Twenty-Fourth Annual Report 2015

Transcription

Twenty-Fourth
Annual Report
2015
His Majesty King Abdullah Bin Al Hussein the Second
His Royal Highness Crown Prince Al-Hussein Bin Abdullah the Second
Company Identity
Al –Eqbal Investment Co. (PLC) is an investment company with branches in the Hashemite Kingdom of Jordan and the United Arab
Emirates. It is specialized in the manufacturing and distribution of molasses and the development and construction of renewable
energy projects.
Our Vision
To be a dynamic investment company with growing influence in the global market.
Our Mission
Maximizing shareholders’ returns whilst actively carrying out our positive role in social and economic development.
Company Values
• Commitment to excellence.
• Ensuring significant financial growth for our partners.
• A competitive and comfortable working environment for our employees.
• A vital contribution to the development and prosperity of society.
7
Contents
Board of Directors
11
Members of the Board of Directors
13
Message from the Chairman of the Board of Directors
14
Report of the Board of Directors
17
Company’s Main Activities
19
Board of Directors Bios
22
Competitive Position of the Company and Achievements for the year 2015
29
Organizational Structure
32
Analysis of Financial Position
34
Corporate Social Responsibility (CSR)
48
Independent Financial Auditor Report
51
Consolidated Balance Sheet
54
Consolidated Income Statement
55
Consolidated Statement of Changes in Shareholders Equity
56
Consolidated Cash Flow Statement
57
Clarifications on Consolidated Financial Statements
59
9
Members of the Board of Directors
Mr. Samer Tawfiq Shaker Fakhouri
Mr. Waleed Tawfiq Shaker Fakhouri
Deputy Chairman
Mr. Haitham Qteishat
Mr. Abd-Alraheem Ali Al-Zoubi
Representing Pearl Commercial for
Reconstruction and Investment Company
Mr. Yazeed Al-Mufti
Representing Al-Sabil Investment
Company
Dr. Naser Mustafa Kherishi
Representing Bank of Jordan
Mr. Saleh Rajab Elayan Hammad
Representing Arabian Gulf General
Investment Transportation Company
Messrs Kawasmy & Partners
Independent Financial Auditor
Mr. Mohammad Naser Barakat
Representing Al Yamamah Public
Investment Company
Mr. Fares Al-Talhouni
13
Message from the Chairman of
the Board of Directors
focused hard work of our team we have managed to
achieve an impressive 16.5% growth in revenue to reach
123.9 M JOD while gross margin and net profit after tax
grew by 24.4% and 18.2% to reach 52.9M JOD and 31.3M
JOD respectively. Our total assets grew by 8.6% to reach
a record 108M JOD and shareholders’ equity reached
74.2M JOD taking into account a distribution of 25M
JOD in March of 2015. Taking these achievements into
consideration, the Board of Directors has recommended
a dividend distribution of 1JOD/Share.
As you all know giving back to the local community
is an integral part of our DNA as a company. The
company continued to invest and support numerous
programs aimed at improving living conditions of the
local community. In 2015 the company spent around
438 thousand JOD on programs focused on education,
Dear fellow shareholders-
healthcare and sustainable developments taking the total
It is with pleasure that I present to you EICO’s 24th annual
amount spent on CSR it’s inception to over 3M JOD.
report showing the results and financial statements for
In 2016, we expect to grow revenue and profits by more
fiscal year 2015 as well as our plan and outlook for fiscal
than 11%. We have devised a balanced plan focused on
year 2016.
the following themes:
The year 2015 witnessed continued economic and
- The continued diversification of our business
political instability on the global scene. Conflict in
geographically and operationally.
neighboring countries showed no signs of stopping which
- Applying the highest standards of transparency and
has continued to cause serious economic and security
proper governance and consulting with subject matter
challenges to the Hashemite Kingdom of Jordan. The
experts to assess all the risks we face as a company and
historical drop in oil prices has put unprecedented strain
the best approach to mitigate such risks.
on oil producing nations in the gulf and beyond. Economic
- Maintaining an optimal structure of the organization
reform and corrective measures in Europe coupled with
by assessing various options that will allow for the
major structural issues in the economies of China,Brazil
maximization of value to the shareholders.
and India have led to volatility in the global markets and
- Optimization of foreign exchange on our operations.
serious concerns over growth in the global economy.
Despite of all the aforementioned challenges, I am proud
Finally, I would like to share my sincere gratitude for
to say that EICO has continued to deliver impressive
everyone involved in Eqbal’s success story. I would like
results. In 2015 we have managed to achieve record
to thank all of our partners for being an integral part of our
figures across the board. Through the diligent and
business and success. I would like to express my special
14
thanks to the Board of Directors for their continued
support, their invaluable contributions in formulating our
strategies. I would also like to thank all of our employees
across the different subsidiaries for their hard works,
relentless desire to improve, and dedication. May 2016
be another year of record achievements for everyone
involved.
Sincerely,
Samer Tawfiq Fakhouri
Chairman of the Board of Directors
15
Company’s main activities:
Al-Eqbal Investment Co. (PLC) is an investment company with branches in the Hashemite Kingdom of Jordan and the United Arab Emirates.
It is specialized in the manufacturing and distribution of molasses and the development and construction of renewable energy projects. It
owns the following companies:
1. Al-Fakher for Trading Tobacco and Agencies Company Ltd.
2. Spectrum International for Renewable Energy Ltd.
3. International Tobacco and Cigarettes Ltd. (under liquidation)
Geographic locations of the Company and number of employees at each location:
Company headquarters in the Hashemite Kingdom of Jordan
Amman – Um Uthaina - Saàd Ibn Abi Waqqas Street - Building No. (39)
P.O. Box 911145 Amman 11191 Jordan
Telephone: +962 6 5561333
Fax: +962 6 5561339
Email: info@eqbal-invest.com
Website: www.eqbal-invest.com
There are (12) employees. The company has no branches.
Its capital is (25,000,000) JOD.
The company is registered with the Ministry of Industry and Trade under the number (218) as of 1/6/1992, with the national identification
number (200022790).
Number of Employees
- As of the end of 2015, the number of employees of Al-Eqbal Investment Company and its subsidiaries amounted to a total of 583 employees.
- The number of employees by academic qualifications as of 2015:
Subsidiaries
Qualification
Al-Eqbal
Investment Co.
Al-Fakher for
Trading Tobacco
and Agencies
Company/Jordan
Al-Fakher Tobacco
Factory/United Arab
Emirates/Ajman
Al-Fakher Al
Dhahabi General
Trading/United Arab
Emirates/Ajman
Spectrum
International
for Renewable
Energy/Jordan
-
1
1
Total
Doctorate
-
-
-
Masters
1
-
9
-
-
10
Higher Diploma
-
-
-
-
-
0
Bachelors
8
-
66
2
4
80
Diploma
1
1
21
-
-
23
High School
1
-
78
-
1
80
Less than High School
1
-
387
-
1
389
Total
12
1
561
2
7
583
19
Training Courses
Employee Training Courses in 2015
Course
Number
Course in Logistical Supply
1
Internal Surveillance and Camera Systems delivered by Samsung Company (IP)
1
Printer Maintenance and Usage (A-series plus & A320i)
4
Professional Microsoft Excel Course Specific to Finance and Accounting
1
Field Visit – Italy
3
Field Visit - Belgium
1
Field visit – America
1
Field Visit - Germany
1
ISO 14001/9001 Refresher Course in accordance with 2015 standards
2
Total Number of participants
15
20
Nature of work and fields of activity of the subsidiary companies
Name of Company
Company Type
Main Activity
Paid-up
capital (JOD)
Shareholding
percentage
Al-Fakher for Tobacco Trading and Agencies
Company*
Limited Liability
Manufacturing and sale of molasses
and its supplies to various countries
6,000,000
100%
International Tobacco and Cigarettes
Company**
Limited Liability
Manufacturing of cigarettes
6,000,000
100%
Spectrum International for Renewable
Energy Company
Limited Liability
Investment in alternative energy
6,000,000
100%
* A branch of the company exists in Aqaba Special Economic Zone / It has a branch, Al-Fakher Factory for Treated Tobacco in Ajman, with a
capital of 40 Million Emirati Dirhams, which is equivalent to 11 Million USD.
** The company is currently under liquidation.
Al-Fakher for Trading Tobacco and Agencies Company
• Limited Liability.
• Manufacturing and distribution of flavored Molasses.
• Capital of 6,000,000 JOD.
• Percentage of shareholding is 100%.
• Company headquarters are in the Hashemite Kingdom of Jordan, Amman / Um Uthaina - Saàd Ibn Abi Waqqas Street - Building No. (39).
One (1) employee works there.
There is a branch of the company in the Aqaba Special Economic Zone. It has a branch, Al-Fakher Factory for Treated Tobacco, (Ajman – the
United Arab Emirates) where (561) employees work.
Al-Fakher Factory for Treated Tobacco owns Al-Fakher Al Dhahabi General Trading, with a capital of (2.7) million USD, where two (2)
employees work.
number (200010064).
Spectrum International for Renewable Energy Company
• Percentage of shareholding is 100%
• Company headquarters are in the Hashemite Kingdom of Jordan, Amman / Um Uthaina - Saàd Ibn Abi Waqqas Street - Building No.
(39). Seven (7) employees work there. The company is registered with the Ministry of Industry and Trade under the number (23148) as of
28/10/2010, with the national identification number (200114522).
International Tobacco and Cigarettes Company / under liquidation
• Manufacturing cigarettes,
• Percentage of shareholding is 100%.
• Company headquarters are in the Hashemite Kingdom of Jordan, Amman / Um Uthaina - Saàd Ibn Abi Waqqas Street - Building No. (39).
• The company is under liquidation.
• The company has no branches.
number (200094979).
21
Bios of the Members of the Board of Directors as of 31/12/2015
Mr. Samer Tawfiq Shaker Fakhouri
Current position: Chairman of the Board of Directors
Date of Birth: 1/5/1972
Qualifications: Bachelors of Business Administration/1993
Current memberships and positions
• General Manager of Al-Eqbal Investment Co. as of 1995
• Chairman of the Management Board of International Tobacco and Cigarettes Company as of 2008
• Chairman of the Management Board of Al-Fakher for Trading Tobacco and Agencies Company as of 2009
• Chairman of the Management Board of Spectrum International for Renewable Energy Company as of 14/7/2015
Previous memberships and positions
• Chairman of the Board of Directors of Al-Eqbal for Printing and Packaging Company during the period from (2001 - 7/11/2007)
• Deputy Chairman of the Board of Directors of Al-Eqbal Investment Company during the period from (2001 - 30/5/2006)
• General Manager of Al Fakher for Trading Tobacco and Agencies Company during the period from (30/5/2006 – 5/7/2009)
• Chairman of the Board of Directors of Pearl Sanitary Paper Converting Company during the period from (1999-2000)
• Chairman of the Management Board of Spectrum International for Renewable Energy Company until 2013
• General Manager of the Arab Company for the Distribution of Cigarettes during the period from (2000-2013)
Mr. Waleed Tawfiq Shaker Fakhouri
Current position: Deputy Chairman of the Board of Directors
Qualifications: Masters of Business Administration/1999; Bachelors of Advertising/1992
• Chairman of the Board of Directors of the Arab Islamic Bank as of 2001
• Member of the Board of Directors of the Bank of Jordan as of 2005
• Deputy Chairman of the Board of Directors of Excel Invest Company as of 2006
• Deputy Chairman of the Board of Directors of Zahrat Alurdon Real Estate and Hotels Investment Company as of 2006
• Deputy Chairman/Chief Executive Officer of Al-Tawfiq Investment House as of 2007
• Founder and Chief Executive Officer of Adaa’ for Sports Management as of 2011
• Member of the Board of Directors of Al-Eqbal Invesment Company/Representative of Al-Eqbal Jordan General Trading Company
during the period from (2001-2005)
• Member of the Board of Directors of Al-Eqbal Invesment Company/Representative of Bank of Jordan during the period from
(2005-25/3/2007)
• Member of the Board of Directors of Al-Eqbal Invesment Company during the period from (25/3/2007 – 3/10/2009)
• Employee/Bank of Jordan during the period from (1992-1995)
• Executive Director/Bank of Jordan during the period from (1995-1999)
• Assistant General Manager of Treasury and Investment /Bank of Jordan during the period from (1999-2003)
• Assistant General Manager for Investment and Branches/Bank of Jordan during the period from (2003-2004)
• Chairman of the Management Board of Spectrum International for Renewable Energy Company during the period from (2013-2015)
• Chairman of the Board of Directors of Trust International Transport Company during the period from (2009-2014)
22
Mr. Yousef Mohammad Omar Omar
Current position: Member of the Board of Directors/Representing Farah for Electrical and Health Appliances Company as of 31/1/2015.
