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OCI N.V.
2014 ANNUAL REPORT
GLOBAL ENTREPRENEURIAL GROWTH
WERELDWIJD ONDERNEMENDE GROEI
Designed and produced by dmicreative www.dmicreative.com
Contents
This annual report is available online at www.oci.nl
OCI N.V.
Honthorststraat 19
1071 DC Amsterdam
The Netherlands
T: (+31) 20 723 45 00
[email protected]
OCI N.V. stock symbols: OCI / OCI.NA / OCI.AS / OCINY
CONTACT US
OVERVIEW
01 About OCI N.V.
02 Highlights 2014
06 Letter to Shareholders fromNassef Sawiris
10 Company Overview
OPERATIONAL REVIEW
12 Global Fertilizer &Industrial Chemicals Player
30 Market Performance
34 Year in Review
38 The Demerger
42 Financial Performance
SUSTAINABILITY
48 CSRReport
CORPORATEGOVERNANCE
56 Board of Directors Pro?le
58 Message fromthe Chairman
59 Corporate Governance
62 Report of the Board of Directors
66 Risk Management and Compliance
72 Remuneration Report
77 Declarations
FINANCIAL STATEMENTS
79 Consolidated Statement of Financial Position
80 Consolidated Statement of Pro?t or Loss and other
Comprehensive Income
81 Consolidated Statement of Changes in Equity
82 Consolidated Statement of Cash Flows
84 Notes to the consolidated ?nancial statements
140 Parent Company Statement of Financial Position and
Parent Company Statement of Pro?t or Loss
141 Notes to the parent company ?nancial statements
143 Other information
144 Independent Auditor’s report
149 Miscellaneous
150 Shareholder Information
152 Key Subsidiaries
OCI N.V. is a global producer and
distributor of natural gas-based
fertilizers and industrial chemicals
based in the Netherlands.
We produce nitrogen fertilizers, methanol
and other natural gas based products,
serving agricultural and industrial customers
around the world. We rank among the world’s
largest nitrogen fertilizer producers, and can
produce nearly 7.7 million metric tons of
nitrogen fertilizers and industrial chemicals at
production facilities in the Netherlands, the
United States, Egypt and Algeria. We expect
total production capacity to exceed 12 million
metric tons in 2017.
OCI N.V. is listed on the NYSE Euronext in
Amsterdam.
Contents
OVERVIEW
01 About OCI N.V.
02 Highlights 2014
06 Letter to Shareholders fromNassef Sawiris
10 Company Overview
OPERATIONAL REVIEW
12 Global Fertilizer &Industrial Chemicals Player
30 Market Performance
34 Year in Review
38 The Demerger
42 Financial Performance
SUSTAINABILITY
48 CSRReport
CORPORATEGOVERNANCE
56 Board of Directors Pro?le
58 Message fromthe Chairman
59 Corporate Governance
62 Report of the Board of Directors
66 Risk Management and Compliance
72 Remuneration Report
77 Declarations
FINANCIAL STATEMENTS
79 Consolidated Statement of Financial Position
80 Consolidated Statement of Pro?t or Loss and other
Comprehensive Income
81 Consolidated Statement of Changes in Equity
82 Consolidated Statement of Cash Flows
84 Notes to the consolidated ?nancial statements
140 Parent Company Statement of Financial Position and
Parent Company Statement of Pro?t or Loss
141 Notes to the parent company ?nancial statements
143 Other information
144 Independent Auditor’s report
149 Miscellaneous
150 Shareholder Information
152 Key Subsidiaries
2014
HIGHLIGHTS
$ million 2014 2013
1
Revenue 2,685.8 2,477.5
Adjusted EBITDA 833.4 676.3
Net income attributable to shareholders
(continuing operations) 444.1 313.3
Net income attributable to shareholders
(including discontinued operations) 328.7 295.2
Earnings per share (continuing operations) ($) 2.17 1.54
Total assets
2
10,577.3 10,487.8
Total assets (continuing operations) 8,038.8 7,863.8
Total equity 2,537.8 2,087.6
Gross interest-bearing debt 5,040.7 5,118.3
Net debt 4,194.1 3,548.1
Capital expenditures 1,211.0 687.0
$
2.7
BN
+8.4% over 2013
Revenue
$
833.4
M
+23.2% over 2013
EBITDA
+41.7% over 2013
Net Income
1 2013 information included in the balance sheet is proforma/unaudited information. 2013 and 2014
results represent continuing operations (the Fertilizer &Chemicals business).
In addition, certain joint ventures (JVs) that were previously proportionately consolidated in the
2013 accounts, are nowaccounted for under the equity method (IFRS11)
2 Including $ 2,538.5 million “Assets held for demerger”
$
444.1
M
OVERVIEW
FINANCIAL
HIGHLIGHTS
2 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 3
OPERATIONAL
HIGHLIGHTS
Total nitrogen fertilizers
and industrial chemicals
volume sold reached
7.4
million metric tons
an 11.7%
improvement over 2013
First full year of
operations at
Sorfert Algérie, the
largest nitrogen
fertilizer producer in
Algeria, achieving 1.4
million tons of sales.
CORPORATE
HIGHLIGHTS
OCI N.V.’s subsidiary, Orascom
Construction Industries (OCI S.A.E.),
was fully exonerated of the tax evasion
claim to bring an end to the two year tax
dispute in Egypt
Expanded our Board composition with
the appointment of two non-executive
directors at the Annual General Meeting
of Shareholders on 26 June 2014
Included in the AEX Index, the ?agship
index for Netherlands-listed companies,
in March 2014
Successfully demerged the Engineering
& Construction Group to form Orascom
Construction Limited in March 2015.
The Engineering & Construction Group
is treated as discontinued operations in
the 2014 Annual Report.
Began construction of
Natgasoline LLC, a 1.75
million metric ton per year
methanol production
facility in the United
States, after receiving
the EPA permit on
29 September 2014.
OVERVIEW
.
Construction at Iowa Fertilizer
Company is currently on schedule
and was 84.32% complete as at
31 December 2014.
4 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 5
WITH THE DEMERGER OF OUR
ENGINEERING & CONSTRUCTION
GROUP COMPLETE, WE ARE NOW WELL
POSITIONED TO FOCUS ON MAXIMIZING
OUR GROWTH AS A GLOBAL FERTILIZER
AND INDUSTRIAL CHEMICALS COMPANY.
Michael Bennett
Chairman
Nassef Sawiris
Chief Executive Of?cer
LETTER TO
SHAREHOLDERS
Rationale
OCI N.V.’s Board of Directors and
management believe that the construction
and fertilizers businesses offer distinct value
propositions to investors and that a spin-off
effectively allows each business to pursue its
independent development strategy, enhance
investor understanding and transparency
of each business, and best serves our
shareholders to unlock value as independent
businesses.
Orascom Construction Limited
The spun-off entity, Orascom Construction
Limited, holds all of the former Engineering &
Construction Group’s assets and subsidiaries.
Orascom Construction continues to
operate under three distinct and separate
brands: Orascom, Contrack, and The Weitz
Company. These core brands are supported
by a network of subsidiaries and af?liates in
complementary industries to construction as
well as a 50% stake in The BESIX Group.
From the date of Orascom Construction’s
listing OCI N.V.’s the Board of Directors and
executive management no longer supervise
or are responsible for the engineering and
construction activities’ management or
operational and ?nancial performance.
Orascom Construction is an independent
company with its own management
and Board of Directors. Accordingly, the
engineering and construction activities are
treated as discontinued operations in OCI
N.V.’s 2014 ?nancial statements.
Further information on the demerger can be
found in the Demerger section beginning
page 38 and at www.oci.nl/demerger
OCI N.V. post spin-off
OCI N.V. continues to trade on the NYSE
Euronext in Amsterdam under the symbol
‘OCI’ and holds the fertilizer and chemicals
assets that comprised the OCI Fertilizer &
Chemicals Group.
OCI N.V. is a leading global producer and
distributor of nitrogen fertilizers and natural
gas-based industrial chemicals, with
production facilities in the Netherlands, the
United States, Egypt, and Algeria. OCI N.V.
serves agricultural and industrial customers
from around the world. OCI N.V. ranks
among the world’s largest nitrogen fertilizer
producers, with current nitrogen fertilizer and
industrial chemicals production capacity of
nearly 7.7 million metric tons, growing to
more than 12 million metric tons by 2017.
Going forward, our strategy will focus on
three key goals:
1. Leading Nitrogen Fertilizer Producer and
Distributor
We are uniquely positioned as a sustainably
low cost producer of nitrogen based fertilizers
on a global scale, with production assets in
both developed and emerging markets. We
are on-track to be a top three global nitrogen
fertilizer producer with 8.9 million tons of
annual sellable nitrogen fertilizer capacity by
2016 once Iowa Fertilizer Company (IFCo),
a wholly owned green?eld nitrogen fertilizer
production facility, starts production.
We continuously look for avenues to
streamline and incrementally increase our
production capacity through debottlenecking
projects and intercompany tie-ins, and
expect to add approximately 22% to OCI
Beaumont’s total production capacity through
a debottlenecking and turnaround that was
completed in April 2015.
In addition to our global production capacity,
we are a global ‘one-stop-shop’ for nitrogen
fertilizers through our trading arm, OCI
Fertilizer Trading (OFT). OFT is capable of
trading in-house and third party products with
a distribution presence around the world.
