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The Arab Potash Company Limited A Public Shareholding

The Arab Potash Company LimitedA Public ShareholdingThis report for the year Ended December 31, 2003and is presented to the General Assembly in is annual meeting held in Amman June 2004 His Majesty King Abdullah II Bin Al-HusseinHis Royal Highness Prince Hamzeh Bin Al-Hussein7 ARAB Potash COMPANYThe Board of DirectorsLetter from the ChairmanThe report of the Board of Directors The International Potash Market1- International Potash Consumption2- World Production 3- Potash International PricesCompany s Activities1- Production2- Potash Sales 3- MarketingMain Financial IndicatorsThe Company s Projects 1- Salt Mushroom Removal2- Industrial Potash 3- Rehabilitation of Dike (19) 4- Production Expansion 5- Rehabilitation of Dike No. (18) 6- Privatization Subsidiaries & Affiliates 1 - Jordan Safi Salt Company (under liquidation)2- Numeira Mixed Salts & Mud Company3- Jordan Magnesia Company4- Kemira Arab Potash Company5-Jordan Bromine Company6-Jordan Dead Sea Industries Company (JODICO)7- Nippon Jordan Fertilizers AffairsEmployees, Training and HousingAdministrative RestructuringThe Local CommunityConsolidated Financial Statements 1- Capital2.

The Arab Potash Company Limited A Public Shareholding This report for the year Ended December 31, 2003 and is presented to the General Assembly in is annual

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Transcription of The Arab Potash Company Limited A Public Shareholding

1 The Arab Potash Company LimitedA Public ShareholdingThis report for the year Ended December 31, 2003and is presented to the General Assembly in is annual meeting held in Amman June 2004 His Majesty King Abdullah II Bin Al-HusseinHis Royal Highness Prince Hamzeh Bin Al-Hussein7 ARAB Potash COMPANYThe Board of DirectorsLetter from the ChairmanThe report of the Board of Directors The International Potash Market1- International Potash Consumption2- World Production 3- Potash International PricesCompany s Activities1- Production2- Potash Sales 3- MarketingMain Financial IndicatorsThe Company s Projects 1- Salt Mushroom Removal2- Industrial Potash 3- Rehabilitation of Dike (19) 4- Production Expansion 5- Rehabilitation of Dike No. (18) 6- Privatization Subsidiaries & Affiliates 1 - Jordan Safi Salt Company (under liquidation)2- Numeira Mixed Salts & Mud Company3- Jordan Magnesia Company4- Kemira Arab Potash Company5-Jordan Bromine Company6-Jordan Dead Sea Industries Company (JODICO)

2 7- Nippon Jordan Fertilizers AffairsEmployees, Training and HousingAdministrative RestructuringThe Local CommunityConsolidated Financial Statements 1- Capital2- Fixed Assets3- Inventories 4- Investments5- Loans6- Revenues7- Total Cost8- Profits9- Shareholder's Equity10- Audit Fees Financial Indicators Future PlanDeclaration of The Board ofDirectorsRecommendations ContentsBoard of Directors and Top Management8 ARAB Potash COMPANYB oard of Directors and Top Management9 ARAB Potash COMPANY10 ARAB Potash COMPANYOn behalf of myself and the members of the Board of Directors, I would like to welcome you warmlyto the ordinary Annual Meeting of the General Assembly of the Company for the year arepleased to present the forty seventh Annual Report on the Company activities for alsohope that you will accept our apology for the delay in holding this meeting, which was due to validreasons relating to the determination of Jordan Magnesia losses and their incorporation in theconsolidated financial year 2003 was distinguished by growth in The Potash industry worldwide.

3 World productionrose by ( ) and consumption increased by ( ).The Company s share of this growth wasdemonstrated by the increase of its sales by ( ) compared to America s mar ketsand some Asian markets have participated in the increase of the demand in world potashconsumption, whereas the markets of china, North America, and Europe have witnessed stabilityin regards world production, it soared in 2003 by ( ) million tons, which were distributed overRussia, Belaruss, and , some other producers were able to sell their inventories,such as in Canada, Germany, Jordan and Israel, Potash production costs increased worldwide dueto higher energy costs, which also led to considerable increase in (internal) transport and oceanfreight a result of this, and in addition to the increase in worldwide demand on Potash , the pricesincreased , the increase of freight prices eroded the profit margin arising fromthe escalation of Potash prices.

4 The effect of the increase of freight costs had a lesser impact, onAPC, due to our proximity to the Asian markets. Likewise, the Company benefited from the effect ofthe rise in the rate of the Euro vis a vis the Dollar in its sales to Company was able to produce ( ) million tons of Potash in four grades, This represented( ) of world production, whereas the Company sales amounted to around ( ) million Company , consolidated revenues were around ( ) million JD in , regretfully theconsolidated costs increased by (70%) to reach around (218) million JDs in isattributable primarily to the huge losses incurred by the Company due to the bad situation of JordanMagnesia compan s Shareholding exceeds ( ) and fully guarantees and all its loansamounting, together with the interest, to around (80) million JDs.

