Ras Al Khaimah Ceramics PSC and its subsidiaries. Condensed consolidated interim financial information 31 March 2013

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5 Ras Al Khaimah Ceramics PSC and its subsidiaries Condensed consolidated interim financial information 31 March 2013

6 Condensed consolidated interim financial information 31 March 2013 Contents Page Independent auditors report on review of condensed consolidated interim financial information 1 Condensed consolidated income statement 2 Condensed consolidated statement of comprehensive income 3 Condensed consolidated statement of financial position 4 Condensed consolidated statement of cash flows 5-6 Condensed consolidated statement of changes in equity 7-8 Notes to the condensed consolidated interim financial information 9-22

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8 Condensed consolidated income statment for the three month period ended 31 March 2013 Three month period ended 31 March Note (Unaudited) (Unaudited) Revenue 805, ,818 Cost of sales 11 (582,349) (547,002) Gross profit 223, ,816 Administrative and general expenses 7 (61,423) (65,280) Selling and distribution expenses 8 (79,265) (85,187) Other income 16,456 17, Results from operating activities 99,313 67,720 Finance cost (53,465) (27,639) Finance income 5,176 10,482 Share of profit in equity accounted investees 10 9,591 6, Profit before tax 60,615 57,374 Tax expense (6,339) (7,509) Profit for the period 54,276 49,865 ===== ==== Profit attributable to: Owners of the Company 50,901 45,676 Non-controlling interests 3,375 4, Profit for the period 54,276 49,865 ===== ===== Earnings per share - basic and diluted (AED) ==== ==== The notes on pages 9 to 22 are an integral part of these condensed consolidated interim financial information. The independent auditors report on review of condensed consolidated interim financial information is set out on page 1. 2

9 Condensed consolidated statement of comprehensive income for the three month period ended 31 March 2013 Three month period ended 31 March Note (Unaudited) (Unaudited) Profit for the period 54,276 49,865 Other comprehensive income: Items that may be reclassified subsequently to profit or loss: Foreign currency translation differences 6,304 (22,083) Total comprehensive income for the period 60,580 27,782 ===== ===== Total comprehensive income attributable to: Owners of the Company 55,905 27,717 Non-controlling interests 4, Total comprehensive income for the period 60,580 27,782 ===== ===== The notes on pages 9 to 22 are an integral part of these condensed consolidated interim financial information. The independent auditors report on review of condensed consolidated interim financial information is set out on page 1. 3

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11 Condensed consolidated statement of cash flows for the three month period ended 31 March 2013 Three month period ended 31 March (Unaudited) (Unaudited) Operating activities Profit for the period before tax 60,615 57,374 Adjustments for: Share of profit in equity accounted investees (9,591) (6,811) Interest expense 20,317 27,639 Interest income (5,176) (1,183) Gain on disposal of property, plant and equipment (1,187) (337) Depreciation on property, plant and equipment 29,993 37,902 Amortization of intangible assets 1, Capital work in progress written off - (4,636) Depreciation on investment property 1,783 1,077 Provision for employees' end-of-service benefits 8,953 3, , ,817 Change in: - inventories (including contract work in progress) (44,971) 68,877 - trade and other receivables (66,594) (22,912) - due from related parties (including long term) - (9,650) - asset classified as held for sale trade and other payables (including billings in excess of valuation) (699) (177,441) - due to related parties (60,086) (4,579) - liabilities classified as held for sale (48) - - derivative financial liabilities 841 1,275 - deferred tax assets (868) (31) - deferred tax liabilities 742 1,650 Income tax paid (1,280) (4,559) Employees end-of-service benefits paid (5,103) (5,040) Currency translation adjustment (5,408) (7,218) Net cash used in operating activities (75,728) (44,811) Investing activities Acquisition of property, plant and equipment (19,988) (36,706) Change in bank deposits (8,384) - Proceeds from disposal of property, plant and equipment 1, Additions to investment property - (627) Cash acquired as part of acquisition of subsidiary 8,051 - Investment in equity accounted investees - (3,108) Dividend received from equity accounted investees 13,447 11,481 Interest income received 5,176 1, Net cash used in investing activities (272) (27,243)