2. Growing Industrial Chemicals Platform
through Gas Monetization Opportunities
We are growing our industrial chemicals
production capacity by capitalizing on natural
gas monetization opportunities in the United
States where we have taken a view on the
long-term sustainability of low natural gas
prices. This is evidenced by the Chicago
Mercentile Board’s (CME) February 2025
Henry Hub Natural Gas Futures consistently
dropping to an average of $ 4.63 / mmbtu
during the ?rst quarter of 2015 as compared
to $ 5.35 / mmbtu during the ?rst quarter
of 2014 and $ 7.18 / mmbtu during the ?rst
quarter of 2013.
Dear Shareholders,
OCI N.V. delivered strong results in 2014, with
revenue growing 8.4% year-on-year to $ 2.7
billion, underlying EBITDA growing 23.2%
year-on-year to $ 833.4 million, and net
income growing 41.7% to $ 444.1 million.
We announced exciting strategic structural
developments during the year, which will
completely transform our business and allow
us to streamline our focus to best deliver
exceptional value to our shareholders.
Spin-off of the Construction Group
In August 2014, we announced our intention
to spin-off our engineering and construction
activities to form Orascom Construction
Limited (“Orascom Construction” or “OC”).
The method of separation as approved by
shareholders at the OCI N.V. Extraordinary
General Meeting (EGM) held on 12
November 2014 was a spin-off by means
of a repayment of capital in kind consisting
of the shares in Orascom Construction. The
demerger was formally effected on 7 March
2015, with OCI N.V. shareholders receiving
one Orascom Construction share for every
two OCI N.V. shares held as at 18:00 CET
on 6 March 2015.
Orascom Construction was admitted to the
of?cial list of securities of the Dubai Financial
Services Authority (DFSA) and began trading
on the NASDAQ Dubai 9 March 2015,
signalling the successful culmination of the
demerger from OCI N.V. It subsequently
began trading on the Egyptian Exchange
on 11 March 2015 in conjunction with an
offering of 11% of its share capital raising
approximately $ 185 million.
Henry Hub Natural Gas Futures
$ / mmbtu
Q1 2013
7.18
Q1 2014
OVERVIEW
Q1 2015
5.25
4.63
CME Feb 2025
6 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 7
As a pure-play nitrogen fertilizer
and industrial chemicals player,
we are now in a position to fully
dedicate our time and resources
to pursuing our growth strategies
and investment mandate and
enhancing investor understanding
of our operations through our
continued commitment to business
transparency. We are con?dent that
we will achieve our 2015 targets
and continue to deliver outstanding
returns to our shareholders.
Michael Bennett
Chairman
Nassef Sawiris
Chief Executive Of?cer
LETTER TO SHAREHOLDERS
CONTINUED
Direct equity placement
In January 2015, we successfully raised EUR
151 million through a private placement of
4.2 million new shares at EUR 36 per share.
OCI N.V.’s shares outstanding now total
210,113,854 ordinary shares following the
placement. The proceeds of this capital raise
are being utilized in our on-going green?eld
initiatives in the United States.
Resolution of tax dispute in Egypt
In November 2014, our Egyptian subsidiary,
Orascom Construction Industries S.A.E. (OCI
S.A.E.), received a favourable ?nal decision
in relation to its tax dispute with the Egyptian
Tax Authority (ETA). The tax dispute was
initiated in 2012 and was related to the sale
of OCI S.A.E.’s cement assets in 2007. The
claim was settled for approximately $ 1 billion
in 2013, and was appealed in 2013. The
decision resulted in a net positive reversal of
$ 336.9 million (50% of the total release) in
the 2014 ?nancial statements. The remaining
50% has been allocated to discontinued
operations. The Board unanimously approved
the transfer of the rights to amounts paid
to the ETA in April 2013 (EGP2.5 billion or
approximately $360 million) to the Tahya Misr
(“Long Live Egypt”) Fund.
We remain fully committed to Egypt as a core
country for OCI N.V. as approximately 30% of
our total 2014 production capacity is located
in Egypt at Egyptian Fertilizers Company
(EFC) and Egypt Basic Industries Corporation
(EBIC).
Further information is found in the Report of
the Board of Directors on pages 63 and 67
and note 12 of our ?nancial statements.
To that end, we have increased OCI
Beaumont’s methanol production capacity by
25% through the debottlenecking project and
have broken ground on Natgasoline LLC, a
wholly owned green?eld methanol production
facility with available infrastructure for further
expansions in the future. As a result of these
projects, we expect to become a top ?ve
global methanol producer by 2017 when
Natgasoline LLC comes online.
Natgasoline will have a production capacity
of 1.75 million metric ton per year and is
located in Beaumont, Texas. It will be one
of the largest methanol production facilities
in the world based on nameplate capacity.
The United States Environmental Protection
Agency (EPA) issued a ?nal greenhouse gas
(GHG) Prevention of Signi?cant Deterioration
(PSD) construction permit for Natgasoline on
29 September 2014.
In addition to its industrial uses, we believe
methanol has further potential as a clean
direct fuel substitute for vehicles as is already
the case in China. We are also diversifying
into other environmentally friendly emissions
control chemicals such as Diesel Exhaust
Fluid (DEF), which will be produced at IFCo.
We are also the world’s largest producer of
melamine with plants in the Netherlands and
China.
We are continually evaluating opportunities
where we can bene?t from the US’s global
natural gas price advantage and from our
position as a ?rst mover.
3. Operational Excellence:
As a global leader, we are committed to
maintaining international product stewardship
and health, safety, quality and environment
standards. We aim to be an environmental
steward by implementing the best technology
available to minimize our environmental
footprint and promote sustainable business
best practices. We train our employees
to operate our plants meeting the highest
international health, safety, environmental,
and quality standards.
Commitment to generating
shareholder value
I would like to thank our Board of Directors
for their guidance and commitment in
executing the demerger and in implementing
sound corporate governance processes at
OCI N.V. to reinforce our success. I would
also like to thank our employees for their
unwavering loyalty to the OCI family and for
the excellence they strive for in every aspect
of our business.
As a pure-play nitrogen fertilizer and
industrial chemicals player, we are now in
a position to fully dedicate our time and
resources to pursuing our growth strategies
and investment mandate and enhancing
investor understanding of our operations
through our continued commitment to
business transparency. I am con?dent
that we will achieve our 2015 targets and
continue to deliver outstanding returns to our
shareholders.
OVERVIEW
8 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 9
COMPANY
OVERVIEW
OUR STRATEGY
Be a leading global nitrogen
fertilizer producer and distributor
uniquely positioned as a sustainably
low cost producer on a global scale,
with production assets in both
developed and emerging markets.
Grow our industrial chemicals
platform by capitalizing on natural
gas monetization opportunities in
the United States where we have
taken a view on the sustainability
of competitive natural gas prices
to become a leader in downstream
natural gas based chemicals.
Commit to being a good corporate
citizen wherever we operate by
investing in the best people and
technologies and maintaining the
highest international standards of
quality and safety.
Continue to deliver exceptional
value to our shareholders.
We aspire to be a leading global
producer and distributor of high
quality nitrogen fertilizer products that
provide essential nutrients to feed
the world, and high quality industrial
chemicals that provide clean,
environmentally sound solutions to
our customers. We aim to create a
safe and encouraging workplace for
our employees, and are committed
to delivering exceptional value to our
shareholders
OUR VALUES
Excellence in every aspect through
our expertise, ef?ciency, attention to
detail and passion.
Creating exceptional value based
on the depth of our ?nancial resources,
our local knowledge and our technical
expertise.
Safety focused in every aspect
of our operations.
Ensuring our people and
operations to match global
standards and maintaining a
commitment to develop our
host communities.
OUR CORE
STRENGTHS
Our people – their expertise,
hunger for knowledge and passion
to excel. Above all, their loyalty and
commitment to OCI N.V.
Our resources – capital resources
that enable us to respond faster than
our competitors.
Our experience – a tradition of
excellence and achievement.
Our entrepreneurial attitude – a
strong appetite for investment and
diversi?cation to grow our business
and increase revenue streams.
OVERVIEW
10 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 11
GLOBAL
FERTILIZER &
INDUSTRIAL
CHEMICALS
PLAYER
OCI N.V. is a leading global producer
and distributor of nitrogen fertilizers and
natural gas-based chemicals, with plants
in the Netherlands, the United States,
Egypt, and Algeria.
We produce a diversi?ed portfolio of nitrogen fertilizers and industrial chemicals, including
anhydrous ammonia, granular urea, urea ammonium nitrate (UAN), calcium ammonium nitrate
(CAN), methanol, and melamine. We are the world’s largest melamine producer, Europe’s
second largest CAN producer, and are on track to be a top ?ve global methanol producer
by 2017.
In addition to our production capacity, we are the world’s largest distributor of ammonium
sulphate (AS), with up to 1.75 million metric tons worth of capacity available for distribution
from two off-take agreements with Lanxess and DFI, a Royal DSM subsidiary.
With the completion of the OCI Beaumont debottlenecking, we have the capacity to produce
nearly 8 million metric tons of nitrogen-based fertilizers and industrial chemicals, and growth
initiatives will take our global capacity to more than 12 million metric tons in 2017.