5 This is in addition to appropriatingan amount of (17) million JDs as a provision (reserve) for Dike (19) and ( ) million JDs for theoutstanding balance of the losses incurred by Jordan Safi Salt Company (under liquidation).Notwithstanding the above, I and as the Members of the Board of Directors, affirm the Company sfinancial creditworthiness and its ability to overcome the effects of these losses in the next year,2004, due to the availability of a large balance from the voluntary reserve and an appropriate levelof liquidity, in addition to the Company s good technical and marketing , this yearlosses occurred as a result of Shareholding in subsidiary and affiliated companies marked by mal-estimation in previous periods, a fact which affected us now, but a final solution will be sought forthis from the chairmanDear shareholders,11 ARAB Potash COMPANYThe losses were offset from the 2003 profits (31) million JD s and the share issue premiumof (54)

6 Million JD s this leaving the Company s balance of the compulsory and voluntaryreserve Company is proceeding with its study of the expansion in Potash production is being undertaken by a consortium of international expertise houses to becompleted during the last quarter of Company has also awarded in the lastquarter of 2003 Enterprise Resource Planning project which should streamline situation at the affiliated and subsidiary companies is also under evaluation andespecially Kemira-Arab Potash which faces technical problems and hence some financialdifficulties that are hopefully surmountable in 2004 production in Jordan Bromine has started and situation is generally Investment Corporation has completed on 16/10/2003 the sale of (26%) of thecompany shares ( around half of its Shareholding in the Company )to a strategic partner,the Canadian PCS Company , at the price of (8) dollars per shares, which was paid in cashto the Jordanian Government means that Jordan Investment Corporationretained four seats at the Board of Directors, whereas the new shareholders obtained thethree remaining seats.

7 We are pleased to welcome the new shareholders to the firstmeeting attended by Jordanian Government was keen to attract an internationalstrategic partner though transparent goal was to achieve more value forthe Company through the partners expertise in technical, marketing, financial andadministration to be reviewed periodically with the go have the pleasure to extend on behalf of you all, plentiful thanks to the Government ofJordan, to the brotherly Arab Government who are shareholders in the Company , to theIslamic Development Bank,Jeddah,to all international and local financing institutions, andto the Company s staff at all locations for their support and efforts accorded to the our thanks to our customers all over the world for their trust and entreat God to grant success to His Hashemite Royal Majesty King Abdullah ll Ibn AlHussein, may God preserve and protect him, in order to promote Jordan and its economicand social achievement to the better, internationally and Issa Ayyoub12 ARAB Potash COMPANYA- The International Potash Market The international Potash market witnessed a marked growth in the year 2003 interms of production ( ) and consumption ( ),The Arab Potash Companyincreased its sales volume in 2003 by ( ) compared to International Potash Consumption World Potash consumption increased by ( ) to reach ( )

8 Million tonscompared to ( ) million tons during increase came as a result of theimprovement in the demand for raw materials for agriculture especially fromagricultural sectors in Latin America, and some Asian countries. Grain stockdecreases led to better prices for Agri-products & hence fertilizer demand wasfuelledIncrease of world demand was registered in the following countries:1) Brazil : Consumption increased by ( ) million tons which is equal to (50%) ofthe total increase in world consumption in increase came as a result ofhigh demand from the farmers for fertilizers to produce agricultural cropsespecially soybeans due to the high increase in their world , Brazil witnessed a stable economy in 2003 compared to previousyears and consequently encouraged the agricultural sector to grow further, whichled to increases in demand on fertilizers in general.

9 Indications show thecontinuous growth in Brazil economy will continue and there will be moredemand for fertilizers ) India : Consumption increased by (300) thousand tons. It is also expected thatdemand increase shall continue during 2004, knowing that mergers occurredbetween major fertilizers manufactures, to strengthen their internal positions, but,the expected high increase in the prices may reduce demand next Board of Directors Report The Board of Directors is pleased to welcome you in this annual general meeting and topresent to you the forty seventh annual report and the consolidated financial statements forthe year ended 31 December, 2003 in accordance with article (169) of the Companies Lawand articles (11 and 12) of APC Potash COMPANY3) Indonesia.

10 Consumption increased by (250) thousand tons approximately dueto the increase in palm oil prices and other crops internationally, as well as thestart of the reco very from the economic problems which prevailed during the is expected that consumption in Indonesia would continue to grow ) Vietnam: Potash consumption witnessed significant growth in 2003, theincrease reached (190) thousand increase came as a result of the economic trends in Vietnam to produce thefertilizers required for agriculture locally and to reduce foreign imports. As well asthe stable economic situation in Vietnam which played a significant role inagriculture and other sectors ) Malaysia:Consumption increased by approximately (150) thousand tons dueto increase in palm oil prices on international markets by (50%), leading theagricultural sector to increase the use of fertilizers in order to increase is not expected to grow in Malaysia in , for the remaining Asian countries, consumption figures were about thesame figures in 2002, China consumption in 2003 indicated minor growth of (2%),which was covered by local Potash production the United States of America and Europe consumption was stable, butdemand is expected to increase in the United States by (2-3%) during the firsthalf of Consumption of Potash (Million tons KCL)


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