12 Condensed consolidated statement of cash flows (continued) for the three month period ended 31 March 2013 Three month period ended 31 March (Unaudited) (Unaudited) Financing activities Long term bank loans availed 368, ,880 Long term bank loans repaid (128,244) (118,597) Net movement in short term bank borrowings (net) (176,915) 50,125 Interest expense paid (20,317) (23,489) Dividend paid - (818) Funds invested in a subsidiary Net cash from financing activities 43, , Net (decrease)/increase in cash and cash equivalents (32,597) 129,962 Cash and cash equivalents at the beginning of the period 289, , Cash and cash equivalents at the end of the period 256, ,482 ====== ====== Represented by: Cash in hand and at bank (net of bank deposits on lien) 413, ,709 Bank overdraft (157,402) (187,227) , ,482 ====== ====== The notes on pages 9 to 22 are an integral part of these condensed consolidated interim financial information. The independent auditors report on review of condensed consolidated interim financial information is set out on page 1. 6

13 Condensed consolidated statement of changes in equity for the three month period ended 31 March 2013 Share Capital Attributable to equity holders of the Company Share premium Legal reserve Translation reserves General reserves Capital reserves Retained earnings Total reserves Total Noncontrolling interests AED 000 AED 000 AED 000 AED 000 AED 000 AED 000 AED 000 AED 000 AED 000 AED 000 AED 000 Total equity Balance at 1 January 2012 (audited) 743, , ,665 (220,835) 82,805 55, ,853 1,338,461 2,081, ,612 2,237,275 Total comprehensive income for the period (unaudited) Profit for the period ,676 45,676 45,676 4,189 49,865 Other comprehensive income (17,959) (17,959) (17,959) (4,124) (22,083) Total comprehensive income (17,959) ,676 27,717 27, ,782 Transactions with owners recorded Directly in equity (unaudited) Other equity movements Other movements ,095 2,095 2,095 1,574 3,669 Transfer to legal reserve 7,108 (7,108) Contribution by and distribution to owners of the Company Funds invested in a subsidiary Dividend declared by a subsidiary (818) (818) At 31 March 2012 (unaudited) 743, , ,773 (238,794) 82,805 55, ,516 1,368,273 2,111, ,348 2,268,823 ====== ====== ====== ====== ===== ======= ====== ======= ======= ====== ======= The notes on pages 9 to 22 are an integral part of these condensed consolidated interim financial information. 7

14 Condensed consolidated statement of changes in equity for the three month period ended 31 March Attributable to equity holders of the Company Share Capital Share premium Legal reserve Translation reserves General reserves Capital reserves Retained earnings Total reserves Total Noncontrolling interests AED 000 AED 000 AED 000 AED 000 AED 000 AED 000 AED 000 AED 000 AED 000 AED 000 AED 000 Balance at 1 January 2013 (audited) 743, , ,922 (418,893) 82,805 55,044 1,138,400 1,366,945 2,110, ,818 2,257,965 Total comprehensive income for the period (unaudited) Profit for the period ,901 50,901 50,901 3,375 54,276 Other comprehensive income , ,004 5,004 1,300 6, Total comprehensive income , ,901 55,905 55,905 4,675 60,580 Transactions with owners recorded Directly in equity (unaudited) Other equity movements Transfer to legal reserve - 7, (7,680) Allocation of legal reserve on acquisition of subsidiary , (27,688) Contribution by and distribution to owners of the Company Acquisition of subsidiary under Common control (note 6) , , , , At 31 March 2012 (unaudited) 743, , ,290 (413,889) 82,805 55,044 1,295,809 1,564,726 2,307, ,493 2,460,421 ====== ====== ====== ====== ===== ======= ======= ======= ======= ====== ======= The notes on pages 9 to 22 are an integral part of these condensed consolidated interim financial information. Total equity 8

