 8

The two wholly-owned subsidiaries of Nass Corporation B.S.C. are:

Nass Contracting Co. W.L.L. (NC)Undertakes a wide range of construction projects for public and private sector. The scope of activities includes civil engineering works for commercial and residential buildings, construction of industrial plants, sewerage lines, drainage schemes & pipelines, land reclamation and off-shore work such as piling, jetty construction and dredging. The company was registered with the Ministry of Commerce, Kingdom of Bahrain in 1986, and over the years have undertaken numerous projects of national importance.

Nass Contracting Co. W.L.L.Comprises of the following three divisions -Nass Asphalt (ISO 9001 Company)Nass LandscapesNass Plumbing

Nass Electrical Contracting Co. W.L.L. (NE)Originally established in 1981 as a joint venture with Balfour Kilpatrick International, United Kingdom. The company undertakes a variety of electrical and instrumentation contracting with primary focus on energy and construction sectors.

The two partly-owned subsidiaries of Nass Corporation B.S.C. are:

Delmon Ready Mixed Concrete and Products Co. W.L.L. (DRMC)Established in 1973 as a joint venture between the Nass Group and Redland Readymix International, United Kingdom. This company operates ten batching plants and is the largest concrete supplier in Bahrain. Each plant has a capacity to produce around 80 cubic meters of concrete per hour.

Delmon Precast Co. W.L.L. (DPC)Established in 1984 as a separate company within the Nass Group. The company produces hollowcore flooring, architectural products, GRC & civil engineering elements to major private and public sectors.

NASS CORPORATION B.S.CNASS CORPORATION B.S.C

Page 11: Bin Salman Al Khalifa Bin Hamad Al Khalifa - Nass · PDF fileconstruction industry. ... to His Highness Shaikh Khalifa Bin Salman Al Khalifa, the Prime Minister, to His Highness Shaikh

Nass Corporation B.S.C., Annual Report 20089

ARCAPITA HEAD QUARTERS AND MOSQUE PROJECT

Page 12: Bin Salman Al Khalifa Bin Hamad Al Khalifa - Nass · PDF fileconstruction industry. ... to His Highness Shaikh Khalifa Bin Salman Al Khalifa, the Prime Minister, to His Highness Shaikh

Nass Corporation B.S.C., Annual Report 2008 10

Ahmed A. Nass Director ProcurementNass Corporation

Fawzy Hammad General Manager, PurchasesNass Corporation

Faiza A. Nass Manager, PurchasesNass Corporation

Yosuf A. Isa Nass General Manager(Administration & Human Resources)

Jon Mottram General ManagerDRMC and DPC

David Anthony General ManagerNass Contracting

Nabeel M. Nass General Manager(Acting)Nass Industrial Services

Khalid Al Shaer General ManagerNass Commercial

Koshy P. Mathew General ManagerNass Food

Brian R. Fox General ManagerNass Scafform

Weddad A. Nass Dy.General ManagerNass Food

P.S. Mukherjee Contracts ManagerNass Contracting

Jatinder Singh Gill ManagerNass Electrical

Gerard Hutton Manager, Asphalt DivisionNass Contracting

Mike O›Brien Manager, LandscapesNass Contracting

T.K. Kutty ManagerNass Sand Processing Plant

Srinath Prabhu Finance ManagerNass Corporation

S.Manikantan Compliance OfficerNass Corporation

MANAGEMENT TEAMMANAGEMENT TEAM

Page 13: Bin Salman Al Khalifa Bin Hamad Al Khalifa - Nass · PDF fileconstruction industry. ... to His Highness Shaikh Khalifa Bin Salman Al Khalifa, the Prime Minister, to His Highness Shaikh

BAHRAIN WORLD TRADE CENTER

Page 14: Bin Salman Al Khalifa Bin Hamad Al Khalifa - Nass · PDF fileconstruction industry. ... to His Highness Shaikh Khalifa Bin Salman Al Khalifa, the Prime Minister, to His Highness Shaikh

Nass Corporation B.S.C., Annual Report 2008 12

To,

All our esteemed shareholders,

On behalf of the Directors of Nass Corporation B.S.C., it is my pleasure and privilege to present to you the Fourth Annual Report and Audited Annual Accounts of the Company for the financial year ended 31 December 2008.

The performance of the Company for the financial year ended 31 December 2008 is summarised below:

Bahraini Dinar ‘000Gross Turnover 121,515Profit before Finance charges & Depreciation 19,047Less: Finance charges 543Less: Depreciation 4,725Less: Minority Interest 748Net profit 13,031Appropriations: Transfer to Statutory Reserve 1,303Proposed Dividend 2,737Bonus Issue 2,000Directors’ Remuneration 220Donations & Charity Reserve 50

Total 6,310

Balance carried to Retained Earnings 6,721

BOARD OF DIRECTORS’ REPORT BOARD OF DIRECTORS’ REPORT

Page 15: Bin Salman Al Khalifa Bin Hamad Al Khalifa - Nass · PDF fileconstruction industry. ... to His Highness Shaikh Khalifa Bin Salman Al Khalifa, the Prime Minister, to His Highness Shaikh

Nass Corporation B.S.C., Annual Report 200813

DIVIDEND AND BONUS ISSUE

I am pleased to inform you that your Directors have recommended for the financial year ended 31 December 2008, a dividend of 14 fils per share of 100 fils each, on its 195,524,400 Ordinary shares (out of total issued shares of 200,000,000 the Company is holding its 4,475,600 shares as treasury shares) and a bonus issue of 1:10 on its 200,000,000 Ordinary shares. Upon approval at the ensuing Annual General Meeting, the said dividend will be paid to all those members whose names appear in the Register of members as on the day of the Annual General Meeting viz. 16 March 2009.

CONSOLIDATION OF ACCOUNTS

Nass Corporation B.S.C. has adopted all of the new and revised standards and interpretations issued by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB that are relevant to its operations and effective for Accounting periods beginning on 1 January 2008.

PERFORMANCE FOR THE yEAR 2008 AND FUTURE OUTLOOK

The period from 1 January 2008 to 31 December 2008 was the fourth year of operations for Nass Corporation B.S.C. During this period, the Company has continued to perform remarkably well and has surpassed its own expectations in terms of profitability and growth. It has demonstrated its strong position of leadership in the industry.

