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A N N U A L R E P O R T 4 7ANd CONsOLidATEd fiNANCiAL sTATEmENTs

In The Name of Allah The Most Gracious The Most Merciful

Established in accordance with Amiri Decree on 5 Nov. 1968

Paid up capital KD 73,330,387

C.R.1532 - P.O. Box 20581,Safat,13066 KUWAIT

Tel.: (+965) 22401700 - Cable : SMEETCO - Telefax: (+965) 22432956 - 22440896

Website: www.kuwaitcement.com - Email: alcement@kuwaitcement.com

Head Office: Kuwait City - Cement House

At the intersection of Al-Shuhada Street

With Khaled Ibn Al-Waleed Street, Al-Sawaber Area

State of Kuwait

HIS HIgHNESSshEikh sAbAh AL-AhmAd AL-JAbER AL-sAbAh

AMIR Of THE STATE Of KUWAIT

HIS HIgHNESSshEikh NAwAf AL-AhmAd AL-JAbER AL-sAbAh

CROWN PRINCE Of THE STATE Of KUWAIT

HIS HIgHNESSshEikh JAbER mUbARAk AL-hAmAd AL-sAbAh

PRIME MINISTER Of THE STATE Of KUWAIT

1517192127454749

TAbLE Of CONTENTs

Board of Directors

The Agenda 50th Ordinary general Assembly Meeting

The AgendaExtraordinary general Assemply

Report of the Board of Directors

Corporate governance Report

Board of Directors Declaration and Acknowledgment Concerning financial Statements

graphs

Consolidated financial statements and independent auditor’s report

Independent auditor’s report

Consolidated statement of financial position

Consolidated statement of income

Consolidated statement of comprehensive income

Consolidated statement of changes in equity

Consolidated statement of cash flows

Notes to the consolidated financial statements

50555657585960Raw material grinding mills

13

AUDITOR faisal Saqer Al SaqerBDO AL-NISf & PARTNERS

AUDITOR Ali Mohammed Kohari

Al-Salhia Office - Certified

Rashed Abdulaziz Al-Rashed CHAIRMAN

dr. Abdulaziz Rashed Al-Rashed VICE CHAIRMAN

basel saad Al-Rashed BOARD MEMBER

Jamal Yousef Al-babtain BOARD MEMBER

khaled Abdullah Al-Rabiah BOARD MEMBER

Rasha Abdulrahman Al-melhem BOARD MEMBER

Rasha fahad Al-Amir BOARD MEMBER

Abdullah mohamad Al-saad BOARD MEMBER

Yacoub Yousef Al-saqer BOARD MEMBER

Yousef bader Al-kharafi BOARD MEMBER

bOARd Of diRECTORs

Side View for Stacker And Reclaimer for Raw Materials15

ThE AgENdA The 50th Ordinary General assembly meeTinG

1- To hear the report of the Board of Directors for the fiscal year ended on 31/12/2017, and endorse the same.

2- To hear the report on governance and the report of the Auditors, for the fiscal year ended on 31/12/2017, and endorse both reports.

3- To hear the report of the Auditors’ for the fiscal year ended on 31/12/2017, and endorse the same.

4- To discuss the Consolidated financial Statements for the fiscal year ended on 31/12/2017, and endorse the same.

5- To hear the report of penalties charged to the Company by the regulatory bodies during the fiscal year ended on 31/12/2017 (if any).

6- To discuss the recommendations of the Board of Directors regarding distribution of cash dividends for the fiscal year ended on 31/12/2017, at the rate of 20% of the nominal value i.e. (Twenty fils) per share, after deducting the treasury shares for the shareholders recorded in the Company’s register on the appointed due date 9/5/2018, and will be distributed to the shareholders on 14/5/2018.

7- To approve the sum of 208,000/- Kuwaiti Dinars as remuneration for the Board members, and the sum of 150,000/- Kuwaiti Dinars for their membership in the committees of the Board of Directors for the fiscal year ended on 31/12/2017.

8- To hear the Company’s dealings with related parties, which took place and which will take place.

9- To approve the Board of Directors to issue bonds denominated in Kuwaiti Dinar or any other currency it deems appropriate, provided not to exceed the maximum limit allowable by law, or its equivalent in foreign currencies. Also, to authorize the Board of Directors to determine the types of these bonds, its duration and nominal value, as well as the yield thereon, maturity date and all the terms and conditions thereto, this after obtaining the approval of the competent regulatory bodies.

10- To approve the Board of Directors to buy or sell the Company’s shares, provided that the value thereof does not exceed 10% of its total shares, this is in accordance with the article of law No. (7) of year 2010 and its Executive Bylaw as well as the amendments to both.

11- To deduct 10% for the voluntary reserve, equivalent to 1,817,198/- Kuwaiti Dinars, from the net profits of the fiscal year ended on 31/12/2017, in accordance with the text of article 222 of the companies law No. (1) of year 2016.

12- To discuss the proposition of the Board of Directors on deducting 10% for the voluntary reserve, equivalent to 1,817,198/- Kuwaiti Dinars, from the net profits of the fiscal year ended on 31/12/2017, in accordance with the text of article 225 of the companies law No. (1) of year 2016, allocated to strengthen the financial position of the company.

13- To discuss the release of Board members and acquit them with respect to their legal, financial and administrative actions for the fiscal year ended on 31/12/2017.

14- To appoint or re-appoint the Company’s Auditors from the accepted list by the Capital Market Authority, while observing the mandatory period to alter the Auditors, which will be for the fiscal year that will end on 31/12/2018, and authorize the Board of Directors to determine their fees.

Ship unloader for transporting raw material through covered belt conveyor from port to the plant 17

ThE AgENdAeXTraOrdinary General assemPly

pre-heater buildings of first and second clinker production lines

To approve the amendment of the item No. (3) and item No. (6) of the article No. (2) from the

first chapter of the Company’s Article of Association related to the Company’s purposes by

adding a new paragraph for the both of their text, as well as amend the item No.(5) for the

same article as follow:

The text after amendmentitem No. (3) Article No. (2)

Trading by all products, materials, equipment and machines related to the company’s

business nature and transfer it whether in or out of the country, and authorizing the

importing and selling of the Aggregate whether in or out of State of Kuwait.

The text before amendmentitem No. (3) Article No. (2)

Trading by all products, materials, equipment and machines related to the

Company’s business nature and transfer it whether in or out of the country.

The text after amendment item No. (6) Article No. (2)

Produce Clinker and all different types of it, and as well as sell and export it whether in

or out of State of Kuwait.

The text before amendment item No. (6) Article No. (2)

Produce Clinker and all different types of it.

The text after amendment item No. (5) Article No. (2)

- Utilization of the Company’s financial surpluses by investing and developing it locally and globally in financial exchange portfolios and property portfolios in various types and purposes.

- Investing company’s money in the following:

• Contributing in establishing companiesfor various types and purpose; and

• Ininvestmentfundsinsideandoutsideofthe State of Kuwait.

The text before amendment item No. (5) Article No. (2)

Utilization of the Company’s financial surpluses by investing and developing it locally and globally in financial portfolios

and property portfolios, as well as investing company’s money over contributing in

establishing companies in various types and purposes and in investment funds whether

in or out of Kuwait which is managed through authorized and

competent companies.

And that after the approval of the competent authorities.

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bOARd Of diRECTORs REPORT FOr The Fiscal year ended

On 31sT december 2017

honorable shareholders,

Peace and god’s mercy and blessing be upon you,,,The Board members and myself are pleased to welcome you, and submit to your general Assembly the 47th Annual Report, which provides explanations on the main activities and achievements of the Company and its subsidiaries during the fiscal year ended on 31st December 2017, together with the report of the Independent Auditors, as well as the Statements of the financial Position, Income, Comprehensive Income, Changes in Ownership Equity and Consolidated Cash flows.

dear shareholders,It gives me great pleasure to inform you that it has been more than 45 years since the production in your Company from its Shuaiba plant to the local market which began its operations in year 1972, taking part in development of the construction and industrial sectors in the country to support the national economy.And certainly with the high quality standards of its production, without exposure to longtime storage, and meeting the requirements of real estate for citizens as well as industrial housing projects and the projects related to cement at all times. In addition to our professional and service oriented marketing and sales efforts to ensure special relationship with all its consumers meeting their requirement and satisfaction, thereby increasing its strength and stability in the market despite of the challenges that are faced, it can keep its main role in the industrial development process in the country, and it can deal with this challenge from the confidence of capability to get through it, and its insistence on continuing on development and advancement, and with high level of techniques to producing cement throughout the years.With the grace of god and great trust, we all are aiming to serve the national economy to improve, and achieve the best result for shareholders. following is the explanation for the company’s achievements and activities for the year 2017:

sales and marketing:Your company continued its advancement by hard work to meet the local market needs for Ordinary Portland Cement, Sulphate Resistant Cement Type-V and ggBS material, which have high special characteristics substantially required in many developing projects. With all capabilities and facilities the Company can produce 16 thousand Tons of Cement per day (5 Million Tons per year) despite the intense competition it faces in the Kuwaiti market from the Iranian Cement and others that import to Kuwait market. As a national local industry, and also the recession in the construction sector as a result of delaying the commencement of some major governmental developing projects, or contractors starting implementation, and the delay in accomplishing some of the infrastructure projects for several new residential cities, and others projects. Moreover, the company was unable to obtain the necessary licenses from the Ministry of Commerce & Industry to export the Kuwaiti Cement to Iraq market, besides the increase in the economic recession as a result of the political events, which is not allowing to operate Kiln and Raw Mill at full capacity although we will continue to do our best to maintain the production with a high degree of quality that can earn the trust of various projects in the Country.

Storage area for raw material

general view for the packing area in Shuaiba Cement Plant

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In this year, the Company recorded a good result in the volume and quantity of sales. Bulk

cement storage and sales terminal at west Shuaiba area - Mina Abduallah, and the subsidiary

Kuwait Cement Ready–mix Company also took part in making a good effort to market the

Cement (Ordinary, Resistant Type-V and White) that are produced in our plant.

We hope that the circumstances will change and the reason for recession will be gone so

that we could resume the revival of the economic cycle and the major residential projects

and any other development for the country in general and the market in particular. Thus the

company could increase its sales quantity and value during 2018 and the subsequent years,

for the interest of the Company and its shareholders, god Willing. We hope more support

from the personnel who are in charge for the industrial affairs by providing the needed

protection.

The project of exploiting used tires as a source of traditional fuel in the kilns for clinker production:

The company has taken care of its hard and continuing pursuit to benefit from exploiting the

used tires as source of fuel in the kilns for clinker production at Shuaiba plant, and after the

successful trial of exploiting the used tires in the first Kiln Line-I has been completed without

any negative impact on the environment or operational issues of the type of produced

clinker from kiln. The Environment Public Authority agreed on studying the environmental

impact presented from one of the qualified environmental consultancy offices for exploiting

shredded tires as a raw material in clinker production Kiln on a continuous basis, and now

it is in an advanced stage of following-up with the Public Authority for Industry to have their

final consent for burning shredded tires in Company plant, as well as starting to discuss

importing and fixing alternative handling equipments with many of specialized European

companies for using shredded tires in the second Kiln Line-II on the other hand. We have

great confidence and optimism that we will be able to achieve this goal by the third quarter

of year 2018 god Willing.

bulk cement storage and sales terminal at west shuaiba area / Abdullah port.

The storage & sales terminal of bulk cement (ordinary and sulphate resistant type-V), which

is owned by Kuwait Cement Company and located in Abdullah port area, with operational

capacity of 6000 tons per day during this year has achieved the maximum sales since

commercial production started in March 2013. The terminal total sales reached throughout

the year of quantity (1.460) million with an increase of 2% as compared to the year 2016, and

this is due to the increase in capacity of the trucks fleet to transport bulk cement from Shuaiba

plant to the storage terminal, and to add trucks with cement silos with a transport capacity

reaching 60 ton per each silo. Also, increased the storage area with efficient scheduling of

work constantly day and night including fridays, vacations and holidays in order to enable

those with urgent orders to receive their needs of Cement easily and smoothly as the

terminal is located outside the main gate of Shuaiba area, which grants us hope to realize

more growth and good results during the year 2018, with god Willing.

subsidiary Companies:

kuwait Cement Ready-mix Company (k.s.C) (closed)Kuwait Cement Ready-mix Company has realized further achievements in year 2017 by

producing the ready mix through presenting technical services, in addition to the geographical

expansion including all areas of Kuwait, that has reflected on the increased sales of the

ready- mix concrete by 20% as compared to the year 2016.

To ensure further success, the Company continues to use the latest technology for designed

mixes according to the international specifications. The Company can characterize by

producing the designed mixes with high strength and hardness, and that giving from god

and the efficiency of its mankind and technology elements, in addition to continue hard

working for more achievements through the year 2017 which the most prominent of it a plant

construction in Al-Zour area to serve Al-Zour refinery related to Kuwait Integrated Petroleum

Industries (Kuwait National Petroleum previously) as the Company seeking in the next step

to Plant construction in Al-Mitlae area to serve Al-Mitlae residential city project related to

Public Authority for Housing Welfare, and in accordance with this major expansions the

Company increased its fleet for year 2017 from trucks and cars (mixer trucks, pumper trucks,

silos and any other different trucks), to meet and implement all the contractual obligations

that expanded all over the country and all sectors (oil, government, private and civil).

Kuwait Cement Ready Mix factory in Ratqa-Abdally and its fleet with 20 truck mixers and 4 pump trucks

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shuwaikh Cement Company (k.s.C) (closed).Shuwaikh Crusher situated at fujairah Emirates, continued its activities and business development for the year 2017, and purchased a big new Crusher from Messrs. SBM an Austrian company with a production capacity between (16) thousand tons to (20) thousand tons daily, will be fixed in quarries zone. Also, the production will commence by the end of february 2018 as expected, and the total production capacity for both the crushers will be more than (40) thousand tons daily with high quality and grade, that will reflect on crusher sales.It is worth mentioning that the crusher Production for year 2017 amounted to (5.7) million tons and Sales (5.2) million ton from the limestone material of all sizes, gravel, washed sand of all types, road paving material (road-base), and certainly for Shuwaikh Crusher obtaining a new land which contained a solid mountain chain which will be exploded, and that will provide a material stock enough to produce for the next (15) years.The company has ambitious plans and projects for increasing sales and production throughout the year 2018 god Willing especially with the starting of the commercial production for the new crusher and the availability to export it to external markets and that can add to the Company’s interests and accomplish the Company’s goals.

Amwaj international Real Estate Company (k.s.C) Closed:Amwaj International Real Estate Company (K.S.C) Closed, has accomplished a good profit the year 2017 from its activity of managing the Cement House properties and marketing the leasing units using the best marketing methods, as well as its investment activities in local Companies listed on the Kuwait Stock Exchange and other international Companies having high reputation and strong performance, in addition to investing in several portfolios and funds managed by professional Companies and bodies in various geographical sectors (Kuwait, gulf Cooperation Council countries, United States), which reflects the Company’s intent of diversifying its investment portfolio to reduce risks also guarantee to have good returns and fixed cash flows in the next years god Willing.

governance reportKuwait Cement Company to keep full commitment to implementing all governance applications and the relevant policies and regulations containing all details related to the roles and responsibilities of the Board of Directors and its meetings, as well as the three committees emerging the Audit committee, Risk management committee and Nomination & remuneration committee, and in the scope of leading company’s business and high level of control, foster performance, improving and supporting responsibility and transparency, reduce risks and regulation level progression and the managerial work and integrity, which ensures interest of the company keeping and protecting shareholders rights, and that will be mentioned in more details later in the company governance report pages for year 2017.

financial reportThe net profit amounted to KD 17,195,498 and earnings per share 24.11 fils for the year ended on 31st December 2017, as compared with net profit of KD 19,496,545 and earnings per share 27.06 fils for the fiscal year ended on 31st December 2017. Total value of assets amounted to KD 305,743,642 as of 31st December 2017 as compared with KD 300,388,578 as of 31st December 2016 i.e. an increase of 2% as of 31st December 2017, the total reserves amounted to KD 107,989,309 as compared with KD 104,354,913 as of 31st December 2016.