Design capacities
1
Ammonia
Plant Country Gross Net
6
Urea UAN
7
CAN
Total
Fertilizer
for sale* Methanol Melamine
8
DEF
Total
product
for sale*
Egyptian Fertilizers
Company
2
Egypt 800 - 1,550 - - 1,550 - - - 1,550
Egypt Basic Industries
Corporation
Egypt 730 730 - - - 730 - -
-
730
OCI Nitrogen
3
Netherlands 1,150 350 - 350 1,450 2,150 - 200 - 2,350
Sorfert Algérie Algeria 1,600 800 1,260 - - 2,060 - - - 2,060
OCI Beaumont USA 265 265 - - - 265 730 - - 995
Year end 2014 4,545 2,145 2,810 350 1,450 6,755 730 200 - 7,685
OCI Beaumont (after
Expansion
4
)
USA 305 305 - - - 305 913 - - 1,218
Iowa Fertilizer Company
5
USA 770 185 420 1,505 - 2,110 - - 315 2,425
Year end 2015 5,355 2,370 3,230 1,855 1,450 8,905 913 200 315 10,333
Natgasoline LLC USA - - - - - - 1,750 - - 1,750
Year end 2016 5,355 2,370 3,230 1,855 1,450 8,905 2,663 200 315 12,083
Note: all tonnage is in thousand metric tons per year and refers to total design capacity, Iowa Fertilizer Company and Natgasoline LLC volumes are
estimates. Design capacities at OCI Nitrogen and IFCo cannot all be achieved at the same time
¹ Table not adjusted for OCI N.V.’s stake in considered plant; ² Also has a 325 thousand metric ton per year (ktpa) UAN line to capitalize on seasonal
UAN price premiums over urea (swing capacity); ³ Also has 500 ktpa of captive urea liquor capacity used to produce downstream products;
4
OCI Beaumont Expansion is expected design capacity once the debottlenecking initiative is completed;
5
IFCo design capacities apart from net
ammonia are maximum expected capacities and cannot all be achieved at the same time;
6
Net ammonia is remaining capacity after downstream
products are produced;
7
Excludes EFC UAN swing capacity; OCI Nitrogen max. UAN capacity cannot be achieved when producing max. CAN
capacity;
8
split as 150 ktpa in Geleen and 50 ktpa in China (Chinese capacity does not account for 49% stake and exclusive right to offtake 90%).
OPERATIONAL REVIEW
12 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 13
OCI NITROGEN
It is capable of producing over 2 million metric tons of sellable fertilizer
products annually through eight interconnected plants located on a fully
integrated management site in Geleen, the Netherlands.
OCI Nitrogen’s melamine production capacity in Geleen is complemented by
a melamine production facility in China.
OCI Nitrogen was fully acquired in 2010.
EMPLOYEES
640
OWNERSHIP
100
%
1.4
CALCIUM AMMONIUM NITRATE
ANNUAL CAPACITY / MILLION TONS
350
UREA AMMONIUM NITRATE
ANNUAL CAPACITY / THOUSAND TONS
2014 SALES BY REGION
South
America 14.3%
Other 8.8%
Europe 76.8%
OCI Nitrogen is Europe’s second largest
integrated nitrates fertilizer producer and
the world’s largest melamine producer.
200
MELAMINE
ANNUAL CAPACITY / THOUSAND TONS
1.15
ANHYDROUS AMMONIA
ANNUAL GROSS CAPACITY / MILLION TONS
OPERATIONAL REVIEW
www.ocinitrogen.com
14 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 15
OCI Partners LP is a master limited
partnership that owns and operates
OCI Beaumont, an integrated methanol
and ammonia production facility that is
strategically located on the Texas Gulf
Coast near Beaumont. The Partnership is
headquartered in Nederland, Texas.
The plant also has an ammonia tank with a capacity of 18,000 tons and two methanol
storage tanks with a capacity of 22,000 tons each. The plant has pipeline connections
to adjacent customers and port access with dedicated methanol and ammonia import/
export jetties to ship both products along the Gulf Coast.
The integrated methanol-ammonia facility uses Lurgi GmbH’s Low Pressure Methanol
technology and Haldor Topsøe technology.
OCI Partners LP is listed on the NYSE in New York under the symbol “OCIP”. OCI N.V.
owns 79.88% of OCI Partners LP.
EMPLOYEES
121
OWNERSHIP
79.88
%
2014 SALES BY REGION
USA 100%
913
METHANOL
ANNUAL CAPACITY / THOUSAND TONS
305
ANHYDROUS AMMONIA
ANNUAL CAPACITY / THOUSAND TONS
OCI PARTNERS LP
(OCI BEAUMONT)
OPERATIONAL REVIEW
www.ocipartnerslp.com
16 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 17
IFCo is a wholly owned greenfield
nitrogen fertilizer complex currently under
construction in Wever County, Iowa. Once
operational in 2016, the plant is expected
to produce north of 1.5 million tons of
nitrogen fertilizers and diesel exhaust
fluid per year.
IFCo was first envisioned in November 2011 as part of the Company’s strategic expansion
into the United States. The plant is the first world scale natural gas-based fertilizer plant
built in the United States in nearly 25 years.
IFCo will utilize proven state-of-the-art production process technologies from world
leaders. Kellogg Brown & Root LLC (KBR), Maire Tecnimont Stamicarbon (Tecnimont),
and Uhde are supplying the process technologies for the plant.
IFCo will have 100 thousand metric tons of ammonia storage, 120 thousand metric tons
of UAN storage and 40 thousand metric tons of urea storage.
Construction work on the plant broke ground on 19 November 2012. The project is
funded by a combination of equity and a non-recourse project finance tax-exempt
municipal bond issuance. IFCo’s peak construction activity created approximately 2,500
jobs and the plant is expected to create approximately 200 permanent jobs once it is
operational.
OWNERSHIP
100
%
1.5
UREA AMMONIUM NITRATE
MAXIMUM ANNUAL CAPACITY / MILLION TONS
0.8
ANHYDROUS AMMONIA
MAXIMUM ANNUAL GROSS CAPACITY /
MILLION TONS
IOWA FERTILIZER
COMPANY
(IFCo)
420
GRANULAR UREA
MAXIMUM ANNUAL CAPACITY /
THOUSAND TONS
315
DIESEL EXHAUST FLUID
MAXIMUM ANNUAL CAPACITY /
THOUSAND TONS
OPERATIONAL REVIEW
www.iowafertilizer.com
18 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 19
NATGASOLINE LLC
The plant is expected to have a capacity of up to approximately 1.75 million metric tons
per year, and is expected to start commissioning in 2017. It will be one of the world’s
largest methanol production facilities based on nameplate capacity.
The project will use state-of-the-art Lurgi MegaMethanol® technology and will
incorporate best available environmental control technology. The plant will take up
a portion of a 514 acre plot of land recently acquired by OCI N.V., adjacent to OCI
Beaumont.
The project has been awarded a grant of $ 2.1 million from the Texas Enterprise Fund,
as well as incentive commitments from local entities, including the city of Beaumont,
Jefferson County, the Beaumont Independent School District, the Port of Beaumont
and the Sabine-Neches Navigation District. The United States Environmental Protection
Agency (EPA) issued a final greenhouse gas (GHG) Prevention of Significant Deterioration
(PSD) construction permit for Natgasoline on 29 September 2014, and construction at
the site has begun.
Natgasoline LLC is estimated to create approximately 3,000 construction jobs and
240 permanent jobs.
OWNERSHIP
100
%
1.75
METHANOL
EXPECTED ANNUAL CAPACITY / MILLION TONS
Natgasoline LLC is a new wholly
owned greenfield world-scale methanol
production complex being developed in
Beaumont, Texas.
OPERATIONAL REVIEW
20 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 21
SORFERT ALGÉRIE
Formed in 2006, Sorfert is a 51% OCI N.V. owned joint venture with Algeria’s state-owned
oil and gas authority, Sonatrach. The plant is located in the Arzew industrial complex in
northwest Algeria 35 kilometers east of Oran, near three Algerian ports.
Sorfert began commercial production in August 2013 and exports primarily to Europe.
Sorfert’s first full year of operations was 2014.
OCI constructed the plant in partnership with Uhde, which supplied the process
technology. As a local Algerian company, Sorfert provided significant employment
opportunities during its construction and continues to do so as an operational plant.
EMPLOYEES
761
OWNERSHIP
51
%
1.26
GRANULAR UREA
ANNUAL CAPACITY / MILLION TONS
2014 SALES BY REGION
North Africa 10.8%
Europe 89.2%
Sorfert Algérie is the largest nitrogen
fertilizer producer in Algeria, capable of
producing 1.26 million metric tons of urea
and 1.6 million metric tons
of gross anhydrous ammonia per year.
1.6
ANHYDROUS AMMONIA
ANNUAL NET CAPACITY / MILLION TONS
OPERATIONAL REVIEW
22 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 23
EFC is the largest private sector granular
urea producer in Egypt.
The plant is capable of producing 1.55 million metric tons per year through two
identical production lines. The production lines were constructed by OCI in 2000
and 2006 in collaboration with Uhde. The facility also includes a 325 thousand
metric ton per year urea ammonium nitrate blending unit, which was added on-
site in 2010. EFC was fully acquired in 2008.