15 Notes to the condensed consolidated interim financial information for the three month period ended 31 March 2013 (unaudited) 1 Reporting entity Ras Al Khaimah Ceramics PSC ("the Company" or the Holding Company ) was incorporated under Emiri Decree No. 6/89 dated 26 March 1989 as a limited liability company in the Emirate of Ras Al Khaimah under the UAE Federal Law No. 8 of 1984 (as amended). Subsequently, under the Emiri Decree No. 9/91 dated 6 July 1991, the legal status of the Company was changed to a Public Shareholding Company. The registered address of the Company is P.O. Box 4714 Al Jazeerah, Al Hamra City, Ras Al Khaimah, United Arab Emirates. The Company is listed on the Abu Dhabi Securities Exchange. The condensed consolidated interim financial information as at and for the three month period ended 31 March 2013 ( the current period ) comprise the Company and its subsidiaries (collectively referred to as the Group ) and the Group s interest in associates and jointly controlled entities. The principal activities of the Company are manufacturing and sale of a variety of ceramic products including tiles, bathroom sets and sanitary wares. The Company and certain entities in the Group are also engaged in investing in other entities, in UAE or globally, that exercise similar or ancillary activities. Accordingly, the Company also acts as a Holding Company of the Group entities. The Group is also engaged in contracting and other industrial manufacturing activities. 2 Basis of preparation Statement of compliance The condensed consolidated interim financial information have been prepared in accordance with the International Accounting Standard ( IAS ) 34, Interim Financial Reporting. The condensed consolidated interim financial information does not include all of the information required for full annual consolidated financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December Accounting estimates and judgements The preparation of condensed consolidated interim financial information requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. In preparing these condensed consolidated interim financial information, the significant judgements made by the management in applying the Group s accounting policies and the key sources of estimation uncertainty were the same as to those that were applied in the preparation of the consolidated financial statements of the Group as at and for the year ended 31 December New standards, interpretations and amendments adopted by the Group Effective 1 January 2013, following new / amended International Financial Reporting Standards (IFRS) have become effective and have been applied in preparing the condensed consolidated interim financial information: - Improvement/amendments to IFRSs: IAS 1 Presentation of Items of Other Comprehensive Income IAS 34 Interim financial reporting and segment information for total assets and liabilities - IFRS 10 Consolidated Financial Statements, IAS 27 Separate Financial Statements - IFRS 11 Joint Arrangements, IAS 28 Investments in Associates and Joint Ventures - IFRS 12: Disclosure of Interests in Other Entities - IFRS 13: Fair Value Measurement 9

16 Notes to the condensed consolidated interim financial information (continued) for the three month period ended 31 March 2013 (unaudited) 3 New standards, interpretations and amendments adopted by the Group (continued) IAS 1 Presentation of Items of Other Comprehensive Income Amendments to IAS 1 The amendments to IAS 1 introduce a grouping of items presented in other comprehensive income (OCI). Items that could be reclassified (or recycled) to profit or loss at a future point in time now have to be presented separately from items that will never be reclassified. The amendment affected presentation only and had no impact on the Group s financial position or performance. IAS 34 Interim financial reporting and segment information for total assets and liabilities (Amendment) The amendment clarifies the requirements in IAS 34 relating to segment information for total assets and liabilities for each reportable segment to enhance consistency with the requirements in IFRS 8 Operating Segments. Total assets and liabilities for a reportable segment need to be disclosed only when the amounts are regularly provided to the chief operating decision maker and there has been a material change in the total amount disclosed in the Group s previous annual consolidated financial statements for that reportable segment. IFRS 10 Consolidated Financial Statements and IAS 27 Separate Financial Statements As a result of adoption of IFRS 10, the Group has changed its accounting policy with respect to determining whether it has control over and consequently whether it consolidated its investee. IFRS 10 introduces a new model of control that is applicable to all investees; among other things it requires the consolidation of an investee if the Group controls the investee on the basis of de facto circumstances. The revised accounting policy is as follows: 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 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 that control commences until the date that control ceases. In accordance with the transitional provisions of IFRS 10, the Group has re-assessed the control conclusion for its investees at 1 January The re-assessment of control did not result in identification of any additional investee being controlled on a de facto control circumstances and accordingly, the change in accounting policy has no impact on the Group s condensed consolidated interim financial information. 10

