Posted on October 07, 2013

Total profit from operations for the 9 months period ended September 30, 2013 was QR 572.5 million compared with QR 561.6 million for the 9 months period ended September 30, 2012, an increase of 2%. Nine months period - 2013 net profit after a loss on derivative instruments from joint ventures was QR 553.2 million compared with QR 562.4 million for nine months period - 2012 after a gain on derivative instrument from joint ventures.

The loss on derivative instruments of QR 19.3 million for nine months period - 2013, compared with a gain on derivative instruments of QR 0.8 million for nine months period - 2012, was due to a technical disqualification (for accounting purposes) of the applicable derivatives (carried in the books of certain of the company’s overseas joint ventures) as hedging instruments in accordance with International Accounting Standard 39. 

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This accounting treatment is only a non-cash accounting entry and does not affect the economics of the derivative transactions nor the cash flows or liquidity of the company. Nakilat and its joint ventures are exposed to high interest rate risk on borrowed funds. The risk is managed by the use of interest rate swap contracts, which will protect the company from increases in interest rates in the future. The majority of Nakilat and its joint ventures borrowings were obtained at the time the company’s time charter party agreements were signed with our charterers.

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