OWNERSHIP
100
%
1.55
GRANULAR UREA
ANNUAL CAPACITY / MILLION TONS
EGYPTIAN
FERTILIZERS
COMPANY (EFC)
EMPLOYEES
847
2014 SALES BY REGION
North America 21.3%
North Africa 41.1%
OPERATIONAL REVIEW
Europe 37.6%
24 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 25
EGYPT BASIC
INDUSTRIES
CORPORATION (EBIC)
It is the only merchant ammonia producer in the Middle East and utilizes KBR’s latest
and commercially proven KBR Advanced Ammonia Process (KAAP) technology.
The plant also owns and is connected by pipeline to two 40 thousand metric ton
refrigerated ammonia storage tanks next to the loading jetty at Sokhna Port.
The plant was established in 2005 in partnership with KBR, government-owned EGAS,
and a number of private investors. OCI completed construction of the plant in 2009
and increased its stake to 60% from 30% by buying out several minority investors.
EMPLOYEES
324
OWNERSHIP
60
%
2014 SALES BY REGION
Middle East 41.0%
Europe 29.1%
EBIC is a state-of-the-art 0.73 million
metric ton per year ammonia plant.
730
ANHYDROUS AMMONIA
ANNUAL CAPACITY / THOUSAND TONS
Asia 29.9%
OPERATIONAL REVIEW
26 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 27
OFT is our in-house global trading
and distribution arm operating
through offices in Dubai, U.A.E.
and Geleen, the Netherlands.
OFT has strategically focused on
developing a global trading and
distribution network that positions
us as a fully accessible nitrogen
fertilizer company.
OCI maintains good relations with major international fertilizer traders, but
mainly sells directly to customers through a strong distribution presence in
Europe and the Americas.
OFT benefits from strategic access to ports in Europe, North Africa, and the
Gulf Coast. OCI Terminal Europoort, our wholly owned ammonia terminal, is
located at the port of Rotterdam in the Netherlands; OCI Beaumont has access
to jetties on the Gulf Coast; EFC and EBIC are located directly at Sokhna Port
on the Red Sea in Egypt, and Sorfert has direct access to two ports in Algeria
on the Mediterranean.
In addition, OFT is the a key importer of nitrogen-based fertilizers into Brazil
through FITCO, a 50/50 joint venture with Fertipar, the country’s largest fertilizer
compounder and distributor. OFT has also captured a significant share of the
Brazilian AS market through the joint venture.
With branches in Europe, North Africa, the Americas and the Middle East and
sales in over 20 countries, our global presence with centralized management
allows us to mitigate the effects of regional demand seasonality and maximize
freight advantages across locations and product mix.
OWNERSHIP
100
%
1.75
AS DISTRIBUTION
ANNUAL CAPACITY / MILLION TONS
OCI FERTILIZER
TRADING (OFT)
2014 TRADING BY REGION
North America 19.1%
Middle East 1.3%
OPERATIONAL REVIEW
Europe 79.6%
28 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 29
Agricultural and industrial chemicals are
our two main end markets. Nitrogen
fertilizers play an essential role in improving
agricultural yields, which is essential to meet
the increasing global demand for food.
Population growth, changing diets and future
agricultural plantings are some of the main
drivers of longer term global fertilizer demand.
In the short-term, demand can be affected
by factors such as ?uctuations in crop prices
and farm income, as well as adverse weather
conditions.
We are also the world’s largest producer of
melamine and are on track to becoming a top
?ve global producer of methanol. Historically,
demand for methanol in chemical derivatives
has been closely correlated to levels of global
economic activity, industrial production,
consumer spending and energy prices, the
latter due to the growing use of methanol
in energy applications. Global melamine
demand is primarily driven by GDP growth
and sentiment in the construction sector.
Natural Gas
Natural gas is the primary feedstock for
the production of fertilizers and methanol.
In recent years, increased natural gas
production from shale formations in the
United States has increased domestic
supplies of natural gas, resulting in a
relatively low natural gas price environment.
As a result, the competitive position of
U.S. methanol and ammonia producers
has been positively impacted relative to the
competitive position of producers outside of
the United States where the natural gas price
environment is generally higher.
Natural gas prices in the United States were
relatively stable and at favourable levels
during 2014, despite some upward spikes
in the ?rst quarter of 2014 due to extreme
cold winter conditions which resulted in
an increase in demand and a reduction in
supply reserves. Towards the end of the year
gas prices started falling and approached
ten-year lows of below $ 3.0 / mmbtu at the
beginning of 2015.
European gas prices fell steadily during the
?rst half of 2014, from around $ 10.7 / mmbtu
at the beginning of the year to reach a low of
under $ 6 / mmbtu at the beginning of July,
mainly caused by price pressure from high
gas inventories resulting from low demand
for natural gas during the very mild winter
of 2013/14. Even the threat of gas supply
disruptions due to the unrest in Ukraine did
not cause any serious upward pressure on
gas prices. In the summer months, gas prices
reached the UK coal ?oor, leading to stronger
demand for natural gas by the power sector
in the UK. During the autumn gas prices
increased mainly due to seasonal higher
demand. This trend was reversed at the end
of the year, when natural gas spot prices
started following the downward trend of oil
prices, combined with low demand due to
relatively high winter temperatures.
Nitrogen Fertilizers
Ammonia
Ammonia prices increased throughout the
year to reach near-record levels in the fourth
quarter. Following lower application levels
in the United States in the autumn of 2013
due to adverse weather conditions, 2014
bene?ted from a strong spring application
driving global demand and prices up. This
coincided with a reduction in global supply,
resulting from major shutdowns in the
Ukraine and Egypt in particular. Production
units in eastern Ukraine were shut down due
to socio-political unrest. In addition, plants
suffered natural gas supply shortages due to
natural gas pricing disputes between Russia’s
Gazprom and the Ukraine. Egypt continued
to face natural gas supply issues resulting in
a drop in ammonia exports.
Global demand for ammonia was supported
by good Diammonium Phosphate (DAP) sales
and high Lique?ed Natural Gas (LNG) prices
in India, which resulted in an increase in
ammonia imports against lower LNG imports.
The autumn dip in prices was primarily due
to a seasonal lull in demand coinciding with
falling prices and a weakening of the Euro
against the US Dollar.
Granular Urea prices
Egypt, FOB ($/TON)
469
414
380
359
335
349
356 353
Q1 Q2 Q3 Q4
2014 2013
MARKET
PERFORMANCE
OPERATIONAL REVIEW
AMMONIA PRICES
North West Europe, FOB ($/TON)
654
528
592
581
499 496
573
685
Q1 Q2 Q3 Q4
2013 2014
269
253
Q1
CALCIUM AMMONIUM
NITRATE PRICES
Germany, CIF (EUR/TON)
257 256
229
217
231
248
Q2 Q3 Q4
2013 2014
30 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 31
MARKET PERFORMANCE
CONTINUED
OPERATIONAL REVIEW
247
215
Q1
UREA AMMONIUM
NITRATE PRICES
France, FOT ($/TON)
237
193 196
185
191
207
Q2 Q3 Q4
2013 2014
1455
Q1
MELAMINE PRICES
Europe Contract (EUR/TON)
Q2 Q3 Q4
2013 2014
1353
1445
1368 1353 1325 1340
1304
492
629
Q1
METHANOL PRICES
North America Contract, FOB ($/TON)
526
560
532
580
471 483
Q2 Q3 Q4
2013 2014
Urea
Urea prices were on average relatively
stable during 2014, despite a record level of
Chinese exports, which reached 13.6 million
tons in 2014, an increase of nearly 5 million
tons as compared to 2013. This resulted
in prices moving towards the coal-based
Chinese urea price ?oor of slightly below
$ 300 per metric ton during the second half
of the year.
The increase in supply from China was
partially mitigated by delays in the execution
of expansion projects, and overall favourable
urea demand that is seeing continuous
growth. A combination of low domestic
inventories, lower urea prices and a corn-to-
soybean price ratio favouring corn planting
over soybeans, resulted in record imports
into the United States of an estimated 8.0
million metric tons. Urea demand in Europe
was strong and imports into Brazil surged
by about 30% in 2014. In addition, restricted
availability of granular urea from Egypt kept
the premium of granular over prilled urea at
healthy levels.
Nitrates
The European nitrates market enjoyed a
relatively tight supply-demand balance during
2014 due to production shortfalls at several
plants coupled with good overall demand.
Prices increased towards the spring season
and favourable conditions during the summer
resulted in relatively small price decreases
supporting the traditional summer pre-
storage activities. During the summer, the
nitrate premium over urea stayed at relatively
high levels, and was maintained at these
levels despite a falling exchange rate as a
result of seasonal CAN price increases. UAN
prices tracked the CAN price development,
also bene?tting from the relative tightness of
the nitrate market.
Industrial Chemicals
Methanol
The primary use of methanol is to make
other chemicals, with approximately 60-
65% of global methanol demand being used
to produce formaldehyde, acetic acid and
a variety of other GDP-cyclical products.
These derivatives are used to produce a wide
range of products, including adhesives for
the lumber industry, plywood, particle board
and laminates, resins to treat paper and
plastic products, paint and varnish removers,
solvents for the textile industry and polyester
?bers for clothing and carpeting.