17 Notes to the condensed consolidated interim financial information (continued) for the three month period ended 31 March 2013 (unaudited) 3 New standards, interpretations and amendments adopted by the Group (continued) IFRS 11 Joint Arrangements and IAS 28 Investment in Associates and Joint Ventures Joint Arrangements As a result of adoption of IFRS 11, the Group has changed its accounting policy with respect to interests in joint arrangements. Under IFRS 11, the Group classifies its interests in joint arrangements as either joint ventures or joint operations depending on the Group s rights to the assets and obligations for the liabilities of the arrangements. When making this assessment, the Group considers the structure of the arrangements, the legal form, the contractual terms and other facts and circumstances. The revised accounting policy is as follows: Joint arrangements are arrangements of which the Group has joint control, established by contracts requiring unanimous consent for decisions about the activities that significantly affect the arrangements returns. They are classified and accounted for as follows: - Joint venture: when the Group has rights only to the net assets of the arrangements, it accounts for its interests using the equity method. The consolidated financial statements include the Group s share of profit and equity movements of joint ventures accounted for on an equity basis, after adjustments to align the accounting policies with those of the Group. When the Group s share of losses exceeds the carrying amount of the investment in the joint venture, the carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the joint venture. - Joint operation: when the Group has rights to the assets, and obligations for the liabilities, relating to an arrangement, it accounts for each of its assets, liabilities and transactions, including its share of those held or incurred jointly, in relation to the joint operation. As at 1 January 2013, the Group has re-evaluated its interests in joint arrangements and has concluded that all its interests in joint arrangements are joint ventures and accordingly are required to be accounted for using the equity method. IFRS 12 Disclosure of Interests in Other Entities IFRS 12 sets out the requirements for disclosures relating to an entity s interests in subsidiaries, joint arrangements, associates and structured entities. None of these disclosure requirements are applicable for interim condensed consolidated financial statements, unless significant events and transactions in the interim period requires that they are provided. Accordingly, the Group has not made such disclosures. IFRS 13 Fair Value Measurement IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS when fair value is required or permitted. The application of IFRS 13 has not materially impacted the fair value measurements carried out by the Group. IFRS 13 also requires specific disclosures on fair values, some of which replace existing disclosure requirements in other standards, including IFRS 7 Financial Instruments: Disclosures. Some of these disclosures are specifically required for financial instruments by IAS 34, thereby affecting the interim condensed consolidated financial statements period (refer note 18). 11

18 Notes to the condensed consolidated interim financial information (continued) for the three month period ended 31 March 2013 (unaudited) 4 Significant accounting policies The accounting policies applied in the preparation of the condensed consolidated interim financial information are consistent with those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2012, except as explained in note 3 and accounting policy on acquisition of entities under common control as mentioned below. Certain comparative amounts have been regrouped and/or reclassified to conform to the current period s presentation. Acquisition of entities under common control Business combinations arising from the acquisition of interests in entities that are under the common control of the shareholders that control the Group are accounted for using book values of the acquired entities on the date of acquisition of interest in these entities. The components of equity of the acquired entities are added to the same components within the Group equity and any gain/loss arising is recognised directly in equity. Non-controlling interests in the acquired entities, on the date of acquisition, are separately disclosed in the Group s financial statements. 5 Financial risk management The Group s financial risk management objectives and policies are consistent with those disclosed in the consolidated financial statements as at and for the year ended 31 December Acquisition of subsidiary under common control Effective 1 January 2013, the Company has obtained control of Al Hamra Construction Company LLC (a jointly controlled entity until 31 December 2012) by transfer of 50 percent of the shares and voting rights in that entity from a related party at a nominal consideration of AED 100 (refer note 16). The Company s holding in this entity is now 100%. Considering that the investee is under common control of the majority shareholders of the Company, the acquisition accounting had been done based on book values at the date of acquisition. Al Hamra Construction Company LLC is engaged mainly in the construction of commercial and residential properties. Also refer note 10. In the period from acquisition of controlling interest in Al Hamra Construction Company LLC up to 31 March 2013, the investee contributed revenue of AED million and loss of AED 3.04 million to the Group s results. The book values of the identifiable assets and liabilities of Al Hamra Construction LLC acquired by the Company were as follows: Book value Assets: Property, plant and equipment 56,228 Investments 30 Loans and advances 17,665 Inventory and work in progress 30,174 Trade receivables 51,533 Due from related parties 366,931 Cash in hand and at bank 8, Total assets acquired 530,