Your Company achieved a gross turnover of BD 121.515 million (BD 77.599 million for 2007) on which it achieved a profit before interest and depreciation of BD 19.047 million (BD 13.467 million for 2007) and a Net Profit of BD 13.031 million (BD 8.251 million for 2007). The Net Profits of the Company for 2008 have shown a robust improvement over those of the past year.

FUTURE OUTLOOK

The global recessionary trends have posed an enormous challenge to the entire corporate world. While every major economy is reeling under the pressure of recession and credit squeeze, the Middle - Eastern and Gulf economies have also been impacted considerably. The continued fall in the international oil prices since August 2008 has been a cause for concern to the economies in the region.

As you are aware, most of the governmental expenditure on infra-structural developmental projects in this region is directly dependent on the revenue from oil and hence weak oil prices have cast a shadow on the prospects of sustaining growth, at least in the short-term.

The challenges ahead are enormous and we have geared ourselves to face the same in apro-active and objective manner. We have already initiated plans to rationalize our cost-structure across the Company. Your directors are committed to diversity and mitigate risks in every single aspect of the Company’s business and ensure that all the stakeholders, interests are safeguarded to the maximum possible extent.

ORDER BOOK POSITION

The work-orders on hand of constituent divisions/companies (excluding Trading Divisions) as of 23 February 2009 amount to a value of BD 106.885 million. In addition, our portion of work pertaining to joint venture projects is BD 40.052 million. The above work-order position represents about a years turnover, taking 2008 turnover as the yardstick.

Your directors are conscious of the difficulties and challenges ahead of the Company and are committed to carrying on the operations of the Company in an effective and efficient manner.

BOARD OF DIRECTORS’ REPORT

Page 16: Bin Salman Al Khalifa Bin Hamad Al Khalifa - Nass · PDF fileconstruction industry. ... to His Highness Shaikh Khalifa Bin Salman Al Khalifa, the Prime Minister, to His Highness Shaikh

Nass Corporation B.S.C., Annual Report 2008 14

BOARD OF DIRECTORS’ REPORT

BOARD OF DIRECTORS’ REPORT

JOINT VENTURES

your Company is presently engaged as a Joint Venture partner in the followingjoint ventures:

JV Partner Project

Expected Contract

Sum (BD ‘000)

Status ofproject

completion31 Dec.2008

Murray Roberts Contractors Int. Ltd.

Arcapita HQ & Mosque 72,713 47%

Murray RobertsContractors Int. Ltd.

Raffles City Foundation& Substructure

30,991 30%

Burhan International Construction Company. W.L.L.

Infrastructure Development, Phase 1, 2 & Mainland A to Durrat Al Bahrain Project

32,065 88%

Burhan International ConstructionCompany. WLL

Construction of King Hamad General Hospital

49,698 63%

Bramco W.L.L. Darari Revetment Works 2,547 92%Bramco W.L.L. Diyaar Al Muharraq

Revetment Works9,104 76%

Bramco W.L.L. Durrat Marina & Golf Course Revetment Works

2,970 58%

Braemar GolfDevelopment Limited

Riffa Views DevelopmentProject - Golf Course Works

10,110 90%

EMCO W.L.L. Electro Mechanical Works at King Hamad General Hospital

16,787 76%

Total 226,985

CORPORATE GOVERNANCE

your Company has demonstrated its keenness in following and implementing an effective corporate governance structure.

The Audit Committee comprising of three independent directors is actively involved in the various aspects of corporate functioning. The Audit Committee meets regularly with a view to strengthen the existing Management Information Systems and Internal Control Systems and is involved in providing directions on policy issues. The Audit Committee has been actively involved in suggesting a viable alternative to complete ERP programme. The Company has a Remuneration Committee that comprises of three independent directors.

Internal Audit function has been outsourced to professional auditors in accordance with the recommendations of the Audit Committee. The Company has a “Compliance Officer” who looks after the day-to-day compliance matters as required by the regulatory authorities.

Page 17: Bin Salman Al Khalifa Bin Hamad Al Khalifa - Nass · PDF fileconstruction industry. ... to His Highness Shaikh Khalifa Bin Salman Al Khalifa, the Prime Minister, to His Highness Shaikh

Nass Corporation B.S.C., Annual Report 200815

AUDITORS

The Board of Directors propose to recommend re-appointment of M/S K.P.M.G Fakhro as the Statutory Auditors of the Company for the year 2009.

EMPLOyEE RELATIONS

The relations between the Management and employees of the Company continue to remain cordial. The Company firmly believes that its workforce is instrumental in its overall success and is indeed a valuable asset of the Company. On behalf of the Board of Directors, I sincerely acknowledge and appreciate the contribution of its employees at all levels.

ACKNOWLEDGEMENTS

On behalf of all the shareholders and the Board of Directors, we take this opportunity to express our sincere gratitude and appreciation to His Majesty King Hamad Bin Isa Al Khalifa, King of the Kingdom of Bahrain, to His Highness Shaikh Khalifa Bin Salman Al Khalifa, the Prime Minister, to His Highness Shaikh Salman Bin Hamad Al Khalifa, the Crown Prince and Deputy Supreme Commander and to all Government Ministries and institutions, especially the Ministry of Finance, Ministry of Industries and Commerce, the Central Bank of Bahrain and the Bahrain Stock Exchange for their continuing support.

We also appreciate support extended to us by our bankers, financial institutions, suppliers and business associates and our Statutory Auditors M/S K.P.M.G Fakhro and our Internal Auditors BDO Jawad Habib for the year 2008.

On behalf of Board of Directors Nass Corporation BSC

Abdulla Ahmed Nass Sameer Abdulla NassChairman Deputy Chairman and Managing Director

Date: 23 February 2009

BOARD OF DIRECTORS’ REPORTBOARD OF DIRECTORS’ REPORT

Page 18: Bin Salman Al Khalifa Bin Hamad Al Khalifa - Nass · PDF fileconstruction industry. ... to His Highness Shaikh Khalifa Bin Salman Al Khalifa, the Prime Minister, to His Highness Shaikh

CONSOLIDATEDFINANCIALSTATEMENTS2008

CONSOLIDATED FINANCIAL STATEMENTS 2008

Page 19: Bin Salman Al Khalifa Bin Hamad Al Khalifa - Nass · PDF fileconstruction industry. ... to His Highness Shaikh Khalifa Bin Salman Al Khalifa, the Prime Minister, to His Highness Shaikh

Nass Corporation B.S.C., Annual Report 200817

INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERSNass Corporation BSCManama, Kingdom of Bahrain 23 February 2009

REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS

We have audited the accompanying consolidated financial statements of Nass Corporation BSC (“the Company”) and its subsidiaries (together the “Group”) which comprise the consolidated balance sheet as at 31 December 2008, and the consolidated income statement, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes.