Energy-related applications consume the
remaining 35-40% of global methanol
demand. In recent years, there has
been a strong demand for methanol in
energy applications such as gasoline
blending, biodiesel and as a feedstock in
the production of dimethyl ether (“DME”)
and Methyl tertiary-butyl ether (“MTBE”),
particularly in China. Methanol blending in
gasoline is currently not permitted in the
United States, but outside of the United
States, methanol is used as a direct fuel
for automobile engines, as a fuel blended
with gasoline and as an octane booster in
reformulated gasoline. MTO (methanol to
ole?ns), a feedstock for the production of
polyethylene and propylene for packaging,
automotive, furniture and ?ber segments, is a
relatively new segment.
Methanol demand continued to be healthy
in 2014. Main growth drivers included use of
methanol as a fuel (MTBE and fuel blending
industries), and MTO segments (especially
in China). Improving consumer con?dence
on the back of GDP developments led to a
healthy demand for formaldehyde in wood
based panels for housing and coating resins,
and for automotive applications.
On the supply side, capacity developments
in China, the US and improved operations of
existing plants in the Middle East and Asia
outpaced the demand growth. This was the
main cause for the price drops observed in
global markets in 2014. Despite the crude
oil values drop in Q4 of 2014, methanol
prices especially in the US did not show any
further weakening in Q4, due to global supply
disruptions caused by production issues and
natural gas supply restrictions.
Melamine
Melamine is a white powder made from
urea and is mainly used to make amino-
formaldehyde resins for the creation of safe,
hard, durable glossy surfaces, resistant to
heat, chemicals and moisture. Products
include surface laminates, laminate ?ooring,
wood-based panels coating resins, moulding
compounds, ?ame retardants, paper and
textile resins and superplasticizers for
concrete.
In 2014, global melamine demand growth
was in line with GDP developments. Demand
growth in Europe, our main market for
melamine, was limited in line with European
macroeconomic developments. In the
Americas, growth was somewhat subdued as
higher demand in North America was offset
by a decline in South America. In the Asia-
Paci?c region, growth was healthy in all our
end markets including China, India, Japan
and South Korea.
Starting at the end of 2013 and into 2014,
supply turned from tight to more balanced,
as melamine plants came back on stream.
Melamine prices were stable throughout 2014
on the back of healthy demand.
32 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 33
YEAR
IN REVIEW
During 2014, we focused on achieving
our full run-rate at Sorfert and on the
development and construction of
our greenfield projects in the United
States. We are on track to increase
our total sellable capacity by nearly
60% to exceed 12 million metric tons
by 2017.
OPERATIONAL REVIEW
Despite volatile natural gas supply to our
Egyptian plants throughout the year, our
revenue grew 8.4% year-on-year to $ 2.7
billion, driven by the ?rst full year of operations
at Sorfert. We achieved a 12.9% improvement
in total produced and traded nitrogen fertilizer
volumes sold over 2013 reaching more than
6.6 million metric tons during the year. We also
sold 779 thousand metric tons of industrial
chemicals, a 2.9% improvement over 2013.
In total, OCI N.V. sold 7.4 million tons of
nitrogen-based fertilizer and industrial
chemical products in 2014 to customers in
more than 20 countries across Europe, the
Americas, Asia and Africa. Total OCI-produced
sales reached 5.1 million metric tons during
2014, a 23.2% increase over 2013, primarily
driven by a strong contribution from Sorfert.
000 metric tons 2014 2013 % change
Granular urea
OCI Product Sold 1,470.0 834.0 76.3%
Third Party Traded 56.2 594.1 nm
Total Granular Urea 1,526.2 1,428.1 6.9%
Ammonia
OCI Product Sold 1,333.4 1,029.9 29.5%
Third Party Traded 528.8 179.6 194.4%
Total Ammonia 1,862.2 1,209.5 54.0%
Calcium Ammonium Nitrate (CAN)
OCI Product Sold 1,158.7 1,131.0 2.4%
Total CAN 1,158.7 1,131.0 2.4%
Urea Ammonium Nitrate (UAN)
OCI Product Sold 321.1 358.1 (10.3%)
Third Party Traded 76.0 105.9 (28.2%)
Total UAN 397.1 464.0 (14.4%)
Ammonium Sulphate (AS)
Third Party Traded 1,694.6 1,648.5 2.8%
Total AS 1,694.6 1,648.5 2.8%
Total Fertilizers
OCI Product Sold 4,283.2 3,353.0 27.7%
Third Party Traded 2,355.6 2,528.1 (6.8%)
Total Fertilizers 6,638.8 5,881.1 12.9%
Industrial Chemicals
Melamine 165.5 146.5 13.0%
Methanol 613.7 610.9 0.5%
Total Industrial Chemicals 779.2 757.4 2.9%
Total
OCI Product Sold 5,062.4 4,110.4 23.2%
Third Party Traded 2,355.6 2,528.1 (6.8%)
Total Product Volumes 7,418.0 6,638.5 11.7%
OCI N.V. Annual Report 2014 35 34 OCI N.V. Annual Report 2014
YEAR IN REVIEW
CONTINUED
OPERATIONAL REVIEW
Operational Excellence
Our underlying EBITDA margin stood at
31.0% for the year, a strong improvement
over the 27.3% margin achieved during
2013. Our performance was positively
impacted by solid operations at Sorfert and
OCI Nitrogen, coupled with a downward
trend in natural gas prices bene?tting the cost
position of OCI Nitrogen and OCI Beaumont.
Sorfert in its ?rst full year of operations sold
nearly 1.4 million tons. The complex achieved
good capacity utilization with increasing
utilization rates throughout the year, at times
reaching above design capacity during the
second half of the year. Sorfert bene?ts from
a competitive long-term natural gas price
contract and was a signi?cant contributor
to EBITDA during the year.
OCI Nitrogen performed smoothly throughout
the year, maintaining its leadership position in
Europe. CAN, OCI Nitrogen’s most important
product, bene?ted from a tight supply-
demand balance, resulting in a favourable
pricing environment. OCI Nitrogen further
bene?ted from a sustained drop in natural
gas prices in Europe in 2014, with TTF prices
averaging $ 8.1 / mmbtu versus $ 10.5 /
mmbtu in 2013, a 22.7% reduction year-
on-year in dollar terms. The nitrate premium
remained at a high level during 2014 and was
above the premium achieved during 2013.
OCI Beaumont also performed well,
and bene?ted in the fourth quarter from
management’s decision to delay the planned
debottlenecking and turnaround from the
fourth quarter of 2014 to the ?rst quarter
of 2015.
Both EFC and EBIC suffered from limited
availability of natural gas during the second
half of 2014 resulting in low utilization rates
during the year, due to the government
prioritizing the supply of natural gas to the
electricity sector to reduce power blackouts
in the country.
The Egyptian government has taken several
short and longer term measures to address
the country’s gas supply issue and has
organized substantial LNG imports from April
2015, which are expected to improve gas
supplies to the fertilizer industry from the
second quarter of 2015 onwards.
Distribution Reach
Our centralized distribution capabilities allow
us to act as a ‘one-stop-shop’ for customers
around the world. Our vast distribution
network stretches across the Americas,
Europe, Africa and parts of Asia, cultivated
both organically through OFT and through
strategic investments and partnerships in
distribution companies to support our global
presence.
Our ability to trade third party products,
both on a spot basis and through long-
term distribution contracts, supports our
own product portfolio and gives us supply
?exibility to mitigate against potential
production disruptions at our plants.
We worked to enhance our sales and
distribution presence in North America
during 2014 in preparation for Iowa Fertilizer
Company and Natgasoline coming on-stream
in the next two years.
Green?elds and Expansions
During 2014, we focused on executing our
green?eld projects in the United States,
which will add an estimated 4.4 million tons
of nitrogen fertilizer and industrial chemical
capacity to our product portfolio by 2017.
Early Mover Advantage
We have bene?ted from a strong ?rst
mover advantage in the United States,
where the barriers to entry have increased
signi?cantly since we broke ground on
our green?eld projects. Today, there is
limited new announced nitrogen fertilizer
capacity expected in the United States,
as new capacity has become increasingly
time consuming and capital intensive to
as compared to when we began work
in 2012. Factors affecting this include
limited availability of skilled labour, few
EPC contractors with industrial green?eld
experience, and dif?culty in attaining
project ?nancing, while the timeline for the
development of a nitrogen fertilizer plant can
take as long as seven years to complete.
Accordingly, we believe the United States will
remain a net importer of nitrogen fertilizer for
the medium term.
Iowa Fertilizer Company
Iowa Fertilizer Company, our nitrogen fertilizer
plant located in Wever County, Iowa, is the
?rst world scale natural gas-based green?eld
fertilizer plant built in the United States in
nearly 25 years. Construction at IFCo was
84.32% complete as at 31 December 2014.
IFCo will sell its products domestically and, as
a ?rst mover, will be a key player in the effort
to reduce the United States’ dependence on
imported fertilizers.
IFCo is primarily ?nanced through a $ 1.194
billion non-recourse project ?nance municipal
bond issuance through the Iowa Finance
Authority’s private activity tax-exempt
Midwestern Disaster Area bond program.