Qualifications: Bachelors of Finance with a major in Accounting/1975
• Member of the Board of Directors /Zahrat Alurdon Real Estate and Hotels Investment Company as of 2010
• Member of the Board of Directors of Pearl Sanitary Paper Converting Company/ Trust International Transport Company as of 10/9/2014
• Employee/Bank of Jordan as of 2001
• Representative of the member of the Board of Directors of Farah for Electrical and Health Appliances Company/Al-Eqbal Investment
Company during the period from (2005-31/1/2015)
• Representative of the member of the Board of Directors of Farah for Electrical and Health Appliances Company/ Al-Eqbal for Printing
and Packaging Companyduring the period from (2003-2007)
• Member of the Board of Directors/ Al-Eqbal for Printing and Packaging Company during the period from (1997-2007)
• Member of the Board of Directors / Trust International Transport Company during the period from (2001-2009)
• Accountant/Almuhairy General Contracting Company – Abu Dhabi during the period from (1975-1984)
• Accountant/Arab Electrical Industries during the period from (1984-1986)
• Accountant/Sandan Jordan during in 1987
• Accountant/Arab Gulf Company during the period from (1987-1995)
• Accountant/Al-Eqbal Jordan Company during the period from (1987-1995)
• Accountant/Modern Fashion Design Company during the period from (1987-1995)
• Finance Manager/ Al-Eqbal for Printing and Packaging Company during the period from (1996-2000)
Mr. Abd-Alraheem Ali Al-Zoubi
Current position: Representative of Pearl Commercial for Reconstruction and Investment Company
Qualifications: Higher Diploma in Media and Journalism/1981; Bachelors in Business Administration and Political Science/1975
• General Manager/Alqamar for Energy and Infrastructure Company as of 2013
• General Manager/Sultani International Oil Private Shareholding during the period from (2012-6/2013)
• General Manager/Jordan Oil Shale Energy Company during the period from (2008-2012)
• Retired Brigadier/Jordan Armed Forces (1976-2007)
23
Mr. Sakher Marwan Akram Dodeen
Current position: Representative of Zahrat Alurdon Real Estate And Hotels Investment Company
Qualifications: Bachelors of Architectural Engineering/1985
• Founder and Member of the Board of Directors / Afkar Investment Company as of 2009
• Founding member/Jordanian Renewable Energy Association (Istidama) as of 2010
• Founding member/Dora Foundation for Societal Development as of 1998
• Member/Khalil Alrahman Charity Foundation as of 2004
• Member/Jordan Architects Society as of 1989
• Member/Jordan Engineers Association, Architecture Division number 1280 as of 1985
• Member/Jordan Engineering Offices, consultation office number 1936 as of 1996
• Visiting member/American Institute of Architects, AIA as of 2011
• Member of the Board of Directors/Special Systems Company (1998-2004)
• Architecture Engieer/Office of Ja’far Touqan Engineering Consultants during the period from (1984-2002)
• Real Estate Department Manager/ Sakher Marwan Dodeen Office during the period from (1989-2004)
Dr. Naser Mustafa “Mohammad Saeed” Kherishi
Current position: Member of the Board of Directors - Representing Bank of Jordan as of 16/2/2014
Qualifications: Doctorate of Electrical Engineering/1990; Masters of Electrical Systems and Economy/1985; Bachelors of Electrical
Engineering/1984
• Executive Director-World Markets/Bank of Jordan as of 2011
• Various executive positions with research, consulting and information technology companies/United States of America during the
period from (1988-2004)
• General Manager/Monere LLC/United States of America during the period from (2011-2014)
• Assistant General Manager – Information Systems Operations/Etihad Bank – Amman during the period from (2009-2011)
• Assistant general Manager – Information Systems/Jordan Kuwait Bank – Amman during the period from (2004-2009)
24
Mr. Saleh Rajab Elayan Hammad
Current position: Member of the Board of Directors - Representing Arabian Gulf Investment Company and Public Transportation
Qualifications: Bachelors of Computer Science – Jordan University/1985
• Secretary of the Board of Directors/Bank of Jordan as of 2007
• Deputy Chairman of the Board of Directors of Jordan Financial Leasing Company as of 2011
• Member of the Board of Directors of the Investment Consulting Group Company as of 2012
• Assistant General Manager of the Compliance and Risk Division / Bank of Jordan as of 2014
• Banking Systems Programmer Analyst and Developer / Jordan Bank Amman - During the period from (1987-1984)
• Executive Director / Compliance and Risk Division / Bank of Jordan – During the period from (1994-2014)
Mr. Ra’ed Fathi Muneeb Samara
Current position: Member of the Board of Directors – Representing Al-Eqbal Jordan General Trading Company as of 31/1/2015
Qualifications: Bachelors in Economy and Business Administration – North Carolina State University / United States of America / 1988-1992
• Chairman of the Management Board / Samara & Yousef Construction Company as of 1994
• Partner / Fathi Samara & Children Housing Company as of 1995
• Chairman of the Board of Directors / Irbid Chamber of Industry as of 2005
• Member of the Investment Committee / Science & Technology University as of 2010
• Member of the Management Board & Partner / Arbella for Medical Technologies Company as of 2012
• Member of the Board of Trustees / Irbid Ahli University as of 2013
• Assistant General Manager / Holiday Inn United States of America / Cary – North Carolina State during the period from (1990-1994)
• Second Deputy to the President of the Jordan Chamber of Industry during the period from (2012-2014)
• Executive Director & Partner / Samara Marble & Stone Company – Irbid
• Member of the Management Board of Al Yarmuk Water Company
• Member of the Board of Directors / Economic Projects Development Organization
• Member of the Board of Directors / The National Fund for the Support of Youth Movement
• Member of the Board of Local Society Consultation / Yarmuk University – Irbid
25
Mr. Mohammad Naser Barakat
Current position: Member of the Board of Directors - Representing Al Yamamah Public Investment Company
Qualifications: Masters in Business Administration & Accounting / 1992; Bachelors of Banking & Finance Sciences / 1989
• Member of Certification in Control Self-Assessment (CCSA)
• Member of Certified Public Accountants Association (CPA)
• Partner responsible for Work Risk Management Services in the Middle East / Grant Thornton Company as of 2010
• Chairman of the Board of Directors of Al Dar International Governance Consulting Company
• Regional Office Assistant Manager and Manager of The Professional Development Department / Talal Abu Ghazaleh International
Company during the period from (1992-1994)
• Financial Manager / Bank of Jordan during the period (1994-1997)
• Consultations Manager / Al Dar for Accounts Auditing Company during the period from (1997-2010)
Mr. Haitham Mohammad Ali Qteishat
Current position: Member of the Board of Directors as of 1/2/2015
Qualifications: Bachelors of Business Administration 1972
• Chairman of the Board of Directors of Trust International Transport Company as of 1/9/2005
• Representative of the Member of the Board of Directors of Pearl Commercial for Reconstruction and Investment Company in Al-Eqbal
for Printing and Packaging Company during the period from (2004-7/11/2007)
• Representative of the Member of the Board of Directors of Al Yamamah Public Investment Company in Al-Eqbal for Printing and
Packaging Company during the period from (29/12/2010 – 27/2/2011)
• Program broadcaster and announcer with the Hashemite Kingdom of Jordan Broadcasting Network during the period from (1972-1975)
• General Supervisor and Customs Director at the Jordanian Customs Department at Queen Alia International Airport during the period
from (1975-2002)
• Advisory to the Prime Minister and General Coordinator of “Jordan First” Commission during the period from (2002-2003)
• Representative of the Member of the Board of Directors of Bank of Jordan in Al-Eqbal Investment Company during the period from
(28/2/2011-25/2/2013)
• Media Consultant at the Bank of Jordan during the period from (2004-31/12/2015)
26
Mr. Yazeed Adnan MustafaAl-Mufti
Current position: Representative of the Member of the Board of Directors of Way Financial Investment Increases Company as of 5/3/2015
Qualifications: Bachelors of Business Administration 1976
• Main Shareholder in Al Hikma Company for Financial Services (Financial Agent) as of 2005
• Chairman of the Board of Directors / Cairo Amman Bank as 2004
• Member of the Board of Directors in each of the following as of 2005:
• Middle East Insurance Company
• Zara Investment Holding Company
• Palestine Development and Investment Company (PADICO)
• Various positions the last of which was Deputy Chairman / City Bank during the period from (1977-1989)
• General Manager / Cairo Amman Bank during the period from (1989-2004)
Mr. Fares Osama Mohammad Yaseen Al-Talhouni
Current position: Member of the Board of Directors as of 1/2/2015
Qualifications: Bachelors - Economic and Political Science (Florida State University, Miami, United States of America) 2009
Masters – Real Estate Development (Colombia University, New York, United States of America) 2013
• Assistant Manager / Al’Usool for Investment & Economy as of 2009
• Executive Director / Modern Fashion Design Company as of 2009
• General Manager / Nite Company for Real Estate Development and Investment as of 2013
• Member of the Investment Committee / Science and Technology University as of 2010
27
Mr. Hussein Abduljaleel Abed Alfawa’eer
Current position: Secretary of the Board of Directors as of 19/1/2014 and Public Relations Manager.
Qualifications: Masters of International Marketing / 1996; Bachelors of Business Administration / 1994
• Private Business during the period from (1980-1989)
• Economic Researcher / Enterprise Development Corporation during the period from (1989-1996)
• Regional Manager / The Islamic Corporation for Food Products – Palestine during the year 1996
• General Manager / The Islamic Corporation for Food Products – Palestine during the period from (1996-1998)
• Manager of Lubna Group during the period from (1998-2000)
• Assistant Public Relations Manager / International Tobacco and Cigarettes Company during the period from (2001-2010)
• Member of the Board of Directors of Trust International Transport Company as of 6/8/2014
Mr. Malek Hussein Yaseen Mahmoud
Current position: Financial Manager as of 1/6/2013
Qualifications: Bachelors of Accounting / 1995
• Member of the Board of Directors of Trust International Transport Company – Representative of Al-Eqbal Investment Company as of
2012
• Assistant Financial Manager / International Tobacco and Cigarettes Company during the period from (1995-2011)
• Internal Auditing Manager / Al-Eqbal Investment Company during the period from (2011-2013)
28
Major Shareholders (owning 5% or more)
Name of Shareholder
Number of
shares
31/12/2014
Number of
shareholders
Percentage
Number of
shares
31/12/2015
Number of
shareholders
Percentage
Tawfiq Shaker Khader Fakhouri
4,367,381
17.470%
4,432,533
17.730%
Bank of Jordan
2,500,000
10.000%
2,500,000
10.000%
Al-Eqbal Jordan General Trading
Company
3,394,708
13.579%
2,738,195
10.953%
Arabian Gulf Company
16.539%
4,134,645
Total
14,396,734
4,134,645
4
57.587%
13,805,373
4
16.539%
55.221%
Remaining shareholders
10,603,266
1,986
42.413%
11,194,627
1,865
44.779%
Grand Total
25,000,000
1,990
100.000%
25,000,000
1,869
100.000%
Competitive Position of the Company
• The Company has continued to strengthen its leading position as one of the most successful investment companies in the region.
There is no doubt that the successes which have been achieved over the course of the previous few years will provide an ideal foundation
for ensuring further growth of the Company’s sales and profits, the development of its investments, and future expansion of its operations,
which will strengthen the reputation and status of the Company on both the regional and international fronts and expand its molasses export
markets and diversify its investments in the field of renewable energy on the technical and geographical levels.
• The Company’s internal markets (through Al Fakher for Trading Tobacco and Agencies Company and Spectrum International for Renewable
Energy): All municipalities and cities in the Kingdom.
• Company’s external markets (through Al-Fakher for Trading Tobacco and Agencies Company) 85 countries around the world and through
Spectrum International for Renewable Energy in the Arab Republic of Egypt.
Achievements and future plans
Al-Fakher for Tobacco Trading and Agencies has continued to achieve significant results on various fronts for the 9th consecutive
year. The company has achieved record levels of sales, profits, assets and shareholders equity. The company has developed and executed
sales and marketing plans and strategies, which have proven effective in increasing market share and spreading of Al-Fakher’s products in
most markets. The company has also continued its expansion and increase of its production capacity and development of quality systems.
The below are the most significant achievements for 2015:
1. The 2015 sales target was achieved by a percentage of 103%
2. New products and flavors (Infinite Mix and Alfakher Aldahabi) were introduced in new and elegant packaging.
3. Increasing total production capacity by 22%
4. Developing ISO 9001 quality control systems to be in line with updated ISO system requirements issued in 2015.
5. Commencing work on new housing for work force with greater capacity and modern specifications to provide comfort and general
safety to workers in the Free Zone.
6. Developing preventative maintenance system to reduce various mechanical and technical faults; this has led to reducing maintenance
costs by 10% in comparison with 2014.
7. Developing training and awareness programs relating to general safety systems and professional safety and health in line with local
and international systems, which provides great readiness in dealing with emergency cases and natural disasters.
8. Improving contracts with main suppliers in addition to new provisions protecting the company’s interests and developing a main
supplier database in addition to new suppliers for the supply of printing and raw tobacco.
9. Completing the preparation of new raw materials warehouse with a capacity of 2400sqm and increasing storage capacity by 16%
in accordance with the international framework and standards for the preparation of warehouses.
10. Started the expansion of the tobacco factory (primary) and fructose and raw tobacco warehouses and increasing production
and storage capacity to be in line with future demand and quality control systems.
29
initiatives 2016
• Completing the move and expansion of the tobacco factory (primary) and fructose and raw tobacco warehouses and increasing
production and storage capacity to be in line with future demand and quality control systems.
• Development of a warehouse management system (WMS Barcode), and supply chain practices by applying to obtain CIPS corporate
certificate.
• Building a future framework strategy for the company.
• Putting in place an information system recovery plan.
• Establishing and developing the following human resources systems:
- Career substitution and employee development plan
- Updating employee ranking system and connecting it with the employee promotion system
Achievements of Spectrum International for Renewable Energy Company
• Signing a joint venture agreement for the development of a 24 MWp in the Arab Republic of Egypt with the Egyptian
Al Tawakol Company and the Spanish Gestamp Solar Company.
• Signing the joint venture agreement for the development of a 58 MWp with the Spanish Gestamp Solar Company.
• Further expand the technical and operational capabilities of Spectrum team, enabling the company to strategically move from targeting
small scale (residential) projects to medium and large scale (facility and utility scale) projects.
• Implementing various projects for commercial, industrial and academic sectors.
• Implementing a unique project at the Zaatari Refugee Camp which included building 175 lighting units which operate entirely on solar
energy and which are not connected to the electrical grid.
• Conducted a complete Business Process Reengineering, along with updating Spectrum’s internal systems.
The financial effects on operations of a non-repetitive nature which took place during the financial year and which does
not fall within the company’s main activities
Within this year used assets (cars, furniture and equipment) were sold and the financial effect there of was the achievement of profits amounting
to 49,718 JOD.
30
The extent of dependency on specific vendors or main agents (local and international)
Agents
Name of Agent
Percentage of Dealings
The National Corporation
19.31%
Al Fakher Al Dhahabi General Trading
10.14%
Serantork
7.62%
Asel Alfakher for Trading
7.00%
Fawryat Al Alamiya for Trading
5.13%
Name of Vendor
Percentage of Dealings with Total Purchases
Vendors
Alliance One Rotag AG
13.59%
Majan Printing & Packaging Company LLC
9.39%
Cosmoplast Industrial Company
9.28%
Mella SRL Societa Unipersonale
8.46%
Hertz Flavors GMBH & Co. KG
7.37%
Decisions issued by the government or by international organizations or others which have a material
impact on the work of the company, its products or, competitive capabilities.