19 Notes to the condensed consolidated interim financial information (continued) for the three month period ended 31 March 2013 (unaudited) 6 Acquisition of subsidiary under common control (continued) Book value Liabilities: Trade and other payables 153,441 Due to related parties 40,493 Bank borrowings 43,792 Provision for employees end-of-service benefits 9, Total liabilities acquired 246, Net assets acquired 283,752 ====== Consideration paid - Book value of pre-existing interest in Al Hamra Construction Company LLC (refer note 10) (141,876) ====== Gain on acquisition recognised in equity 141,876 ====== 7 Administrative and general expenses Three month period ended 31 March 2013 (Unaudited) 2012 (Unaudited) These include: Staff costs 29,227 23,719 Depreciation 6,322 6,848 Telephone, postal and office supplies 2,497 2,565 Repairs and maintenance 3,293 2,200 Legal and professional fee 1,422 2,544 Amortization of intangible assets Impairment loss on trade and other receivables 6,702 13,500 ==== ===== 8 Selling and distribution expenses Three month period ended 31 March 2013 (Unaudited) 2012 (Unaudited) These include: Staff costs 18,461 16,383 Performance rebates 18,495 20,117 Advertisement and promotions 9,385 12,002 Travel and entertainment 586 1,176 Depreciation 680 1,046 ==== ===== 13

20 Notes to the condensed consolidated interim financial information (continued) for the three month period ended 31 March 2012 (unaudited) 9 Property, plant and equipment and investment properties Additions, disposal and depreciation (unaudited) During the three month period ended 31 March 2013, the Group acquired property, plant and equipment amounting to AED 19,988 thousand (three month period ended 31 March 2012: AED 36,706 thousand). Property, plant and equipment with net book value of AED 4,113 thousand were disposed during the current period (three month period ended 31 March 2012: AED 547 thousand) resulting in a gain on disposal of AED 1,187 thousand (three month period ended 31 March 2012: AED 337 thousand) which is included in other income in the condensed consolidated income statement. Furthermore, during the previous period, a building with net book value of AED 78,865 thousand was transferred to investment property due to change in its use. The building is leased to a third party to earn rental income. Depreciation charge on property, plant and equipment for the current period amounted to AED 29,993 thousand (three month period ended 31 March 2012: AED 37,902 thousand). 10 Investments in equity accounted investees During the three month period ended 31 March 2013, the Group has made no further investments (three month period ended 31 March 2012: AED 3,108 thousand). The Group s share of profit in equity accounted investees for the three month period ended 31 March 2013 amounted to AED 9,591 thousand (three month period ended 31 March 2012: AED 6,811 thousand). The Group has received a dividend of AED 13,447 thousand during the current period from equity accounted investees (three month period ended 31 March 2012: AED 11,481 thousand). During the three month period ended 31 March 2013, the Group derecognised equity accounted investment amounting to AED 141,876 thousand upon acquisition of control in a jointly controlled entity (refer note 6). 14