The bonds were rated BB- by both ratings
agencies Standard & Poor’s (S&P) and
Fitch. The issuance represents the largest
nonrecourse project ?nance transaction
ever sold in the US tax-exempt market. In
November 2014, we announced that the
current estimate of the cost to complete
the project has increased by about $ 100
million to a total expenditure of approximately
$ 1.9 billion. The increase will be funded
by Additional Senior Obligations worth
approximately $ 60 million and additional
equity of approximately $ 40 million as
permitted by the Bond Financing Agreement.
Natgasoline LLC
On 21 November, 2013, OCI N.V. announced
the establishment of Natgasoline LLC, a
wholly owned subsidiary that will construct
a new world-scale green?eld methanol plant
in Beaumont, Texas. OCI N.V. signed Basic
Engineering and License agreements with Air
Liquide in February 2014 and an Engineering
and Procurement contract with Air Liquide in
March 2014. On 20 March 2014, OCI N.V.
held a ground-breaking ceremony to mark
the start of site preparation works and has
since then signed an agreement with Air
Liquide for the supply of 2,400 metric tons of
oxygen per day in addition to the supply of
other industrial gases.
On 29 September 2014, Natgasoline LLC
received a ?nal greenhouse gas (GHG)
Prevention of Signi?cant Deterioration (PSD)
permit from the United States Environmental
Protection Agency (EPA). Natgasoline is
expected to have a production capacity of
approximately 1.75 million metric tons per
annum and is scheduled to commission in
2017. Engineering and procurement by Air
Liquide at Natgasoline was approximately
33.4% complete as at 31 December 2014.
OCI Beaumont Debottlenecking
OCI Beaumont has undertaken a
debottlenecking project that is expected to
increase the facility’s methanol and ammonia
production lines by 25% to approximately
913 thousand metric tons and 15% to
approximately 305 thousand metric tons,
respectively. During the summer of 2014,
the debottlenecking project received all
necessary permits, including the Texas
Commission for Environmental Quality (TCEQ)
permit and the EPA permit.
The plant upgrade and turnaround was
completed in April 2015.
To fund the debottlenecking project cost
increases, OCI N.V. injected two capital
contributions of $60 million each in 2014 and
2015, in exchange for a total of 6,497,590
common units. This increased OCI N.V.’s total
unit ownership to 69,497,590 common units
resulting in an ownership 79.88% of the total
common units outstanding.
Divestments
It is part of our business model to develop
and nurture businesses relevant to our
core businesses. However, we have a
policy of evaluating the performance of
minority investments in which we have no
management control as ?nancial investment
assets. If a business becomes non-core or
has reached a certain level of maturity, we
actively pursue monetizing the business
through divestment.
Notore Chemical Industries
We expect to divest our minority stake in
Notore Chemical Industries, a granular
urea and bulk blended NPK producer and
exporter in Nigeria, in 2015. OCI’s stake in
Notore was inherited during our acquisition of
EFC in 2008. OCI reduced its stake in 2010
posting a capital gain of $ 19.1 million or 2.5x
book value.
36 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 37
THE
DEMERGER
On 16 February 2015, OCI
N.V. announced the formal
commencement of proceedings
to effect a demerger of the
engineering and construction
business from the fertilizer and
chemicals business (the Demerger).
OPERATIONAL REVIEW
OCI N.V.’s shareholders approved the proposal to reduce the share
capital of OCI N.V. by $ 1.4 billion to facilitate the Demerger at an
extraordinary general meeting of shareholders held on 12 November
2014. On 16 January 2015, the creditor objection period in relation
to the resolutions passed on 12 November 2014 expired without any
objections being made.
Return of Capital to OCI N.V. Shareholders
The Demerger was effected on 7 March 2015 whereby OCI N.V.
shareholders received one Orascom Construction share for every
two OCI N.V. shares they owned as at 18:00 CET on 6 March 2015.
Accordingly, the shareholding structure of Orascom Construction was
identical to that of OCI N.V. upon demerger.
Admission to Listing and Egyptian Offer
Orascom Construction Limited, demerged construction business,
was admitted to the Of?cial List of Securities of the Dubai Financial
Services Authority (DFSA) and began trading on the NASDAQ Dubai
on 9 March 2015. Orascom Construction completed its dual listing on
the Egyptian Exchange on 11 March 2015.
Concurrently with the implementation of the Demerger, Orascom
Construction offered new ordinary shares representing 11% of its
ordinary shares (the New Shares) to persons reasonably believed to
be Egyptian Quali?ed Institutional Buyers (QIBs) or Professional High
Net Worth Investors, and through a private placement to quali?ed
institutional investors and high net worth individuals (the Egyptian
Offer). The Egyptian Offer successfully raised approximately $ 185.4
million for Orascom Construction, to be used for general corporate
purposes including debt settlement.
OCI N.V. Annual Report 2014 39 38 OCI N.V. Annual Report 2014
THE DEMERGER
CONTINUED
OPERATIONAL REVIEW
Rationale
The Board of Directors announced the following bene?ts of the spin-
off:
• Streamline shareholder base: Creates two separately listed pure-
play companies offering distinct investment propositions, each with
clear market valuations. This should serve to attract a wider investor
base in each company’s shares and bene?t liquidity.
• Business transparency: Allows for a better understanding of each
company’s business, prospects and impact of sector-focused
events on its performance.
• Flexibility: Provides greater ?exibility for each business to manage
its own resources and pursue strategic options appropriate to their
respective markets.
• Growth opportunities: Allows each business to actively participate
in consolidation opportunities and value-accretive partnerships and
joint ventures in their respective markets.
• Ef?cient capital structure: Enables each business to adopt a
capital structure, balance sheet and ?nancing strategy which more
ef?ciently meet its individual requirements.
• Enhanced credit pro?le: Improves lenders’ ability to evaluate
each independent business, thereby increasing balance sheet
effectiveness.
• Improved management focus: Sharpens management focus,
helping the two businesses to maximize their performance and
make full use of their available resources.
• Alignment of incentives: Aligns management’s and employees’
rewards more directly with business and stock market performance,
helping to attract, retain and motivate the best people.
OCI N.V. following the Demerger
The Demerger resulted in OCI N.V. continuing to be listed on the
Euronext Amsterdam as a global producer of nitrogen fertilizers,
methanol and other industrial chemical products.
Following the demerger, OCI N.V.’s operating production complexes
comprise:
• OCI Nitrogen (100% owned): one of Europe’s largest integrated
nitrogen fertilizer and melamine production sites. It is capable
of producing over 2 million metric tons of sellable fertilizer and
chemicals products annually through eight interconnected
plants located on a fully integrated production site in Geleen, the
Netherlands, complemented by additional melamine production
capacity in China. OCI Nitrogen’s product portfolio primarily includes
calcium ammonium nitrate, ammonia, urea ammonium nitrate, and
melamine.
• OCI Partners LP (LP (79.88% owned) (NYSE: OCIP): a master
limited partnership (MLP) that owns and operates OCI Beaumont,
an integrated methanol and ammonia production facility that is
strategically located on the Texas Gulf Coast near Beaumont.
The MLP is headquartered in Nederland, Texas. The facility
started a debottlenecking program in 2014 to increase methanol
and ammonia production capacities by 25% and 15% to 0.91
million metric tons and 0.31 million metric tons respectively. The
debottlenecking program was completed in April 2015.
• Sorfert Algérie (51% owned): the largest integrated nitrogen
fertilizer producer in Algeria, capable of producing 1.26 million
metric tons of urea and 1.6 million metric tons of gross anhydrous
ammonia per year. The green?eld plant was constructed by
Orascom Construction.
• Egyptian Fertilizers Company (100% owned)
: a 1.55 million metric
ton per year granular urea plant located in Ain Sokhna, Egypt.
The facility also includes a 325 thousand metric ton per year urea
ammonium nitrate blending unit, which was added on-site in 2010.
The green?eld plant was constructed by Orascom Construction.
• Egypt Basic Industries Corporation (60% owned): a 0.73 million
metric ton per year anhydrous ammonia plant located in Ain
Sokhna, Egypt. The plant also owns and is connected by pipeline
to two 40 thousand metric ton refrigerated ammonia storage tanks
next to the loading jetty at Sokhna Port. The green?eld plant was
constructed by Orascom Construction.
OCI N.V. is also constructing two green?eld production complexes in
the United States:
• Iowa Fertilizer Company (100% owned): nitrogen fertilizer complex
currently under construction by Orascom Construction in Wever
County, Iowa. The plant is expected to produce north of 1.5 million
tons of nitrogen fertilizers and diesel exhaust ?uid per year. The
plant is the ?rst world scale natural gas-based fertilizer plant built in
the United States in nearly 25 years. As at 31 December 2014, the
plant was 84.32% complete.
• Natgasoline LLC (100% owned): methanol production complex
under construction by Orascom Construction in Beaumont, Texas.
The world-class plant is expected to have a capacity of up to
approximately 1.75 million metric tons per year, and is expected
to start commissioning in 2017. It will be one of the world’s largest
methanol production facilities based on nameplate capacity.
OCI N.V. is also a global distributor of nitrogen fertilizers primarily
through its wholly owned trading arm OCI Fertilizer Trading (OFT),
beni?tting from strategic access to ports in Europe, North Africa, and
the US Gulf Coast, allowing it to trade both OCI N.V.’s and third party
products. OCI N.V. is also the world’s largest distributor of crystalline
and granular ammonium sulphate (AS), with up to 1.75 million metric
tons from existing off-take agreements.