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. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatements, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors’ responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the 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 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 principles used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

INDEPENDINDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS

Page 20: Bin Salman Al Khalifa Bin Hamad Al Khalifa - Nass · PDF fileconstruction industry. ... to His Highness Shaikh Khalifa Bin Salman Al Khalifa, the Prime Minister, to His Highness Shaikh

Nass Corporation B.S.C., Annual Report 2008 18

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 2008, 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 LEGAL AND REGULATORY REQUIREMENTS

In addition, in our opinion, the Company has maintained proper accounting records and the consolidated financial statements are in agreement therewith. We have reviewed the accompanying Board of Directors’ report and confirm that the information contained therein is consistent with the consolidated financial statements. We are not aware of any violations of the Bahrain Commercial Companies Law 2001 or the terms of the Company’s memorandum and articles of association having occurred during the year that might have had a material effect on the business of the Company or on its financial position. Satisfactory explanations and information have been provided to us by the management in response to all our requests.

ENT AUDITORS’ REPORTTO THE SHAREHOLDERS

Page 21: Bin Salman Al Khalifa Bin Hamad Al Khalifa - Nass · PDF fileconstruction industry. ... to His Highness Shaikh Khalifa Bin Salman Al Khalifa, the Prime Minister, to His Highness Shaikh

Nass Corporation B.S.C., Annual Report 200819

CONSOLIDATED BALANCE SHEETas at 31 December 2008 Bahraini dinars ‘000

Note 2008 2007AssetsProperty, plant and equipment 5 19,634 16,582Total non-current assets 19,634 16,582

Interests in joint ventures 20 8,160 4,361Inventories 6 7,730 4,276Trade and other receivables 7 40,557 23,254Due from customers 8 9,899 4,424Due from related parties 19 10,075 10,042Cash and cash equivalents 10 5,754 3,458Total current assets 82,175 49,815Total assets 101,809 66,397

Equity and liabilitiesShare capital 18 20,000 20,000Treasury shares 18 (1,597) (48)Statutory reserve 17 3,635 2,332Retained earnings and other reserves 17,101 10,393Equity attributable to equity holders of the parent 39,139 32,677

Minority interest 2,092 1,784Total equity (page 9) 41,231 34,461

LiabilitiesTerm loans 9 405 938Employee benefits 11 2,030 1,279Total non-current liabilities 2,435 2,217

Trade and other payables 12 27,283 17,057Due to customers 13 4,327 959Employee benefits 11 1,883 1,192Due to related parties 19 15,706 4,258Bills payable 2,609 3,408Term loans 9 3,486 874Bank overdrafts 10 2,849 1,971Total current liabilities 58,143 29,719Total equity and liabilities 101,809 66,397

Abdulla Ahmed Nass Sameer Abdulla NassChairman Deputy Chairman & Managing Director

The Board of Directors approved the consolidated financial statements consisting of pages 19 to 45 on 23 February 2009.

CONSOLIDATEDBALANCE SHEETCONSOLIDATED BALANCE SHEET

Page 22: Bin Salman Al Khalifa Bin Hamad Al Khalifa - Nass · PDF fileconstruction industry. ... to His Highness Shaikh Khalifa Bin Salman Al Khalifa, the Prime Minister, to His Highness Shaikh

Nass Corporation B.S.C., Annual Report 2008 20

CONSOLIDATED INCOME STATEMENTfor the year ended 31 December 2008 Bahraini dinars ‘000

Note 2008 2007

Contract income 71,992 39,672Sales 40,680 32,274Hire income 8,843 5,653Total revenue 121,515 77,599

Cost of sales/ contract costs (104,943) (64,191)Gross profit 16,572 13,408

Share of profit from joint ventures 20 8,114 3,930Other income 15 401 275General and administrative expenses 14 (10,765) (8,185)Finance costs (543) (522)Profit for the year 13,779 8,906

Attributable to:Equity holders of the parent 13,031 8,251Minority interest 748 655

Earnings per share attributable to shareholders of the parentBasic and diluted earnings per share 16 66 Fils 41 Fils

Abdulla Ahmed Nass Sameer Abdulla NassChairman Deputy Chairman & Managing Director

The Board of Directors approved the consolidated financial statements consisting of pages 19 to 45 on 23 February 2009.

CONSOLIDATEDINCOME STATEMENTCONSOLIDATED INCOME STATEMENT

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Nass Corporation B.S.C., Annual Report 200821

CONSOLIDATEDSTATEMENT OF CASH FLOWCONSOLIDATED STATEMENT OF CASH FLOW

CONSOLIDATED STATEMENT OF CASH FLOWSfor the year ended 31 December 2008 Bahraini dinars ‘000

Note 2008 2007Operating activitiesProfit for the year before minority interest 13,779 8,906

Adjustments for:Depreciation 5 4,725 4,039Gain on disposal of plant and equipment 15 (29) (77)Employee benefits 11 751 328Working capital changes:Inventories 6 (3,454) (826)Trade and other receivables 7 (17,270) (61)Due from customers 8 (5,475) (433)Due from related parties and interests in joint ventures 19,20 (3,832) (7,000)Accounts payable, accruals, and provisions 12 9,985 5,064Due to customers 13 3,368 67Due to related parties 19 11,448 (2,289)Bills Payable (799) 1,723Employee benefits 11 691 90

Cash flows from operating activities 13,888 9,531

Investing activitiesPurchase of property, plant and equipment 5 (7,831) (5,174)Proceeds on sale of property, plant and equipment 83 365Investment in associate (33) -Cash flows utilised in investing activities (7,781) (4,809)

Financing activitiesProceeds from bank loans 8,151 3,934Repayment of bank loans (6,072) (4,261)Dividends paid to equity shareholders of the parent (4,535) (3,777)Dividends paid to minority shareholders (440) (360)Directors remuneration paid (220) (165)Purchase of own shares (1,549) (48)Donations paid (24) (23)Cash flows utilised in financing activities (4,689) (4,700)

Net increase in cash and cash equivalents 1,418 22

Cash and cash equivalents at 1 January 10 1,487 1,465Cash and cash equivalents at 31 December 10 2,905 1,487

The consolidated financial statements consist of pages 19 to 45.