Profit distribution Total ownership equity amounted to KD 197,420,061, and the profits carried forward amounted KD 28,437,008 as of 31st December 2017. The Board of Directors suggests distributing the profits as follows:

Description K.D.Cash to Shareholders 20% (20 fils per share) 14,262,063Profits carried forward for next year 14,174,945Total 28,437,008

Before the end of our report, it strikes us in the hearts and affects our hearts to leave a dear brother for All of us our late colleague, Suleiman Khaled Al-ghunaim, who moved to god’s mercy last September. On this painful occasion, we recall his efforts and dedication to the company through his position as Vice Chairman since its establishment in 1968 until it became a prominent center among the public shareholding companies in the State of Kuwait, but this is the will of god, we ask god to have mercy on him, and to dwell in the spaciousness paradise.

honorable shareholders:finally, the Board of Director has the honor to explore with you the Company’s main achievements in year 2017. The Board of Directors are honored to raise highest thanks and admiration to His Highness the Amir Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah – leader of humanitarian deeds, may god protect him, for all his gracious support and patronage to the industrial development as well as his dignified directives to expedite the execution of the country’s strategic development projects, which with god’s Willing shall fulfill the desire of His Highness to transform Kuwait into a financial and business center. The Board of Directors plead to god almighty to grant His Highness health and wellness, to preserve Kuwait during his auspicious reign, and to keep it safe, secured, stable and prosperous. The Board of Directors also extends its highest thanks and admiration to His Highness the Crown Prince Sheikh Nawaf Al-Ahmad Al-Jaber Al-Sabah for his immense and assiduous efforts for the good and benefit of our beloved Kuwait. Moreover, the Board of Directors extends its highest thanks and admiration to His Highness the Prime Minister Sheikh Jaber Mubarak Al-Hamad Al-Sabah for his gracious patronage and continued encouragement for the industrial sector. The Board of Directors extends utmost thanks to their Excellences the Ministers and all other government institutions, affiliate companies, local banks and the Industrial Bank of Kuwait for their support and collaboration. The Board also expresses its thanks to all technical and administrative staff for their sincere dedication and commitment towards preserving the Company’s progress and prosperity. The Board also expresses its thanks to the honorable shareholders and appreciate their valued trust and support to us.

Pleading to god Almighty to grant us further luck and success,Peace and god’s mercy and blessing be upon you,,,

Rashed Abdulaziz Al-RashedChairman

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Composition of the board of directors:

The Board of Directors of Kuwait Cement Company K.P.S.C. approved the composition of the

Board in the meeting dated 2/5/2016 after the end of Extra Ordinary and Ordinary general

Assembly meeting No. forty Eight.

As of 31/10/2017 Dr. Abdulaziz Rashed Al-Rashed has been recalled, as he is the first reserve

member to attend the Ordinary general Assembly meeting dated 2/5/2016, as he has been

elected in the Board of Directors meeting as of 8/11/2017 Vice Chairman unanimously.

Therefore, the Board of Director composition is the following as:

NameCategory (Executive/

Non-Executive/Independent),Secretary

Date of Election/ Secretary

appointment

Rashed Abdulaziz Al-Rashed Non-Executive 2/5/2016

Dr. Abdulaziz Rashed Al-Rashed Non-Executive 8/11/2017

Basel Saad Al-Rashed Non-Executive 2/5/2016

Jamal Yousef Al-Babtain Non-Executive 2/5/2016

Khaled Abdullah Al-Rabiah Non-Executive 2/5/2016

Rasha Abdulrahman Al-Melhem Non-Executive 2/5/2016

Rasha fahad Al-Ameer Non-Executive 2/5/2016

Abdullah Mohammed Al-Saad Non-Executive 2/5/2016

Yacoub Yousef Al-Saqer Non-Executive 2/5/2016

Yousef Bader Al-Kharafi Non-Executive – Independent 2/5/2016

AbdulMutaleb Ismael Behbehani Secretary of the Board 28/12/2015

CORPORATE gOvERNANCE REPORT

fOR YEAR 2017

Side view of the plant’s showing preheater’s of two production lines and cement storage silos 27

kuwait Cement Company (k.P.s.C) board of directors meetings during the year 2017

Member’s Name

Meeting No.

1/2017 Dated

15/2/2017

Meeting No.

2/2017 Dated

15/3/2017

Meeting No.

3/2017 Dated

1/5/2017

Meeting No.

4/2017 Dated

15/5/2017

Meeting No.

5/2017 Dated

9/8/2017

Meeting No.

6/2017 Dated

8/11/2017

Number Of

Meetings

Rashed Abdulaziz Al-Rashed √ √ √ √ √ 5Dr. Abdulaziz Rashed Al-Rashed √ 1Basel Saad Al-Rashed √ √ √ √ 4Jamal Yousef Al-Babtain √ √ √ √ √ √ 6Khaled Abdullah Al-Rabiah √ √ √ √ √ 5Rasha Abdulrahman Al-Melhem √ √ √ √ √ √ 6Rasha fahad Al-Ameer √ √ √ √ √ 5Abdullah Mohammed Al-Saad √ √ √ √ √ √ 6Yacoub Yousef Al-Saqer √ √ √ √ √ 5Yousef Bader Al-Kharafi √ √ √ √ √ √ 6

The Board of Directors has held six (6) meetings during the year 2017, the following schedule represents the details, and Number of the meetings and Presence of each member:

• ThisMark(√) refers to Members of Board of Directors presence.• TheBoardofDirectorsmeetingspresencefromNo.(1/2017)toNo.(5/2017)beforethe

passing away of, the late Sulaiman Khaled Al-ghunaim.

Recording, co-ordinating and keeping minutes of the board of directors meetings:

The Board of Directors secretary prepared the registration requirements and kept the minutes of the Board of Directors of Kuwait Cement Company, and record it in a special register containing information on the agenda of each meeting, its date, venue, starting and ending timing, each meeting has a serial number according to the year. further, special files are prepared in which the minutes of the meetings are kept, and the deliberations and discussions held in the meetings. Members of the Board are furnished with the agenda, supported with the relevant documents, sufficient time in advance in order to permit the members to study the agenda items. The minutes of the meeting are signed by all those present and the Secretary. Minutes of the meetings held by passing are signed by all members. The secretary acts for the proper coordination and distribution of information among the members.

board of directors’ and secretary qualifications, experiences and positions:

Board of Directors should be of Kuwaiti nationality, also, they should have the qualifications and the experiences for their positions, and they are:

mr. Rashed Abdulaziz Al-Rashed - Chairman.- graduating with Bachelors of Business Administration from Clermont University in

United States of America in year 1958, and Master of Business Administration and Economy from the same university in 1959.

- He is also member in Kuwait Cement Company since its establishment in 1968 and

the first Chairman of the company since convening of the Article of Association on

20/1/1969 till 1978. Also the Chairman and the Deputy Member since 1996 till 27/12/2015,

and the Chairman since 28/12/2015 till today, as he is also Chairman of the Nominations

& Remuneration Committee.

His work experience includes many Ministries and Positions he held:

• AssistantDirectorofTechnicalAffairsMinistryofPublicWorks.

• SecretaryofStateforPoliticalAffairs.

• DirectorofPoliticalAffairsMinistryofForeignAffairs.

• KuwaitiAmbassadorfortheUnitedNations(firstambassador).

• VicePresidentoftheGeneralAssemblyoftheUnitedNations.

• DeputyForeignMinister1967to1985.

• MinisterofStateforCabinetAffairs1985to1990.

• ParticipatinginmanyInternationalandNationalmeetings.

• Holdinganumberofinternational&nationalcharters.

• In1990workedinprivatebusiness.

dr. Abdulaziz Rashed Al-Rashed - vice Chairman.- Holds M.S (Masters degree) in Electrical engineering from Wisconsin University in

United States of America.

- Dr. Abdulaziz Rashed Al-Rashed was elected to be Vice Chairman at the Board of Directors

meeting dated at 8/11/2017, also he is Member of Audit Committee.

- Chairman of Kuwait Drilling Company.

- Board of Directors’ Member at Contracting and Marine Services Company.

- Board of Directors’ Member at National Industries Company.

mr. basel saad Al-Rashed – board member.- Bachelor of Business Administration from United States of America in 1988.

- Has held many Management and Executive positions, also, has experience including

working in many companies.

And from the positions he currently occupies:

- Board of Directors’ Member in Kuwait Cement Company representative from Al-Rashed

Trading, Industry and Contracting Co. Ltd. since 1995 till now, also holds the Membership

of the Risk Management Committee.

- general Manager of Al-Rashed International Shipping Company since 2007 till now.

His previous positions are as follow:

- Chairman at Hempel Paints Company from 2007 to 2010.

- Board of Directors’ Member for Cable for TV Company from 1998 to 2003.

- Director of Communications Department for Abdulaziz Abdulmohsin Al-Rashed sons.

Co from 1992 to 2003.

- Member of National Assembly of Kuwait from 2003 to 2006.

2928

mr. Jamal Yousef Al-babtain – board member.- Bachelor of Management, Political Science from Portland State Oregan in United States

of America.- Board of Directors’ Member at Kuwait Cement Company representative of Public

Investment Authority since 2013 till now. Also, he is a member at the Committee of Risk Management.

- He holds Board of Directors’ membership of Rohing and Jukcca group, first Capita and Watros AUE group.

- He has also worked in Oxsan Bank (Bahrain) from 1987 to 1992, and in the Kuwaiti Investment Office (London) from 1993 to 2013, also in the Public Authority of Investment

since 2014 until now.

mr. khaled Abdullah Al-Rabiah – board member.- He holds Certificate of Kuwait university in 1977.- Member of the Board of the Directors of Kuwait Cement Company representative

of National Industries Holding Company since 1998 till now, also Member of Risk Management Committee.

- general Director of the gulf International Company for general Trading & Contracting and in Mohammed Abdullah Al-Rabiah and his partners company.

ms. Rasha Abdulrahman Al-melhem – board member.- Bachelor in Business Administration - finance from Kuwait University in 1997.- She joined the membership of the Board of Directors as representative of public

investment authority since 2015 till now, also Member of the audit committee.- Currently, the position of Investment Audit Manager at the general Authority for

Investment, which includes the internal audit work to design the control of the administrative and financial policies and procedures and the management of local and international portfolios of public investment authority.

- Member of the Board of Directors of a number of companies affiliated to public investment authority locally and externally.

Previous experience includes:• AttendingcoursesfortheperiodfromApril1998toNovember1999invariousfields

including (financial equations and accounting, corporate finance, macro-economics, credit analysis, securities analysis, financial market projections, project finance, time management, problem solving and decision making, communication skills and writing reports, financial designs using Excel, stocks and bonds, proposed markets, job training in the management of public investment Authority , financial designs in portfolio management).

• CoursesfromNovember2000toMay2015inmanyareasincluding(writingreports,operating strategies of the investment fund, preparation and writing of reports, audit, audit plan, English language, portfolio study and investment funds, Methods and basics of internal auditing, Certified Internal Auditor, finance, Risk Management and Corporate governance).

• AttendtwomonthsoflocaltrainingprogramsatCommercialBankofKuwait,NationalPetroleum Company, Kuwait fund for Arab Economic Development, Real Estate Investment Union, and a three months training program at union bank of Switzerland – London.

ms. Rasha fahad A-Amir – board member.- Bachelor of Computer Science and Accounting, Ms. Rasha fahad Al-Amir joined the

Board of Directors represented by public investment Authority in 2015 and is also a

member of the Nomination and Remuneration Committee

- Currently works as a manager of portfolio management unit in Asset Management -

general Reserve Sector at public investment Authority.

- Member of the Board of Directors of Kuwait-Egypt Investment Company.

And previous practical experience:

• Thefirstinvestmentmanagerinthemanagementofcontributions

- general reserve sector in public investment Authority.

• Headofthefollow-upteamlistedinthemarketsoftheArabregion.

• MemberoftheBoardofDirectorsoftheLivestockTransportandTradingCompany.

mr. Abdullah mohamed Al-saad – board member.- Bachelor degree in Business Administration from Cairo University with a good grade in

1969.

His experience included several positions including:

• WorkedattheMinistryofForeignAffairsasadiplomaticattachin1970.

• DirectorofKuwaitOfficeinDubaiuntil1972.

• ChargedinEmbassyofKuwaitinAbuDhabi1973.

• ChargedintheEmbassyofKuwaitinNairobi,Kenya,1974.

• ChargedintheKuwaitiEmbassyinMogadishu/Somalia1975.

• CompletedhisworkattheForeignMinistryandreturnedtoKuwaitin1976.

• Startedhisfreetrade1977.

• Joined theBoardofDirectorsofKuwaitFoodCompany (Americana) from1977until

2017.

• ChairmananddeputymemberofSefuryAmericanaInternational1984.

• JoinedtheBoardofDirectorsofKuwaitCementCompanyfrom1998untiltoday,andis

also a member of the Nomination and Remuneration Committee.

• MemberoftheBoardofDirectorsofAl-AhliaInsuranceCompanyfrom1999untiltoday.

mr. Yacoub Yousef Al-saqer – board member.Member of Kuwait Cement Company Board of Directors, represented in National industries

group Holding since 2007 till date and also head of audit committee.

- Member Board of Directors in projects tourism through years from 1976 Till 1982 and

from 1998 Till 2004 , Board member in Warba insurance company from 31/3/1987 till

13/3/1993 , and work in Directorate general of Civil Aviation from September 1969

till 1/12/2007 gradation through this period to different positions from researcher ,

Monitor , financial and administration Director affairs , vice general manager at the rank

of assistant under-secretary , general manger of Civil Aviation at the rank of deputy

Minister And then head of Civil Aviation at the rank excellence.

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mr. Yousef bader Al-kharafi – board member.- He is a holder of the bachelor of Military college from Egypt as of 1957 and certified in

theoretical and training study in different sections Ministry of interior in EgYPT in the same year.

- Member of Kuwait cement Company Board of Director since year 2007 till date, and head of risk management committee.

- He held for many leadership positions through the service period in Ministry of interior since year 1957 till 1998 from first lieutenant, Captain, Reconnoiterer, Lieutenant Colonel, Colonel, Brigadier, Major general, Lieutenant general and then advance to general at 1998. Also he assume to much of management responsibilities in Ministry of interior from period 22/5/1974 till the date of retirement at 14/11/1998. Head of employees affairs committee, Head of general committee of police affairs, Chairman of Police faculty, Vice head of emergence committee, Supreme council of traffic, Chairman officer club, Assistant ministry under – secretary and then under-Secretary Ministry of interior since year 1981 till the date of retirement at 1998.

mr. Abdulmutaleb ismael behbehani - CEO - secretary of board of directors.- The first employee selected by the Chairman on the second day of the article of

association meeting and the formation of the first Board of Directors on 21/1/1969 to do the following:

- Working on the preparation of publications related to the activities of administrative affairs - financial and shares affairs.

- Hiring competent staff and conducting the necessary tests for them to managing as a financial and administrative Director and reasonable for stock affairs officer.

- He was also appointed Secretary of the Board of Directors two years after the establishment of the company.

- Continuous follow-up at the establishment of the plant and preparation of all documents required for operation and stores of materials and spare parts, and the exchange of cement.

- He has been fully employed by Kuwait Cement Company since 1974 and has been appointed to the position of Chief Executive Officer and Assistant Secretary general for financial and Administrative Affairs.

- His experience includes working in several companies, where he heads the Board of Directors of Shuwaikh Cement Company (Shuwaikh Crusher), owned by Kuwait Cement Company in fujairah since 1983 until today.

- Member of the Board of Directors of gulf Energy Holding Company representing Kuwait Cement Company since 2007 until today.