Al-Eqbal Investment Company is entitled to rights under the currently enforced laws and regulations in Jordan, whereby the company enjoys: • Protection under enforced intellectual property and trademarks laws in the Kingdom, noting that it owns the following trademarks:
- Al-Eqbal Investment Company (2) trademarks
- International Tobacco and Cigarettes Company (50) trademarks
- Al-Fakher for Tobacco Trading and Agencies Company (6) trademarks
• Alternative renewable energy systems have obtained exemptions from customs duties and sales tax and that is in accordance with decisions
issued by the Ministry of Finance and General Customs Department.
• There are no patents or concession rights
• The company’s committed to enforcing international quality standards, and that is by of placing the necessary health warnings on its
products in terms of molasses packaging in addition to supervision and conformity of the product to the standards and specifications
adopted locally and internationally.
31
32
33
Risks which the Company is subject to
Due to the nature of its activities, the Company is subject to various risks, which can be summarized as follows:
• Market risks, currency exchange rates, and interest rates.
• Adverse economic conditions in the region.
• Changes to laws and regulations and their potential negative effect on the objectives and plans of the company.
• Production of counterfeit products with our brand which would negatively affect the reputation of the Company.
Financial Highlights in 2015
• The consolidated revenue of the company increased from 106.3 million JOD in 2014 to 123.9 million JOD in 2015 with an increase of 17.6
million JOD representing an increase of 16.5%.
• The operational profits of the company increased from 27.7 million JOD in 2014 to 34.4 million JOD in 2015 with an increase of 6.7 million
JOD and a percentage increase of approximately 24.1%.
• Increase in shareholders equity by 6.7 million JOD despite the distribution of 25 million JOD as dividends to shareholders during the year
2015 whereby shareholders equity by end 2015 amounted to 74.2 million JOD as opposed to 67.6 million JOD for the year 2014.
• The working capital of the company by year end 2015 amounted to 46.9 million JOD as compared with 38.2 million JOD for the year 2014
• The liquidity of the company and its ability to meet its short-term commitments is considered to be very strong with a current ratio of 2.5.
• Gross profit percentage in 2015 was 42.7% compared to 40% for 2014.
• General and administrative expenses amounted to 9.4 million JOD compared to 7.8 million JOD in the previous year. Meanwhile costs of
sales and distribution increased to 9.2 million JOD compared to 6.7 million JOD for the previous year.
Some of the increase in general and administrative expenses is attributed to a change in the treatment of annual bonuses which is a nonrecurring item.
Non-Recurring Expenses/Costs
It is worth mentioning that in 2015 the company incurred some expenses/costs that are non-recurring in nature. Below is a list of all the major
non-recurring elements:
• Discarding of old packaging materials of 1.05 million JOD.
• Change in Bonus Accrual Policy 1.65 million JOD. Another provision will be taken in 2016. Double counting for bonuses will stop or be
significantly reduced in 2017 onwards.
• One time marketing bonuses for previous years at 1.2 million JOD.
• One time electricity connection cost in Industrial Area of 277 thousand JOD.
Analysis of financial percentages
Statement / year
2014
2015
Return on investments
39.0%
42.0%
Return on assets
27.0%
30.0%
Return on equity
40.0%
44.0%
Proficiency indicator (expenses/income)
13.7%
15.0%
7.4%
7.6%
24.8%
25.2%
6.3%
7.4%
General & Administrative expenses to revenue
Net profit to revenue
Distribution & Selling expenses to revenue
34
Profit progression and net shareholder equity and price of share and dividends
statement/year
2009
2010
2011
2012
2013
2014
2015
Assets
86,278,940
86,687,889
67,662,846
67,873,197
97,701,774
99,620,066
108,234,546
Equity
40,073,585
45,814,431
56,546,503
57,465,334
66,096,666
67,568,459
74,223,601
Profits before tax
11,420,062
17,571,111
22,739,380
22,463,850
30,012,905
28,312,913
33,531,000
Profits after tax
10,299,304
16,194,873
21,340,989
21,004,698
28,039,900
26,462,297
31,280,583
Share distribution
Dividends
1,821,693
10,000,000
10,000,000
20,000,000
20,000,000
20,000,000
25,000,000
25,000,000
Earnings per share
0.495
0.799
1.063
1.048
1.120
1.056
1.249
Per Share Dividends
0.500
0.500
1.000
1.000
1.000
1.000
1.000
3.14
5.08
6.7
9.45
14
11.62
17.40
Share price by year
end (Dinars)
Jordanian Dinar = 1.4104 US Dollars
35
36
Auditor’s Fees for the year 2015
Statement
Auditor’s Fees
Total
Al-Eqbal Investment Company
13,000
13,000
Al-Fakher for Trading Tobacco and Agencies Company
19,000
19,000
Spectrum International for Renewable Energy
3,000
3,000
Total
35,000
35,000
37
Shares owned by the chairman, members of the board of directors, the general manager, senior management and each of their wives, minor children in
Al-Eqbal Investment Company and companies in which it has shares and in companies under the control of any of them
Name
ID Number/
Center
Number
Nationality
Position in company issuing
security (and/or) companies
in which Al-Eqbal Investment
Company is a shareholder
Election /
Appointment
Date
General Manager
1995
Chairman of the Board of
Directors
2009/10/3
Shareholder
Bank of Jordan
Shareholder in member of the
board of directorscompany
owning more than 5% of
Al-Eqbal Investment
Company Shareholder
Shareholder
Bank of Jordan
Al-Eqbal Investment
Company Shareholder
Bank of Jordan
Al-Eqbal Investment
Company Shareholder
Name of company issuing
security
Person represented
or relation
(husband/wives/
children)
Type
Nominal Number of
Number of
value
securities as securities as
(JOD) of 31/12/2014 of 31/12/2015
Members of the board of directors and their representatives
Mr. Samer Tawfiq
Fakhouri
9721050578
Child/Jafaar Samer 2001154306
Fakhouri
Jordanian
Jordanian
38
Child/Ne’mat
Samer Fakhouri
Child/Hamza
Samer Fakhouri
2001419606
Jordanian
2003178343 Jordanian
Son of Mr. Samer
Tawfiq Fakhouri
Daughter of Mr.
Samer Tawfiq
Fakhouri
Son of Mr. Samer
Tawfiq Fakhouri
Share
1.000
10,939
11,118
Share
1.000
157
157
Share
1.000
1,441
1,461
Share
1.000
106
126
Share
1.000
1,162
1,220
Share
1.000
-
21
Name
Mr. Waleed Tawfiq
Fakhouri
Mrs. Shatha
Abdelhameed Al
Dabbas
ID Number/
Center
Number
Nationality
Deputy Chairman of the
Board of Directors
Share
1.000
6,250
6,250
Bank of Jordan
Member of the board of
directorsof a company owning
more than 5% of Al-Eqbal
Investment Company
Share
1.000
8,196
8,796
Zahrat Alurdon Real Estate
and Hotels Investment
Company
Deputy Chairman of the
Board of Directors of a
company having shares in
Al-Eqbal Investment company
Share
1.000
5,000
5,000
Bank of Jordan
board of directors company
Share
1.000
286
286
Bank of Jordan
Share
1.000
35,303
44,604
Shareholder
Share
1.000
303
322
Bank of Jordan
Share
1.000
19,983
24,211
Shareholder
Share
1.000
284
302
Bank of Jordan
Share
1.000
7,505
10,088
Shareholder
Share
1.000
303
321
39
security
Child/Maryam
Waleed Fakhouri
Child/Rakan
Waleed Fakhouri
Child/Aisha
Waleed Fakhouri
Election /
Appointment
Date
Person represented
or relation
(husband/wives/
children)
Wife of Mr. Waleed
Tawfiq Fakhouri
Daughter of Mr.
Waleed Tawfiq
Fakhouri
Son of Mr. Waleed
Tawfiq Fakhouri
Daughter of Mr.
Waleed Tawfiq
Fakhouri
Type
Nominal Number of
Number of
value
(JOD) of 31/12/2014 of 31/12/2015
Name
Child/Ahmad
Waleed Fakhouri
ID Number/
Center
Number
2001974088
Nationality
Jordanian
40
M/S Bank of
Jordan
1105698671
security
Bank of Jordan
Shareholder
Member of Board of Directors
Transport Tourism Company
Jet
Election /
Appointment
Date
Person represented
or relation
(husband/wives/
children)
Type
Nominal Number of
Number of
value
(JOD) of 31/12/2014 of 31/12/2015
Share
1.000
6,489
8,952
Share
1.000
290
321
Share
1.000
2,500,000
2,500,000
Owning more than 5%
Share
1.000
1,080,000
1,080,000
Bank of Jordan Syria
Owning more than 5%
Dollar
1$
2,940,000
2,940,000
Al Batoun Al Jahez Wal
Tawreedat Al Insha’yeh
Member of the Board of
Directors
Represented by Mr.
Sohrab Owais
Share
1.000
40,000
40,000
Asas Lilsinat Al Kharasanyeh
Directors
Represented by Mr.
Sohrab Owais
Share
1.000
250,000
250,000
Tafawoq for Financial
Investments Company
Subsidiary Company
Share
1.000
3,500,000
3,500,000
Trust International Transport
Company
Ownership of more than
5% in Trust International
Transport Company for
which Al-Eqbal Investment
Company is a member on its
board of directors
Share
1.000
310,100
310,100
Consulting Investment Group
Owning more than 5%
Share
1.000
7,830,681
-
National Industries Company
Owning more than 5%
Affiliate Company
Share
1.000
2,140,576
2,140,576
Jordan Company for
FinancialLeasing
Subsidiary Company
Share
1.000
10,000,000
10,000,000
Middle East Insurance
Company
Directors
Share
1.000
-
828,253
Solutions for Mobile Phone
Services Company
Owning more than 5%
Share
1.000
250,000
250,000
Jordanian
Son of Mr. Waleed
Tawfiq Fakhouri
2005/3/9
Represented by
Mr. Naser Mustafa
Kherishi
Represented by Mr.
Shaker Fakhouri
Name
Mr. Naser Mustafa
Mohammad Saeed
Kherishi
Child/Saleen
Naser Mustafa
Kherishi
ID Number/
Center
Number
9621018291
Nationality
security
Election /
Appointment
Date
Representative of Member
Board of Directors Bank of
Jordan
2014/10/16
Bank of Jordan
Shareholder
2015/9/15
Bank of Jordan
owning more than 5% of AlEqbal Investment Company
2015/9/15
Directors
2005/3/9
Bank of Jordan
Company
Directors of Trust International
Transport Company for which
is a member on its board of
directors
Directors
Jordanian
Person represented
or relation
(husband/wives/
children)
Type
Nominal Number of
Number of
value
(JOD) of 31/12/2014 of 31/12/2015
-
-
-
-
Share
1.000
4
4
Share
1.000
-
200
Share
1.000
-
1,000
Represented by Mr.
Abdelraheem Ali
Share
Abdelraheem Al Zubi
1.000
14,782
14,782
Share
1.000
4,500
9,408
Represented by Mr.
Yousef Omar
Share
1.000
5,000
5,000
Represented by Dr.
Salah Almawajda
Share
1.000
10,000
10,000
Daughter of Mr.
Naser Mustafa
Kherishi
41
M/S Pearl
Commercial for
Reconstruction
and Investment
Company
1109416944
Jordanian
Name
Mr. Abdelraheem
Ali Abdelraheem
Al Zubi
42
M/S Arabian
Gulf Investment
Company
and Public
Transportation
Mr. Saleh Rajah
Elayyan Hammad
ID Number/
Center
Number
Nationality
security
of the Board of Directors
Pearl Commercial for
Reconstruction and
Investment Company
Directors
Election /
Appointment
Date
Person represented
or relation
(husband/wives/
children)
Type
Nominal Number of
Number of
value
(JOD) of 31/12/2014 of 31/12/2015
-
-
-
-
Share
1.000
4,134,645
4,134,645
Bank of Jordan
directors of a company
Represented by Mr.
Haitham Mohammad Share
Barkat
1.000
8,197
8,197
Company
board of directors
Represented by Mr.
Haitham Mohammad Share
Qutaishat
1.000
5,000
5,000
Shareholders
Share
1.000
10,000
-
Bank of Jordan
Shareholder in member of
the board of directors of a
company owning more than
5% of Al-Eqbal Investment
Company
Share
1.000
23,755
28,755
Arabian Gulf Investment
Company and Public
Transportation
-
-
-
-
2005/3/9
2013/2/25
Represented by
Mr. Saleh Rajab
Hammad
Name
Al Yamamah
Public Investment
Company
Mr. Mohammad
Naser Naseeb
Barakat
43
Mrs. Eqbal Tawfiq
Fakhoury
Ms. Zain
Mohammad Naser
Barakat
Ms. Hala
Mohammad Naser
Barakat
ID Number/
Center
Number
Nationality
security
Election /
Appointment
Date
Person represented
or relation
(husband/wives/
children)
Type
Member of the Board
Directors
2005/3/9
Represented by Mr.
Mohammad Naser
Barakat
Share
1.000
8,332
8,332
Bank of Jordan
Share
1.000
1,898,325
1,898,325
Representative of Member of
Al Yamamah Public
Investment Company
-
-
-
-
Shareholder
Share
1.000
34,407
34,407
Bank of Jordan
Share
1.000
76,847
76,847
Shareholder
Share
1.000
5,175
5,179
Share
1.000
16,419
16,419
Share
1.000
304
324
Share
1.000
1,834
1,834
9712000812
Jordanian
Bank of Jordan
Shareholder
Bank of Jordan
2010/12/29
Wife of Mr.
Mohammad Naser
Barakat
Daughter of Mr.
Mohammad Naser
Barakat
Daughter of Mr.
Mohammad Naser
Barakat
Nominal Number of
Number of
value
(JOD) of 31/12/2014 of 31/12/2015
Name
M/S Al-Eqbal
Jordan General
Trading Company
ID Number/
Center
Number
1901304522
Nationality
Jordanian
Election /
Appointment
Date
Person represented
or relation
(husband/wives/
children)
Type
Directors until 31/1/2015
2005/3/9
Represented by Mr.
Raed Fathi Moneeb
Samara
Share
1.000
3,394,708
2,738,195
Bank of Jordan
directors in a company owning
Investment Company
Represented by
Mr. Haytham Abu
Alnaser Al Mufti
Share
1.000
19,958,077
19,958,077
Zahrat Alurdon Real Estate
And Hotels Investment
Company
Shareholders in a Company
having sharesin and member
of the Board of Directors of
Represented by Mr.