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Nass Corporation B.S.C., Annual Report 2008 22

CONSOLIDATED STATEMENT OF CHANGES IN EQUITyCONSOLIDATED STATEMENT OF CHANGES IN EQUITy

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Nass Corporation B.S.C., Annual Report 200823

1. STATUS AND OPERATIONS Bahraini dinars ’000

Nass Corporation B.S.C. (the “Company”) is a public shareholding Company incorporated and registered in Bahrain and listed on the Bahrain Stock Exchange. The commercial registration number is 60037. A.A.Nass & Sons Co. W.L.L. is the holding company of Nass Corporation BSC with 51% shareholding.

It operates through a group consisting of divisions, subsidiaries and joint ventures. The Group is mainly engaged in civil engineering, mechanical and electrical contracting, manufacture and supply of manpower to related contracting activities. It is also involved in the sale of ready mixed concrete, ice blocks, spare parts, foodstuff, general trading and undertakes contracts relating to ready mixed concrete, precast concrete and water supply.

The consolidated financial statements for the year ended 31 December 2008 comprise the financial statements of the Company and its subsidiaries (together referred to as the “Group”) and the Group’s interest in Joint Ventures.

The Company’s operations are organised along the following divisions and subsidiaries:

Divisions Principal Activity1. Nass Ice Plant Production and sale of ice blocks and sweet water.2. Nass Scafform Supply, erection and dismantling of scaffolding3. Nass Industrial Services Mechanical Fabrication and maintenance contracts4. Nass Commercial Sales, distribution, spares parts, service facilities and authorised agents5. Nass Foods Import and wholesale of frozen food products6. Nass Sand Processing Plant Sale of processed sand produced through its sand processing plant,

land reclamation and the hire of equipment.

Percentage Equity Place ofSubsidiaries Principal Activity Shareholding and Incorporation

Controlling Interest1. Nass Contracting Co. W.L.L. Civil Engineering 100% Kingdom of Bahrain

- Nass Mechanical Contracting Mechanical Kingdom of BahrainCompany W.L.L. (100% owned) Fabrication and

maintenance contracts

2. Nass Electrical Electrical Contracting 100% Kingdom of BahrainContracting Co. W.L.L.

- BK Gulf - Nass ContractingCompany W.L.L. (Associate with40% shareholding)

Electrical Contracting

3. Delmon Ready MixConcrete and ProductsCompany W.L.L.

Ready MixedConcrete

80% Kingdom of Bahrain

- Dona Marine W.L.L. (Associatewith 33% shareholding)

Tranportation of bulkmaterials by marine vessels

4. Delmon Precast Co. W.L.L. Precast Concrete 80% Kingdom of Bahrain

NOTES TO THE 2008 CONSOLIDATED FINANCIAL STATEMENTS

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Nass Corporation B.S.C., Annual Report 2008 24

2. SIGNIFICANT ACCOUNTING POLICIES Bahraini dinars ’000

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) Statement of complianceThe consolidated financial statements have been prepared in accordance with International Financial Reporting Standards and in conformity with the Bahrain Commercial Companies Law 2001.

(b) Basis of preparationThe consolidated financial statements are presented in Bahraini Dinars (“BD”), being the principal currency of the Group’s operations. The financial statements have been drawn up from the accounting records of the Group under the historical cost convention.

(c) Basis of consolidation(i) Subsidiaries

Subsidiaries are entities controlled by the Group. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

(ii) Interest in Joint VenturesJoint ventures are those entities over whose activities the Group has joint control, established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions. All the joint ventures are unincorporated.

The Group reports its interest in the joint ventures using the equity method which is initially recorded at cost and adjusted thereafter for the Group’s share of the total recognised gains and losses of the joint venture after adjustments to align the accounting policies with those of the Group, from the date that joint control commences until the date that joint control ceases.

When the Group’s share of losses in the Joint Venture exceeds its interest, the carrying amount of the interest (including any long term investment) 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 joint venture.

(iii) Transactions eliminated on consolidationIntra-group balances and transactions, and any unrealised income and expense 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.

(d) Revenue:(i) Contract revenue and expense

Contract revenue and expense are recognised in the income statement in proportion to the stage of completion of the contract as soon as the outcome of the contract can be measured reliably. Contract revenue includes the initial amount agreed in a contract plus any variations in contract work and claims to the extent that it is probable that they can be measured reliably and will be accepted by the customer.

The stage of completion is assessed by reference to the proportion that contract costs incurred for work performed to date bear to the estimated total contract costs, completion of a physical proportion of the contract work and surveys of work performed depending on the nature of the contract. When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised only to the extent of contract costs incurred that are likely to be recoverable. An expected loss on a contract is recognised immediately in the income statement.

CONSOLIDATED FINANCIAL STATEMENTS 2008

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Nass Corporation B.S.C., Annual Report 200825

2. Significant accounting policies (continued) Bahraini dinars ’000

(ii) SalesSales represent the invoiced value of goods supplied and services performed during the year measured at the fair value of consideration received or receivable. The revenue is recognised when the significant risk and rewards of ownership have been transferred to the buyer and the recovery of the consideration is probable.

(iii) Hire incomeHire income represents the value of scaffolding and crane hire charges and related services provided; and are recognised as and when the services are rendered.

When the Group acts in the capacity of an agent rather than as the principal in the transaction, the revenue recognised is the net amount of commission made by the Group.

(e) Foreign currency transactions(i) Functional and presentation currency

Items included in the consolidated financial statements of the Group are measured using the currency of the primary economic environment in which the entity operates (the “functional” currency). The consolidated financial statements are presented in Bahraini Dinars, which is the Group’s functional and presentation currency.

(ii) Transactions and balances

Transactions in foreign currencies are translated to Bahraini dinars, which is the Group’s measurement currency, at the foreign exchange rates ruling at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated into Bahraini dinars at the foreign exchange rate ruling at that date. All foreign exchange differences arising on conversion and translation are recognised in the income statement.

(f) Property, plant and equipment(i) Owned assets

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses, if any. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset is written down immediately to its recoverable amount if its carrying amount is greater than its estimated recoverable amount.

(ii) Subsequent measurementExpenditure incurred to replace a component of an item of property, plant and equipment that is accounted for separately, is capitalised. Other subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the item of property, plant and equipment. All other expenditure is recognised in the income statement as an expense as incurred.