- formerly a member of the Board of Directors of Oman Cement / Muscat and a member of the Board of Directors of the Land Transport Company / Kuwait for two sessions representing Kuwait Cement Company from his previous experience: employee at the ministry of works of which (6) years in construction materials and cement stores, then an employee of the Purchasing Department for (4) years, and then head of purchasing department for a period of (10) years.

- Among his duties was a representative of the Ministry of Works in the meeting of the Central Tenders Committee when the tender tenders prepared by the Purchasing Department were canceled.

- Holds a number of certificates and training courses in statistics / accounting / business administration / warehouse management / procurement management.

The tasks policy and responsibility for the board of directors, duties of each member of the board of directors and the executive management as well as the authorities has been mandated to the executive management:

The List of tasks and authorities for Board of Directors described that’s was approved by Board of Directors as of 15 /11/ 2016 to afford the Board of Directors all responsibilities for the Company in addition to put the strategic goals for the Company , Risk strategies and the governance standers and supervisions responsibility on executive management and keeping for the shareholder rights , creditors , employees and all of stakeholders, making sure the company’s management are effectively and within framework regulators, article of association, Regulations and company’s internal policies . the following is a brief for the general duties for Board of Directors:

- The final responsibility for the company’s operations and financial position safety, completion the requirements of Capital Market Authority, keeping for the shareholder rights, Minority, Creditors, Investors, Clients, Employees, stakeholders related and ensure the company’s management in a wise manner according to the law, Regulation, policies and internal procedures in force.

- Ensure the related parities transactions are reviewed and making sure the honestly and clearly of these transactions.

- Approval of the objectives, strategies, plans, important policies for the company that’s included at least:

• ApprovetheInterimandAnnualfinancialinformation.• Supervision of the substantial of expenditure expenses for the Company, the assets

ownership and the disposals.• Ensurethecompanycommitmentinpoliciesandprocedureswhichincludedcompany

respect for the organize and internal regulation in force.• Guaranteetheaccuracyandclearlythefinancialinformationthat’smustbedisclosedas

per policies and mechanism of disclosure &integrity in force.• Composition of Specialized committees according to the charter clarify the time of

committee, Authorization and responsibility and the Board of Directors Monitoring.• EnsurethatCompany’sorganizationstructurecharacterizedtointegrityandclaritytomake

a decision and achievement the governance principles and segregation of responsibility and powers between the Board of Directors and the executive management.

• Determinethepowersthat’sauthorizedtoexecutivemanagementandtheproceduresof decision making and also duration of authorization. The Board determine also the topics that’s safety authorization for decision making.

• Monitoringandsupervising theperformanceofexecutivemanagementsandensurefrom the responsibilities due to them.

Also the Board of Directors approved the policies and procedures for executive management duties and the following is summery of the general duties for executive management:

- Company’s business administration and submit the guidance to executive department to be match with company strategic goals and the policies that determined by Board of Directors and laws and other legislation award related to the company’s business and activities.

- Providing the Board of Directors by accurate annual reports for the financing positions, it’s business and procedures taken in risk management and internal control system, to enable Board of Director review the goals, plans and policies implemented and asking for the performance of executive management.

- Providing the Board of Directors by suggestion mechanism of special Recommendations that’s necessary to company business.

- Providing the Monitoring Authorities for any information and required documents according to laws award, systems, instructions and the decisions issued for any of them.

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The board of directors achievements during the year 2017Kuwait Cement Board of Directors keenness to follow up the plans implementation and strategic goals that’s setting up continued communication the executive management to achieve it’s goals and compliance with legal instruction from Capital Market Authority and full compliance with the requirements of corporate governance rules and adherence to the strategy work approach inside the company, The most significant achievements of the Board of Directors during the year 2017:

• Approved the renewal of company organization structure as per the Capital MarketAuthority requirements.

• Followupcompanyworkwiththeexecutivemanagementanddiscussallofthetopicsthat’s related to company financial, administrative and technical work, and its effect on business and production after reviewing the executive management studies.

• ApprovedofrequirednecessarystepsofusingthealternativeofoiltypesforburringinClinker kilns production and the main material in cement industry.

• Review the result of audit committee and recommendation submitted in the interimfinancial statements for the year 2017 and Minutes of meeting of three committees that’s emerging from the Board, audit committee, Risk management committee and Nomination and remuneration committee.

• Approved the project of produce white cement (Packed and Bulk), to cover thedevelopment projects that’s related to state for this kind of cement.

• ApprovedtosellitsshareholdinginKuwaitFoodCompany.

board of directors committees:According with the Board of Directors decision No. 1214/4/2016 as of 15/5/2016 , three specialized committee were formulated from the Board of Directors for three years ending at the end of the current period of Board of Directors (2016 – 2018) as well as approved the tasks Board and responsibilities of each of this committees . This committees are:

1- Audit Committee:Audit committee held 4 Meetings during the year 2017 and the following schedule is represent to the committee formulated and meetings details :

Member’s Name Title Category First13/3/2017

Second15/5/2017

Third9/8/2017

Fourth8/11/2017

Yacoub Yousef Al-SaqerHead of the committee

Non- Executive √ √ √

Dr. Abdulazizi Rashed Al-Rashed

MemberNon- Executive

Yousef Badr Al-Kharafi MemberNon- Executive – Independent

√ √ √ √

Rasha Abdulrahman Al-Melhem

MemberNon- Executive √ √ √ √

This Mark (√) refers to Head of the audit committee and Members presence. Dr. Abdulaziz Rashed Al-Rashed joined audit committee’s membership as per Board of Directors decision in its meeting dated on 8/11/2017 (After audit committee meeting). Mr. Sulaiman Khaled Al-ghunaim has been attending the three audit committee meetings before he passed away.

The Tasks of committee :This committee performs it’s monitoring role which is lending assistance and support the Board of Directors in his responsibilities towards the representation of shareholders with respect to the correctness and integrity of the financial statements and supervision, auditing the company’s accounts and financial statements for the company and the internal controls and risk management, setting the policy of contracting with external Auditors and ensuring from the independent and integrity of the external auditor , effectiveness of the internal control system and its effectiveness as per the approved audit standards through the audit work carried out by the company’s internal audit unit . In addition to ensuring the company’s compliance with the rules of professional conduct, and the guarantee of implementing laws and policies, systems and relevant instructions and approval as per the approved policies from Board of Directors in this field.

The most significant Achievements of audit committee during the year 2017:

• Discussion and approved the reports from internal audit manager according to theapproved audit plan at 2017.

• Review annual and interim financial information, submit the opinion andrecommendations to Board of Directors.

• PeriodicallymeetingswiththeexternalauditoranddiscuswiththemanyPendingandnotes appeared during the audit period.

• Prepared and approved the audit committee report to be represented to companyshareholders through holding general assembly meeting for shareholders.

• RecommendofBoardofDirectorstoappointedorreappointedtheauditor.

2- Riskmanagement Committee:Risk Management committee held 4 Meetings during the year 2017 and the following schedule is representing to the committee formulated and meetings details:

Member’s Name Title Category First15/5/2017

Second24/5/2017

Third8/11/2017

Fourth25/12/2017

Yousef Bader Al-KharafiHead of the committee

Non- Executive – Independent

√ √ √ √

Basel Saad Al-Rashed Member Non- Executive √ √ √

gamal Yousef Al-Babtain Member Non- Executive √ √ √

Khaled Abdullah Al-Rabiah Member Non- Executive √ √ √ √

This Mark (√) refers to Head of the risk management committee and Members presence.

The Tasks of committeeThis committee assumes the responsibility of assisting the Board of Directors in it’s tasks of managing risk by advising and review the strategies and policies of risk management prior to being endorsed by the Board , as well as ensuring the implementation consistent with the nature and size of the company’s business in addition to evaluating the system and mechanisms of determining , measuring and monitoring the types of risks which the company could be exposed to, as well as identifying and rectifying the shortcomings therein in order to avoid any losses that may occur , and presenting them to the Board of Directors to reviewing and approval.

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It is worth mentioning that the company has sought assistance from one of the consultancy offices approved by the Capital Market Authority in order to help in identifying the types and nature of the risks which the company could be exposed to , preparation a record thereto and submitting semi-annual reports to preserve the company’s assets , and ensuring the continuity of conducting it’s activity positively.

The most significant Achievements of risk management committee during the year 2017 :

1. Review the risk reports that’s submitted from departments managers directly to it’s committee and discussing it with the executive management.

2. Review the risk standers reports that’s submitted from consultancy office to determine the mechanisms business that’s should be used when determine the type , volume , nature and risk result which may faces the company , the risk standards are send to the Board of Directors to approving and start to work.

3. Review the risk valuation report that’s submitted from consultancy office which was recommended to the Board of Directors approval according to governance requirements.

3- Nomination and remuneration committee:Nomination and remuneration committee held one Meeting during the year 2017 and the following schedule is representing to the committee formulated and meetings details:

Member’s Name Title Category 14/3/2017

Dr. Rashed Abdulaziz Al-Rashed Head of the committee Non-Executive √

Rash fahad Al-Amir Member Non- Executive √

Abdullah Moahmed Al-Saad Member Non- Executive √

Yousef Bader Al-Kharafi Member Non- Executive - independent √

This Mark (√) refer to presence of head of the Nomination and remuneration committee and Members

The Tasks of Committee:This committee assumes the responsibility of assisting the Board of Directors in it’s tasks of nominating and remunerating the Board’s members and executive management, reviewing the scope and plan of remuneration applicable at the company, preparing an separate annual report on all remunerations granted to the Board members and the executive management whether in cash, benefits or privileges, moreover, the committee assumes the responsibility of ensuring autonomy of the independent Board member.

The most significant Achievements of nomination and remuneration committee during the year 2017 :

1. Preparation annual report for all the remunerations and benefits that’s granted to Members the Board of Directors, executive management and employees and send the report to Board of Directors to approval.

2. Supervision in annual valuation for members of Board of Directors and executive management.

3. Review and ensure of Non-absence for Board of Directors member independence.

The mechanism of obtaining board of directors on the information and data accurately in the right time.

The company provide the mechanisms and tools which enables Board of Directors to obtain on the required information and data in the right time, and that is through developing the information technology environment inside the company, as well as create direct contact channels between secretary of Board of Directors and Board of Directors, also provide special reports in the meetings with high degree of quality and accuracy and that before enough time to discuss it and take decision about it.

board of directors and executive management remunerations report.

board of directors remunerations.

By virtue of Article No. (198) of the Companies Law and Article No. (29) of Kuwait Cement Company’s Articles of Association, the total remuneration of the Board’s members may not exceed 10% (Ten Percent) of the Company’s net profit after deducting depreciation, reserves and profit distribution of at least 5% (five Percent) of capital to the shareholders. The independent Board member may be excluded from the maximum limit of remuneration upon decision from the Ordinary general Assembly. The members of the Company’s Board have been earning remuneration for attending the Board’s sessions and for their membership in the committees emanating from the Board, which has been less than the specified limit as they used to earn nearly 5% (five Percent) for many years. Taking into account the Board’s efforts and scope of work, including the number of meetings to be attended, the remuneration granted to the Board’s members shall in all cases be subject to the Companies Law in the State of Kuwait.

The total remuneration of the Board members for the fiscal year ended on 31/12/2017 amounted to KD.358,000/-, of which KD.208,000/- is for their membership on the Board of Directors, and KD.150,000/- for their membership in the committees emanating from the Board of Directors.

Remuneration of the Executive management and financial manager:

The remuneration policy prevailing at the Company is consistent with the specified strategic objectives, which aims at attracting, maintaining and encouraging all its staff and chiefly those with educational and professional competence and also skills and knowledge, thus reflecting on the enhancement of risk management and constant profitability, in accordance with the performance standards and annual assessment being applied. The table below shows the remuneration details in Kuwaiti Dinar:

Staff Categories Number Of Staff

Salaries & Privileges

Annual Remuneration

Executive management & financial manager 8 370,745 246,000

The remuneration are subject to the approval of the Shareholders’ general Assembly

5 March 2018

Nominations & Remunerations Committee

Kuwait Cement Company K.P.S.C

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board of directors and executive management written pledges for the amendments financial reports safety and integrity.

In line with the requirements of corporate governance, the Executive Management has submitted a declaration and undertaking on its responsibility towards the Board of Directors with respect to presenting the annual financial statements and reports, as well as the correctness, accuracy and inclusiveness of the information and data contained therein and also its attachments, and that such financial statements and reports are presented in a correct and fair manner according to the international accounting standards. After discussing and endorsing the financial statements, the Board of Directors in turn presented a declaration and undertaking on the financial reports as well as its responsibility for the correctness and integrity of all annual financial statements and reports of the Company.

independency and impartiality of external auditors.On 26/4/2017 the company ordinary public assembly had approved for re-appointment of Messrs. BDO Al-Nisf & Partners and Messrs. Al-Salhiya Auditing Office (Prime global) as external auditors and both of them are certified and registered in Capital market authority register, also both of them have full independency from the company and its Board of Directors.

Risk management.Board of Directors adopted the updated organizational structure, as in resolution no. (2017/2) in which dependency of the risk management unit according with book fifteenth (governance rules) article no. (3/3-6), directly to company Board of Directors, also appointed manager of risk management unit as of 20/6/2016.

Preciseness and internal control systems.• The company depends on a group of preciseness systems and internal control that

covers all the company’s activities and its management, as well as systems and rules in keeping the company financial position safe and its data accurate and its operations efficient from various aspects, also the organizational structure in the company reflects on dual control systems (four eyes principles) and it contains the right specifications for responsibilities and authorities full separation for duties and avoids conflict of interest, double test and control.

• Auditingcommitteeinthecompanyreviewingoninternalauditmanagementactivitiesin the company and discuss its reports to ensure the safety, sufficiency and effectiveness of preciseness systems and internal control.

• EmanatingfromKuwaitCementCompany’skeennesstocomplywiththerequirementsof corporate governance - 15th Edition - Articles 6 - 9, an independent consultancy office approved by the Capital Markets Authority was commissioned to review the Company’s Internal Control Systems (ICR).

Professional Conduct and Ethical values guidance.The company applying the prepared system for the codes and ethics of professional conduct of the Board of Directors, executive management and staff which including the general

rules for professional ethics and covered a wide range of procedures and practices while consistent with regulatory requirement, relevant legislation and local customs to limit the incidences of conflict of interest. for this purpose, the Board is keen on implementing the highest standards and values that provide integrity to the Company as whole, the Executive Management and the staff, as they indicate the codes of conduct and ethical standards to be followed by the various stakeholders in the course of executing the Company’s business. The Board of Directors also assumes the task of monitoring and managing any potential conflict of interest which the Company may encounter, including the exploitation of the Company’s resources and the misuse of jurisdictions and powers.

Transparency and disclosure of information: The Company is committed to provide accurate, complete and updated information to the shareholders, in line with the legislative and regulatory requirements within the framework of transparency. The Company guarantees implementing integrated practices and procedures on disclosure of substantial information, and the possibility of providing the public with the announced information instantly and accurately.

shareholders affairs (investors’ affairs).The company committed to develop policies and procedure for fairly representing the company in which the current and potential investors be informed of substantive decisions that taken by the company, also shareholders affairs department in the company have the necessary independence, as it working to provide information, data and reports in the right time and by necessary accuracy through tools of disclosure commonly known.

information Technology infrastructure in the Company The company had updated its website as well as established a special section for corporate governance, and all information, data, financial reports and others on the company’s website also these information updated as soon as it is available to the company.

general rights of shareholders and limit conflict of interest cases.The policy of the relations and rights of stakeholders and shareholders was approved by the Board of Directors on 15/11/2016, which the guide states that all shareholders of the company have general and clear rights as following:

• Disposalofsharesfromregistration,transferortransferofownership.• Therighttoreviewandparticipateindecisionsregardingtheamendmentsofthearticles

of association and articles of association of the company, as well as decisions regarding unusual transactions that may affect the company’s future or activity, such as mergers and sale of a large part of its assets or liquidation of subsidiaries.