Yousef Omar
Share
1.000
13,843
13,843
Company
board of directors
Represented by Mr.
Share
Hussein Al Fawaeer
1.000
5,000
5,000
Shareholders
Share
1.000
10,000
-
-
-
-
-
Share
1.000
2,136
-
44
security
Mr. Raed Fathi
Moneeb Samara
of the Board of Directors AlAl-Eqbal Investment Company
Eqbal Jordan General Trading
Company until 31/1/2015
Bank of Jordan
directors in a company owning
Investment Company
2011/2/28
Nominal Number of
Number of
value
(JOD) of 31/12/2014 of 31/12/2015
Name
ID Number/
Center
Number
M/S Farah for
Electrical and
Health Appliances
Company
1117715390
Mr. Yousef
Mohammad Omar
Omar
Nationality
security
Election /
Appointment
Date
Person represented
or relation
(husband/wives/
children)
Type
Jordanian
2005/3/9
Represented by Mr.
Yousef Mohammad
Omar Omar
Share
1.000
8,332
8,332
the Board of Directors Farah
for Electrical and Health
Appliances Company
2005/3/9
-
-
-
-
2007/3/3
Share
1.000
19,250
20,825
Bank of Jordan
Shareholders in member
of the board of directors
company owning more than
5% of Al-Eqbal Investment
Company
Share
1.000
215,187
215,187
Representing Member of the
Board of Directors of Zahrat
Alurdon Real Estate And
Hotels Investment Company
until 5/3/2015
-
-
-
-
Nominal Number of
Number of
value
(JOD) of 31/12/2014 of 31/12/2015
45
M/S Zahrat
Alurdon Real
Estate And
Hotels Investment
Company
Mr. Sakher
Marwan Akram
Dodeen
1164063016
9611001523
Jordanian
Jordanian
2011/2/28
Represented by
Mr. Sakher Marwan
Akram Dodeen
Name
ID Number/
Center
Number
Nationality
security
Election /
Appointment
Date
Directors
2015/2/1
Person represented
or relation
(husband/wives/
children)
Type
Nominal Number of
Number of
value
(JOD) of 31/12/2014 of 31/12/2015
Share
1.000
80,000
84,100
Bank of Jordan
Share
1.000
170,000
200,000
Company
Arabian Gulf Investment
Company and Public
Transportation
-
-
-
-
Directors
2015/3/5
Share
1.000
-
5,000
Alsabeel for financial
Investments Company
2015/3/5
-
-
-
-
Mr. Fares Osama
Mohammad Yassin 9851033202 Jordanian
Al Talhouni
Directors
2015/2/1
Share
1.000
13,400
13,400
Secretary of the Board of
Directors
2014/1/19
-
-
-
-
Public Relations Manager
2001/2/19
-
-
-
-
Company
Al-Eqbal Jordan General
Trading Company
2014/8/6
Financial Manager
2013/6/1
-
-
-
-
Company
-
-
-
-
Mr. Haytham
Mohammad Ali Al
Kteishat
M/S Alsabeel
for Financial
Investments
Company
46
Mr. Yazeed Adnan
Mustafa Al Mufti
1102850799
Jordanian
Represented by Mr.
Yazeed Adnan
Al Mufti
Higher Management
Mr. Hussein Abdel
Jaleel Abdel
Fawaeer
Mr. Malek Hussein
Yassin Mahmoud
9591001635
Jordanian
Benefits and rewards to which the Chairman and Members of the Board of Directors were entitled
during the year 2015:
Name
Position
Annual
Salaries
Transport
Allowances
Annual
Rewards
Auditing
fees
Total Benefits
Directors/General Manager
-
12,000
5,000
-
17,000
Waleed Tawfiq Fakhouri
Deputy Chairman of the Board
of Directors
-
12,000
5,000
-
17,000
Abd-Alraheem Ali Al-Zoubi
Directors
-
12,000
5,000
-
17,000
Mohammad Naser Barakat
Directors
-
12,000
5,000
1,667
18,667
Saleh Rajab Elayan
Directors
-
12,000
5,000
333
17,333
Naser Mustafa (Mohammad
Saeed) Kherishi
Directors
-
12,000
1,055
1,667
14,722
Haitham Mohammad Ali
Qteishat
Directors
-
11,000
-
-
11,000
Yazeed Adnan Al-Mufti
Directors
-
10,000
-
1,667
11,667
Fares Ousama Al-Talhouni
Directors
-
11,000
-
-
11,000
Sakher Marwan Akram Dodeen
Previous Member of the Board
of Directors
-
2,000
5,000
-
7,000
Yousef Mohammad Omar
of Directors
-
1,000
5,000
167
6,167
Ra’ed Fathi Samara
of Directors
-
1,000
5,000
-
6,000
Eyad Mohammad Fahmi Jarrar
of Directors
-
-
3,945
-
3,945
Benefits and rewards of Senior Management during 2015:
Name
Position
Total
Annual
Salaries
Transport
Allowances
Secretary
Bonus
Annual
Travel
Rewards
Expenses
End of
Service
Benefit
Total
Benefits
Samer Fakhouri
General Manager
27,769
12,000
- -
- -
39,769
Malek Hussein
Financial Manager
57,673
-
- -
- - 57,673
Hussein Alfa’oury
Public Relations
Manager
41,175
Car for work
affairs
4,200
-
-
-
45,375
The management of the mother company (Al-Eqbal) and all its employees receive wages in return for services provided to Al Fakher Factory
for Treated Tobacco and its subsidiaries which are paid out directly from Al Fakher Factory for Treated Tobacco.
Contracts, projects and commitments entered into by the Company or its subsidiaries
Spectrum Company has sold a Photovoltaic system to the Chairman of the Board of Directors Mr. Samer Fakhouri for the amount of 34,750
JOD. Otherwise, there are no contracts or projects or commitments entered into by the company with any of its subsidiaries, the Chairman
of the Board of Directors, the members of the Board of Directors, the General Manager, or any employee working for the company or their
relatives.
47
Social Corporate Responsibility
On the social responsibility level, our Company’s experience is full of achievements and initiatives, whereby we have launched many programs
which aim at serving the society and its continued development, and that is by way of financial, moral and educational support to families in
need and to various charity organizations. On such note, the value of donations provided by the company amounted to approximately 438
thousand JOD for the year 2015, with the total donations provided by the company since its establishment amounting to 3 million JOD.
Donations and grants for the year 2015
The following table demonstrates the entries that have been donated to:
Name of entity to which donations were made
Al-Eqbal Investment Grants Fund Program (Bedaya) (Education)
Amount/JOD
126,813.00
Families in need Fund
83,171.00
Senior Centers Assistance Program
18,000.00
Arab Patients Assistance Program
29,650.00
Health Care Program
63,225.00
Ramadan Assistance Program
30,000.00
Eid Al Adha Assistance Program
14,000.00
Charity Foundations Assistance Program
10,100.00
Employee Families Assistance Program
26,394.00
Subsidiary Donations (Al-Fakher)
37,026.00
Total
438,379.00
48
Declarations of the Board of Directors
First Declaration
The Board of Directors of Al-Eqbal Investment Company declares there are no fundamental matters which would affect the continuance of the
Company for the year 2016.
Second Declaration
The Board of Directors of Al-Eqbal Investment Company declares its responsibility in preparing the financial statements and the existence of
an oversight system within the Company.
Name
Position
Signature
Directors
Waleed Tawfiq Fakhouri
Deputy Chairman of the Board of
Directors
Haitham Mohammad Qteishat
Directors
Abd-Alraheem Ali Al-Zoubi
Directors
Yazeed Adnan Al-Mufti
Directors
Dr. Naser Mustafa Kherishi
Directors
Saleh Rajab Elayan
Directors
Mohammad Naser Barakat
Directors
Fares Ousama Al-Talhouni
Directors
Third Declaration
We, the below signatories, hereby declare correctness, accuracy and completeness of the information and statements in the annual report of
2015.
Name
Position
Directors
General Manager
Malek Hussein Yaseen
Financial Manager
49
Signature
The Company’s contribution to protection of the environment
• As related to the activities of Al-Eqbal Investment Company, Al-Fakher for Trading Tobacco and Agencies
Company and International Tobacco and Cigarettes Company, these companies do not own any factories
within Jordan which could impact the environment.
• As related to the activities of Spectrum International for Renewable Energy, this company ensure that it
installs environmentally-friendly systems whilst implementing renewable energy projects.
50
53
53
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS OF DECEMBER 31st
Note
Jordanian Dinar
As of December 31
2015
2014
Assets
Current assets
5
Cash on hand and at banks
Cheques under collection
6
7
8
Trade and other receivables
Inventory
Other debit balances
Total current assets
45,121,377
198,063
10,059,518
19,375,304
3,248,301
78,002,563
35,408,296
30,795
12,694,583
16,777,034
3,131,635
68,042,343
2,530,434
658,884
6,602,986
19,501,016
938,663
30,231,983
108,234,546
3,373,245
600,760
151.883
6,602,986
20,848,849
31,577,723
99,620,066
189,889
5,827,397
173,523
5,938,459
3,045,480
15,930,000
31,104,748
332,732
6,978,982
31,772
2,745,151
2,059,211
17,700,000
29,847,848
2,906,197
2,906,197
34,010,945
23,902
2,179,857
2,203,759
32,051,607
25,000,000
13,897,311
1,021,083
34,305,207
74,223,601
108,234,546
25,000,000
13,897,311
(503)
1,089,745
27,581,906
67,568,459
99,620,066
Non-current assets
Financial assets at fair value through statement of other comprehensive income
Investment property
Investment in associate company
Intangible assets-Goodwill from acquisition of subsidiary
Property, plant and equipment
Advance payment for Investments
9
10
11
12
13
26
Total non-current assets
Total assets
Liabilities and Shareholders' Equity
Current liabilities
Deferred cheques -Short Term
Accounts payable
14
15
21
16
Due to related party
Other credit balances
Income tax provision
Loans and Bank facilities Mature within a year
Total current liabilities
Non-current liabilities
Deferred cheques - Long Term
23
Provision of Employees end of service indemnity
Total non-current liabilities
Total liabilities
Shareholders' Equity
1
27
Capital
Statutory reserve
Shares owned by subsidiary company
Cumulative change in fair value
Retained earnings
Total Shareholders' Equity
Total Liabilities and Shareholders' Equity
The accompanying notes from pages (61) to (92) are an integral part of these consolidated financial statements.
54
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME FOR THE YEAR END DECEMBER 31st
Note
Jordanian Dinar
Net sales
17
Cost of sales
Gross profit
18
19
11
11
Administrative expenses
Selling and distribution expenses
Loss of investment in associate company
Impairment of Investment in associate company
Dividends from financial assets at fair value through other comprehensive income
Operating income for the year
Finance Cost
Interest Revenue
Gain from sale of property, plant and equipment
25
Other income
Profit for the year before contingent liability provision,
For the year end December 31
2015
2014
123,894,339
(70,964,884)
52,929,455
106,331,877
(63,772,991)
42,558,886
(9,432,129)
(9,161,840)
(151,883)
227,586
(7,839,131)
(6,715,866)
(184,439)
(200,000)
100,943
34,411,189
27,720,393
(539,135)
684,142
49,718
311,188
(610,744)
554,189
17,449
631,626
34,917,102
28,312,913
(1,386,102)
33,531,000
28,312,913
(2,250,417)
31,280,583
(1,850,616)
26,462,297
(45,000)
31,235,583
(45,000)
26,417,297
487,718
(68,662)
31,654,639
1,249
54,496
26,471,793
1,056
income tax and board of directors' remuneration
24
Contingent liabilities provision
Profit for the year before income tax and board of directors' remuneration
21
Income tax expense
Profit for the year before board of directors' remuneration
Board of directors' remuneration
Profit for the year
Other comprehensive income items:
Items will never be reclassified to profit or loss statement
Gain from sale of financial assets at fair value through other comprehensive income
Change in fair value for financial assets through other Comprehensive income
Total comprehensive income for the year
22
Basic and diluted earnings per share (JD/Share)
55
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
Capital
Statutory
Reserve
Shares owned
by subsidiary
company
Cumulative
change
in fair value
Retained
Earnings
25,000,000
13,897,311
(503)
1,089,745
27,581,906
67,568,459
Profit for the year
-
-
-
-
31,235,583
31,235,583
Other comprehensive income
-
-
-
(68,662)
487,718
419,056
Shares owned by a subsidiary
-
-
503
-
Dividends during the year-Note (20)
-
-
-
-
(25,000,000)
(25,000,000)
1,021,083
34,305,207
74,223,601
Jordanian Dinar
Balance as at 1st January 2015
Total
503
56
Balance as of December 31, 2015
25,000,000 13,897,311
Balance as at 1st January 2014
25,000,000
13,897,311
(503)
1,035,249
26,164,609
66,096,666
Profit for the year
-
-
-
-
26,417,297
26,417,297
Other comprehensive income
-
-
-
54,496
-
54,496
Dividends during the year-Note (20)
-
-
-
-
(25,000,000)
(25,000,000)
25,000,000 13,897,311
(503)
1,089,745
27,581,906
67,568,459
*According to the Jordanian Securities Commission instructions the negative value of the cumulative change in fair value in the
retained earnings is prohibited from distributionto shareholders
Consolidated statement of cash flows
Jordanian Dinar
Note
For the year end December 31,
2015
2014
Cash flows from operating activities
Profit for the year before Income tax
33,486,000
28,267,913
1,386,102
346,238
3,727,837
(49,718)
151,883
1,030,626
(227,586)
539,135
40,390,517
10,604
262,173
3,394,473
(17,449)
200,000
184,439
474,759
(100,943)
610,744
33,286,713
2,635,065
(167,268)
(2,598,270)
(462,904)
(1,151,585)
141,751
(166,745)
1,541,206
40,161,767
(1,264,148)
(304,286)
38,593,333
4,713,363
148,181
(4,165,455)
(780,575)
750,522
(289,670)
35,996
1,063,677
34,762,752
(3,311,719)
(127,682)
31,323,351
1,099,286
(938,663)
(3,429,572)
227,586
34,944
(6,867,033)
100,943
(58,124)
-
Amendments
Impairment of account receivable
Key-money amortization
Depreciation
Impairment of Investment in associate
Company share from loss of investment in associate company
Provision for end of service indemnity
Finance costs
24
6
8
13
11
11
23
Change in:
Inventory
Accounts payable
Deferred cheques
Cash flows from operating activities
Income tax paid
End of service of indemnity paid
21
23
Net cash flows from operating activities
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Advance payment for investment
Acquisition of property, plant and equipment
13
Investment property
1,262,370
Proceeds from sale of financial assets at fair value through other comprehensive
income
Net cash flows used in investing activities
Cash flows from financing activities
Finance expense paid
Loans and bank facilities mature within a year
Dividends paid
Net cash flows used in financing activities
Net increase (decrease) in cash on hand and at banks
Cash on hand and at banks at the beginning of the year
Cash on hand and at banks at the end of the year
20
5
(1,837,117)
(6,731,146)
(539,135)
(1,770,000)
(24,734,000)
(27,043,135)
9,713,081
35,408,296
45,121,377
(610,744)
(25,000,000)
(25,610,744)
(1,018,539)
36,426,835
35,408,296
57
1) GENERAL
Al-Eqbal Investment Company PLC (International Tobacco and Cigarettes PLC previously) was incorporated in accordance with Jordan
Companies temporary Law no. (1) for the year 1989 as a Jordanian public shareholding company, and registered in the Ministry of Industry
and Trade of Jordan under no. (218) on 1/6/1992.The authorized paid up capital amounted 5 million (1 JD /share).