(iii) DepreciationDepreciation is charged to the income statement on a straight-line basis over the estimated useful lives of items of property, plant and equipment. No depreciation is charged on freehold land. The estimated useful lives are as follows:

Buildings 3 - 10 yearsLeasehold Land/Improvements 3 - 15 yearsPlant, Machinery and Motor Vehicles 3 - 15 yearsVessels and Barges 10 - 15 yearsOffice Equipment, Furniture and Fixtures 1 - 5 yearsOther Assets 1 - 5 years

NOTES TO THE 2008 CONSOLIDATED FINANCIAL STATEMENTS

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Nass Corporation B.S.C., Annual Report 2008 26

2. Significant accounting policies (continued) Bahraini dinars ’000

(g) Impairment The carrying amounts of the Group’s assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the assets’ recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset exceeds its estimated recoverable amount. All impairment losses are recognised in the income statement.

(h) InventoriesInventories are stated at the lower of cost and net realisable value. Cost is determined on a first-in-first-out or weighted average basis according to the nature of specific business segments. The cost includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated selling expenses.

(i) Trade receivablesTrade and other receivables are recognised initially at cost, being their fair value and subsequently measured at amortised cost, less impairment allowance for doubtful debts.

(j) Due from / to customers Due from customers represents the gross unbilled amount expected to be collected from customers for contract work performed till date. It is measured at cost plus profit recognised till date less progress billings and recognised losses (if any).

Due to customers represents the excess of progress billings over the revenue recognised (costs plus attributable profits) for the contract work performed till date.

Cost includes all expenditure related directly to specific projects and an allocation of fixed and variable overheads incurred in the Group’s contract activity based on normal operating capacity.

(k) ProvisionsA provision is recognised in the balance sheet when the Group has a legal or constructive obligation as a result of a past event that can be measured reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.

(l) Lease payments Payments made under operating leases are recognised in the income statement on a straight line basis over the term of the lease.

(m) Employee benefits(i) Bahraini employees

Pensions 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 contribution to this scheme, which represents a defined contribution scheme under International Accounting Standard 19 - Employee Benefits, is expensed as incurred.

(ii) Expatriate employees Expatriate employees are entitled to leaving indemnities payable under the Bahraini Labour Law for the Private Sector of 1976, based on length of service and final remuneration. Provision is made for amounts payable under the local labour law based on the employees accumulated periods of service since the previous settlement dates and latest entitlements to salaries and allowances at the balance sheet date.

CONSOLIDATED FINANCIAL STATEMENTS 2008

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Nass Corporation B.S.C., Annual Report 200827

2. Significant accounting policies (continued) Bahraini dinars ’000

(n) Cash and cash equivalentsCash and cash equivalents comprises cash and bank balances and short term deposits. For the purpose of the consolidated statement of cash flows, cash and cash equivalents are presented net of bank overdrafts.

(o) Dividends and directors’ fees Dividends and directors’ fees are recognised as a liability in the period in which they are declared.

(p) Treasury sharesWhere the Company purchases its own equity share capital, the consideration paid, including any attributable transaction costs, are deducted from total equity and recorded as treasury shares until they are cancelled. Where such shares are subsequently sold or reissued, any gain or loss is included in equity.

(q) Earnings per shareThe Group presents basic earnings per share (EPS) data for its shares. Basic EPS is calculated by dividing the profit or loss attributable to shareholders of the Company by the weighted average number of shares outstanding during the year excluding the average number of ordinary shares purchased by the Company and held as treasury shares.

(r) Segment reportingA segment is a distinguishable component of the Group that is engaged either in providing related products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. The Group’s primary format for segment reporting is based on business segments.

3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS IN APPLYING ACCOUNTING POLICIES

The Group makes estimates and assumptions that affect the reported amount of assets and liabilities within the next financial year. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Impairment of receivables:An impairment allowance for receivables is made 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 trade receivable is impaired. The receivables recoverable amount is estimated based on past experience and estimated cash flows.

Impairment of inventories: Inventories are held at the lower of cost and net realisable value. When inventories become old or obsolete, an estimate is made of their realisable value and the difference between the carrying amount and the realisable value is provided for.

Impairment of property, plant and equipment: The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset is written down immediately to its recoverable amount if its carrying amount is greater than its estimated recoverable amount.

Claims and expected losses on contracts in progress: Claims for additional contract compensation due to the Group are not reflected in the financial statements until the year it is probable that such claims can be measured reliably and will be accepted by the customer. Provision for expected losses on claims and contracts in progress is made in full in the period in which such losses are first determined.

NOTES TO THE 2008 CONSOLIDATED FINANCIAL STATEMENTS

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Nass Corporation B.S.C., Annual Report 2008 28

3. Critical accounting estimates and judgments in applying accounting policies (continued) Bahraini dinars ’000

Estimated contract revenue and costs on a project:The revenue to be recognised on a project is based on a percentage of completion method in which the costs incurred till date are compared to the total estimated costs to be incurred on the project. The total costs to be incurred on the project are estimated by the project management. A change in estimate of contract costs or contract revenue are recognised in the period in which the change is made and in subsequent periods.

4. FINANCIAL RISK MANAGEMENT

OVERVIEW

Financial instruments include financial assets and financial liabilities. Financial assets of the Group include cash and cash equivalents, trade receivables, due from related parties, due from customers and certain other current assets. Financial liabilities of the Group include trade payables, due to customers, due to related parties, bills payable, term loans, bank overdrafts and certain other current liabilities. 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. Further quantitative disclosures are included throughout these consolidated financial statements. The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Group Audit Committee oversees how management monitors compliance with the Group’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Group Audit Committee is assisted in its oversight role by Internal Audit. CREDIT RISK

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers, related parties and cash and cash equivalents.

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:

2008 2007

Trade and other receivables 39,837 22,419Due from related parties 10,075 10,042Cash and cash equivalents 5,754 3,458

55,666 35,919

Trade and other receivablesThe Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The Group operates mainly in the Kingdom of Bahrain.

Purchase limits are established for each customer by every division/ subsidiary, which represents the maximum open amount and these limits are reviewed periodically. Customers that fail to meet the Group’s benchmark creditworthiness may transact with the Group only on a prepayment basis.

CONSOLIDATED FINANCIAL STATEMENTS 2008

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Nass Corporation B.S.C., Annual Report 200829

4.Financial risk management (continued) Bahraini dinars ’000Credit risk (continued)

In monitoring customer credit risk, customers are grouped according to their credit characteristics, including whether they are an individual or legal entity, geographic location, industry, aging profile, maturity and existence of previous financial difficulties.