• Therighttoparticipateinmeetings,makeobservationsandrecommendations.• RightstoexpressopinionsontheappointmentandelectionofBoardofDirectors.• The right tomonitor theperformanceof the company ingeneral and theworkof the

Board of Directors in particular.• Therighttoreceivedividends,participationandvotingattheGeneralAssemblymeetings.

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• Shareholders’rightstobetreatedonanequalbasisandtogivethemtheopportunitytorectify any abuse of their rights.

• The right to request sufficient time before the General Assembly, and to obtain allinformation related to the meeting schedule, in particular Board of Directors reports, auditor and financial information.

• Shareholders who own 5% and above of the company’s capital have the right to additems to the agenda of the general assembly.

A special register was also provided to the Kuwaiti Clearing Company, listing the names, nationality, home and number of shares owned by the Kuwait Clearing Company, Any changes in the data recorded in this register shall be recorded in the register as received by the Company or the Kuwait Clearing Company, Any interested party may request the Company or the clearing company to provide him with data from this register.

In addition to the above policy, the Company’s Articles of Association clarify the above in line with the requirements of the capital market authority and the regulatory bodies.

There is a related party transaction policy that clarifies the guiding principles on how to execute and manage dealings with the affiliated parties, whether such dealings are between the Company and the Board members, or with its subsidiaries, affiliated parties, Executive management or staff. Such policy abides by the regulatory standards as well as the international accounting standards for financial reporting.

meeting of the general Assemblies of the Company.Kuwait cement Company is keen to organize meetings of the general assembly of shareholders as set forth in the corporate governance rules, laws and rules regulating the same. The agenda items shall include the minimum items required according to the rules. Details and information of the agenda shall be furnished to shareholders in advance of the date of holding the assembly by a sufficient time. Shareholders are permitted effective participation in the general assembly meetings, discussion of the topics listed therein and raise questions. further, the company is keen that all shareholders practice the right of voting without any hurdles.

stakeholder’s rights.The company has set clear policies and procedures in the management of open dialogue and communication with its stakeholders, transparency in communicating with them and the level and degree of information that can be disclosed. The rights of stakeholders include, but are not limited to:

• The right to be treated on a fair and equitable basis.• The right to compensation in the event of any violations of their rights.• The right to obtain relevant company information that is necessary for the stakeholders.• Inform stakeholders of the company’s violations reporting program and should

provide them with adequate protection in accordance with the requirements of the violations policy.

Training programs and courses.Kuwait Cement Company guarantees to all Members of the Board of Directors and Executive Management, the required Training Courses in order to increase the skills and knowledge to achieve a better level of Management and Competence at work. During 2017, workshops were provided by international companies specialized in Cement Industry for the development of the activities of the Company’s business related to the Members of the Board of Directors. Also, the Company’s performance in terms of technical and administrative subjects were analyzed and compared with international companies in accordance with international standards followed in the field of Cement Industry and leading Companies in the world in order to develop the technical and administrative performance for all departments of the Company, in accordance with the requirements of the governance rules. The Members of the Board of Directors have not received the attendance certificates of the mentioned workshops and this will be considered in 2018.

institutional values of the Company personnel.The Kuwait Cement Company Board of Directors on 15/11/2016 outlined in the professional and ethical code of conduct the fundamental principles which creates corporate values on the basis that the company’s reputation is based on the behavior of the Board members, executive management and staff. Everyone should play a role in safeguarding the Company reputation by complianceWith the highest ethical standards, the Board of Directors assumes the responsibility of laying down the criteria and specifications of the company’s ethical values. Each member of the senior management and staff shall assist to enforce this manual as part of his function and ethical responsibility and report any violation to the Board of Directors.

The company contribution for social Responsibility and environmental conservation.

Among the other similar companies, Kuwait Cement Company has been the pioneer in lending attention to social responsibility, where the Company is seriously striving to abide to by developing and deepening its role in the society, and by realizing social development as one of the key aspects of its mission and objectives. Among the key achievements of the Company, for example but not limited to, are the following:

Project on utilizing the used tires as source of conventional fuel in the kilns for Clinker production:

Kuwait Cement Company has succeeded in utilizing the used tires as a source for conventional fuel without causing environmental or operational changes, through a trial considered the first of its kind to be carried out by an industrial company in Kuwait, thus it was the pioneer in doing that. This accomplishment was realized through a training program held in the Company’s plant at Shuaiba area, with participation from the Public Authority for Environment and the Public Authority for Industry, and under the supervision of “fraunhofer” Institute for Environment, Safety and Energy Technology which is the largest organization of applied research in Europe, based in germany.

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Rashed Abdulaziz Al-RashedChairman

Considering that Kuwait is one of the largest sites of accumulation of used tires in the world, As reports indicate that there are more than 20 million used tires on lands of high-value In the Arhiya district, and this number is increasing daily at a rate of three thousand tires. Hence, Kuwait Cement Company is contributing effectively to dispose of the accumulation of these tires and its harmful impact on safety, public health and environment in the State of Kuwait.

Company’s attainment of the quality mark and isO 9001: 2008 certificateKuwait Cement Company is the only national company that manufactures the cement product as complete in the State of Kuwait, hence, it shoulders the responsibility of meeting the needs of all citizens, government projects and others. As such, the Company has been striving to continue providing a product of global efficiency and quality.

In order to enhance confidence and ensure standard specifications for quality control, the Company has attained the Quality Mark from the Public Authority for Industry for its cement products. Moreover, in year 2012, it attained the ISO 9001:2008 certificate for Quality Control, which is based on using the latest means of technology as well as the best and finest raw materials required for the manufacture of cement. Therefore, our cement products are distinct as being of high quality, strength and stability in terms of specifications, and also granted such products the merit of excellence and leadership throughout the past forty-eight years under the theme “Quality means … Kuwaiti Cement”, in addition to the accreditation of the Public Authority for Housing Welfare and the Ministry of Public Works for its cement products as national product.

Quality Mark Logo

ISO 9001:2008 Logo

National Cadres Training:According to Chairman of the Board of Directors instructions, Kuwait Cement Company

is always keen to provide Trainee national cadres by providing opportunities to holder of

university degrees who are certified in engineering disciplines (Electrical, Mechanical,

Chemistry, etc.) and also who are certified in Diplomas, Commercial and Applied Institute or

in the near future to graduate training in different technical fields including administration,

to get the practical and scientific experience, as well as the participation and contribution

in events of exhibitions, seminars, conferences of job opportunities that’s invites from

universities and institutes, it’s responsibilities sense of responsibility to meet the national

duty to recruit the qualified Kuwaiti youth in the jobs available to them. During the year

2017 a number of qualified Kuwaiti youths were trained in the Management of Information

System in public administration, as well as in the departments and different sections in

Shuaiba Cement factory.

A group photo of the first training program in Kuwait for the burning of used tires in the Shuaiba industrial area.

4342

board of directors declaration and Acknowledgment Concerning

The consolidated Financial statementsof Kuwait cement company for year 2017

Auto-pack machine for loading the trucks with cement bags

The Board of Directors of Kuwait Cement Company K.S.C.P declares it’s responsibility for

the reliability and integrity of all consolidated annual financial reports and statements which

include the consolidated financial positions, consolidated income statements, consolidated

comprehensive income, consolidated statements of change in equity, consolidated cash flow

statements, and notes to the consolidated financial statements as of 31 December 2017, and

that they have been prepared according to the international accounting standards approved

by the Capital Market Authority, and that the company keeps the accounting records and

documents appropriately. Also, it’s responsibility for providing an effective control system

in the company, and that the Board members bear the responsibility if any of the company’s

consolidated financial reports and statements fail to honestly reflect its actual consolidated

financial positions as well as the results of its business and its consolidated cash flow.

Moreover, the Board of Directors declares that the executive management has made available

for auditors all the reports, records, documents and information necessary to conduct the audit

on the company consolidated financial statements, and enable them to examine all the papers

and documents, and also made available all the information the auditors deemed necessary to

carry out their task. They also declared that the company’s consolidated financial statements

reflect honestly and clearly the actual consolidated financial position of the company, as well

as the results of its business and its consolidated cash flow.

furthermore, the Company’s Board of Directors acknowledges the correctness, accuracy and

completeness of the information and reports revealed in the company’s consolidated financial

reports and statements as well as its attachments, and that they were presented properly and

fairly, and that they are considered in accordance with international accounting standards

approved by the Capital Markets Authority.

Rashed Abdulaziz Al-RashedChairman

45

gRAPhs

NET PROfiT fOR ThE YEAR

REsERvEs

Kuwait Dinars

Kuwait Dinars

Cement silos for bulk loading47

Bulk terminal for storage and sales of bulk cement at West Shuaiba Industrial Area -

Mina Abdullah

AUdiTORs’ REPORTANd fiNANCiAL sTATEmENTsConsolidated financial statements & independent auditors’ reportfor the year ended 31 December 2017

4948

independent Auditors› Report To the shareholders of kuwait Cement Company k.P.s.C.state of kuwaitReport on the Audit of the Consolidated financial statements

Opinion We have audited the consolidated financial statements of Kuwait Cement Company K.P.S.C. (“the Parent Company”) and its subsidiaries, (collectively referred to as “the group”) which comprise the consolidated statement of financial position as at 31 December 2017, and the consolidated statement of income, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the financial year then ended, and notes to the consolidated financial statements including summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the group as at 31 December 2017, and its consolidated financial performance and cash flows for the financial year then ended in accordance with International financial Reporting Standards (IfRSs).

basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated financial Statements section of our report. We are independent of the group in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (“IESBA Code”) together with ethical requirements that are relevant to our audit of the consolidated financial statements in the State of Kuwait. We have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

key Audit mattersKey audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current year. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon. We do not provide a separate opinion on these matters. We identified the following key audit matters:

Al Shaheed Tower, 6th floorKhaled Ben Al Waleed Street, SharqP.O. Box 25578, Safat 13116KuwaitTel: +965 2242 6999fax: +965 2240 1666www.bdo.com.kw

impairment test of investment in an associateInvestments in associates include an associate stated at carrying value of KD 16,628,067. However, management assessed operating value of the associate at end of the financial year to determine whether there is any impairment. It has been concluded that the recoverable value of the associate is higher than its carrying value at date of the consolidated financial statements. This part was significant for our audit, as the audit process is complex and depends on judgments and estimates that are affected by the unexpected future market conditions or economic circumstances, especially those related to expectations of cash flows and applied rates.

There are number of main significant judgments taken in determining inputs for impairment model, which include:

•RevenueGrowth

• Pre-tax rate used for deducting the projectedcash flows.

•Growthrateusedtoarriveattheterminalvalue

See note 7 on the consolidated financial statements for its related disclosures.

how our audit addressed the matterAudit procedures performed by us included carrying out the following procedures and other matters:

1- Engaging our valuation experts to help in valuation of appropriateness of the discount rates applied and other assessment factors.

2- Valuation of appropriateness of the applied projections on key inputs such as sales volume, revenue growth rates and operating costs which included comparison of such inputs to data derived from external sources, in addition to our assessment based on our knowledge of the customer and segment.

3- We carried out a sensitivity analysis, which included valuation of effect of the reasonably possible decrease in the growth rates and projected cash flows for assessment of the effect on the currently estimated usage value.

4- Valuation of adequacy of the disclosure in note 7 to the financial statements, including disclosures related to key estimates, judgments and sensitivity.

valuation of available for sale financial assets and their impairment The assessment of investment in available for sale financial assets is subjective in nature, in the first place for instruments classified within level 2 and 3, because it is assessed by inputs other than the quoted prices in an active market. fair value of available for sale financial assets is determined by applying valuation techniques, which often include practicing the judgment by management and using assumptions and estimates. Due to significance of available for sale financial assets and its related uncertainty of estimates, and whereas the audit process is complex and is based on judgments and assumptions that are affected by the unexpected future market positions or economic conditions, further, the group determines whether there is an objective evidence on impairment of individual investments classified as available for sale. In such cases, the cumulative change in fair value is transferred from consolidated statement of comprehensive income to consolidated statement of income. Taking into consideration the aspect of being subjective in nature for valuation of instruments classified within levels 2 and 3 and valuation of impairment. This aspect was significant to our audit. See note 8 on the consolidated financial statements for its related disclosures.

how our audit addressed the matterAudit procedures performed by us included carrying out the following procedures and other matters:

1- It was focused on carrying out procedures to assess the applied techniques for valuation of financial assets available for sale. As part of our audit, we used our valuation experts to help in valuation of applied forms and assumptions.

2- We reviewed valuation of the group with regard to existence of objective evidences on impairment of individual investments.

3- Valuation of adequacy of the disclosure in note 8 to the consolidated financial statements, especially completeness and accuracy of information and its related sensitivity, as well as fair value disclosures mentioned in note (3.3).

Baneid Al gar – Al Darwaza Tower – 10 floor Tel : 2246 4282 – 2246 0020fax : 2246 0032P.O.Box : 240 Aldasma – 35151 – Kuwait www.alikouhari.com

Kuwait Cement Company K.S.C.P. and its subsidiariesKuwait Cement Company K.S.C.P. and its subsidiaries

Independent auditors’ reportTo the Shareholders of Kuwait Cement Company K.P.S.C.State of KuwaitReport on the Audit of the consolidated financial statements

Independent auditors’ reportTo the Shareholders of Kuwait Cement Company K.P.S.C.

State of KuwaitReport on the Audit of the consolidated financial statements

5150

Other information Management is responsible for the other information. The other information comprises the board of directors report (but does not include the consolidated financial statements and our auditor’s report thereon] and group’s annual report. The annual report is expected to be made available to us after the date of this auditor’s report.

Our opinion on the consolidated financial statements does not cover the other information attached to it, and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed concerning the other information we received before date of our report, we conclude that there is a material misstatement of this other information; we are required to report that fact. We have nothing to report in this regard.

Responsibilities of management and Those Charged with governance for the Consolidated financial statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IfRSs, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the group’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Consolidated financial statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidatedfinancial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting

a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the group’s internal control.

•Evaluatetheappropriatenessofaccountingpoliciesusedandthereasonablenessof accounting estimates and related disclosures made by management.

•Concludeontheappropriatenessofmanagement’suseofthegoingconcernbasisof accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of auditors’ report. However, future events or conditions may cause the group to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidatedfinancial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

•Obtainsufficientappropriateauditevidenceregardingthefinancialinformationof the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

from the matters communicated with those charged with governance, we determined those matters that were of most significance in the audit of the consolidated financial statements for the current period, and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Kuwait Cement Company K.S.C.P. and its subsidiariesKuwait Cement Company K.S.C.P. and its subsidiaries

Independent auditors’ reportTo the Shareholders of Kuwait Cement Company K.P.S.C.State of KuwaitReport on the Audit of the consolidated financial statements

Independent auditors’ reportTo the Shareholders of Kuwait Cement Company K.P.S.C.