On 10/10/1993 the capital has raised through special offering by 100% of the capital to reach (10) million JD. On 5/5/1998 the capital had
raised through distributing free shares by 20% of the capital to reach (12) million JD. On 16/4/2001 the company has merged with Eqbal for
Financial Investments Company to be the capital JD 14,304,675. On 15/4/2002 the capital has raised through distributing free shares by 5%
of the capital to reach JD (15) million. On 10/4/2005 the capital has raised through distributing free shares by 10% to reach JD 16,500,000.
On 16/4/2006 the capital has raised through distributing free shares by 21% of capital to reach JD (20) million. On 25/2/2013 the capital has
raised through distributing free shares by 25% of the capital to reach JD (25) million.
The company’s main objectives inside and outside the kingdom include the following:
- Owning commercial agencies.
- Trade intermediaries (except dealing with International stock).
- Engaging in brokerage and trading tenders.
- Import and export.
- Guaranty of third parties obligations relevant to the interest of the company.
- Investment of the Company’s funds surplus in the appropriate way.
- Ownership of movable and immovable funds, for achieving the company’s objectives.
- Ownership of land and real estate for achieving the company’s objectives.
- Contracting with any government, commission, authority, company, institution or individual interested in the goals and objectives of
the company or any of them.
- Borrowing needed money from banks.
The consolidated financial statements were approved by the Board of Directors on 14/1/2016 and is subject to the General Assembly approval.
2) BASIS OF PREPARATION CONSOLIDATED FINACIAL STATEMENTS
(a) Statement of compliance
The consolidated financial statements have been prepared in accordance with international financial reporting standards.
(b) Basis of consolidated financial statements
The consolidated financial statements comprise of the consolidated financial statements of Al-Eqbal investment Company (the “Parent
Company”) and its subsidiaries together referred to (the “Group”), which subject to its control. Subsidiaries are entities controlled by the
Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity. The financial statements of the subsidiaries are included in the consolidated
financial statements from the date on which controls commences until the date on which control ceases.
The parent company controls subsidiaries when it is exposed, or has rights, to variable returns from its involvement with these subsidiaries
and has the ability to affect those returns through its power over these subsidiaries.
Thus, the principle of control sets out the following three elements of control:
1- Power over the investee.
2- Exposure, or rights, to variable returns from its involvement with the investee; and
3- The ability to use power over the investee to affect the amount of the investor’s returns.
The Group should reassess whether it controls an investee if facts and circumstances indicate that there are changes to one or more of the
three elements of control at each reporting period.
The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill
that arises is tested annually for impairment.
Any gain on bargain purchases is recognized in statement of profit or loss and other comprehensive income immediately. Transactions costs
are expensed as incurred, except if related to the issue of debt or equity securities.
The consideration transferred does not include amounts related to the settlement of pre-existing relationship. Such amounts are generally
recognized in consolidated statement of profit or loss and other comprehensive income.
61
Any contingent consideration payable is measured at fair value at the acquisition date. If the contingent consideration is classified as equity,
then it is not re-measured and settlement is accounted for within equity. Otherwise, subsequent changes in the fair value of the contingent
consideration are recognized in consolidated statement of profit or loss and other comprehensive income.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. This means that no gain
or loss from these changes should be recognized in profit or loss. It also means that no change in the carrying amounts of the subsidiary’s
assets (including goodwill) or liabilities should be recognized as a result of such transactions
On loss of control, the parent-subsidiary relationship ceases to exist. The parent no longer controls the subsidiary’s individual assets and
liabilities. Therefore, the parent company:
1- Derecognizes the assets and liabilities of the former subsidiary from the consolidated statement of financial position.
2- Recognizes any investment retained in the former subsidiary at its fair value when control is lost and subsequently accounts for it and for any
amounts owed by or to the former subsidiary in accordance with relevant IFRSs.
3- Recognizes the gain or loss associated with the loss of control attributable to the former controlling interest.
Consolidated financial statements are prepared for the subsidiaries to the same financial year of the parent company and using the
same accounting policies adopted by the parent company.if one of the subsidiary use accounting policies other than those adopted in
the consolidated financial statements for similar transactions and events in similar circumstances, appropriate adjustments are made to
that Group subsidiary’s financial statements, in preparing the consolidated financial statements to ensure conformity with the International
Financial Reporting Standards.
Non-controlling interest are measured at their proportionate share of the acquiree’s identifiable net assets at the acquisition date.
Balances, transactions and unrealized profits and expenses resulted from transactions within the group are eliminated when preparing these
consolidated financial statement.
The company owns the following subsidiaries as of 31/12/2015:
Company Name
Capital
Percentage
Ownership
Nature of Operation
Country of Operation
Al-Fakher Tobacco for Trading
and Agencies*
6,000,000
100%
Tobacco
Jordan
6,000,000
100%
Renewable Energy
Jordan
International Cigarettes and Tobacco
Company
6,000,000
100%
Tobacco
Jordan
*Al Fakher Tobacco for Trading and Agencies, owns a subsidiary of which related information is as follows:
Company Name
Al Fakher Tobacco Factory
Capital
Percentage
Ownership
Nature of
operation
Country of
Operation
7,720,000
100%
Tobacco
UAE
- Al-Fakher for Tobacco owns a company in Ajman industrial area where the control is for Al-Fakher Tobacco Factory.
- During 2015 Alfakher Aldahabi for general trd. Company has sold its assets and liabilities to Al-Fakher Tobacco Factory at 30/9/2015
at Book Value. Which became a part of Alfakher Tobacco Factory assets and liabilities and it will be reconciled with the partner’s contribution.
62
The following table represents the financial position and financial performance of the subsidiaries as of 31/12/2015
As of December 31, 2015
Total Assets
Total Liabilities
Total Revenue
Total
comprehensive
income (loss) for the
year
100,903,498
(56,260,458)
123,324,982
32,643,039
6,436,031
(1,112,035)
569,357
(229,675)
International cigarettes and Tobacco Company
4,254,094
-
-
(70)
Jordanian Dinar
Al-Fakher Tobacco for Trading and Agencies
(c) Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis except for the financial assets at the fair value
through profit or loss measured at fair value, financial assets and liabilities measured at amortized cost.
(d) Functional and presentation currency
The consolidated financial statements are presented in Jordanian Dinar, which is the Group’s functional currency.
(e) Use of Judgments and estimates
The preparation of consolidated financial statements in conformity with IFRSs requires management to make judgments, 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.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the year
in which the estimates are revised and in any future years affected.
In particular, information about significant areas of estimation uncertainties and critical judgments in applying accounting policies that
have the most significant effect on the amounts recognized in the consolidated financial statements is summarized as follows:
Management periodically reassesses the economic useful lives of tangible assets and intangible assets based on the general condition
of these assets and the expectation for their useful economic lives in the future.
Management frequently reviews the lawsuits raised against the group based on a legal study prepared by the company’s legal advisors.
This study highlights potential risks that the group may incurred in the future.
A provision for impairment on account receivables is taken on the basis and estimates approved by management in conformity with
International Financial Reporting Standards (IFRS).
Management estimates the provision to decrease inventory to net realizable value if the cost of inventory may not be recoverable,
damaged, wholly or partially obsolete, and it selling price to fall below cost or any other factors that causes the recoverable amount to be
lower than its carrying amount.
Management review annually the recoverable amount of the goodwill to determine whether there was any impairment in its value.
Management estimated the recoverable amount of the other financial assets to determine whether there was any impairment in its value.
Management estimates the provision for income tax in accordance with the prevailing laws and regulations.
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. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability
takes place either:
1- In the principal market for the asset or liability, or
2- In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible to by the Group
A- A stand-alone asset or liability; or
B- a group of assets, a group of liabilities or a group of assets and liabilities (eg a cash generating unit or a business).
A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial
assets and liabilities.
63
The Group has an established control framework with respect to the measurement of fair values. This includes a valuation team that has
overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to the CFO.The
valuation team regularly reviews significant unobservable inputs and valuation adjustments.
If third party information, such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses the
evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of IFRS, including the level in
the fair value hierarchy in which such valuations should be classified. Significant valuation issues are reported to the Group Audit Committee.
When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair values are categorized
into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
Level1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly
(i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). If the inputs used to measure the fair
value of an asset or a liability might be categorized in different levels of the fair value hierarchy, then the fair value measurement is
categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Group recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has
occurred.
3) Significant Accounting Policies
The Grouphas adopted early International Financial Reporting Standard IFRS 9 Financial Instruments to be applied on the financial statement
that begins on the first of January 2011 based on the instructions of security exchange commission.This standard is mandatory well be applied
internationally on 1/1/ 2018:
The accounting policies applied by the Group in these consolidated financial statements for the year ended 31/12/2015 are the same as those
applied by the Group in its consolidated financial statements for the year ended 31/12/2014, except for the following International Financial
Reporting Standards effective after 30/6/ 2015:
• Defined Benefit Plans: Employee Contributions (Amendments to IAS 19)
• Annual Improvements to IFRSs 2010–2012 cycle
• Annual Improvements to IFRSs 2011–2013 cycle
The application of these amended standards did not have a significant effect on the consolidated financial statements of the Group.
a) Financial instruments
The Group classifies non-derivative financial assets into the following categories: financial assets at fair value through profit or loss, loans
and receivables and Investments at fair value through other comprehensive income. The Group classifies non-derivative financial liabilities
into the other financial liabilities category.
-Non-derivative financial assets and financial liabilities – recognition and derecognition
The Group initially recognizes loans and receivables and debt securities issued on the date when they are originated. All other financial assets
and financial liabilities are initially recognized on the trade date.
The Group derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to
receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are
transferred, or it neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control over the
transferred asset. Any interest in such derecognized financial assets that is created or retained by the Group is recognized as a separate
asset or liability.
64
The Group derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire.
Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when,
the Group has a legal right to offset the amounts and intends either to settle them on a net basis or to realize the asset and settle the liability
simultaneously.
b) Non-derivative financial assets – measurement
• Financial assets at fair value through other comprehensive income (IFRS 9)
These assets represent investments in equity instruments with the intention to keep them as a long term investments.
When purchasing these assets they are recognized at fair value including acquisition expenses then to be re-evaluated later at fair value,
where changes in the fair value appears in the consolidated statement of other comprehensive income and owners equity including the
change in fair value resulting from the differences in conversion of non-monetary assets items in foreign currencies, in case of selling such
assets or part there of profits or losses to be recorded in the consolidated statement of other comprehensive income and owners equity
where the valuation reserve balance of the sold assets should be directly transferred to the retained earnings and losses and not through the
consolidated statement of profit or loss and other comprehensive income.
However, for investments in equity instruments that are not held for trading, the Group may elect at initial recognition to present gains and
losses in OCI. For such investments measured at fair value through OCI, gains and losses are never reclassified to profit or loss, and no
impairment is recognized in profit or loss. Dividends earned from such investments are recognized in profit or losses as a separate line item.
• Financialassets at amortized cost (IFRS 9)
The financial assets held within the Group management whose objective is to hold these assets in order to collect contractual cash flows,
which represent payments of principal and interest on the principal amount outstanding on specific dates, these assets are not traded in an
active market and group has no intent to sell these assets in near future.
When purchasing these assets they are recognized at cost plus acquisition costs, where premium / discount are amortized using the effective
interest method, recording or to the interest account, where any provisions resulted from the impairment in its amount leads to the inability
to recover the principal or part of it are deducted, any impairment in its amount to be recognized at the statement of profit or loss and other
comprehensive income.
The impairment amount in the value of these assets represents the difference between the value recorded at the books and the present value
of the expected discounted cash flows at the original effective interest rate.
Financial assets should not be reclassified from / to this item except in specified cases by the International Financial Reporting Standards. In
case of sale of any of these assets before its due date where the sales result should be recorded at the statement of profit or loss and other
comprehensive income in a separate line and to be disclosed in accordance to the international financial reporting standards requirements.
• Non-derivative financial liabilities – measurement (IAS 39 and IFRS 9)
Non-derivative financial liabilities are initially recognized at fair value less any directly attributable transaction costs. Subsequent to initial
recognition, these liabilities are measured at amortized cost using the effective interest method
c) Investment in associates
Associates are those entities in which the Group has significant influence, but not control or joint control, over the financial and operating
policies.
Interests in associates and the joint venture are accounted for using the equity method. They are recognized initially at cost, which includes
transaction costs. Subsequent to initial recognition, the consolidated financial statements include the Group’s share of the profit or loss of
equity accounted investees, until the date on which significant influence or joint control ceases.
Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated.
Unrealized gains or losses arising from transactions with equity accounted investees are eliminated against the investment to the extent of
the Group’s interest in the investee.
65
d) Property, plant and Equipment
Recognition and measurement
- Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses.
- Cost includes expenditures that are directly attributable to the acquisition of the property, plant and equipment.
- When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separated items of property,
plant and equipment.
- Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with
the carrying amount of property, plant and equipment and are recognized net within the consolidated statement of profit or loss and other
Subsequent costs
- The cost of replacing part of an item of property, plant and equipment is recognized in the carrying amount of the item if it is probable that
the future economic benefits embodied within the part will flow to the company and its cost can be measured reliably. The carrying amount
of the replaced part is derecognized.