The credit period established by the Group for all its receivables is 90 days after which the dues are classified as past due. All dues outstanding in excess of one year are assessed for impairment and the estimated unrecoverable amount is considered impaired and provided for.

Due from related parties Due from related parties pertains to the receivable from the holding company and the joint ventures of the Group. Transactions with related parties are conducted in the normal course of business, at rates agreed on an arms’ length basis. The credit risk on these is perceived to be minimal by the Group.

Credit risk by segmentThe maximum exposure to credit risk for trade receivables and other receivables and related party dues at the reporting date by segment is:

2008 2007Trade and Due from Trade and Due from

other related parties other related partiesreceivables receivables

Construction and allied activitiesTrading activities

37,089 8,697 19,990 8,2072,748 1,378 2,429 1,835

39,837 10,075 22,419 10,042

Impairment lossesThe aging of trade and other receivables at the reporting date was:

2008 2007

Not past due 29,439 15,107Past due 0-90 days 6,413 3,457Past due 91-180 days 1,663 1,715More than one year 6,835 4,494

44,350 24,773Impairment allowance for doubtful debts (4,513) (2,354)

39,837 22,419

Based on past experience, the Group believes that no impairment allowance is necessary in respect of receivables not past due.

NOTES TO THE 2008 CONSOLIDATED FINANCIAL STATEMENTS

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Nass Corporation B.S.C., Annual Report 2008 30

4. Financial risk management (continued) Bahraini dinars ’000Credit risk (continued)

Movements in impairment allowance for doubtful debts and claims

2008 2007

At 1 January 2,354 1,207Charge for the year 2,465 1,357Write-back during the year (272) (103)Write-off during the year (34) (107)

4,513 2,354

Cash and cash equivalentsGroup’s credit risk on these is limited as these are placed with banks in Bahrain having good credit ratings.

LIQUIDITY RISK

Liquidity risk, also referred to as funding risk, is the risk that the Group will not be able to meet its financial obligations as they fall due. 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 following are the contractual maturities of financial liabilities:

2008 Carryingamount

Contractual cash flows

6 monthsor less

6-12months

1-2 years Morethan 2years

Term loans 3,891 4,056 3,059 584 413 -Trade and other payables 27,283 27,283 27,283 - - -Due to related parties 15,706 15,706 15,706 - - -Bills payable 2,609 2,661 2,661 - - -Bank overdraft 2,849 2,934 2,934 - - -

52,338 52,640 51,643 584 413 -

2007 Carryingamount

Contractual cash flows

6 monthsor less

6-12months

1-2 years Morethan 2years

Term loans 1,812 1,956 495 480 789 192Trade and other payables 17,057 17,057 17,057 - - -Due to related parties 4,258 4,258 4,258 - - -Bills payable 3,408 3,441 3,441 - - -Bank overdraft 1,971 2,045 2,045 - - -

28,506 28,757 27,296 480 789 192

CONSOLIDATED FINANCIAL STATEMENTS 2008

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Nass Corporation B.S.C., Annual Report 200831

4. Financial risk management (continued) Bahraini dinars ’000Liquidity risk (continued) 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.

Interest rate risk Interest rate risk is the risk that the Group’s earnings will be affected as a result of fluctuations in the value of financial instruments due to changes in market interest rates. The Group’s interest rate risk is limited to its interest bearing short-term deposits, term loans and bank overdrafts. At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was:

2008 2007Fixed rate instrumentsShort term deposits 1,703 1,020

1,703 1,020Variable rate instrumentsTerm loans 3,891 1,812Bank overdraft 2,849 1,971

6,740 3,783

The effective interest on these financial instruments is as follows:

2008 2007% %

Short term deposits 4.20 – 4.65 p.a 3.51 – 5.00 p.aTerm loans 4.75 – 5.10 p.a 6.90 – 7.50 p.aBank overdraft 5.00 – 7.00 p.a 6.50 – 8.25 p.a

Changes in market interest rates are not expected to have a significant impact on the carrying value of these financial instruments.

Foreign exchange riskForeign exchange risk is the risk that the Group’s earning will be affected as a result of fluctuations in currency exchange rates.

The Group has exposure to foreign exchange risk on its purchases invoiced in foreign currency. The majority of the foreign currency purchases are in US dollars and Euro.

The Group’s exposure to significant foreign currency risk at the reporting date was:

In ’0002008 2007

USD Euro USD EuroAccounts receivable 7,166 - 4,365 -Accounts payable 166 129 2,191 231

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.

NOTES TO THE 2008 CONSOLIDATED FINANCIAL STATEMENTS

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Nass Corporation B.S.C., Annual Report 2008 32

4. Financial risk management (continued)Market risk (continued)

Equity price riskThe Group is not exposed to any equity price risk as it does not have any investments in equity securities.

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 excluding minority interest, and the level of dividends to shareholders.

From time to time the Group purchases its own shares on the market; the timing of these purchases depends on market prices. Buy and sell decisions are made on a specific transaction basis by the Board.

There were no significant changes in the Group’s approach to capital management during the year. Neither the Company nor its subsidiary is subject to externally imposed capital requirements.

CONSOLIDATED FINANCIAL STATEMENTS 2008

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Nass Corporation B.S.C., Annual Report 200833

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NOTES TO THE 2008 CONSOLIDATED FINANCIAL STATEMENTS

Page 36: Bin Salman Al Khalifa Bin Hamad Al Khalifa - Nass · PDF fileconstruction industry. ... to His Highness Shaikh Khalifa Bin Salman Al Khalifa, the Prime Minister, to His Highness Shaikh

Nass Corporation B.S.C., Annual Report 2008 34

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ness

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hold

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162

CONSOLIDATED FINANCIAL STATEMENTS 2008

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Nass Corporation B.S.C., Annual Report 200835

6. INVENTORIES Bahraini dinars ’000

2008 2007

Raw materials 3,925 1,908Stores, spares, fuels and lubricants 2,631 1,588Food products 680 654Finished goods 521 308Goods in transit 365 144

8,122 4,602Impairment allowance for slow moving and obsolete inventories (392) (326)

7,730 4,276

Movement in impairment allowance for slow moving and absolete 2008 2007inventories

At 1 january 326 267Charge duing the year 121 59Write-back during the year (55) -

392 326

7. TRADE AND OTHER RECEIVABLES2008 2007

Trade accounts receivable 36,453 19,753Claims receivable 1,000 1,000Retentions receivable 5,653 3,204Prepaid expenses 687 835Advances to suppliers and sub-contractors 903 551Other receivables 205 152Staff receivables 169 113