State of KuwaitReport on the Audit of the consolidated financial statements

5352

Report on Other Legal and Regulatory Requirements

furthermore, in our opinion proper books of accounts have been kept by the Parent Company and the consolidated financial statements, together with the contents of the report of the Parent Company’s board of directors relating to these consolidated financial statements, are in accordance therewith. We further report that we obtained all the information and explanations that we required for the purpose of our audit and that the consolidated financial statements incorporate all information that is required by the Companies’ Law No. 1 of 2016 and its executive regulations and amendment, and by the Parent Company’s memorandum of incorporation and articles of association, as amended, that an inventory was duly carried out and that, to the best of our knowledge and belief, no violations of the Companies’ Law No. 1 of 2016 and its executive regulations and amendment, nor of the Parent Company’s memorandum of incorporation and articles of association, as amended, have occurred during the financial year ended 31 December 2017 that might have had a material effect on the business of the group or its consolidated financial position.

faisal saqer Al saqer Ali mohammed kohari

License No. 172 – “A” BDO

Al Nisf & Partners

License No. 156 “A”Member of Prime global

Al-Salheya Office - Certified Public Accountant

kuwait: 6 march 2018Rashed Abdulaziz Al-Rashed dr. Abdul Aziz Rashid Al-Rashid

Chairman Vice Chairman

Note 2017 2016AssetsNon-current assetsProperty, plant and equipment 5 160,124,189 161,937,752Intangible assets 110,594 132,915Investment properties 6 794,656 818,668Investments in associates 7 16,628,067 15,709,730Available for sale investments 8 55,022,845 50,408,038

232,680,351 229,007,103Currents assetsInventories 9 17,579,349 16,367,871Receivables and other debit balances 10 35,242,517 33,902,954Investments at fair value through profit or loss 11 8,827,808 8,154,235Cash and cash equivalents 12 11,413,617 12,956,415

73,063,291 71,381,475Total assets 305,743,642 300,388,578Equity and liabilitiesEquity Share capital 13 73,330,387 73,330,387Share premium 26,675,810 26,675,810Treasury shares 14 (13,497,645) (13,497,645)Profits on sale of treasury shares 445,592 445,592Statutory reserve 15 47,010,835 45,193,637Voluntary reserve 16 42,048,346 40,231,148general reserve 18,930,128 18,930,128Change of fair value reserve (25,995,463) (29,287,828)group’s share in associates’ reserves (203,112) (410,163)group’s share in foreign currency exchange reserve 93,702 117,162Retained earnings 28,437,008 29,141,885Equity attributable to shareholders of the Parent Company 197,275,588 190,870,113Non-controlling interests 144,473 136,184Total equity 197,420,061 191,006,297

LiabilitiesNon-current liabilitiesLoans, bank facilities and murabaha 17 58,749,216 60,115,957Provision for employees end of services benefits 2,777,262 2,591,433

61,526,478 62,707,390Current liabilities Loans, bank facilities and murabaha 17 18,686,515 22,181,196Payables and other credit balances 18 28,110,588 24,493,695

46,797,103 46,674,891Total liabilities 108,323,581 109,382,281Total equity and liabilities 305,743,642 300,388,578

The accompanying notes form an integral part of these consolidated financial statements.

Kuwait Cement Company K.S.C.P. and its subsidiariesKuwait Cement Company K.S.C.P. and its subsidiaries

Consolidated statement of financial positionAs at 31 December 2017(All amounts are in Kuwaiti Dinars)

Independent auditors’ reportTo the Shareholders of Kuwait Cement Company K.P.S.C.

State of KuwaitReport on the Audit of the consolidated financial statements

5554

Note 2017 2016

Sales 97,256,668 98,515,714

Cost of sales 19 (75,918,278) (73,628,253)

gross profit 21,338,390 24,887,461

Other operating income 20 676,837 114,656

Selling, general and administrative expenses (4,928,011) (4,739,108)

Operating profit 17,087,216 20,263,009

Provision for doubtful debts 10 (626,740) (294,161)

finance charges (3,398,852) (2,918,405)

Interest income 38,469 24,800

Net investment profits 21 4,364,519 2,966,027

group’s share of business results from associates 7 711,286 459,400

Net profit before deductions 18,175,898 20,500,670

Contribution to Kuwait foundation for the Advancement of Sciences (162,024) (181,450)

National Labour Support Tax (452,521) (451,911)

Zakat (157,855) (180,764)

Board of directors’ remuneration (208,000) (190,000)

Net profit for the year 17,195,498 19,496,545

Attributable to:

Shareholders of the Parent Company 17,191,582 19,486,113

Non-controlling interests 3,916 10,432

Net profit for the year 17,195,498 19,496,545

Basic and diluted earnings per share (fils) 22 24.11 27.33

The accompanying notes form an integral part of these consolidated financial statements.

Note 2017 2016

Net profit for the year 17,195,498 19,496,545

Other comprehensive income/(loss) items

Items that may be reclassified subsequently to the consolidated statement of income:

Available for sale investments:

Net unrealized profits/(losses) from available for sale investments 5,052,429 (573,369)

Transferred to consolidated statement of income from sale of available for sale investments (1,754,559) (20,759)

3,297,870 (594,128)

investments in associates:

group’s share in associates’ reserves 7 207,051 115,197

207,051 115,197

differences of translation of financial statements with foreign currencies:

group’s share in foreign currency exchange reserve (23,630) (3,716)

Total other comprehensive income/(loss) items for the year 3,481,291 (482,647)

Total comprehensive income for the year 20,676,789 19,013,898

Attributable to:

Shareholders of the Parent Company 20,667,538 19,003,806

Non-controlling interests 9,251 10,092

20,676,789 19,013,898

The accompanying notes form an integral part of these consolidated financial statements.

Kuwait Cement Company K.S.C.P. and its subsidiariesKuwait Cement Company K.S.C.P. and its subsidiaries

Consolidated statement of comprehensive income As at 31 December 2017(All amounts are in Kuwaiti Dinars)

Consolidated statement of income As at 31 December 2017

(All amounts are in Kuwaiti Dinars)

5756

Note 2017 2016Cash flows from operating activities

Net profit for the year 17,195,498 19,496,545Adjustments:

Depreciations and amortizations 8,883,220 7,524,715Provision for doubtful debts 10 626,740 294,161finance charges 3,398,852 2,918,405Interest income (38,469) (24,800)Net investment profits 21 (4,479,819) (3,071,756)group’s share of business results from associates 7 (711,286) (459,400)Provision for employees end of services benefits 185,829 186,059Net operating profit before working capital changes 25,060,565 26,863,929Inventories (1,211,478) (1,377,711)Receivables and other debit balances (1,966,303) (10,929,590)Investments at fair value through profit or loss 819,089 56,667Payables and other credit balances 1,758,322 2,821,339Net cash generated from operating activities 24,460,195 17,434,634

Cash flows from investing activities

Paid for the acquisition of property, plant and equipment (5,446,315) (5,010,951)Proceeds from sale of property, plant and equipment 153,865 75,575Paid for purchase of intangible assets (14,900) (42,909)Proceeds from sale of Intangible assets - 633Paid for purchase of available sale investments (3,671,490) (2,306,593)Proceeds from sale of available for sale investments 4,314,496 1,248,445Dividend received 1,027,214 2,988,092Interest income received 38,469 24,800Deposits with financial institutions - 528,959Net cash used in investment activities (3,598,661) (2,493,949)

Cash flow from financing activities

Withdrawn from loans, bank facilities and murabaha 15,252,443 39,275,951Paid for loans, bank facilities and murabaha (20,018,981) (40,135,920)finance charges paid (3,398,852) (2,918,405)Dividend payments (14,237,980) (14,279,785)Net change in non-controlling interests (962) 125,752Net cash used in financing activities (22,404,332) (17,932,407)Net change in cash and cash equivalents (1,542,798) (2,991,722)Cash and cash equivalents at beginning of the year 12,956,415 15,948,137Cash and cash equivalents at the end of the year 12 11,413,617 12,956,415

The accompanying notes form an integral part of these consolidated financial statements.

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Kuwait Cement Company K.S.C.P. and its subsidiariesKuwait Cement Company K.S.C.P. and its subsidiaries

Consolidated statement of cash flows As at 31 December 2017(All amounts are in Kuwaiti Dinars)

Consolidated statement of changes in equity As at 31 December 2017

(All amounts are in Kuwaiti Dinars)

5958

1. incorporation and activities

Kuwait Cement Company K.P.S.C. “the Parent Company” is a Kuwaiti Shareholding Company incorporated as per the Amiri Decree issued on 5 November 1968. The Parent Company’s shares were listed on Kuwait Stock Exchange on 29 September 1984.

The Parent Company’s objectives are as follows:

1- Establishing a project for the production of ordinary cement, sulphate resisting Portland cement and Portland cement for industrial purposes and all kinds of cement at large.

2- Construction of factories and laboratories needed for achieving the Parent Company’s objectives.

3- Dealing in all types of products, materials, tools and machinery relating to the Parent Company’s activity and transferring them locally or abroad.

4- The Parent Company may have interests or participate in any suitable way with entities or companies conducting similar activities or which may assist it in achieving its objectives in Kuwait or abroad. It may as well acquire such entities or affiliate them, and participate in incorporation of real estate companies.

5- Utilizing the financial surpluses of the Parent Company by investing and developing them locally and globally in financial and real estate portfolios and investing the Company’s funds by participating in incorporation of companies of all types and with different purposes and in investment funds, inside the State of Kuwait or abroad, to be managed by specialized companies and entities.

The Parent Company’s headquarters is located at Sharq, Al Sawaber area, Shuhada Street, Cement House, P.O. Box 20581, Safat 13066, State of Kuwait.

The consolidated financial statements include the financial statements of the Parent Company and its subsidiaries together referred to as “the group”.

Name of the company: Legal entity

ActivityPrincipal

Country of incorporation

Percentage of ownership (%)2017 2016

Shuwaikh Cement Company K.S.C.C Industrial Kuwait 99.250 99.250

Amwaj Real Estate Company K.S.C.C Real Estate Kuwait 96.000 96.000

Kuwait Cement Ready-mix Company K.S.C.C Industrial Kuwait 99.844 99.844

The consolidated financial statements were prepared using the audited financial statements of subsidiaries as at 31 December 2017.

The subsidiaries’ total assets amounted to KD 38,791,337 as at 31 December 2017 (31 December 2016: 34,849,059) and their net profits amounted to KD 1,262,174 for the year ended 31 December 2017 (31 December 2016: KD 1,896,261).

The consolidated financial statements for the year ended 31 December 2017 were authorized for issue by the Parent Company’s board of directors on 6 March 2018 and it is subject to the approval of the shareholders’ general assembly.

2. basis of preparation and significant accounting policies2.1 Basis of preparation

These consolidated financial statements have been prepared in accordance with the International financial Reporting Standards (IfRS). These consolidated financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair values, as explained in the accounting policies below.

2.2 Application of New and Revised International Financial Reporting Standards (IFRSs)

(a) New standards, interpretations and amendments effective from 1 January 2017

The accounting policies applied by the group are consistent with those used in the previous year except for the changes due to implementation of the following new and amended International financial Reporting Standards:

Amendments to IAS 7: Disclosure Initiative

The amendment to this standard which is effective prospectively for annual periods beginning on or after 1 January 2017 require an entity to provide disclosures that enable users of financial statements to evaluate changes in liability arising from financing activities, including both changes arising from cash flows and non-cash changes.

The adoption of these amendments did not have any material impact on the current year.

Amendments to IAS 12: Recognition of deferred tax assets for unrealized losses

The amendments to this standard which are effective retrospectively for annual periods beginning on or after 1 January 2017 clarify that any entity needs to look into whether the tax law limits sources of the taxable profits in return for deducting the amendment resulting from temporary tax differences. furthermore, the amendments provide guidance on how an entity should determine future taxable profits and explain the circumstances in which taxable profit may include the recovery of some assets for more than their carrying amount.

The adoption of these amendments did not have any material impact on the current year.

Annual Improvements to IFRSs 2014 – 2016 Cycle:

Amendments to IFRS 12 - “Disclosure of Interests in Other Entities”

IfRS 12 states that an entity need not provide summarized financial information for interests in subsidiaries, associates or joint ventures that are classified (or included in a disposal group that is classified) as held for sale. The amendments clarify that this is the only concession from the disclosure requirements of IfRS 12 for such interests.

b) Standards and interpretations issued but not effective

The following new and amended IASB Standards have been issued but are not yet effective, and have not been adopted by the group:

Amendments to IFRS 2: Classification and measurement of share-based payment transactions.

This standard will be effective for annual periods beginning on or after 1 January 2018. These amendments address three main aspects as follows:

• Theeffectsofvestingconditionsonthemeasurementofacash-settledshare-basedpayment transaction

Kuwait Cement Company K.S.C.P. and its subsidiariesKuwait Cement Company K.S.C.P. and its subsidiaries

Notes to the consolidated financial statements As at 31 December 2017(All amounts are in Kuwaiti Dinars)

Notes to the consolidated financial statements As at 31 December 2017

(All amounts are in Kuwaiti Dinars)

6160

• Theclassificationofashare-basedpaymenttransactionwithnetsettlementfeaturesfor withholding tax obligations

• Theaccountingwhereamodificationtothetermsandconditionsofashare-basedpayment transaction changes its classification from cash-settled to equity-settled.

These amendments are not expected to have any material impact on the group.

IFRS 9 Financial Instruments

The standard, effective for annual periods beginning on or after 1 January 2018, replaces the existing guidance in IAS 39 financial Instruments: Recognition and Measurement. IfRS 9 specifies how an entity should classify and measure its financial instruments and includes a new expected credit loss model for calculating impairment of financial assets and the new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from IAS 39.

Management of the Parent Company anticipates that the application of IfRS 9 in the future may not have a material impact on amounts reported in respect of the group’s financial assets and financial liabilities. However, it is not practicable to provide a reasonable estimate of the effect of IfRS 9 until the group undertakes a detailed review.

IFRS 15 – Revenue from contract with customers

The standard, effective for annual periods beginning on or after 1 January 2018, establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces the following existing standards and interpretations upon its effective date:

• IAS18–Revenue,

• IAS11–ConstructionContracts,

• IFRIC13–CustomerLoyaltyPrograms,

• IFRIC15–AgreementsfortheConstructionofRealEstate,

• IFRIC18–TransfersofAssetsfromCustomers,and,

• SIC31–Revenue–BarterTransactionsInvolvingAdvertisingServices

The group is currently assessing the impact of IfRS 15 and plans to adopt the new standard on the required effective date.

IFRS 16: Leases

This standard will become effective for annual periods beginning on or after 1 January 2019. This standard will be replacing IAS 17 “Leases” and will require lessees to account for all leases under consolidated on-balance sheet model in a similar way to finance leases under IAS 17 with limited exceptions for low-value assets and short term leases. As at the date of commencement of the lease, the tenant will acknowledge commitment of paying the lease payments, and a principal amount represents the right to use the concerned principal during lease period.

The group is currently assessing the impact of IfRS 16 and plans to adopt the new standard on the required effective date.

IFRS 17: Insurance Contracts

This standard will become effective for annual periods beginning on or after 1 January 2021, and replaces IfRS 4: Insurance Contracts. The new standard applies to all types of insurance contracts, regardless of the type of entities that issue them, as well as to certain guarantees and financial instruments with discretionary participation features.

The core of IfRS 17 is the general model, supplemented by:

a) A specific adaptation for contracts with direct participation features (Variable fee approach).

b) A simplified approach (premium allocation approach) mainly for short duration contracts.

These amendments are not expected to have any material impact on the group.

IFRIC 22 Foreign Currency Transactions and Advance Consideration

The interpretation will be effective for annual periods beginning on or after 1 January 2018 and clarifies that in determining the spot exchange rate to use on initial recognition of the related asset, expense or income (or part of it) on the derecognition of a nonmonetary asset or non-monetary liability relating to advance consideration, the date of the transaction is the date on which an entity initially recognizes the non-monetary asset or nonmonetary liability arising from the advance consideration. If there are multiple payments or receipts in advance, then the entity must determine a date of the transactions for each payment or receipt of advance consideration.

These amendments are not expected to have any material impact on the group.

Amendments to IAS 28 – Investment in Associates and Joint Ventures

The amendments should be applied retrospectively and are effective from 1 January 2018, with earlier application permitted.

The amendments clarify that:

a) An entity that is a venture capital organization, or other qualifying entity, may elect, at initial recognition on an investment-by-investment basis, to measure its investments in associates and joint ventures at fair value through profit or loss.

b) If an entity that is not itself an investment entity has an interest in an associate or joint venture that is an investment entity, the entity may, when applying the equity method, elect to retain the fair value measurement applied by that investment entity associate or joint venture to the investment entity associate’s or joint venture’s interests in subsidiaries. This election is made separately for each investment entity associate or joint venture, at the later of the date on which (i) the investment entity associate or joint venture is initially recognised; (ii) the associate or joint venture becomes an investment entity; and (iii) the investment entity associate or joint venture first becomes a parent.

These amendments are not expected to have any material impact on the group.