21 Notes to the condensed consolidated interim financial information (continued) for the three month period ended 31 March 2012 (unaudited) 11 Inventories 31 March 2013 (Unaudited) 31 December 2012 (Audited) Finished goods (net of NRV write down) 589, ,719 Less: Provision for slow moving and obsolete inventories (25,948) (21,875) (A) 563, , Raw materials 265, ,043 Goods-in-transit 57,454 51,744 Work-in-progress 6,197 15,023 Stores and spares 214, , , ,348 Less: Provision for slow moving raw materials and stores and spares (32,306) (34,378) (B) 511, , Total (A+B) 1,074,979 1,034,814 ======= ======= During the three month period ended 31 March 2013, the Group recognised a loss due to write-down of finished goods inventories of AED 30,747 thousand (three month period ended 31 March 2012: AED 23,438 thousand) to bring them to their net realisable value as the value was lower than its cost. The write down is included in cost of sales in the condensed consolidated income statement. 12 Trade and other receivables 31 March 2013 (Unaudited) 31 December 2012 (Audited) Trade receivables 1,232,294 1,087,103 Less: Allowance for impairment loss (188,992) (150,723) ,043, ,380 Advances 81,826 80,662 Deposits 13,866 12,003 Other receivables 95,397 69, ,234,391 1,098,599 ======= ======= 15

22 Notes to the condensed consolidated interim financial information (continued) for the three month period ended 31 March 2013 (unaudited) 13 Cash in hand and at bank 31 March 2013 (Unaudited) 31 December 2012 (Audited) Cash in hand 5,472 1,576 Cash at bank - in fixed deposits 203, ,359 - in current accounts 295, ,646 - in margin deposits 6,941 3,271 - in call accounts 4,654 30, , ,656 ====== ====== Cash in hand and cash at bank includes AED 0.34 million (31 December 2012: AED 0.46 million) and AED million (31 December 2012: AED million) respectively, held outside UAE. Fixed deposits are placed with banks for an original maturity period of less than three months and carry interest at normal commercial rates and includes AED million (31 December 2012: AED million) which are held by banks under lien against bank facilities availed by the Group. 14 Share capital 31 March 2013 (Unaudited) 31 December 2012 (Audited) Authorised, issued and paid up 170,000,000 shares of AED 1 each paid up in cash 170, , ,202,460 shares of AED 1 each issued as bonus shares 573, , , ,202 ====== ====== 15 Trade and other payables 31 March 2013 (Unaudited) 31 December 2012 (Audited) Trade payables 579, ,693 Accrued and other expenses 262, ,333 Advances from customers 53,891 31,294 Others 66,773 36, , ,611 ====== ====== 16

23 Notes to the condensed consolidated interim financial information (continued) for the three month period ended 31 March 2013 (unaudited) 16 Related party transactions The Group in the ordinary course of business, enters into transaction with other business enterprises that fall within the definition of a related party as contained in International Accounting Standard 24. Related parties of the Group primarily comprise associates, joint ventures, major shareholders and key management personnel. Pricing policies and terms of transactions with related parties are mutually agreed. Significant transactions carried out with related parties during the period, other than those disclosed elsewhere in the condensed consolidated interim financial information (in particular note 6), are as follows: Three month period ended 31 March 31 March (Unaudited) (Unaudited) Sales 106, ,138 Purchases 1,434 28,331 ==== ==== Compensation to key management personnel: Salaries and benefits 1,849 3,796 End of service benefits ,116 3,832 ==== ==== 31 March 31 December (Unaudited) (Audited) Due from related parties: Equity accounted investees 668, ,918 Other related parties 446,313 96,748 Less: Allowance for impairment loss (58,463) (60,090) ,056, ,576 ======= ====== Long term receivables from related parties: Long term amount receivables from related parties 303, ,400 Less: Discounting of long term receivables (53,563) (55,971) , ,429 Less: Current portion (20,790) (20,680) Long term portion 229, ,749 ====== ====== Details of long term receivables from related parties, including terms of repayment are mentioned in the consolidated financial statements of the Group for the year ended 31 December