45,070 25,608Impairment allowance for doubtful debts and claims (4,513) (2,354)

40,557 23,254

Movements in Impairment allowance for doubtful debts 2008 2007

At 1 January 2,354 1,207Charge during the year 2,465 1,357Write-back during the year (272) (103)Write-off during the year (34) (107)

4,513 2,354

8. DUE FROM CUSTOMERS2008 2007

Cost incurred plus recognised profits on contracts-in-progress 44,728 37,462Progress billings received and receivable (34,829) (33,038)

9,899 4,424

NOTES TO THE 2008 CONSOLIDATED FINANCIAL STATEMENTS

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Nass Corporation B.S.C., Annual Report 2008 36

9. TERM LOANS Bahraini dinars ’000

2008 2007

Non-current portionBank loan 405 938

Current portionBank loan 3,486 874

The effective interest rate on term loans was 4.75% - 5.10% (2007: 6.90% – 7.50% p.a.).

10. CASH AND CASH EQUIVALENTS 2008 2007

Cash and bank balances 4,051 2,438Short term deposits 1,703 1,020Cash and cash equivalents 5,754 3,458Bank overdrafts (2,849) (1,971)

Cash and cash equivalents in the statement of cash flows 2,905 1,487

The security for the bank overdrafts is assignment of proceeds to the banks for projects financed.

11. EMPLOYEE BENEFITS 2008 2007

At 1 January 2,471 2,053Charge for the year 4,236 3,039Paid during the year (2,794) (2,621)

3,913 2,471

Analysed as:Current liabilities 1,883 1,192Non current liabilities 2,030 1,279

3,913 2,471

12. TRADE AND OTHER PAYABLES2008 2007

Trade accounts payable 13,130 8,209Accrued expenses 6,600 3,706Advances against contracts 5,606 3,882Retentions payable 1,144 775Unclaimed dividends 603 362Other payables 200 123

27,283 17,057

CONSOLIDATED FINANCIAL STATEMENTS 2008

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Nass Corporation B.S.C., Annual Report 200837

13. DUE TO CUSTOMERS Bahraini dinars ’000

2008 2007

Progress billings received and receivable 25,261 21,354Costs incurred plus recognised profits on contracts-in-progress (20,934) (20,395)

4,327 959

14. GENERAL AND ADMINISTRATIVE EXPENSES2008 2007

Salaries of administration staff 4,000 3,124Management consultancy fees 1,560 1,320Impairment allowance for doubtful debts and claims 2,193 1,254Depreciation 521 525Rent, Electricity & Water 398 266Communication 197 186Vehicle expenses 334 252Travel 163 135Commission paid 272 154Business promotion 121 106Legal and consulting 211 205Repairs and maintenance 161 104Insurance 79 72Listing & meeting expenses 73 76Printing and stationery 92 66Other office expenses 390 340

10,765 8,185

15. OTHER OPERATING INCOME2008 2007

Gain on disposal of property, plant and equipment 29 77Commission income 41 44Miscellaneous income 331 154

401 275

NOTES TO THE 2008 CONSOLIDATED FINANCIAL STATEMENTS

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Nass Corporation B.S.C., Annual Report 2008 38

16. BASIC AND DILUTED EARNINGS PER SHARE Bahraini dinars ’000

Basic earnings per share is calculated by dividing the profit attributable to equity shareholders of the Company by the weighted average number of ordinary shares outstanding during the year excluding the average number of ordinary shares purchased by the Company and held as treasury shares, as follows:

2008 2007

Profit attributable to equity shareholders of the parent 13,031 8,251Weighted average no. of shares at 31 December (Nos in ‘000) 197,456 199,976Basic earnings per share 66 Fils 41 Fils

Diluted earnings per share have not been presented as the Company has no instruments convertible into shares that would dilute earnings per share.

17. STATUTORY RESERVE

In accordance with the parent company’s Articles of Association and in compliance with the Bahrain Commercial Companies Law 2001, a minimum of 10% of the profit is appropriated to a statutory reserve, until it reaches 50% of the paid-up share capital. This reserve is not normally distributable, except in the circumstances stipulated in the Bahrain Commercial Companies Law 2001.

18. SHARE CAPITAL2008 2007

Authorised share capital500,000,000 (2007: 500,000,000) shares of 100 fils each 50,000 50,000Issued and fully paid At 31 December 200,000,000 (2007: 200,000,000) shares of 100 fils each 20,000 20,000

Treasury shares: 4,475,600 (2007: 133,175) 1,597 48

The Board of Directors have proposed a cash dividend 14 fils per share of 100 fils nominal value, a 14% dividend (2007: 24 fils per share of 100 fils nominal value, a dividend of 24%) and a bonus issue of 1:10. Directors remuneration of BD 220 (2007: BD 220) is also proposed. Proposed appropriations are in accordance with the Company’s Articles of association and are subject to approval by the shareholders at the Annual General Meeting.

2008 2007

Directors’ remuneration 220 220Donations and charity reserve 50 25Bonus issue 2,000 -Proposed dividend 2,737 4,797

5,007 5,042

CONSOLIDATED FINANCIAL STATEMENTS 2008

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Nass Corporation B.S.C., Annual Report 200839

18. Shared capital (continued) Bahraini dinars ’000The major shareholders are:

Name of Shareholder Number Percentage Nationalityof shares held of Ownership

1. Mr. Abdulla Ahmed Nass* 20,400,000 10.20% Bahraini2. Mr. Sameer Abdulla Nass* 13,600,000 6.80% Bahraini3. Mr. Sami Abdulla Nass* 13,600,000 6.80% Bahraini4. Mr. Adel Abdulla Nass* 13,600,000 6.80% Bahraini5. Mr. Ghazi Abdulla Nass* 13,600,000 6.80% Bahraini6. Mr. Fawzi Abdulla Nass* 13,600,000 6.80% Bahraini7. Mr. Ahmed Abdulla Nass* 13,600,000 6.80% Bahraini8. Abdul Rahman Saleh Al Rajhi 15,094,342 7.54% Kingdom of Saudi Arabia & Partners Company Limited9. Amwal Al Khaleej Commercial 10,722,962 5.36% Kingdom of Saudi Arabia Investment Co.

* The shares of A.A.Nass and Sons Co. W.L.L. are held by the directors on its behalf.