Amendments to IAS 40 – Transfers of Investment Property

The amendments will be effective for annual periods beginning on or after 1 January 2018 and clarify when an entity should transfer property, including property under construction or development, into or out of investment property. The amendments state that a change in use occurs when the property meets, or ceases to meet, the definition of investment property and there is evidence of the change in use. A mere change in management’s intentions for the use of a property does not provide evidence of a change in use.

These amendments are not expected to have any material impact on the group.

Kuwait Cement Company K.S.C.P. and its subsidiariesKuwait Cement Company K.S.C.P. and its subsidiaries

Notes to the consolidated financial statements As at 31 December 2017(All amounts are in Kuwaiti Dinars)

Notes to the consolidated financial statements As at 31 December 2017

(All amounts are in Kuwaiti Dinars)

6362

2.3 Significant accounting policies

2.3.1 Basis of consolidation

Subsidiaries

The consolidated financial statements incorporate the financial statements of the Parent Company and entities controlled by the Parent Company and its subsidiaries. Control exists when the parent company has: (a) power over an investee, (b) exposure, or rights, to variable returns from its involvement with the investee, and (c) the ability to use its power over the investee to affect the amount of the investor’s returns.

The group reassess whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three components of controls listed above.

Consolidation of a subsidiary begins when the Parent Company obtains control over the subsidiary and ceases when the Parent Company losses control over subsidiary. Specifically, income and expenses of subsidiary acquired or disposed of during the year are included in the consolidated statement of income or other comprehensive income from the date the Company gains control until the date when Company ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interest. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the group’s accounting polices.

All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.

Changes in the group’s ownership interests in subsidiaries that do not result in the group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company.

When the group loses control of a subsidiary, the profit or loss on disposal is stated in the consolidated statement of income and is calculated as the difference between:

a) The aggregate of the fair value of the consideration received and the fair value of any retained interest and

b) The previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests.

All amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted for as if the group had directly disposed of the related assets or liabilities of the subsidiary. The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IAS 39, when applicable, the cost on initial recognition of an investment in an associate or a joint venture.

Business combinations

Acquisitions of businesses combination are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the group, liabilities incurred by the group to the former owners of the acquiree and the equity interests issued by the group in exchange for control of the acquiree. Acquisition-related costs are generally recognised in the consolidated statement of income as incurred.

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value at the acquisition date, except deferred tax assets or liabilities, liabilities or equity instruments related to share based payment arrangements and assets that are classified as held for sale in which cases they are accounted for in accordance with the related IfRS.

goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree, the excess is recognised immediately in consolidated statement of income as a bargain purchase gain.

Non-controlling interests may be initially measured either at fair value or at the non-controlling interests’ proportionate share of the recognised amounts of the acquiree’s identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis.

When a business combination is achieved in stages, the group’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date (i.e. the date when the group obtains control) and the resulting gain or loss, if any, is recognised in the consolidated statement of income. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in consolidated comprehensive income are reclassified to consolidated statement of income where such treatment would be appropriate if that interest were disposed of.

Goodwill

goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment losses, if any.

for the purposes of impairment testing, goodwill is allocated to each of the group’s cash-generating units (or groups of cash-generating units) that is expected to benefit from the synergies of the combination.

Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired.

If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in the consolidated statement of income. An impairment loss recognised for goodwill is not reversed in subsequent periods.

Kuwait Cement Company K.S.C.P. and its subsidiariesKuwait Cement Company K.S.C.P. and its subsidiaries

Notes to the consolidated financial statements As at 31 December 2017(All amounts are in Kuwaiti Dinars)

Notes to the consolidated financial statements As at 31 December 2017

(All amounts are in Kuwaiti Dinars)

6564

On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

Investments in associates and joint ventures

An associate is an entity over which the group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies

A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.

The considerations made in determining significant influence or joint control are similar to those necessary to determine control over subsidiaries. The group’s investments in its associate and joint venture are accounted for using the equity method.

Under the equity method, the investment in an associate or a joint venture is initially recognised at cost. The carrying amount of the investment is adjusted to recognise changes in the group’s share of net assets of the associate or joint venture since the acquisition date. goodwill relating to the associate or joint venture is included in the carrying amount of the investment and is neither amortized nor individually tested for impairment. The consolidated statement of income reflects the group’s share of the results of operations of the associate or joint venture. Any change in OCI of those investees is presented as part of the group’s comprehensive statement of income. In addition, when there has been a change recognised directly in the equity of the associate or joint venture, the group recognizes its share of any changes, when applicable, in the consolidated statement of changes in equity. Unrealized profits and losses resulting from transactions between the group and the associate or joint venture are eliminated to the extent of the interest in the associate or joint venture. The aggregate of the group’s share of results of an associate and a joint venture is shown on the face of the consolidated statement of income outside operating profit and represents profit or loss after tax and non-controlling interests in the subsidiaries of the associate or joint venture. The financial statements of the associate or joint venture are prepared for the same reporting period as the group. When necessary, adjustments are made to bring the accounting policies in line with those of the group.

After application of the equity method, the group determines whether it is necessary to recognise an impairment loss on its investment in its associate or joint venture. At each reporting date, the group determines whether there is objective evidence that the investment in the associate or joint venture is impaired. If there is such evidence, the group calculates the amount of impairment as the difference between the recoverable amount of the associate or joint venture and its carrying value, then recognises the loss as ‘Impairment of an associate and a joint venture’ in the consolidated statement of income.

Upon loss of significant influence over the associate or joint control over the joint venture, the group measures and recognises any retained investment at its fair value. Any difference between the carrying amount of the associate or joint venture upon loss of significant influence or joint control and the fair value of the retained investment and proceeds from disposal is recognised in consolidated statement of income.

2.3.2 Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and any impairment losses if any. Cost includes the purchase price and directly associated costs of bringing the asset to a working condition for its intended use. Maintenance and repairs, replacements and improvements of minor importance are expensed as incurred. In situations, where it is clearly demonstrated that the expenditure has resulted in an increase in the future economic benefits expected to be obtained from the use of an item of property, plant and equipment beyond its originally assessed standard of performance.

Property, plant, and equipment are depreciated on a straight-line basis over the estimated useful lives as follows:

Useful livesBuildings 10-35 yearsMachinery & equipment 7-25 yearsMotor vehicles, computers & furniture 1-7 years

The asset’s residual values, useful life and depreciation method is reviewed periodically to ensure that the method and period of depreciation are consistent with the expected pattern of economic benefits from items of property, plant and equipment. A change in the estimated useful life of a property, plant and equipment is applied at the beginning of the year of change prospectively.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

gains or losses on disposals are determined by the difference between the net sales proceeds and the net carrying amount of the asset and is recognised in the consolidated statement of income.

Work in progress is included in property, plant and equipment in the consolidated statement of financial position until they are completed and ready for their intended use, at that time, they are reclassified under similar assets and the depreciation commences.

2.3.3 Intangible assets

Intangible assets with definite life, which are separately acquired, are carried at cost less accumulated amortization and impairment losses if any. Amortization is charged on a straight-line basis over the estimated useful lives.

The useful live and amortization methods are reviewed at the end of each financial year. Changes in estimations are accounted for as at the beginning of the financial year in which the change occurred.

Intangible assets with infinite life, which are separately acquired, are carried at cost less impairment losses if any.

Intangible assets are removed on disposal or when it is proved that there will not be any future benefit resulting from use of these assets. The profit and loss resulting from disposal are measured by the difference between the net proceeds and carrying value of the disposed asset and are then recorded in the consolidated statement of income.

Kuwait Cement Company K.S.C.P. and its subsidiariesKuwait Cement Company K.S.C.P. and its subsidiaries

Notes to the consolidated financial statements As at 31 December 2017(All amounts are in Kuwaiti Dinars)

Notes to the consolidated financial statements As at 31 December 2017

(All amounts are in Kuwaiti Dinars)

6766

2.3.4 Investment PropertiesProperty that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the company, is classified as investment property. Investment property also includes property that is being constructed or developed for future use as investment property.Investment properties are initially measured at cost, including transaction costs. Transaction costs include professional fees for legal services and initial leasing commissions to bring the property to the condition necessary for it to be capable of operating. The carrying amount also includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met.Investment property is recorded at cost less impairment in value, if any. Land is not depreciated. Building is depreciated using the straight line method over its estimated useful live of 10-20 years.Investment property is derecognised when it has been disposed of or permanently withdrawn from use and no future economic benefit is expected from its disposal. gains or losses on the disposal of investment property are determined as the difference between the carrying amount and the net disposal proceeds. Any gains or losses on the retirement or disposal of investment property are recognised in the consolidated statement of income in the year of retirement or disposal.Transfers are made to investment property when, and only when, there is a change in use, evidenced by the end of owner occupation or commencement of an operating lease. Transfers are made from investment property when, and only when, there is a change in the use, evidenced by commencement of owner occupation or commencement of development with a view to sale.

2.3.5 Impairment of tangible and intangible assets other than goodwill

The tangible and intangible assets are reviewed annually to determine whether there is any indication that those assets have suffered impairment in value. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired.

The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. Impairment losses are recognised in the consolidated statement of income for the period in which they arise. When an impairment loss subsequently reverses, the carrying amount of the asset is increased to the extent that it does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years.

A reversal of an impairment loss is recognised immediately in the consolidated statement of income.

2.3.6 Financial instruments

financial assets and financial liabilities are recognised when a group entity becomes a party to the contractual provisions of the instrument.

financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition immediately in the statement of income.

Financial assets

financial assets are classified into the following specified categories: financial assets “at fair value through profit or loss” “fVTPL”, held to maturity, ‘available-for-sale’ (AfS) financial assets and ‘loans and receivables’. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis. The group has determined the classification of its financial assets as follows:

Financial assets at fair value through profit or loss

financial assets are classified at fVTPL where the financial asset is either held for trading or it is designated at fVTPL. financial assets at fVTPL are stated at fair value, with any resultant gains or losses arising from remeasurement recognised in the consolidated statement of income. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Assets in this category are classified as current assets if expected to be settled within 12 months, otherwise they are classified as non-current. The net gain or loss recognised in consolidated statement of income incorporates any dividend or interest earned on the financial asset. fair value is determined in the manner described in (note 3.3).

Available for Sale (AFS) assets

AfS financial assets are non-derivatives which are not classified as (a) loans and receivables, (b) held-to-maturity or (c) financial assets at fair value through profit or loss.

The financial assets available for sale are re-measured at fair value. fair value is determined in the manner described in (note 3.3).

Changes in the fair value of available-for-sale financial assets are recognized in other comprehensive income and accumulated under the heading of changes in fair value reserve. When available for sale assets are disposed of or is determined to be impaired, the cumulative profit or loss previously recognized in changes in fair value reserve shall be transferred to the statement of income.

AfS equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost less any identified impairment losses at the end of each reporting period.

Dividends on AfS equity instruments are recognized in the consolidated statement of income when the group’s right to receive the dividends is established. foreign exchange gains and losses are recognized in other comprehensive income.

Loans and debtors

Loans and debtors are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables (including trade and other receivables and cash with banks) are measured at amortized cost using the effective interest method, less any impairment.

Impairment in value

financial assets, other than those at fVTPL, are assessed for indicators of impairment at the end of each reporting period. Impairment losses are recognized in the consolidated statement of income directly when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of such assets, that the estimated cash flows of such asset will be affected.

for AfS investments, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment.

Kuwait Cement Company K.S.C.P. and its subsidiariesKuwait Cement Company K.S.C.P. and its subsidiaries

Notes to the consolidated financial statements As at 31 December 2017(All amounts are in Kuwaiti Dinars)

Notes to the consolidated financial statements As at 31 December 2017

(All amounts are in Kuwaiti Dinars)

6968

for financial assets carried at amortized cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s average effective interest rate.

for financial assets carried at cost, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of doubtful debts allowance. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited to the consolidated statement of income.

When AfS financial assets are impaired, the accumulated gains and losses previously recognized in the statement of other comprehensive income are reclassified to the consolidated statement of income for the period.

for financial instruments that are measured at amortized cost, in case of any positive change in the period subsequent to the impairment losses, which can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through the consolidated statement of income to the extent that the carrying amount of the income at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.

In respect of AfS equity securities, impairment losses previously recognized in consolidated statement of income are not reversed through profit or loss, as any increase in fair value subsequent to an impairment loss is recognized in other comprehensive statement of income.

Derecognition

The group derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.

The difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in the consolidated statement of income.

Financial liabilities

financial liabilities (including borrowings; payables and other credit balances) are recognized initially at fair value, net of transaction costs incurred subsequently measured at amortized cost using the effective interest method.

Derecognition

The group derecognises financial liabilities when, and only when, the group’s obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in the consolidated statement of income.

Offsetting

financial assets and financial liabilities are only offset and the net amount reported in the consolidated statement of financial position when there is a legally enforceable right to set off the recognised amounts and the group intends to settle on a net basis or realize the asset and settle the liability simultaneously.

2.3.7 Inventories

Inventories are held at lower of cost and net realizable value. Raw materials cost is determined on a weighted average cost basis. The cost of finished goods and goods in process includes direct materials, direct labor and fixed and variable manufacturing overhead and other costs incurred in bringing inventories to their present location and condition. Net realizable value is the estimated selling prices less all the estimated costs of completion and costs necessary to make the sale.

2.3.8 Employees’ end of service indemnity

The group is liable under Kuwait Labor Law to make payments under defined benefit plans to employees at termination of employment. Regarding the labor in other countries; the indemnity is calculated based on law identified in these countries. Such payment is made on a lump sum basis at the end of an employee service. This liability is un-funded and is computed based on amount payable that would arise on involuntary termination of all employees on the consolidated financial statements date. The management expects this method to produce a reliable approximation of the present value of the goup’s liability.

2.3.9 Provisions

Provisions are recognised when the group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are measured at the present value of the consideration expected to be required to settle the obligation using a rate that reflects current market assessments of the time value of money and the risks specific to the obligation.

2.3.10 Treasury shares

Treasury shares represent the Company’s own shares that have been issued, subsequently purchased by the group and were not reissued or cancelled till the consolidated financial statements date. Treasury shares are accounted for using the cost method, where the total cost of the shares acquired is reported as a contra account within equity. When the treasury shares are disposed; gains are credited to a separate un-distributable account in equity “gain on sale of treasury shares”. Any realized losses are charged to the same account in the limit of its credit balance, any additional losses are charged to retained earnings and then to reserves then to share premium. gains realized subsequently on the sale of treasury shares are first used to offset any previously recorded losses in reserves, retained earnings and the gain on sale of treasury shares.

2.3.11 Foreign currency

Functional and presentation currency

Items included in the financial statements of each of the group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Kuwaiti Dinars (“KD”).

Kuwait Cement Company K.S.C.P. and its subsidiariesKuwait Cement Company K.S.C.P. and its subsidiaries

Notes to the consolidated financial statements As at 31 December 2017(All amounts are in Kuwaiti Dinars)

Notes to the consolidated financial statements As at 31 December 2017

(All amounts are in Kuwaiti Dinars)

7170

Transactions and balances

foreign currency transactions are translated into Kuwaiti Dinars using the exchange rates prevailing at the dates of the transactions. Monetary items denominated in foreign currencies are retranslated at the rates prevailing at the consolidated financial statements date.

foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the consolidated statement of income.

Group companies

The results and financial position of all the group entities that have a functional currency different from the presentation currency (except those companies that operate in countries with high inflation rate) are translated into the presentation currency as follows:

• Assetsandliabilitiesforeachstatementoffinancialpositionpresentedaretranslatedat the closing rate at the date of the consolidated financial statements.

• Income and expenses for each statement of income are translated at averageexchange rates; and

• Allresultingexchangedifferencesarerecognisedasaseparatecomponentofthestatement of equity.

2.3.12 Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances and after elimination of intra-group sales.

• Revenuesfromsaleofgoodsarerecognisedwhenthesignificantrisksandrewardsof ownership have been transferred to the buyer.These risks and rewards are transferred generally to the buyer on delivery and legal title is passed.