Strategy Post Demerger
OCI N.V. will focus on pursuing its growth strategy as a pure-play
nitrogen fertilizer and industrial chemicals producer, focusing on three
key goals:
1. Leading Nitrogen Fertilizer Producer:
• Uniquely positioned as a sustainably low cost producer of nitrogen
based fertilizers on a global scale, with production assets in both
developed and emerging markets.
• Top 3 global nitrogen fertilizer producer with 8.9 million tons of
annual capacity by 2016.
• Production capacity ramp-up through timely completion of
green?elds.
• Streamlined production through debottlenecking and intercompany
tie-ins.
• Global ‘one-stop-shop’ for nitrogen fertilizers capable of trading in-
house and third party products.
• Leading global distributor of AS with 1.75 million tons of capacity.
• Second largest distributor in Brazil through JV with Fertipar.
2. Growing Industrial Chemicals Platform:
• Grow industrial chemicals production capacity by capitalizing on
opportunities in the United States where we have taken a view on
the long-term sustainability of low natural gas prices.
• Methanol production capacity ramp-up to top ?ve globally by 2017
through timely completion of Natgasoline LLC and debottlenecking
at OCI Beaumont.
• Largest global producer of melamine.
• Diversi?cation into Diesel Exhaust Fluid through Iowa Fertilizer
Company, and other downstream industrial chemicals where we
can bene?t from a ?rst mover advantage.
3. Operational Excellence:
• Maintain international product stewardship and health, safety,
quality and environment standards.
• Be an environmental steward by implementing the best technology
available to minimize our environmental footprint and promote
sustainable business best practices.
• Train all employees to operate our plants meeting the highest
international safety standards.
40 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 41
Financial Highlights
1
$ millions unless otherwise stated 2014
2013
restated
Revenue 2,685.8 2,477.5
Cost of Sales (1,949.4) (1,864.6)
Gross Pro?t 736.4 612.9
Gross Pro?t Margin 27.4% 24.7%
EBITDA before one-off items 833.4 676.3
EBITDA Margin 31.0% 27.3%
Operating pro?t before one-off items 525.0 458.0
One-off items (309.4) 71.9
Operating pro?t - reported 215.6 529.9
Income tax 565.0 (71.1)
Minorities (121.2) 36.0
Net Income from continuing operations
attributable to shareholders 444.1 313.3
Net Income Margin 16.5% 12.6%
Discontinued operations (115.4) (18.1)
Net income after discontinued operations
attributable to shareholders
328.7 295.2
Earnings/(loss) per share for continuing
operations ($)
Basic earnings per share 2.168 1.538
Diluted earnings per share 2.161 1.493
Total Assets 10,577.3 10,487.8
Total Assets (continuing operations) 8,038.8 7,863.8
Total Equity 2,537.8 2,087.6
Gross Interest-Bearing Debt 5,040.7 5,118.3
Net Debt 4,194.1 3,548.1
Capital expenditure 1,211.0 687.0
1
2013 and 2014 results represent continuing operations (the Fertilizer & Chemicals
business), unless otherwise stated. In addition, certain joint ventures (JVs) that were
previously proportionately consolidated in the 2013 accounts, are now accounted
for under the equity method (IFRS 11). The 2013 restated ?gures are pro forma and
unaudited.
2
After non-controlling interest.
As a result of the demerger of the Engineering & Construction Group,
only the Fertilizer & Chemicals ?nancials are reported as continuing
operations. The demerged Construction & Engineering Group has
been classi?ed as Discontinued Operations. OCI N.V.’s EBITDA from
continuing operations includes corporate costs (amounting to $ 25.5
million in 2013), which were previously not included in segmental
pro?ts.
In addition, the adoption of IFRS 11 has resulted in a change of
accounting for certain joint ventures, which has lowered 2013 revenue
by $ 155.8 million and 2013 EBITDA by $ 6.4 million, compared to the
?gures previously reported for the Fertilizer & Chemicals Group.
Revenue
OCI N.V.’s 2014 revenue from continuing operations reached
$ 2,685.8 million, an 8.4% increase compared to 2013. Revenue
increased primarily due to an increase of 11.7% in product
volumes sold.
In total, OCI N.V. sold 7.4 million metric tons of nitrogen-based
fertilizer and industrial chemical products in 2014 to customers in
more than 20 countries across Europe, the Americas, Asia and Africa.
Product prices were on average relatively stable and at a comparable
level as 2013.
EBITDA
EBITDA from continuing operations, excluding one-off items, reached
$ 833.4 million in 2014, a 23.2% increase from $ 676.3 million in
2013. Our performance was positively impacted by solid operations at
Sorfert and OCI Nitrogen in particular, coupled with a downward trend
in natural gas prices bene?ting our spot-based plants and despite a
lower result at both EFC and EBIC due to lower utilization rates.
Sorfert, in its ?rst full year of operations, was a signi?cant contributor
to EBITDA in 2014. The plant has been operating at high capacity
utilization rates as of April 2014, at times at or even above design
capacity. Sorfert bene?ts from a competitive low price long-term gas
contract.
OCI Nitrogen performed smoothly throughout the year, resulting in
a higher operating result compared to 2013. OCI Nitrogen’s most
important product, CAN, bene?ted from a tight supply-demand
balance, resulting in a favourable pricing environment. The nitrate
premium remained at a high level during 2014 and was above the
premium achieved in 2013. OCI Nitrogen also bene?ted from a
sustained drop in natural gas prices in Europe in 2014, with TTF
prices averaging $ 8.1 / mmbtu versus $ 10.5 / mmbtu in 2013,
a 22.7% reduction year-on-year in dollar terms.
The EBITDA margin from continuing operations, excluding one-off
items, reached 31.0% for the year, compared to 27.3% achieved
over 2013.
FINANCIAL
PERFORMANCE
OPERATIONAL REVIEW
OCI N.V. Annual Report 2014 43 42 OCI N.V. Annual Report 2014
FINANCIAL PERFORMANCE
CONTINUED
OPERATIONAL REVIEW
One-off items
One-off items have had a material impact on the operating pro?t and
net income results in 2014:
• A negative $ 309.4 million on EBITDA / operating pro?t
• A positive impact of $ 236.0 million on net income
In November 2014, our Egyptian subsidiary, Orascom Construction
Industries S.A.E. (OCI S.A.E.), received a favourable ?nal decision in
relation to its tax dispute with the Egyptian Tax Authority (ETA).
The tax dispute was initiated in 2012 when OCI S.A.E. received an
unsubstantiated tax evasion claim from the ETA related to the sale
of its cement assets in 2007. The company was forced to settle for
approximately $ 1 billion, payable in instalments over a four-year
period. The ?rst instalment of approximately $ 360 million (equivalent
to EGP 2.5 billion) was paid on 10 May 2013.
Following the change in government in Egypt in 2013, the company
appealed the settlement. The ETA’s Independent Appeals Committee
issued a ruling in favour of the Company in November 2014.
Despite the fact that the Egyptian Prosecutor started an appeal on
30 November 2014, the Company’s management, supported by
its legal experts concluded that the tax liability of $ 673.7 million
as at 31 December 2013 should be released through the 2014
income statement. The reversal is allocated evenly to continuing and
discontinuing operations. As a result OCI N.V. reported a net positive
reversal of $ 336.9 million in the 2014 Statement of Pro?t or Loss,
which contains the following elements:
• A net positive reversal of $ 36.6 million interest and a net foreign
exchange rate gain of $ 9.5 million in the net ?nance income line
• A positive reversal of $ 290.8 million in the tax expense line
In November 2014, the Board of Directors of OCI N.V. unanimously
approved the transfer of the rights from the ?rst instalment already
paid to the ETA in 2013 to the Tahya Misr (“Long Live Egypt”) Fund.
In March 2015, OCI S.A.E received an amount of EGP 1.9 billion
(equivalent to $ 266.2 million) from the ETA, as a refund of the ?rst
instalment paid net of taxes considered to be valid. In the 2014
Statement of Pro?t or Loss, this amount is recognized as a donation
cost in the Operating Pro?t line and as a gain in the Income Tax line.
Other one-off items had a net negative impact of $ 43.2 million
on EBITDA. Selling, General and Administrative (SG&A) included
expenses of $ 37.4 million related to our development projects in the
United States and $ 10.0 million expenses associated with the appeal
in the tax liability dispute case in Egypt. This was partially offset by
a positive of $ 9.0 million related to the partial release of the escrow
account created during the sales transaction of Gavilon in 2013.
One-off items’ impact on EBITDA
$ millions unless otherwise stated 2014
2013
restated
One-off item in
Income Statement
Operating pro?t as reported 215.6 529.9
Depreciation & amortization 308.4 218.3
Donation cost 266.2 - Donation Costs
Transaction cost - 89.3 Transaction Costs
Gain on sale of Gavilon (9.0) (262.1) Other income
Change in fair value of natural gas hedge 4.8 31.0 Other expenses
Reported EBITDA 786.0 606.4
Expenses related to expansion projects 37.4 - SG&A
Expenses related to tax dispute 10.0 - SG&A
Sorfert idled capacity expenses - 54.3 Other expenses
Prepayment of long-term contract - 15.6 SG&A
Total one-off items (309.4) 71.9
Operating pro?t excluding one-off
items
525.0 458.0
EBITDA excluding one-off items 833.4 676.3
One-off items at the net income level comprise one-off items at the
EBITDA level net of tax, the positive impact of the tax dispute liability
and net foreign exchange losses of $ 72.9 million on intercompany
balances. The foreign exchange losses are related to intercompany
?nancing of our activities in the United States through Euro-
denominated funding. The loss has no impact on our external ?nancial
position.