- Ongoing costs of repair and maintenance of property, plant and equipment are expensed in the consolidated statement of profit or loss and
other comprehensive income as incurred.
- Depreciation
Depreciation is calculated to write off the cost of items of property, plant and equipment less their estimated residual values using the straightline method over their estimated useful lives, and is generally recognized in profit or loss. Land is not depreciated.
- The estimated useful lives of property, plant and equipment for the current and previous year are as follows:
Items of property, plant and equipment
Depreciation rate
Vehicles
%20 – %25
Other equipment
%20 – %25
Computers and office equipment
%20 – %25
Furniture and fixtures
%10 – %20
Tools
%25
Machines and equipment
%10 – %20
Buildings and apartments
%5
The group reviews the useful lives and depreciation for the property, plant and equipment at the end of each financial year.
e) Impairment
Financial Assets
A financial asset is assessed at each reporting date to determine whether there is objective evidence that it is impaired.
A financial asset is impaired if objective evidence indicates that a loss event had a negative effect on the estimated future consolidated
cash flows of that asset that can be estimated reliably.
An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount
and the present value of the estimated future consolidated cash flows discounted at the asset’s original effective interest rate.
Individually significant financial assets are tested for impairment on an individual basis.
66
An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognized. For
financial assets measured at amortized cost, the reversal is recognized in the consolidated statement of consolidated profit or loss and other
Non-Financial Assets
The carrying amounts of the group’s non-financial assets are reviewed at each reporting date to determine whether there is any indication of
impairment. If any such indication exists, then the asset’s recoverable amount is estimated.
An impairment loss is recognized if the carrying amount of an asset or cash generating unit exceeds its estimated recoverable amount.
Recoverable amount is the higher of an asset’s fair value less costs to sell or its value in use.
All impairment losses are recognized in the consolidated statement of profit or loss and other comprehensive income.
f) Investment in property
Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course
of business, use in the production or supply of goods or services or for administrative purposes. Investments Property is recognized initially
at cost. Their fair values are disclosed in the notes of the consolidated financial statements, independent real-estate experts based on market
values, in an active market, revaluate investment property annually.
g) Intangible Assets
Goodwill
The Group measures goodwill at the acquisition date as The fair value of the consideration transferred; plus The recognized amount of any
non-controlling interests in the acquire; plus the fair value of the pre-existing equity interest in the acquire; less The net recognized amount
(generally fair value) of the identifiable assets acquired and liabilities assumed.
Goodwill is measured at cost less accumulated impairment losses. In respect of equity-accounted investees, the carrying amount of goodwill
is included in the carrying amount of the investment, and any impairment loss is allocated to the carrying amount of the equity-accounted
investee as a whole
Other intangible assets
Other intangible assets that are acquired through other than acquisition are recognized at cost less accumulated amortization and accumulated
impairment losses.
Intangible assets, which have finite useful lives, are amortized over their useful lives. Amortization is recognized in the consolidated profit
or loss and other comprehensive income; however, intangible assets without definite useful lives are required to be tested for impairment as
of the date the consolidated financial statement. Impairment loss shall be recognized in the consolidated statement profit or loss and other
Intangible assets arising from company operation are not capitalized and should be recognized in the consolidated statement of profit or loss
and other comprehensive income when incurred.
Intangible assets are assessed at each consolidated reporting date to determine whether there is any objective evidence that they are impaired
as well as the useful lives of the intangible asset are annually reassessed and any adjustments raised are recognized in the subsequent years.
Amortization
Amortization is calculatedusing the straight-line method over their estimated useful lives, and is generally recognized in consolidated
statement of profit or loss and other comprehensive income.
h) Revenues recognition and expenses realization
Revenue is recognized based on accrual bases.
Revenue is recognized when the significant risks and rewards of ownership have been transferredto the customer, recovery of the consideration
is probable, the associated costs and possiblereturn of goods can be estimated reliably, there is no continuing management involvement
withthe goods, and the amount of revenue can be measured reliably. Revenue is measured net ofreturns, trade discounts and volume rebates.
Interest income and expense presented in the consolidated statement of profit or loss and other comprehensive income include:
67
Interest income / expense on financial assets and financial liabilities measured at amortized cost calculated on an effective interest rate basis.
Interest income on Banks deposits.
Interest expense on the borrowings and bank facilities.
i) Foreign Currency Transactions
Transactions in foreign currencies during the year are translated at exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to JOD at the exchange rate at that date.
The foreign currency gain (loss) on monetary items is the difference between amortized cost in JOD at the beginning of the year, adjusted
for effective interest rate and payments during the year, and the amortized cost in foreign currency translated to JOD 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 JOD at the exchange
rate at the date that the fair value was determined.
Foreign currency differences arising on retranslation of foreign currencies to JOD are recognized in the consolidated statement of profit or
loss and comprehensive income.
j) Fair value for financial assets
Fair values represent the amount with which an asset could be exchanged, or a liability settled, in a transaction between knowledgeable,
willing parties in an arm’s length transaction.
The closing prices (purchase of assets \ sale of liabilities) on consolidated financial statements date in effective markets, represents the fair
value of financial assets and liabilities that have market prices.
In the absence of quoted prices or lack of active trading of some financial assets or the in absence of an active market, fair value is determined
by comparing with current market value of financial instrument, or by using the discounted future cash flows discounted at the rate of similar
financial instrument or by use the net assets value method of investments.
k) Offsetting
Financial liabilities are set off against financial assets, and the net amount is shown in the consolidated financial position only when the
obliging legal rights are available or when settled on net basis or the realization of assets or settlement of liabilities is done at the same time.
l) Date of recognition of financial assets
Purchase and sell of financial assets are recognized on the trading date (date when company commitment to sell or buy financial assets)
m) Provisions
A provision is recognized if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably,
and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the
expected future cash flows at a rate that reflects current market assessments of the time value of money and the risks specific to the liability.
n) Finance expenses
Finance expenses comprise interest expense on borrowings. All borrowing costs that are not directly attributable to the acquisition, construction
or production of a qualifying asset are recognized in the consolidated statement of profit or loss and other comprehensive income using the
effective interest method.
o) End of Service Indemnity
A provision for end of service indemnity is recognized if, as a result of a past event, and that can be estimated reliably, and it is probable that
an outflow of economic benefits will be required. Provisions for end of service indemnity is calculated bases on the Group’s internal bylaw.
p) Income tax
Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in statement of profit or loss and other
Comprehensive income except to the extent that it relates to a business combination, or items recognized directly in profit or loss and other
68
Comprehensive income or in other consolidated comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively
enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that
have been enacted or substantively enacted by the consolidated reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate
to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax
liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.
A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable
that future taxable profits will be available against which they can be utilized.
Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit
will be realized.
Current tax payable is in accordance with prevailing income tax law in Jordan.
q) Earnings per share
The Company presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit
or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year.
Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary
shares outstanding, for the effects of all dilutive potential ordinary shares.
a) New standards and interpretations not yet adopted
A number of new standards, amendments and imporvements to standards and interpretations are effective for annual periods beginning on
1/1/ 2016, and have not been applied in preparing these financial statements. Those which may be relevant to the Group, is set out below.
New standards
• IFRS 14 Regulatory Deferral Accounts (effective from 2016)
• IFRS 15 Revenue from Contracts with Customers (effective from 2017)
• IFRS 9 Financial Instruments (effective from 2018)
• IFRS 16 Leases (effective 31 December 2019)
Amendments
• Amendments to IFRS 10, IFRS 12 and IAS 28: Investment Entities Applying the consolidation exception. (effective from 2016)
• Amendments to IFRS 11: Accounting for Acquisitions of Interests in Joint Operations (effective from 2016)
• Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of Depreciation and Amortization (effective from 2016)
• Amendments to IAS 16 and 41: Bearer plants (effective from 2016)
• Amendments to IFRS 10 and IAS 28: Sale or contribution of assets between an investor and its associate or joint venture (effective from 2016)
• Amendments to IAS 27: Equity method in separate financial statements (effective from 2016)
• Amendments to IAS 1 (effective from 2016)
Improvements
• Annual Improvements to IFRSs 2012–2014 cycle (effective from 2016)
69
4) Segment Reporting
An operating segment is a group of components of the Company affected by risks and returns that distinguish it from others and engages in
producing products or services known as operating segments or engages in producing products or services within economic environments
known as geographical segments.
A- Operating Segment
The Company operates its activities in major operating segments, which represents the follows:
- Tobacco manufacturing and trading.
- Investments
- Energy.
70
B- Geographical Segment
The Company operated its activities inside and outside of the Hashemite Kingdom of Jordan.
For the year end December 31, 2015
Jordanian Dinar
Tobacco manufacturing
and trading
Energy
Segment net revenue
52,766,954
162,501
-
52,929,455
(7,803,191)
(402,173)
(1,226,765)
(9,432,129)
(9,161,840)
-
-
(9,161,840)
-
(146,550)
(5,333)
(151,883)
325
227,261
-
227,586
Finance Expenses
(539,135)
-
-
(539,135)
Interest Revenue
684,142
-
-
684,142
13,091
-
36,627
49,718
309,149
2,541
(502)
311,188
(1,386,102)
-
-
(1,386,102)
Segment profits (losses) for the year before tax and board
of directors’ remuneration
34,883,393
(156,420)
(1,195,973)
33,531,000
Segment total assets
101,098,480
5,827,704
1,308,362
108,234,546
31,891,744
200,587
1,918,614
34,010,945
2,792,010
632,993
4,569
3,429,572
Tobacco manufacturing
and trading
Energy
Segment net revenue
42,479,458
79,428
-
42,558,886
(6,118,485)
(360,769)
(1,359,877)
(7,839,131)
(6,715,866)
-
-
(6,715,866)
(184,439)
-
(184,439)
Impairment in investment in associate
Dividends from financial assets at Fair value through
other comprehensive income
Other income
Segment total liabilities
Capital expenditure
For the year end December 31, 2014
Jordanian Dinar
Loss of investment in associate company
Investments
Investments
Total
Total
Impairment in investment in associate
-
(200,000)
-
(200,000)
Dividends from financial assets
-
-
100,943
100,943
Finance Expenses
(609,611)
-
(1,133)
(610,744)
Interest Revenue
536,505
5,274
12,410
554,189
17,449
-
-
17,449
664,293
(32,320)
(347)
631,626
Segment profits (losses) for the year before tax and board
of directors’ remuneration
30,253,743
(692,826)
(1,248,004)
28,312,913
Segment total assets
93,680,860
4,538,203
1,401,003
99,620,066
Segment total liabilities
30,033,330
53,688
1,964,589
32,051,607
6,859,481
3,928
3,624
6,867,033
Other (Expenses) income
Capital expenditure
71
5) Cash on hand and at banks
As of December 31,
Jordanian Dinar
2015
2014
Cash on hand
2,128,087
1,058,128
Current accounts at banks
16,368,598
10,962,544
Deposits at banks *
26,624,692
23,387,624
45,121,377
35,408,296
* The maturity date of the deposits is from 14/1/2016 till 30/3/2016 and their interest equals 3.9%.
6) Trade and other receivables
As of December 31,
Jordanian Dinar
Trade receivables
Advancepayment to suppliers
Other
Provision for impairment on doubtful debts*
2015
2014
9,425,421
10,921,928
746,665
1,885,223
101,230
101,230
10,273,316
12,908,381
(213,798)
(213,798)
10,059,518
12,694,583
Impairment of trade receivables is calculated when exceeding the ceilings agreed in advance with customers. Provision is made for the entire
balance (the ceiling of the facilities in addition to excess) in the case of late payment from client.
*The movement on the provision for impairement on doubtful debts is as follow:
As of December 31,
Jordanian Dinar
Balance as of January 1
2015
2014
213,798
203,194
-
10,604
213,798
213,798
Provision made during the year
*Aging customer accrued accounts as follow :
0 – 90
91-180
181-270
271-365
More than
day
day
day
day
365 day
9,425,421
8,829,235
279,647
102,741
-
213,798
10,921,928
8,231,585
2,148,870
327,675
-
213,798
Jordanian Dinar
Total
2015
2014
7) Inventory
As of December 31,
Jordanian Dinar
2015
2014
13,321,295
11,609,986
Work in process
139,017
84,437
Finished goods
1,592,530
1,708,446
Goods in transit
Spare parts
1,937,517
1,080,638
1,681,630
2,317,802
Raw material
72
Advertisement and accessories goods
Consumable goods
Provision for slow-moving inventory*
1,485,466
750,687
217,331
224,520
20,374,786
17,776,516
(999,482)
(999,482)
19,375,304
16,777,034
8) Other debit balances
As of December 31,
Jordanian Dinar
2015
2014
Key-money*
967,595
1,313,833
Accrued interest revenue
271,767
177,670
Prepaid expenses
794,414
807,938
Prepaid income tax
593,639
323,296
Refundable deposits
366,531
337,891
Employees receivable
117,603
91,375
Sales and income tax deposits
41,818
11,912
Taxes on interests
81,998
52,035
Advance payment on projects under construction
Other
Impairment in employees account
73
9,312
35,589
23,624
96
3,268,301
3,151,635
(20,000)
(20,000)
3,248,301
3,131,635
*Key-money details are illustrated as follow:
Item
Key-money
free zone
Key-money
Rafy
1,264,150
289,500
Key-money
Land
72-76
Key-money
Alshamsy
Total
Jordanian Dinar
Cost
Balance at the beginning of January 2014
53,075
-
1,606,725
-
-
-
862,710
862,710
1,264,150
289,500
53,075
862,710
2,469,435
1,264,150
289,500
53,075
862,710
2,469,435
-
-
-
-
-
1,264,150
289,500
53,075
790,094
72,375
30,960
Amortization during the year
158,019
28,950
22,115
53,089
262,173
948,113
101,325
53,075
53,089
1,155,602
948,113
101,325
53,075
53,089
1,155,602
Amortization during the year
158,018
28,950
-
159,270
346,238
1,106,131
130,275
53,075
212,359
1,501,840
316,037
188,175
-
809,621
1,313,833
158,019
159,225
-
650,351
967,595
Additions during the year
Additions during the year
Accumulated amortization
Net book value as of December 31, 2014
862,710
2,469,435
-
893,429
9) Financial assets at fair value through statement of other comprehensive income
As of December 31,
Jordanian Dinar
Quoted market prices
Unquoted market prices
74
2015
2014
2,229,409
3,072,220
301,025
301,025
2,530,434
3,373,245
10) Investment property
Country
Area
UAE – Ajman*
As of December 31,
Land no
Piece
number
2015
2014
2S
2/1/271
271,028
271,028
1
1
387,856
329,732
658,884
600,760
Aljorf
Jordan –
Amman**
Aljbayha
* The fair value for Ajman’s land as of 31/12/2015 according to weighted average real estate expert valuation amounted to 337,750JOD (2014:
JOD 337,750) the fair value measurement for land has been categorized under level 2 fair value based on the inputs that has been determined
either directly (i.e., as prices) or indirectly (i.e., derived from prices of similar assets).