• Dividend income is recognised when the right to receive payment has beenestablished.

• Interestincomefromdepositsisrecognisedontimebasisandotherrevenuesarerecognised on an accrual basis.

2.3.13 Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

2.3.14 Leasing

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

The Group as lessorRental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the group’s net investment outstanding in respect of the leases.

The Group as lesseeAssets held under finance leases are initially recognised in the consolidated statement of financial position as assets for the group at its fair value at the beginning of lease or, if it was less, at the current value estimated for the minimum of amounts paid for lease. The corresponding liability to the lessor is included in the consolidated statement of financial position as a finance lease obligation. Operating lease payments are recognised as an expense in the statement of income on a straight-line basis over the lease term.

2.3.15 Dividends

Dividend distribution to the Company’s shareholders is recognized as a liability in the consolidated financial statements in the period in which the dividends are approved by the shareholders.

3. Risk management 3.1. Financial risk

The activities of the group expose it to a set of financial risks, which are market risk, which include (foreign currency risk and risks of change in fair value resulting from the change in interest rates, and risks of fluctuations in cash flows resulting from the change in interest rates, and price risk) in addition to credit risk and liquidity risk. The group’s management for these financial risks is concentrated in the continuous evaluation of market conditions and trends and the management’s assessment of the changes to long and short-term market factors.

Market risk

Foreign currency risk

The group is exposed to foreign currency risk resulting primarily from dealing with financial instruments in US Dollar. The foreign currency risk results from future transactions and from the assets and liabilities denominated with different currency other than the functional currency.The group has set policies to manage foreign currency risk represented in close monitoring of the change in currency rate, in addition to monitoring the effect of such changes on the financial position of the group. Also, the use of hedging instruments to cover for the exchange rate risk of some foreign currencies over the year. The group is exposed to foreign currency risk resulting primarily from translation of assets and liabilities in foreign currency such as cash and cash equivalents, investments, payables, loans, bank facilities and Murabaha. The following is the value of net positions of US Dollar as at the consolidated financial statements date:

2017 2016

Net positions of US Dollar 1,235,845 (201,483)

In case the US Dollar decreases / increases by 5% against the Kuwait Dinar, while all other variables are held constant, the group’s net profits will increase/decrease by KD 61,792 for the year ended 31 December 2017 (31 December 2016: KD 10,074).

Kuwait Cement Company K.S.C.P. and its subsidiariesKuwait Cement Company K.S.C.P. and its subsidiaries

Notes to the consolidated financial statements As at 31 December 2017(All amounts are in Kuwaiti Dinars)

Notes to the consolidated financial statements As at 31 December 2017

(All amounts are in Kuwaiti Dinars)

7372

Price risk

The group is exposed to price risk through its investments classified in the consolidated financial statements as available for sale investments, or financial investments at fair value through profit or loss. The group manages this risk by diversifying its investments on the basis of pre-determined asset allocation across various categories, continuous appraisal of market conditions and trends and management’s estimate of long term changes in fair value. Also the group keeps its investments at specialised investment companies which manage these investments. The group monitors the management of the investment portfolios through monthly periodic reports provided by the portfolio managers of these portfolios and takes the necessary actions when required to minimise the expected market risk of these investments. The table below summarizes the impact of the decrease in the Kuwait Stock Exchange “KSE” index on the group’s net profit for the year and consolidated statement of comprehensive income. This analysis is based on the assumption that the KSE changes by ±5% with all other variables held constant.

Effect on consolidated statement of

comprehensive income

Effect on consolidated statement of income

2016201720162017

--71,20551,030Investments at fair value through profit or loss

2,272,3472,364,573--Available for sale investments

Cash flow and fair value fluctuation risk resulting from the change in interest rate: As the group has no significant interest-bearing assets, the group’s income and operating cash flows are independent of interest rate risks. The group’s interest rate risk arises from long-term borrowings. The group has floating and fixed interest bearing loans. The group analyses its interest rate exposure on a dynamic basis. Available scenarios are considered by the group, taken into consideration the ability for refinancing and renewal of existing and alternative borrowings.At 31 December 2017, if the interest rate on US Dollar bank facilities, loans and murabaha had been 0.20% higher, with all other variables held constant, net profits for the year would have been lower by KD 10,551 (31 December 2016: KD 16,812).

Credit risk

This represents the inability of one party to the financial instrument to meet its liabilities on maturity date, resulting into financial losses to the other party. The group’s credit risk is highly concentrated in receivables and cash and cash equivalents; the group manages and follows up the credit risk as follows:

• Dealingwithcustomers,withgoodcreditworthinessandreputation,relatedpartiesand government bodies.

• Diversificationofthecustomerbaseandavoidingcentralization.• ObtainingbankguaranteesfromcustomerstotheCompanyissuedbyhighcredit

rating banks and irrecoverable letters of credit. • Transactingwithfinancialinstitutionswithhighcreditreputation.

Liquidity riskLiquidity risk is the risk that the group will be unable to meet its liabilities when they fall due. To limit this risk, management has arranged diversified funding sources, manages assets with liquidity in mind, and monitors liquidity on a regular basis.

The ultimate responsibility of managing the liquidity risk is kept with the board of directors. The group manages the liquidity by keeping appropriate reserves and obtaining bank credit facilities. In addition to continuous monitoring of the expected and actual cash flows and a comparison of maturity dates of financial assets and liabilities.

The following are the maturity dates of undiscounted financial liabilities of the group as of 31 December:

2017

more than three years

more than one up to

three years

within one year

29,212,49836,040,14019,166,813Loans, bank facilities and murabaha--28,110,588Payables and other credit balances

2016

more than three years

more than one up to

three years

within one year

11,083,50956,081,56021,279,852Loans, bank facilities and murabaha--24,493,695Payables and other credit balances

3.2 Capital risks

The group manages its capital to ensure that entities in the group will be able to continue as going concerns while maximizing the return to stakeholders through the optimization of the debt and equity balance.

The capital structure of the group consists of net debt (loans, bank facilities and Murabaha offset by cash and cash equivalents) and equity.

The group aims to keep gearing ratio to total capital ranging from 20% to 30% determined as the proportion of net debt to total capital.

The following shows the net debt to total capital as at 31 December:

2017 2016Total loans, bank facilities and murabaha 77,435,731 82,297,153(Less): Cash and cash equivalents (11,413,617) (12,956,415)Net debt 66,022,114 69,340,738Total equity attributable to shareholders of the Parent Company 197,275,588 190,870,113

Total capital 263,297,702 260,210,851Net debt to total capital ratio (%) 25.08 26.65

3.3 Fair value estimation

The fair values of financial assets and liabilities are estimated as follows.

Level 1: Quoted prices in active markets for quoted financial instruments.

Level 2: Quoted prices in active markets for similar instruments. Quoted prices in inactive markets for similar assets or liabilities. Valuation techniques based on observable inputs other than quoted prices of financial instruments.

Level 3: Inputs for the asset or liabilities that are not based on observable market data.

Kuwait Cement Company K.S.C.P. and its subsidiariesKuwait Cement Company K.S.C.P. and its subsidiaries

Notes to the consolidated financial statements As at 31 December 2017(All amounts are in Kuwaiti Dinars)

Notes to the consolidated financial statements As at 31 December 2017

(All amounts are in Kuwaiti Dinars)

7574

The table below gives information about how the fair values of the financial assets and liabilities are determined:

financial assets

fair valueAs at 31 december fair

value level

valuation techniques and

key inputs

significant observable

inputs

Relationship of unobservable inputs to fair

value2017 2016

Available for sale investments:Quoted shares 47,291,46246,366,700 first Last bid price None Noneforeign funds 2,730,374 711,048 Second Net asset value None NoneInvestments at fair value through profit or loss:

Local shares 673,311 1,106,442 Third

Based on the latest available financial statements or on the basis of the last transaction

None None

Local funds 347,290 317,655 Second Net asset value None Noneforeign investments

7,807,207 6,730,138 Second Net asset value None None

fair value of financial assets and liabilities of the group not measured at fair value on a periodical basis is as follows (provided that disclosing the fair value):

31 december 2017 31 december 2016Carrying

value fair value Carrying value fair value

financial assetsReceivables and other debit balances 35,242,517 35,242,517 33,902,954 33,902,954

financial liabilitiesLoans, bank facilities and murabaha 77,435,731 77,435,731 82,297,153 82,297,153Payables and other credit balances 28,110,588 28,110,588 24,493,695 24,493,695Total 105,546,319 105,546,319 106,790,848 106,790,848

fair value hierarchy at 31 december 2017Level 1 Level 2 Level 3 Total

financial assetsReceivables and other debit balances - - 35,242,517 35,242,517

financial liabilitiesLoans, bank facilities and murabaha - - 77,435,731 77,435,731Payables and other credit balances - - 28,110,588 28,110,588Total - - 105,546,319 105,546,319

fair value hierarchy at 31 december 2016Level 1 Level 2 Level 3 Total

financial assetsReceivables and other debit balances - - 33,902,954 33,902,954

financial liabilitiesLoans, bank facilities and murabaha - - 82,297,153 82,297,153Payables and other credit balances - - 24,493,695 24,493,695Total - - 106,790,848 106,790,848

The fair value of financial assets and liabilities are categorized under level 3 below by using recognized valuation technique such as discounted cash flows.

4. Critical accounting estimates and assumptions

In the application of the group’s accounting policies, the management are required to

make judgments, estimates and assumptions about the carrying amounts of assets and

liabilities that are not readily apparent from other sources. The estimates and associated

assumptions are based on historical experience and other factors that are considered to

be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions

to accounting estimates are recognized in the period of the revision and future periods

if the revision affects both current and future periods. The following are the assumptions

concerning the future that may result in a significant risk of causing material adjustments

to the assets and liabilities within the next financial years.

Valuation of financial instruments

Certain assets and liabilities of the group are measured at fair value for the purposes of preparing the consolidated financial statements. group management determines the main appropriate techniques and inputs required for measuring the fair value. In determining the fair value of assets and liabilities, management uses observable market data as appropriate. Information regarding the required valuation techniques and inputs

used to determine the fair value of assets and liabilities is disclosed in note 3.3.

Impairment of inventories

The management assesses at the date of each consolidated financial position whether inventory are impaired. On determining impairment, the management is required to make significant judgments including assessment of factors such as the nature of the industry and market conditions.

Impairment of receivables

Objective evidence of impairment for a portfolio of receivables could include the group’s experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period, as well as observable changes in international and financial economic conditions that correlate with default on receivables.

Contingent liabilities

Contingent liabilities arise as a result of past events confirmed only by the occurrence or non-occurrence of one or more of uncertain future events that are not included in full within control of the group. Provisions for liabilities are recorded when a loss is considered probable and can be reasonably estimated. The determination of whether or not a provision should be recorded for any potential liabilities is based on management’s judgment.

Classification of investments

On acquisition of an investment, the group has to decide whether it should be classified as carried at fair value through profit or loss or as available for sale.

Kuwait Cement Company K.S.C.P. and its subsidiariesKuwait Cement Company K.S.C.P. and its subsidiaries

Notes to the consolidated financial statements As at 31 December 2017(All amounts are in Kuwaiti Dinars)

Notes to the consolidated financial statements As at 31 December 2017

(All amounts are in Kuwaiti Dinars)

7776

A financial asset is classified by the group at fair value through profit or loss if acquired

principally for the purpose of generating short-term profit or if they are managed and

their performance is evaluated and reported internally on a fair value basis in accordance

with a documented risk management or investment strategy. All other investments are

classified as available for sale.

Impairment of investments

Management determines the impairment in equity instruments classified as available

for sale when there is a significant or prolonged decline in the fair value of these

investments, the determination of what is significant or prolonged requires judgment

from management. The group evaluates, among other factors, the usual fluctuation of

listed stock prices, expected cash flows and discount rates of unquoted investments.

Impairment is considered appropriate when there is objective evidence on the

deterioration of the financial position for the investee, including factors such as industry

and sector performance, changes in technology and operational and financing cash

flows. Note 8 shows effect of this on the consolidated financial statements.

Impairment of investments in associates

The group calculates the impairment amount by the difference between the recoverable

value of the associates and their carrying value if there is any objective evidence that the

investment in associates is impaired. Estimation of the recoverable amount requires the

group to estimate the expected future cash flows and select the appropriate inputs for

valuation.

Impairment of tangible assets and intangible assets

The group reviews the tangible and intangible assets on a continuous basis to determine

whether a provision for impairment should be recorded in the consolidated statement

of income. In particular, considerable judgment by management is required in the

estimation of the amount and timing of future cash flows when determining the level of

provisions required. Such estimates are necessarily based on assumptions about several

factors involving varying degrees of judgment and uncertainty, and actual results may

differ resulting in future changes to such provisions.

Useful lives of property, plant and equipment

The group’s management determines the estimated useful lives and the related

depreciation for property, plant and equipment. group’s management increased the

depreciation charge where the useful lives are lower than previously estimated lives.

The group eliminates or writes down obsolete or non-strategic assets which have been

disposed or sold.

5. Property, plant and equipment

Land and buildings

machinery and

equipment

motor vehicles,

computers and furniture

Projects in Progress Total

Cost

At 1 January 2016 31,742,989 90,497,493 11,889,418 131,997,113 266,127,013

Additions 138,245 1,164,653 323,910 3,384,143 5,010,951

Transfers 21,142,692 111,012,597 1,210,998 (133,366,287) -

Disposals - (9,762) (57,106) (29,649) (96,517)

Exchange differences 245 336 331 252 1,164

At 31 December 2016 53,024,171 202,665,317 13,367,551 1,985,572 271,042,611

Additions 1,029,576 1,741,634 1,325,247 3,073,058 7,169,515

Transfers - - 912,500 (912,500) -

Disposals - (6,072) (216,270) - (222,342)

Exchange differences (11,617) (46,115) (4,904) (1,071) (63,707)

At 31 December 2017 54,042,130 204,354,764 15,384,124 4,145,059 277,926,077

Accumulated depreciation

At 1 January 2016 23,340,359 75,735,652 2,559,453 - 101,635,464

Charge for the year 1,386,292 5,033,444 1,068,439 - 7,488,175

Disposals - (6,946) (13,996) - (20,942)

Exchange differences 281 1,451 430 - 2,162

At 31 December 2016 24,726,932 80,763,601 3,614,326 - 109,104,859

Charge for the year 1,592,137 5,498,871 1,730,979 - 8,821,987

Disposals - (6,015) (62,462) - (68,477)

Exchange differences (10,438) (41,801) (4,242) - (56,481)

At 31 December 2017 26,308,631 86,214,656 5,278,601 - 117,801,888

Net carrying value

At 31 December 2016 28,297,239 121,901,716 9,753,225 1,985,572 161,937,752

At 31 December 2017 27,733,499 118,140,108 10,105,523 4,145,059 160,124,189

Kuwait Cement Company K.S.C.P. and its subsidiariesKuwait Cement Company K.S.C.P. and its subsidiaries

Notes to the consolidated financial statements As at 31 December 2017(All amounts are in Kuwaiti Dinars)

Notes to the consolidated financial statements As at 31 December 2017

(All amounts are in Kuwaiti Dinars)

7978

• Allproperty,plantandequipmentlocatedonlandleasedfromthestateownedunder

lease for a term of five years ending in 2019.

• Depreciationhasbeenchargedtotheconsolidatedstatementofincomeasfollows:

2017 2016

Cost of sales 8,749,825 7,413,093

Selling, general and administrative expenses 72,162 75,082

8,821,987 7,488,175

6. investment Properties

20162017

Cost

1,989,7441,989,744As of 1 January and 31 December

Accumulated depreciation

1,147,0641,171,076As of 1 January

24,01224,012Charge for the year

1,171,0761,195,088As at 31 December

818,668794,656Carrying value

fair value of the group’s investment properties was reached to as at 31 December 2017

based on the valuation done on that date by independent valuers who are not related to

the group. Those valuers are licensed by the official bodies and they have qualifications

and latest experience in valuation of properties at these locations. fair value of investment

properties classified based on comparable market prices which reflect prices of recent

transactions for similar real estates. To estimate the value of such real estates, it has

been supposed that the current usage for the real estates is the best usage for the same.