Distribution schedule of Shareholders as at end of the year is as follows:

Categories Number of shares No. of Percentage of total Shareholders outstanding shares

2008 2007 2008 2007 2008 2007Less than 1%** 33,941,149 33,410,513 8,501 9,559 16.97% 16.70%1% up to lessthan 5% 38,241,547 38,772,183 11 11 19.12% 19.39%5% up to lessthan 10% 107,417,304 107,417,304 8 8 53.71% 53.71%10% up to lessthan 20% 20,400,000 20,400,000 1 1 10.20% 10.20%Total 200,000,000 200,000,000 8,521 9,579 100.00% 100.00%

** Includes 4,475,600 (2007: 133,175) treasury shares.

19. RELATED PARTY TRANSACTIONS

a) Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial and operating decisions. Transactions with related parties are conducted in the normal course of business.

Sales/Revenues Purchases and

operating expensesAmounts due from Amounts due to

2008 2007 2008 2007 2008 2007 2008 2007A.A. Nass& Sonsand its 2,029 2,532 15,298 11,264 3,505 4,344 5,506 2,674relatedcompaniesJoint 17,916 14,204 8,710 4,284 6,570 5,698 10,200 1,584venturesTotal 19,945 16,736 24,008 15,548 10,075 10,042 15,706 4,258

NOTES TO THE 2008 CONSOLIDATED FINANCIAL STATEMENTS

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Nass Corporation B.S.C., Annual Report 2008 40

During the year the parent company has provided guarantees of BD 92,975 (2007: BD 84,005) to various banks for banking facilities or other financial accommodation to its subsidiaries.

Technical and managerial consultancy fee paid to A.A.Nass & Sons Co. WLL by the Group amounts to BD 1,560 (2007: BD 1,320)

b) Transactions with key management personnel: Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group. The key management personnel comprise members of the Board of Directors, the Divisional Managers, the General Managers and their compensation is as follows:

2008 2007

Short term benefits 1,198 1,185Termination benefits 28 42

1,226 1,227

The short term compensation includes directors fees of BD 220 (2007: BD 220) subject to approval by the shareholders at the Annual General Meeting and board committee attendance fees BD 33 (2007: BD 40).

CONSOLIDATED FINANCIAL STATEMENTS 2008

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Nass Corporation B.S.C., Annual Report 200841

NO

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2008

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81,

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8,16

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The

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join

t ven

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inte

rest

is a

s fo

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s:

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2007

At 1

Jan

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4,36

12,

749

Shar

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of p

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dur

ing

the

year

(4,3

15)

(2,3

18)

8,16

04,

361

NOTES TO THE 2008 CONSOLIDATED FINANCIAL STATEMENTS

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Nass Corporation B.S.C., Annual Report 2008 42

20. I

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Lette

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Gua

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issu

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CONSOLIDATED FINANCIAL STATEMENTS 2008

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Nass Corporation B.S.C., Annual Report 200843

21. S

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NOTES TO THE 2008 CONSOLIDATED FINANCIAL STATEMENTS

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Nass Corporation B.S.C., Annual Report 2008 44

22. NEW INTERNATIONAL FINANCIAL REPORTING Bahraini dinars ’000 STANDARDS AND INTERPRETATIONS NOT YET ADOPTED

During the year the following new/ amended IFRS’s and interpretations have been issued which are not yet mandatory for adoption by the Group:• Revised IAS 1 “Presentation of Financial Statements” - Effective for financial periods beginning on or after 1 January 2009• Revised IAS 23 “Borrowing Costs” - Effective for financial periods beginning on or after 1 January 2009• IFRS 8 “Operating Segments” - Effective for financial periods beginning on or after 1 January 2009• Amended IAS 27 “Consolidated and Separate Financial Statements” - Effective for financial periods beginning on or after 1 July 2009• Amendments to existing standards made by the International Accounting Standards Board as part of its first annual improvements project. The effective date for these amendments varies by standard and most will be applicable for financial periods beginning on or after 1 January 2009.

The adoption of these standards and interpretations and other amendments to existing standards made by the International Accounting Standards Board as part of its first annual improvements project are not expected to have a material impact on the financial statements of the Group.

23. COMMITMENTS AND CONTINGENCIES

2008 2007

Letters of credit 2,542 4,601Capital commitments 386 1,544Guarantees 62,454 56,134

The banks have provided guarantees (performance, retention, financial and others related to contracting activities) amounting to BD 62,454 (2007 - BD 56,134) for the various divisions and subsidiaries of the parent company out of which BD 40,901 (2007 - BD 42,520) have been issued for the joint venture activities.

Letters of credit includes BD 734 (2007 - BD 1,513) issued for the joint venture activities. 24. OPERATING LEASE RENTALS

2008 2007

Minimum lease payment recognised as an expense during the year 1,560 1,075

Future minimum lease payments:- not later than one year 1,318 927- later than one year and not later than five years 397 184Aggregate rental lease expenditure contracted at balance sheet date 1,715 1,111

The operating lease is cancellable/ renewable by mutual consent of the lessee and the lessor.

CONSOLIDATED FINANCIAL STATEMENTS 2008

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Nass Corporation B.S.C., Annual Report 200845

25. ACCOUNTING CLASSIFICATION AND FAIR VALUES Bahraini dinars ’000

The Group’s financial statements are compiled under the historical cost method. Fair values represent the amount at which an asset could be exchanged or a liability settled, in a transaction between knowledgeable, willing parties in an arm’s length transaction. Differences can therefore arise between the book values under the historical cost method and fair value estimates.

The table below sets out the classification of each class of financial assets and liabilities, and their fair values.

2008 Amortised cost Total carrying value

Trade and other receivables 39,837 39,837Due from related parties 10,075 10,075Cash and cash equivalents 5,754 5,754

55,666 55,666

Trade and other payables 27,283 27,283Term loans 3,891 3,891Due to related parties 15,706 15,706Bills payable 2,609 2,609Bank overdrafts 2,849 2,849

52,338 52,338

2007 Amortised cost Total carrying value

Trade and other receivables 22,419 22,419Due from related parties 10,042 10,042Cash and cash equivalents 3,458 3,458

35,919 35,919

Trade and other payables 17,057 17,057Term loans 1,812 1,812Due to related parties 4,258 4,258Bills payable 3,408 3,408Bank overdrafts 1,971 1,971

28,506 28,506

The fair values of the Group’s financial assets and liabilities are not materially different from their carrying values.

CONSOLIDATED FINANCIAL STATEMENTS 2008NOTES TO THE 2008 CONSOLIDATED FINANCIAL STATEMENTS

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