** The fair value for Amman’s land as of 31/12/2015 according to weighted average real estate expert valuation amountedto 1,889,772JOD
(2014: JOD 1,506,557) the fair value measurement for land has been categorized under level 2 fair value based on the inputs that has been
determined either directly (i.e., as prices) or indirectly (i.e., derived from prices of similar assets).
11) Investment in associate company
This item represents the percentage 38.431% of its paid up capital in “Trust international Transport” – PSC– for the year 2015 (2014: 38.431%).
The movement on the balance of investment in associate company was as follow:
As of December 31,
Jordanian Dinar
Balance as of January 1,
2015
2014
151,883
536,322
-
(184,439)
(151,883)
(200,000)
-
151,883
Loss of investmentin associate company
Impairment in investment in associate company
The company recognized an impairment in investment in associate amounted of 151,883 JD during 2015.
75
12) Intangible assets – Goodwill from acquisition of subsidiary
AL Fakher International Trading Tobacco and Agencies purchased on June 1, 2006 100% of Al-Fakher Trading Tobacco and Agencies – Ajman
as follow:
Fair value on
acquisition
Book value on
acquisition
Property, plant and equipment
418,293
418,293
Land
251,817
251,817
38,857
38,857
418,390
418,390
1,127,357
1,127,357
(10,343)
(10,343)
Net assets
1,117,014
1,117,014
Cash paid
7,720,000
Goodwill from acquisition
Cash flow at acquisition
6,602,986
Jordanian Dinar
Inventory
Account payables and other credit balances
-
Net cash obtained from subsidiary company
Cash paid
7,720,000
Net cash paid
7,720,000
Based on the expert report for the next five years, where he used the discounted future cash flows using a growth rate which is consistent
with the average growth rare for the last 5 years, and a discount rate which is consistent with borrowing interest rate take in consideration the
revenue growth by calculating the growth rate during the 5 years, and assuming the selling prices which is consistent with the expected gross
profit for the next 5 years.
The study showed that there is no decline in goodwill value and therefore there is no impairment in goodwill value as of 31/12/2015.
The realizable value is the value which arising from cash flow units, where it is calculated based on fair value after deducting the cost of
disposal based on the expected amount for the discounted future cash flows, Accordingly, it can be classified within the fair value under
second level.
76
13) Property, plant and equipment
Computers
and office Furniture and
fixture
equipment
Projects
under
construction
Total
-
329,471
33,727,782
393,853
227,246
1,026,401
3,429,572
(73,649)
(784,787)
-
(409,733)
(1,381,214)
2,520,964
14,766,184
10,515,996
227,246
946,139
35,776,140
261,893
1,332,954
5,363,459
4,426,072
-
-
12,878,933
49,181
67,602
498,227
1,335,006
1,515, 737
22,724
-
(385)
-
(4,350)
(26,489)
(195,422)
-
-
(331,646)
329,495
1,826,831
6,671,976
5,746,387
22,724
-
16,275,124
77,186
407,394
694,133
8,094,208
4,769,609
204,522
946,139
19,501,016
1,038,793
282,391
333,174
1,821,131
10,046,806
9,495,078
-
-
26,985,210
217,958
265,095
37,553
83,834
326,859
4,180,575
1,425,688
-
329,471
6,867,033
-
(43,792)
-
-
-
(21,754)
(45,079)
(13,836)
-
-
(124,461)
3,515,741
626,262
1,303,888
319,944
417,008
2,126,236
14,182,302
10,906,930
-
329,471
33,727,782
Balance as of January 1, 2014
-
279,065
707,485
180,206
200,233
869,869
4,272,905
3,081,663
-
-
9,591,426
Depreciation for the year
-
90,198
226,296
54,807
61,660
478,937
1,133,124
1,349,451
-
-
3,394,473
Disposal
-
(43,502)
-
-
-
(15,852)
(42,570)
(5,042)
-
-
(106,966)
-
325,761
933,781
235,013
261,893
1,332,954
5,363,459
4,426,072
-
-
12,878,933
3,515,741
300,501
370,107
84,931
155,115
793,282
8,818,843
6,480,858
-
329,471
20,848,849
Tools
Machines and
equipment
Buildings
Leasehold
investment
417,008
2,126,236
14,182,302
10,906,930
42,267
319,881
401,184
657,531
-
(1,216)
-
(6,456)
746,380
1,439,606
360,995
736,889
325,761
933,781
235,013
-
137,350
102,010
-
(105,000)
-
-
358,111
1,035,791
283,809
3,515,741
388,269
403,815
3,515,741
452,096
Addition
-
Disposal
Land
Vehicles
Other
equipment
3,515,741
626,262
1,303,888
319,944
Addition
-
225,491
135,718
Disposal
-
(105,373)
3,515,741
-
Depreciation for the year
Disposal
Jordanian Dinar
Cost
Accumulated depreciation
3,727,837
Cost
77
Accumulated depreciation
14) Due to related party
As of December 31,
Jordanian Dinar
Nature of transaction
Nature of
relationship
2015
2014
Finance
Associate company
173,523
31,772
173,523
31,772
Key management remuneration
Salaries and benefits of the key managementpersonnel for the year-end 31/12/2015 amounted to JOD 358,613(31/12/2014: JOD 470,302).
As shown in note (16) the group took a loan from Jordan Bank where the remaining amount of the loan equals to 15,930,000JD, which is
considered due to related party.
15) Other credit balances
As of December 31,
Jordanian Dinar
2015
2014
Accrued expenses – advertisement material
1,341,951
1,129,934
Yearly rewards provision
1,649,994
-
646,754
564,010
Shareholders deposits
Legal provision
480,151
480,151
1,600,103
214,001
Accrued expenses
18,495
160,846
Jordanian universities provision
76,448
76,448
Board of directors’ remuneration
45,000
45,883
Humanitarian cases fund
34,021
29,010
Insurance cheques issued
9,650
9,650
Social security deposits
8,741
7,886
27,151
27,382
5,938,459
2,745,151
Contingent liability provision
Others
16) Loans and bank facilities mature within a year
Al-Fakher Tobacco for Trading and Agencies Company – subsidiary company got a credit facilities in the year 2013 from Bank of Jordan
amounted 25,000,000 USD, (17,700,000 JOD) which represent a reducing loan, that will be settled in one payment on 4/1/2014 with a LIBOR
of +2%. The loan payment due date has been extended till 4/1/2015.
In 28/12/2014 the maturity date of the loan was extended to be paid in a full amount at 31/12/2015 with a LIBOR 3 months + 2.5% with a limit
3% with the following conditions and insurances:
• The guarantee of Al-Eqbal investement company.
• Reduce the early repayment commission to become zero
In 31/12/2015 the company paid 10% of the loan amount and extended the maturity date of the remaining amount of 15,930,000 JD till 31/12/ 2016
with LIBOR 3 months + 2.5% with a limit of 3% with the same conditions.
The purpose from these facilities is to distribute dividends.
78
17) Cost of sales
Jordanian Dinar
2015
2014
Raw Materials beginning of the year
11,609,986
9,346,887
Raw Material purchases during the year
60,951,573
54,930,524
Raw Materials end of the year
(13,321,295)
(11,609,986)
Raw Materials used in productions
59,240,264
52,667,425
84,437
139,377
14,013,165
12,467,317
(139,017)
(84,437)
73,198,849
65,189,682
1,708,446
1,168,960
Finished Goods- End of the year
(1,592,530)
(1,708,446)
Cost of goods sold
73,314,765
64,650,196
939,047
1,068,619
69,355
109,629
(3,272,043)
(1,867,717)
(86,240)
(187,736)
70,964,884
63,772,991
Work in process - beginning of the year
Manufacturing cost during the year*
Work in process - end of the year
Cost of goods Manufactured
Finished Goods-beginning of the year
Add:
Cost of selling advertising goods
Cost of selling Alo Argheleh
Subtract:
Cost of free distributed goods
Cost of goods returned to manufacturing
79
*Manufacturing cost includes the following
Jordanian Dinar
2015
2014
Depreciation and amortization
3,768,565
3,432,151
Salaries and benefits
3,935,853
3,477,055
911,500
628,280
1,059,493
1,472,618
Maintenance
385,890
591,861
Repairs expenses
657,876
548,092
Consumed tools
716,697
546,399
Rent
629,946
379,569
End of services indemnity
356,445
183,314
59,651
223,079
Training expenses
105,498
127,924
Electricity and water
264,130
196,540
Insurance expense
207,812
145,609
Research fees
76,819
143,416
Other expenses
153,644
74,846
12,545
71,583
115,625
-
25,205
22,007
Fees and subscriptions
359,371
18,661
Food and hospitality expenses
177,781
157,061
21,103
12,762
-
10,603
11,716
3,887
14,013,165
12,467,317
Employees’ rewards
fuel
Damaged materials and goods
Cost of returned goods to manufacturing
Project expenses
Export and shipping fees
Phone and post mail
Commercial commissions
Office expenses
80
18) Administrative expenses
Jordanian Dinar
2015
2014
2,653,257
2,523,326
Employee’s rewards
3,459,440
1,989,356
Donations
310,015
450,864
Travel and residency
218,203
306,056
Studies and consulting’s
434,368
265,127
End of service indemnity
401,840
211,746
296,093
205,856
Rent
150,171
201,371
Legal and consulting fees
149,365
275,254
professional fees
121,452
158,117
Fees and subscriptions
110,155
156,941
Health insurance
110,087
47,170
Phone and post mail
116,599
123,417
Board of directors transportation
146,790
108,000
Bdaya project
128,364
92,926
Trade marks
143,717
155,940
Advertisement
31,227
58,911
Transportation
51,451
43,609
Governmental expenses
17,676
55,570
Hospitalities
45,235
32,090
Bank commission
32,158
17,972
Stationary and printings
35,618
30,163
Vehiclesexpenses
36,561
27,641
Maintenance
24,789
24,117
Consumed materials
14,945
19,538
Computer expenses
51,570
18,860
Electricity and water
16,041
16,280
Cleaning
15,618
15,997
Fuel
12,677
15,786
Security
17,544
14,966
Property insurance
7,227
9,722
Consumed tools
8,566
9,480
Training expense
3,754
38,217
Audit committee fees
5,500
5,667
Advertising material management
42,248
101,108
Other
11,808
11,970
9,432,129
7,839,131
81
19) Selling and distribution expenses
Jordanian Dinar
2015
2014
Promotion expenses
5,152,277
4,285,500
676,683
515,064
Employee’s rewards
300,954
169,817
Trade commission
256,363
614,994
Export and shipping expenses
289,542
346,008
Allowed discount
-
146,522
Exhibit expenses
248,089
112,040
Lawsuit expenses
36,212
Travel
-
131,339
78,719
16,136
69,994
600,499
60,566
74,389
54,404
157,997
39,036
24,166
27,249
1,066,979
25,473
Advertising expense
16,617
49,738
Rent
10,369
18,351
Health insurance
20,626
12,297
Governmental expenses
26,342
31,639
9,417
13,999
24,364
17,727
9,704
17,178
12,776
9,551
9,161,840
6,715,866
Studies and consulting
Designs expense
Contributions
End of service of indemnity
Phone and post mail
Damaged and absolute goods
Transportation
Hospitality
Other
82
20) Dividends
The following table described the declared dividends by the group:
Jordanian Dinar
2014
Cash Dividends*
2015
25,000,000
25,000,000
25,000,000
25,000,000
*The General assembly decided in its meeting held on 4/3/2015 to distribute an amount of 25,000,000 as dividends for the year 2014.
* The General assembly decided in its meeting held on 27/2/2014 to distribute an amount of 25,000,000 as dividends for the year 2013.
21) Income tax
Income tax expense is recognized based on management’s best estimate of the weighted average annual income tax rate expected for the
full financial year applied to the pre-tax income of the year.
The movement on income tax provision during the year was as follows:
Jordanian Dinar
2015
2014
Balance at the beginning of the year
2,059,211
3,520,314
Allowance for the year
2,250,417
1,850,616
Income tax paid for the year
(1,264,148)
(3,311,719)
Balance at the end of the year
3,045,480
2,059,211
Group tax position
a- Parent company – Al Eqbal for Investment PLC
The income tax was settled until 2014 except for the financial year 2012 which was to the court and the claim in the tax consultant opinion was
misplaced and will be separated for the company.
In the tax consultant opinion, the company doesn’t need to account any provision for the income tax liability for the results of the business for
the fact that the business results are a loss.
b- Subsidiary – AL-Fakher for tobacco trading LLC
Al-Fakher – Amman
The Income Tax was settled until the financial year 2008.
The Income Tax Department audited the accounts of the company and issued its final decision for the financial years 2009, 2010 and
2011 which was objected to the court of the tax, inthe tax consultant opinion, the decisions of the Tax Department is misplaced and will be
dismissed in favor of the company.
The tax return was submitted for the financial year 2012 and 2014 within the legal period of submission, the department did not audit the
company’s accounts and didn’t issue its final decisions till the date of the preparation of the consolidated financial statements.
In the tax consultant opinion, the company should take a provision amount of 373,525 for the income tax liability for the year ended 31/12/2015
Al-Fakher – Aqaba private
The Income Tax was settled until the financial year 2011.
The tax return was submittedfor the years 2012, 2013 and 2014 within the legal period, the department did not audit the company’s accounts
and didn’t issue its final decisions till the date of the preparation of the consolidated financial statements.
In the tax consultant opinion the company should take a provision amount of 1,867,625 for the income tax liability for the year ended 31/12/2015
for the business results in Aqaba and Ajman equal 5% of profit.