24 Notes to the condensed consolidated interim financial information (continued) for the three month period ended 31 March 2013 (Unaudited) 16 Related party transactions (continued) 31 March 31 December (Unaudited) (Audited) Due to related parties: Equity accounted investees 59, ,219 Others related parties 41,070 5, , ,531 ===== ====== 17 Bank borrowings 31 March 31 December (Unaudited) (Audited) (i) Short term Bank overdrafts 157, ,572 Short-term loans 332, ,561 Trust receipts 242, ,613 Current portion of long-term bank loans (refer note (ii) below) 694, , ,427,119 1,531,364 ======= ======= (ii) Three month period ended Year ended 31 March 31 December (Unaudited) (Audited) Long term bank loans Opening balance 1,148,644 1,362,187 Add: Availed during the period/year 368, ,268 Less: Repayments made during the period/year (128,244) (512,811) Closing balance 1,389,279 1,148,644 Less: Current portion of term loans (refer note (i) above) (694,666) (711,618) Long-term portion of term loans 694, ,026 ====== ====== The details of the long term bank loans, including terms of repayment, interest rate and security provided are mentioned in the consolidated financial statements of the Group for the year ended 31 December The new long term bank loans availed during the current period are at terms which are consistent with those mentioned in the Group s 2012 consolidated financial statements. 18

25 Notes to the condensed consolidated interim financial information (continued) for the three month period ended 31 March 2013 (Unaudited) 18 Derivative financial instruments The table below shows the positive and negative fair values of derivative financial instruments, which are equivalent to the market values, together with the notional amounts analysed by term to maturity. The notional amount is the amount of a derivative's underlying asset, reference rate or index and is the basis upon which changes in the value of derivatives are measured. The notional amounts indicate the volume of transactions outstanding at the reporting date and are neither indicative of the market risk nor credit risk Maturity date Positive Negative Notional Within 1 Between fair value fair value amount Year 1-5 years 31 March 2013 Interest rate swaps - 3, , , ,165 Currency swaps ,374 9,187 9,187 Forward foreign exchange contracts - 1,690 27,758 27, , , , ,352 === ==== ====== ====== ====== 31 December 2012 Interest rate swaps - 5, , , ,696 Currency swaps 1,081-18,306 9,153 9,153 Forward foreign exchange contracts 44-29,745 29, ,125 5, , , ,849 ==== ==== ====== ====== ====== Fair value hierarchy All financial instruments for which fair value is recognised or disclosed are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole: Level 1: Level 2: Level 3: quoted prices (unadjusted) in active markets for identical assets or liabilities 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). inputs for the asset or liability that are not based on observable market data (unobservable inputs). For financial instruments that are recognised at fair value on a recurring basis, the Group determines whether transfers have occurred between Levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period. 19

26 Notes to the condensed consolidated interim financial information (continued) for the three month period ended 31 March 2013 (Unaudited) 18 Derivative financial instruments (continued) As at 31 March 2013, the Group held the following classes of financial instruments measured at fair value: Level 1 Level 2 Level 3 31 March 2013 Financial assets Equity securities Financial liabilities Derivative financial liabilities (net) - (4,803) (4,803) - == ==== === During the three month period ended 31 March 2013, there were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into or out of Level 3 fair value measurements. Valuation techniques Equity securities Equity securities are measured based on share price in the active market. Derivative financial liabilities The foreign currency forward contracts are measured based on observable spot exchange rates, the yield curves of the respective currencies as well as the currency basis spreads between the respective currencies. All contracts are fully cash collateralised, thereby eliminating both counterparty and the Group s own credit risk. 19 Proposed dividend and directors fee (i) At the Annual General Meeting (AGM) held on 23rd April 2013, the shareholders approved 20% cash dividend (AED 0.2 per share) which was proposed by the Board of Directors. (ii) At the Annual General Meeting (AGM) held on 23rd April 2013, the shareholders approved the proposed Directors fees amounting to AED 2.4 million for the year ended 31 December Earnings per share Three month period ended 31 March (Unaudited) (Unaudited) Net profit attributable to owners of the Company () 50,901 45,676 ====== ===== Weighted average number of shares outstanding ( 000) 743, ,202 ====== Earnings per share (AED) basic and diluted ==== ====== ==== There was no dilution effect on the basic earnings per share as the Company does not have any such outstanding commitment as at the reporting date. 20