Details of real estate investments of the group and information about the fair value

hierarchy as at 31 December are as follows:

fair value2016

fair value2017Level 2

3,835,0003,705,0003,705,000Investment properties

There have been no transfers between levels during the year.

7. investments in an associates

Name of the associate

Country of incorporation

voting capital and ownership interest %

Carrying valuemeasurement

method2017 2016

Kuwait Rocks Co. (K.S.C.C.) - (under liquidation)

Kuwait 30.00 - - Equity

Marine Contracting and Services Co. K.P.S.C.

Kuwait 33.39 16,628,067 15,709,730 Equity

16,628,067 15,709,730

Movement on investment in associates was as follows:

20162017

15,516,91115,709,730Balance at 1 January

459,400711,286group’s share of business results from associates

115,197207,051group’s share in associates’ reserves

(381,778)-Cash dividends received

15,709,73016,628,067Balance at 31 December

On 6 July 2017, Marine Contracting and Services Co. K.P.S.C. has exited from Kuwait Stock Exchange. The Parent Company’s management carried out a study to determine whether there is any indication that the investment in associate has suffered impairment as at the reporting date. The study concluded that the fair value of the associate exceeds its carrying value.

Summarized financial information in respect of the significant associates is as follows: The summarized financial information below represents the amounts shown in the latest financial information available to those associates, which has been prepared in accordance with International financial Reporting Standards:

Marine Contracting and Services Company:

2017 2016

Available financial statements

Unaudited financial

statements for the period ended30 September

Unaudited financial

statements for the period ended 30 September

Assets 400,013,804 347,552,955

Liabilities 301,958,779 253,676,273

Non-controlling interests 48,258,911 46,830,714

Income 99,626,919 60,806,898

Profit for the period 2,130,089 1,375,767

Other comprehensive income items for the period 620,057 344,979

Total comprehensive income 2,750,146 1,720,746

Kuwait Cement Company K.S.C.P. and its subsidiariesKuwait Cement Company K.S.C.P. and its subsidiaries

Notes to the consolidated financial statements As at 31 December 2017(All amounts are in Kuwaiti Dinars)

Notes to the consolidated financial statements As at 31 December 2017

(All amounts are in Kuwaiti Dinars)

8180

8. Available for sale investments

20162017

46,366,70047,291,462Quoted shares

3,330,2905,001,009Unquoted equities

711,0482,730,374foreign funds

50,408,03855,022,845

The fair value of available for sale investments was determined based on valuation levels mentioned in note 3.3.

The quoted investments include investments of KD 20,353,814 as at 31 December 2017 in shares of National Industries group Holding K.P.S.C. which is one of the major shareholders in the group (31 December 2016: KD 16,554,435). A study was prepared by the management for this investment to determine whether there is an impairment in value or not, the management study resulted that the fair value of the investment exceeds the current market value and did not prove to be impaired in the consolidated statement of income.

Unquoted investments were stated at cost less impairment, if any, since their fair values could not be reliably determined and there have not been active markets for such investments. The available information for these investments did not indicate the existence of any impairment in value.

Available for sale investments include investments of KD 1,188,432 as of 31 December 2017 (31 December 2016: KD 264,372) that were valued based on recent valuation reports available during the year from investment managers as no reports were available for these investments at date of the consolidated financial statements.

Impairment of certain available for sale investments was recognized at KD 19,719 for the year ended 31 December 2017 (31 December 2016: KD 665) as a result of the significant decrease of their value. This impairment was recognized in the consolidated statement of income.

Available for sale investments are denominated in the following currencies as at 31 December:

20162017

47,656,84050,923,896Kuwaiti Dinar

2,494,5903,700,270US Dollar

256,608176,638Euro

-222,041gBP

50,408,03855,022,845

9. inventories

20162017

15,764,48116,904,918Raw materials

603,390674,431finished goods

16,367,87117,579,349

10. Receivables and other debit balances

20162017

380,143917,353Amounts under collection at banks

4,147,5174,466,633Receivables against unconditional bank guarantees

10,310,0435,922,640Ministry of Commerce – difference from subsidizing cement and ready mix concrete to the public

1,566,6341,170,507Related parties (note 25)17,096,04622,379,026Other trade receivables33,500,38334,856,159Total trade receivables

1,454,1231,682,006Other receivables 34,954,50636,538,165(3,098,264)(3,636,236)Provision for doubtful debts31,856,24232,901,929

314,098490,029Prepaid expenses1,732,6141,850,559Notes receivable

33,902,95435,242,517The average credit period granted to trade receivables is 60-90 days. No interest is charged on trade receivables. The fair value of guarantees received by the group from the debtors was KD 5,323,160 as at 31 December 2017 (31 December 2016: KD 5,151,275).Impaired and fully provided for receivables amounted to KD 3,636,236 as at 31 December 2017 (31 December 2016: KD 3,098,264).

The following is the movement on the provision for doubtful debts:

2017 2016Balance beginning of the year 3,098,264 2,810,307Charged during the year 626,740 294,161Bad debts during the year (85,170) (6,204)Exchange differences (3,598) -Balance end of the year 3,636,236 3,098,264

11. investments at fair value through profit or loss

201620171,424,0971,020,601Local investments 6,730,1387,807,207foreign investments

8,154,2358,827,808

The fair value of investments at fair value through profit or loss was determined based on valuation levels mentioned in note 3.3.

foreign investments as at 31 December 2017 include investments of KD 91,795 (31 December 2016: KD 4,807,693) that were priced based on recent available reports from investment managers during the year.

Kuwait Cement Company K.S.C.P. and its subsidiariesKuwait Cement Company K.S.C.P. and its subsidiaries

Notes to the consolidated financial statements As at 31 December 2017(All amounts are in Kuwaiti Dinars)

Notes to the consolidated financial statements As at 31 December 2017

(All amounts are in Kuwaiti Dinars)

8382

12. Cash and cash equivalents

20162017

7,725,49510,073,629Cash on hand and at banks

3,280,105336,326Cash at investment portfolios

1,950,8151,003,662Bank deposits

12,956,41511,413,617

The average effective annual interest rate on bank deposits was 1.5% as at 31 December 2017 (31 December 2016: 0.750%).

13. share capitalThe authorized, issued and fully paid share capital is KD 73,330,387 divided into 733,303,870 shares as at 31 December 2017/2016, each of a nominal value of 100 fils. All shares are cash shares.

14. Treasury shares

20162017

20,200,72920,200,729Number of shares (share)

2.752.75Percentage of issued shares (%)

8,282,2999,474,142Market value (KD)

The Parent Company is committed to keeping reserves, retained earnings and share premium equal to the purchased treasury shares along acquisition period according to the instructions of the concerned regulatory authorities.

15. statutory reserveIn accordance with the Parent Company’s articles of association, 10% of the net profit for the year, before KfAS contribution, NLST, Zakat expense, and board of directors’ remuneration, is transferred to the statutory reserve. The Parent Company may resolve to discontinue such transfer when the reserve equals 50% of the paid up share capital. The reserve is not available for distribution except for payment of a dividend of 5% of paid up capital in years when profit is not sufficient for the payment of such dividend.

16. voluntary reserveIn accordance with the Parent Company’s articles of association, 10% of the net profit for the year, before KfAS contribution, NLST, Zakat expense, and board of directors’ remuneration, is transferred to the voluntary reserve. The Parent Company may resolve to discontinue such transfer under a resolution of the shareholders’ general assembly upon recommendation by the board of directors. There is no restriction on distribution of this reserve.

17. Loans, bank facilities and murabaha

20162017Non-current portion

28,245,33728,930,000Loans and borrowings31,870,62029,819,216Murabaha60,115,95758,749,216

Current portion9,038,0006,811,973Loans and borrowings

13,143,19611,874,542Murabaha22,181,19618,686,51582,297,15377,435,731Total loans, bank facilities and murabaha

The effective annual interest rate on loans, bank facilities and murabaha was 3.625% as at 31 December 2017 (31 December 2016: 3.215%).Certain loans are secured by the whole official location and extensions of the Company’s factory with book value of KD 12,481,819 as at 31 December 2017 (31 December 2016: KD 13,850,632). One of the main borrowings, bank facilities and murabaha covenants is that the group will not distribute dividends if the ratio of current assets to current liabilities decreases less than (1:1.5) and not to pledge movable and non-movable funds to others before obtaining written approval from the bank. The loans and murabaha covenants also state that the ratio of net debts to operating profit not be more than (1:8) and the ratio of operating profit to interests not be less than (2:1) and the ratio of net debts to equity increases not be more than (1:0.8) and the ratio of liabilities to equity not be more than (1:1.3).Loans, bank facilities and murabaha are denominated in the following currencies as at 31 December:

2016201773,891,02972,160,470Kuwaiti Dinar

8,406,1245,275,261US Dollar82,297,15377,435,731

18. Payables and other credit balances

2016201717,197,93420,976,523Suppliers1,006,452567,201Retentions 2,778,2742,961,732Accrued interest and expenses

974,3271,165,399Notes payable1,013,489747,327Clients - advance payments

671,927696,010Payable cash dividends

192,244361,181Contribution to Kuwait foundation for the Advancement of Sciences

451,911452,521National Labour Support Tax194,334172,293Zakat12,80310,401Other

24,493,69528,110,588

Kuwait Cement Company K.S.C.P. and its subsidiariesKuwait Cement Company K.S.C.P. and its subsidiaries

Notes to the consolidated financial statements As at 31 December 2017(All amounts are in Kuwaiti Dinars)

Notes to the consolidated financial statements As at 31 December 2017

(All amounts are in Kuwaiti Dinars)

8584

19. Cost of sales

20162017

61,695,38562,894,397Raw material

(12,949)(78,721)Change in finish goods

4,601,7234,215,766Maintenance and spare parts

3,971,4064,705,113Salaries and benefits

1,605,9902,614,856Depreciations and amortizations

509,926654,937Rent

1,256,772911,930Other

73,628,25375,918,278

20. Other operating income

20162017

98,51097,974Net income from investment properties

(120,752)49,875Net profits / (losses) from exchange differences

136,898528,988Other revenues

114,656676,837

Other revenues item includes an amount of KD 355,000 representing the financial effects resulted from approval of the shareholders’ general assembly for the financial statements of the year ended 31 December 2016 held on 26 April 2017.

21. Net investment profits

20162017investments at fair value through profit or loss:

216,7211,089,911Unrealised gains-402,751Realized gains

19,45834,101Cash dividends236,1791,526,763

Available for sale investments:(665)(19,719)Impairment

249,3861,979,662Realized gains2,586,856993,113Cash dividends(105,729)(115,300)Portfolio management fees2,729,8482,837,756

2,966,0274,364,519

22. basic and diluted earnings per share

Basic and diluted earnings per share are calculated by dividing the net profit attributable to shareholders of the Parent Company for the year by the weighted average of the number of the existing ordinary shares determined based on number of existing shares of issued capital during the year, taking into account treasury shares. The calculation of basic and diluted earnings per share is as follows:

20162017

19,486,11317,191,582Net profit for the year attributable to shareholders of the Parent Company

713,103,141713,103,141Weighted average number of outstanding shares during the year (share)

27.3324.11Basic and diluted earnings per share (fils)

23. staff costs

Staff costs include wages, salaries, leave, end of service’s indemnity and other benefits for the group’s staff. The staff costs amount for the year ended 31 December 2017 is KD 12,101,774 (31 December 2016: KD 10,379,416).

24. dividends

The general Assembly of shareholders, held on 26 April 2017, approved cash dividends of 20 fils per share of the paid share capital after deducting treasury shares for 2016 (2015: 20 fils). further, it approved the amendment to sequence of the eighth item to be the seventh and its text will be as follows “approval of KD 190,000 as a board of directors’ remuneration and KD 120,000 for their membership in board committees).

On 6 March 2018 the Parent Company’s Board of Directors proposed to distribute cash dividends at 20 fils per share after deducting treasury shares from the paid up capital for year 2017.

25. Related party transactions

Related parties comprise of the group’s shareholders who are members in the board of directors, board of directors, key management personnel, associates, and subsidiaries in which the Company has representatives in their board. In the normal course of business, subject to approval of the group’s management, transactions were made with such parties during the year ended 31 December 2017. Balances and transactions between the Company and its subsidiaries, which are related parties of the group, have been eliminated on consolidation and are not disclosed in this note.

Kuwait Cement Company K.S.C.P. and its subsidiariesKuwait Cement Company K.S.C.P. and its subsidiaries

Notes to the consolidated financial statements As at 31 December 2017(All amounts are in Kuwaiti Dinars)

Notes to the consolidated financial statements As at 31 December 2017

(All amounts are in Kuwaiti Dinars)

8786

following is a summary of significant related party transactions and outstanding balances:

20162017Transactions

3,304,2352,845,893Sales 190,000208,000Board of directors’ remuneration120,000150,000Committees’ fees 355,000-Other benefits to the board of directors600,491902,745Senior management salaries and benefits

balances1,566,6341,170,507Receivables and other debit balances (Note 10)

487,377489,577Provision for end of service indemnity

All transactions with related parties are subject to the approval of the shareholders of the general Assembly.

26. Contingent liabilities and capital commitments

20162017Contingent liabilities

424,383573,633Letters of guarantee

Capital commitments176,8071,848,583Letters of Credit321,972321,972Uncalled subscription relating to investments in funds

17,053,66816,288,435Contracts for importing raw materials86,912681,635Projects in Progress

There is a dispute between the Parent Company and a supplier about the financial obligations resulting from the termination of the raw materials supply contract between both parties where that party submitted a financial claim, while, during the previous period, parent company’s management has applied with the Court’s judicial arbitration for discharging it from any financial obligations resulting from termination of that contract. During the previous period, a ruling was issued for the release of all the Parent Company’s financial obligations towards the supplier. The dispute with the supplier has not been resolved yet and the Parent Company’s management believes that the provisions provided are sufficient against all the obligations that might result from this dispute.

27. segment financial informationThe management has classified its significant operating sectors as follows:

- Manufacturing sector which includes production and sale cement & ready – mix cement.

- Investments sector.

financial information about business segments for the year ended 31 December is as follows:

2017

manufacturing sector

investments sector Total

Segments revenues 97,785,656 5,173,780 102,959,436

gross segments profit 16,362,501 5,173,780 21,536,281

Segments assets 224,133,940 81,609,702 305,743,642

2016

manufacturing sector

investments sector Total

Segments revenues 98,652,612 3,523,937 102,176,549

Total segments profit 19,870,338 3,523,937 23,394,275

Segments assets 222,017,802 78,370,776 300,388,578

2017 2016

Adjustments:

Total segments profit 21,536,281 23,394,275

finance charges (3,398,852) (2,918,405)

Interest income 38,469 24,800

Net segments profit before deductions 18,175,898 20,500,670

Geographical segments:

financial information about geographical segments for the year ended 31 December are set out below:

2017

LiabilitiesAssetsRevenues

105,922,712287,360,00898,565,481Inside Kuwait

2,400,86918,383,6344,393,955Outside Kuwait

108,323,581305,743,642102,959,436

2016

LiabilitiesAssetsRevenues

107,755,826287,230,17196,955,047Inside Kuwait

1,626,45513,158,4075,221,502Outside Kuwait

109,382,281300,388,578102,176,549

Kuwait Cement Company K.S.C.P. and its subsidiariesKuwait Cement Company K.S.C.P. and its subsidiaries

Notes to the consolidated financial statements As at 31 December 2017(All amounts are in Kuwaiti Dinars)

Notes to the consolidated financial statements As at 31 December 2017

(All amounts are in Kuwaiti Dinars)

8988

General view for the Covered Conveyor Belt for the raw materials length 780 meters between the

port and the plant