83
c- Subsidiary – Spectrum International for Renewable Energy
The Income Tax was settled until the financial year 2011 .
The tax return was submittedfor the financial year 2012, 2013 and 2014 within the legal period for submission of statements, the department
did not audit the company’s accounts and issue final decisions until the date of the preparation of the consolidated financial statements.
In the tax consultant opinion the company should take a provision amount of 9,267 for the income tax liability for the year ended 31/12/2015,
for the return of outside investment.
Income tax expense recognized based on management estimate of enacted of average annual tax rate. The company make a reconciliation
between taxable income and financial income. The tax rate based on prevailing local law is 14% for Al Eqbal Company and Al Fakhar
Company. and 5% for Al Fakhar- Aqaba, the effective tax rate for the group is 6.4% for the profit for the yearended 31/12/2015 (31/12/ 2014:
6.5%)
22) Earning per share
As of December 31,
Jordanian Dinar
2015
2014
Profit for the year for the shareholders (JD)
31,235,583
26,417,297
Weighted average for number of shares (Share)
25,000,000
25,000,000
1,249
1,056
Earning per share for the year
23) Provision of employees end of service indemnity
End of service indemnity is calculated according to the company’s internal bylaw the movement on the provision during the year was as
follows:
As of December 31,
Jordanian Dinar
2015
2014
Balance at the beginning of the year
2,179,857
1,832,780
Provision for the year
1,030,626
474,759
Paid during the year
(304,286)
(127,682)
Balance at the end of the year
2,906,197
2,179,857
84
24) Contingent liabilities
The contingent liabilities at the date of these consolidated financial statements are as the following:
As of December 31,
Jordanian Dinar
Bank guarantees
2015
2014
198,826
186,571
198,826
186,571
Against cash margins represented as follow:
As of December 31,
Jordanian Dinar
Cash margins
2015
2014
198,826
186,567
198,826
186,567
There is a pending lawsuit filed against the Group by other parties to claim compensation for damages caused by illegitimate competition.
As of today, the registered case number is 622/2002. The courthouse ruled that the Group is liable to pay the full amount of JD (833,000)
including all attorney fees, expenses, and interest. A request to appeal the decision was issued by the Group; the Court of Appeal’s response
to such an action was to reject the appeal. As a result, the Group has appealed this decision to the Court of Cassation.The lawsuit is currently
pending at the court of appeal where the report of expertise shown the lack of similarity between the two brands.
Therefore, the Group took a provision of JD 480,150 in order to meet all liabilities resulting from this lawsuit. The Group’s management and
legal counsel have expressed their opinions stating that the possibility of winning the case is extremely high.
The Group filed a lawsuit with the First Instance Court to object to the decisions passed on by the Income Tax Department for imposing taxes
and fees to support a fund for education and training during the year 2012 amount of 111,756 JD in addition to a legal compensation amount
of 46,123 JD.
Based on the company’s management and tax consultant opinion, the probability of winning the legal case depends that the objection
committee didn’t deduct the yearly donations, the BOD rewards and the full amount of retained earnings as it didn’t take into account the
necessity of subtracting the interest expense and currency differences from the interest revenue.
The Group’s subsidiary (Al-Fakher for Trading Tobacco and Agencies Company) filed a lawsuit with the First Instance Court to object on the
decisions passed on by the Income Tax Department for imposing income taxes for the years of 2009, 2010, 2011amount of 7,843,927 JDand
Legal compensation amount of 3,889,245 JD, the case is still pending in the tax first instance court.Note that the Companycalculating the
provisions in the same way that it was reconciled for the years 2006, 2007 and 2008, and this provisionrequired by law in the Aqaba Special
Economic Zone, in addition the Company taking extra provision in Amman by 1%.
Based on the Company’s management and tax consultant the probability of winning the legal case is high because the profit is from the
branch and not from the investment, and the company will not have any further liability more than what already paid to the income and sales
tax department in Aqaba and the provision taken in Amman.
The company booked an additional contingent liability provision to face any contingent tax and legal liabilities.
85
25) Other income
Jordanian Dinar
2015
2014
Foreign exchange rate and prices
108,606
508,356
Scrap sales
207,018
155,558
Other
(4,436)
(32,288)
311,188
631,626
26) Advance Payment for Investments
The amount represents entering Tyef International for Renewable Energy in a joint project agreement as the following:
• Joint project with Altawakol Company and Getsamp Asetym Solar to develop solar power plant with capacity of 24 MW.
• Joint project with Getsamp Asetym Solar to develop solar power plant with capacity of 58 MW.
This joint venture is still under formation and registration.
27) Statutory Reserve
The amounts in this account represent what transferred from the annual profit before taxes and fees.By 10% during the year and previous
years, according to the Companies Act, and is not available for distribution to shareholders. The Company stoppedcalculating the statutory
reserve at 31% and it is subject to General Assembly approval.
28) Financial risk management
Overview
The Group has exposure to the following risks from its use of financial instruments.
- Credit risk
- Liquidity risk
- Market risk
- Capital management
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.
Risk management framework
The management has overall responsibility for the establishment and oversight of Group’s risk management framework.
The Group’s risk management policies are established to identify and analyses the risks faced by the Group, to set appropriate risk limits and
controls, and to monitor risks and adherence to limits.
Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the group’s activities. The group,
through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which
all employees understand their roles and obligations.
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. Group management undertakes both
regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.
- 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 Cash at banks and deposits, cheques under collections, Trade and other receivables and
other debit balances.
86
The carrying amount of the financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting
date was as follows:
Carrying value as of
Jordanian Dinar
Current accounts and deposits at banks
2015
2014
42,993,290
34,350,168
198,063
30,795
10,059,518
12,694,583
1,860,248
2,000,401
55,111,119
49,075,947
- 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.
The Group ensures that it has sufficient cash on demand to meet expected operational expenses, including the servicing of financial
obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. In
addition, the Group maintains line of credit from its bank for sudden cash requirements.
The following are the contracted maturities of financial liabilities:
December 31, 2015
Contractual Cash
Flows
Carrying Amount
less than
a year
More than
a year
Deferred cheques
189,889
(189,889)
(189,889)
-
Accounts payable
5,827,397
(5,827,397)
(5,827,397)
-
173,523
(173,523)
(173,523)
-
5,938,459
(5,938,459)
(5,938,459)
-
3,045,480
(3,045,480)
(3,045,480)
-
15,930,000
(15,930,000)
(15,930,000)
-
2,906,197
(2,906,197)
-
(2,906,197)
34,010,945
(34,010,945)
(31,104,748)
(2,906,197)
Loan and bank facilities mature within a year
Carrying Amount
Contractual Cash
Flows
less than
a year
More than
a year
Deferred cheques
356,634
(356,634)
(332,732)
(23,902)
Accounts payable
6,978,982
(6,978,982)
(6,978,982)
-
31,772
(31,772)
(31,772)
-
2,745,151
(2,745,151)
(2,745,151)
-
2,059,211
(2,059,211)
(2,059,211)
-
17,700,000
(17,700,000)
(17,700,000)
-
2,179,857
(2,179,857)
-
(2,179,857)
32,051,607
(32,051,607)
(29,847,848)
(2,203,759)
December 31, 2014
Loan and bank facilities mature within a year
- Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rate and equity prices will affect the group’s profit
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 optimizing the
return.
87
- Currency Risk
Most of the group’s financial assets and liabilities are in Jordanian Dinar and UAE Dirhams
The summary of quantitative data about the Group’s exposure to foreign currency risk provided to management of the Group based on its
risk management policy was as follows:
Jordanian Dinar
JOD
UAE Dirhams
Total
Cash and cash equivalent
30,312,327
14,809,050
45,121,377
170,160
27,903
198,063
474,523
9,584,995
10,059,518
1,430,612
1,817,689
3,248,301
Deferred cheques
(23,902)
(165,987)
(189,889)
Accounts payable
(51,920)
(5,775,477)
(5,827,397)
(3,045,480)
-
(3,045,480)
(2,902,841)
(3,035,618)
(5,938,459)
(15,930,000)
-
(15,930,000)
13,205,683
17,262,555
30,468,238
JOD
UAE Dirhams
Total
25,216,285
10,192,011
35,408,296
-
30,795
30,795
122,682
12,571,901
12,694,583
981,843
2,149,792
3,131,635
Deferred cheques
(167,314)
(189,320)
(356,634)
Accounts payable
(59,583)
(6,919,399)
(6,978,982)
Income tax Provision
(2,059,211)
-
(2,059,211)
(1,560,610)
(1,184,541)
(2,745,151)
(17,700,000)
-
(17,700,000)
4,774,092
16,651,239
21,425,331
December 31, 2014
88
- Sensitivity analysis
A strengthening (weakening) of the JD, as indicated below, against the UAE Dirhams at 31 December would have increased (decreased)
equity and profit or loss by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Group
considered to be reasonably possible at the reporting date. The analysis assumes that all other variables, in particular interest rates, remain
constant and ignores any impact of forecasted sales and purchases. The analysis is performed on the same basis for 2013, albeit that the
reasonably possible foreign exchange rate variances were different, as indicated below.
December 31, 2015
Increase
Decrease
Jordanian Dinar
Profit or loss
Profit or loss
1,726,256
(1,726,256)
1,726,256
(1,726,256)
December 31, 2014
Increase
Decrease
Jordanian Dinar
Profit or loss
Profit or loss
1,665,124
(1,665,124)
1,665,124
(1,665,124)
UAE dirham (10% change)
UAE dirham (10% change)
- Interest rate risk
At the reporting date of consolidated financial statements the interest rate profile of the Group’s interest-bearing financial instruments was as
follows:
As of December 31,
Jordanian Dinar
2015
2014
26,624,692
23,387,624
(15,930,000)
(17,700,000)
Fixed Rate Instruments:
Financial Assets
Variable rate instrument
Financial Liabilities
An increase in the interest average rate by 1% will lead to increase in finance expense with an amount of JD 159,300, a decrease in the
interest average rate by 1% will lead to decrease in finance expense with an amount of JD 159,300.
- Other market price risk
Equity price risk arises from financial assets at fair value through other comprehensive income held for meeting partially the unfunded portion
of the Group’s obligations as well as investments at fair value through profit or loss. Management of the Group monitors the mix of debt and
equity securities in its investment portfolio based on market indices. Material investments within the portfolio are managed on an individual
basis and all buy and sell decisions are approved by the Risk Management Committee.
89
- Sensitivity analysis for equity price risk
A change of 5%in fair value of the securities at the reporting date would have increased (decreased) equity and profit or loss by the amounts
shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.
December 31, 2015
Equity
Jordanian Dinar
Financial assets at fair value through other comprehensive income
5%
Increase
5%
decrease
126,522
(126,522)
126,522
(126,522)
168,662
(168,662)
168,662
(168,662)
December 31, 2014
Financial assets at fair value through other comprehensive income
- Capital management
The Group’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 business. Capital consists of ordinary shares, retained earnings and interests of the Group.
The management monitors the return on capital, which the management defined as net operation income divided by total shareholders’
equity.
The management seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the
advantages and security afforded by a sound capital position.
There have been no changes in the group’s approach to capital management during the year neither the group is subject to externally
imposed capital requirements.
Debt-to-adjusted Capital Ratio
As of December 31,
Jordanian Dinar
2015
2014
34,010,945
32,051,607
(Less) cash and cashequivalents
(45,121,377)
(35,408,296)
Net Debt
(11,110,432)
(3,356,689)
Net Shareholders’ equity
74,223,601
67,568,459
Adjusted capital
74,223,601
67,568,459
Total Debt
-
Debt - to- adjusted capital ratio
90
-
29) Fair value hierarchy
The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or
indirectly (i.e., derived from prices)
Prices quoted in active markets for similar instruments or through the use of valuation model that includes inputs that can be traced to
markets, these inputs good be defend directly or indirectly.
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable 0inputs).
- Financial Instruments measured at fair value:
The Company does not measure any financial instruments at fair value.
- Financial Instruments not measured at fair value:
These financial instruments are measured at amortized cost and the fair value of these instruments do not differ significantly from their
amortized cost.
Fair Value
December 31, 2015
Jordanian Dinar
Book value
Fair Value
level (1)
45,121,377
45,121,377
-
-
198,063
-
-
-
10,059,518
-
-
-
2,530,434
2,229,409
-
301,025
Trade and other receivable
Financial assets at fair value through
statement of other comprehensive income
level (2)
Deferred cheques
(189,889)
-
Accounts payable
(5,827,397)
-
(173,523)
-
Loans and bank facilities
(15,930,000)
-
-
level (3)*
-
December 31, 2014
35,408,296
35,408,296
-
-
30,795
-
-
-
12,694,583
-
-
-
3,373,245
3,072,220
-
301,025
Trade and other receivable
Financial assets at fair value through
statement of other comprehensive income
Deferred cheques
(356,634)
-
Accounts payable
(6,978,982)
-
(31,772)
-
Loans and bank facilities
(17,700,000)
-
-
-
Fair value in accordance with 3 level
This item represents the cost of financial assets through other comprehensive income that is not listed in financial markets for the company
portion in North manufacturing Company -Jenin-. The company performed test over the fair value for this item using Net asset value of the
last available audited financial statements, the company’s management believes that this is the most convenient way to measure the fair
value of the investment due to the lack of updated information on the market value of this investment.
- Fair value
The fair value of financial assets and liabilities are not materially different from its book value in the consolidated statements of financial
position.As of 31/12/2015 and 2014.
91
30) Comparative figures
The comparative figures represents the Consolidated Statement of Financial Position as of 31/12/2014,in addition to the consolidated Statement
of Profit or Loss and other comprehensive income Consolidated Statement of Changes in Shareholders’ Equity and the Consolidated
Statement of Cash flow for the year ended 31/12/2014.Some comparative figures were reclassified to match with current presentation. The
effect of reclassification was as follows:
2014
Category
Before
Reclassification
Effect of
Reclassification
After Reclassification
4,804,362
(2,059,211)
2,745,151
-
2,059,211
2,059,211
7,497,169
341,962
7,839,131
7,057,828
(341,962)
6,715,866
Governance
The Company implements all good governance practices with the exception of one provision relating to unifying the position of General
Manager and Chairman of the Board of Directors; the Company will work to avoid such matter in the future.
92

Twenty-Fourth Annual Report 2015

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