27 Notes to the condensed consolidated interim financial information (continued) for the three month period ended 31 March 2013 (Unaudited) 21 Contingent liabilities and commitments The Company has issued corporate guarantees for loans and advances from commercial banks obtained by related and third parties including subsidiaries, joint ventures and associates. 22 Operating lease As lessor: Certain Group entities lease out their investment properties under operating leases. The leased properties mainly include a property leased to a third party for a period of 14 years. The Group also has lease arrangement on other properties which run for a period of one to five years with an option to renew the lease after that date. Lease rentals are usually reviewed periodically to reflect market rentals. 31 March 31 December (Unaudited) (Audited) Less than one year 23,948 16,142 Between two and five years 45,000 57,268 More than five years 150, , , ,804 ====== ====== 23 Segment reporting The Group has broadly three reportable segments as described below, which are the Group s strategic business units. The strategic business units operate in different sectors and are managed separately because they require different strategies. The following summary describes the operation in each of the Group s reportable segments: Ceramic products Contracting Other industrial Others* includes manufacture and sale of ceramic wall and floor tiles, Gres Porcellanato and bathware products. includes construction projects, civil works and contracting for the supply, installation, execution and maintenance of electrical and mechanical works. includes manufacturing and distribution of pharmacy, power, table ware, paints, plastic and gypsum and decorations, glue, chemicals, mines and faucets. other operations include food and beverages, trading, travel, logistics, real estate and warehousing. * In the previous period, the Group discontinued its business of hotel operations. The hotel building and related assets have been leased to a third party for a fixed monthly rental. Accordingly, the carrying value of the building under property, plant and equipment was reclassified to investment property due to change in its use. 21

28 Notes to the condensed consolidated interim financial information (continued) for the three month period ended 31 March 2013 (Unaudited) 23 Segment reporting (continued) Information regarding the operations of each separate segment is included below. Performance is measured based on segment profit as management believes that profit is the most relevant factor in evaluating the results of certain segments relative to other entities that operate within these industries. There are regular transactions between the segments and any such transaction is priced on mutually agreed terms. Three month period ended 31 March 2013 Ceramic Other products Contracting industrial Others Elimination Total External revenue 667,781 71,705 29,009 37, ,894 Inter segment revenue 66,402 21,260 35,726 24,812 (148,200) Total revenue 734,183 92,965 64,735 62,211 (148,200) 805,894 ====== ===== ===== ===== ====== ====== Segment profit / (loss) for the period 56,576 (2,901) 4,744 9,444 (13,587) 54,276 ===== ===== ==== ===== ===== ===== As at 31 March 2013 Total assets 6,412,233 1,009, , ,782 (2,420,936) 5,814,696 ======= ======= ====== ====== ======= ======= Total liabilities 3,636, , , ,348 (1,241,682) 3,354,275 ======= ====== ====== ====== ======= ======= Three month period ended 31 March 2012 External revenue 645,015 71,211 10,061 21, ,818 Inter segment revenue 127,636 8,494 4,087 47,734 (187,951) Total revenue 772,651 79,705 14,148 69,265 (187,951) 747,818 ====== ===== ===== ===== ====== ====== Segment profit / (loss) for the period 63,013 (4,183) 2,489 3,907 (15,361) 49,865 ===== ===== ==== ===== ===== ===== As at 31 December 2012 Total assets 6,232, , , ,522 (2,302,656) 5,311,997 ======= ===== ====== ====== ======= ======= Total liabilities 3,589, , , ,594 (1,234,901) 3,054,032 ======= ====== ====== ====== ======== ======= 22