One-off items impact on net income from continuing operations
$ millions 2014 2013
One-off
item in P&L
Net income from continuing
operations 444.1 313.3
One-off items in EBITDA 309.4 (71.9)
Tax dispute settlement reversal (557.0) Income tax
Interest on tax settlement (non-cash) (36.6) 36.6 Finance expenses
Forex gain on tax settlement (9.5) (44.1) Finance income
Forex loss on intercompany loans 72.9 Finance expenses
Tax relief one-off items (15.2) (22.3) Income tax
Sorfert idled capacity expenses -
adjustment for minorities (26.6)
Non-controlling
interest
Total one-off items in net income (236.0) (128.3)
Net income fromcontinuing
operations excl. one-offs 208.1 185.0
Gross pro?t and cost of sales
Cost of sales from continuing operations of $ 1,949.4 million in 2014
increased 4.5% from $ 1,864.6 in 2013, solely the result of higher
depreciation & amortization charges. Excluding depreciation &
amortization cost of sales was at the same level in 2014 as in 2013
despite higher revenue. Cost of sales as a percentage of revenue
decreased to 72.6% as compared to 75.3% in 2013,
The gross pro?t margin increased from 24.7% in 2013 to 27.4% in
2014, resulting in an increase in gross pro?t of 20.2%.
Selling, General and Administrative Expenses
SG&A expenses as a percentage of revenue were 9.9% in 2014
compared to 8.2% in 2013, and amounted to $ 265.1 million in 2014.
The increase was due to the ?rst-year of operations of Sorfert, low
utilization rates at our Egyptian plants, and the one-off expenses
explained above. Excluding one-off costs, SG&A as a percentage of
revenue would have been approximately in line with the 2013 level
(8.1% and 8.2% respectively).
Operating Pro?t
Depreciation and amortization expenses are a signi?cant component
of the cost of our operations. Depreciation and amortization expenses
stood at $ 308.4 million, a 41.3% increase as compared to 2013,
solely the result of the ?rst-time inclusion of Sorfert.
One-off items, in particular $ 266.2 million donation expenses
recorded in operating pro?ts had a material impact on reported
operating pro?ts. Accordingly, operating pro?t from continuing
operations amounted to $ 215.6 million compared to $ 529.9 million
in 2013. Excluding one-off items, operating pro?t increased 14.6%
from $ 458.0 million in 2013 to $525.0 million in 2014.
Net ?nancing cost
Net ?nance costs consist of interest income, gain or loss on foreign
exchange, and interest expense on interest-bearing liabilities.
Net ?nance costs include interest of $ 36.6 million related to the tax
dispute liability mentioned above in 2013 and the subsequent reversal
in 2014. A foreign exchange gain related to tax dispute liability stood
at $ 44.1 million in 2013 and $ 9.5 million in 2014. In 2014, non-
recurring foreign exchange losses related to intercompany balances
were $ 72.9 million.
Including those one-off items net ?nance costs were $ 250.4 million,
an increase from $ 203.2 million in 2013.
Net income attributable to shareholders and earnings
per share (EPS)
Net income from continuing operations improved 41.7% from
$ 313.3 million in 2013 to $ 444.1 million in 2014. Total one-off items
had a positive impact of $ 236.0 million on net income in 2014,
mostly related to the reversal of the tax liabilities discussed above.
Net income excluding one-off items stood at $ 208.1 million
compared to $ 185.0 million in 2013.
Following the successful demerger of the Engineering & Construction
Group, all demerged entities have been treated as discontinued
operations. Discontinued operations reported a net loss after non-
controlling interest of $ 115.4 million and $ 18.1 million in 2014 and
2013 respectively.
As a result, net income including discontinued operations and
including the impact of non-controlling interests amounted to $ 328.7
million, an 11.3% improvement on the $ 295.2 million reported in
2013.
Basic EPS for continuing operations stood at $ 2.168 per share in
2014, compared to $ 1.538 during 2013. Diluted EPS for continuing
operations stood at $ 2.161 per share in 2014, compared to $ 1.493
during 2013.
Dividends
OCI has a ?exible dividend policy designed to balance the availability
of funds for dividend distribution with pursuing growth opportunities
that generate attractive returns. We currently have two large green?eld
projects under construction in the United States. Accordingly, the
Board of Directors has decided to focus cash ?ows on completing
these signi?cant growth initiatives in a timely manner and therefore has
not announced a dividend for FY2014.
Number of employees
During the ?nancial year ended 31 December 2014, the average
number of staff employed in the Group converted into full-time
equivalents (FTE) amounted to 33,282 employees compared to
72,418 in 2013, where the latter ?gure included employees employed
by associates and joint ventures. Of these employees 2,911 were
employed in the continuing Fertilizer & Chemicals segment, an
increase of 5.2% from 2,768 employees in 2013.
Cash ?ow
Condensed Consolidated Statement of Cash Flows
for the years ended 31 December
$ millions 2014
2013
restated
Pro?t for the year 449.9 259.2
Adjustments:
Net pro?t / (loss) from discontinued operations 96.1 3.8
Depreciation of PPE and amortization 308.4 218.3
Gain on sale of Gavilon (9.0) (262.1)
Adjustments related to tax dispute liability in Egypt (565.0) 71.1
Changes in working capital 236.9 (83.4)
Changes in provisions 262.3 15.3
Other cash ?ows from operating activities (59.6) (476.4)
Cash ?ows from operating activities (continuing
operations) 720.0 (254.2)
Investments in property, plant and equipment (1,211.0) (687.0)
Proceeds from sale of other investments 9.0 1,829.9
Dividends from equity accounted investees 33.0 33.0
Cash ?ow from investing activities (continuing
operations)
(1,169.0) 1,175.9
Proceeds from share issuance - 355.6
Proceeds from sale of treasury share 37.7 91.2
Proceeds from borrowings 550.0 2,573.3
Repayment of borrowings (433.2) (2,098.9)
Other cash ?ows from ?nancing activities (119.2) (150.2)
Financing related to discontinued operations (390.0) (459.0)
Cash ?ows from ?nancing activities (continuing
operations) (354.7) 312.0
Net cash ?ows from / (used in) continuing
operations (803.7) 1,233.7
Net cash ?ows from / (used in) discontinued
operations (51.1) (7.8)
Net increase (decrease) in cash and cash
equivalents (854.8) 1,225.9
Cash and cash equivalents at 1 January 1,990.2 762.5
Currency translation adjustments (20.2) 1.8
Cash and cash equivalents at 31 December 1,115.2 1,990.2
Presentation in the statement of ?nancial position
Cash and cash equivalents
846.6 1990.2
Bank overdraft (100.3) -
Cash and cash equivalents (as held for demerger) 368.9 -
Cash and cash equivalents at 31 December 1,115.2 1,990.2
44 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 45
FINANCIAL PERFORMANCE
CONTINUED
OPERATIONAL REVIEW
Cash Flows from Operating Activities
Cash in?ows from continuing activities in 2014 totaled $ 720.0
million, compared to a negative of $ 254.2 million in 2013. This was
principally generated from cash ?ow generated by our operating
companies and changes in working capital items, most notably
payables of $ 140.8 million and receivables of $ 88.6 million.
Cash Flows from Investing Activities
Cash used in investing activities (continuing operations) reached
$ 1,169.0 million. Total capital expenditures in 2014 increased to
$ 1,211.0 million compared to $ 687.0 million in 2013, principally
used for the construction of the Iowa Fertilizer Company, the
debottlenecking and turnaround program at OCI Beaumont and the
start of construction at Natgasoline LLC.
Cash Flows from Financing Activities
Cash out?ows used in ?nancing continuing activities in 2014 totaled
$ 354.7 million, compared to $ 312.0 million in?ows in 2013.
This consisted principally of the issuance of a $ 550 million revolving
credit facility in the third quarter of 2014 at the OCI N.V. level, offset
by repayment of borrowings ($ 433.2 million). Financing related to
Discontinued Operations amounted to out?ows of $ 390.0 million,
mainly to deleverage the construction business.
The revolving credit facility was earmarked towards general corporate
purposes including retirement of some debt with short-term maturities
and partial ?nancing of capital expenditure for Natgasoline LLC.
Net debt
Net Debt as at 31 December
$ millions 2014
2013
1
restated
Long-term interest-bearing debt 4,638.5 4,441.1
Short-term interest-bearing debt 402.2 677.2
Gross interest-bearing debt 5,040.7 5,118.3
Cash and cash equivalents 846.6 1,570.2
Net debt 4,194.1 3,548.1
1
2013 restated ?gures are pro forma and unaudited.
Total gross debt outstanding was slightly down from $ 5,118.3 million
as at 31 December 2013 to $ 5,040.7 million as at 31 December
2014, with no major debt maturing over the next twelve months. Our
total interest-bearing debt decreased by $ 77.6 million during the
year primarily due to the issuance of the revolving credit facility at the
OCI N.V. level, offset by repayments of $ 433.2 million and currency
?uctuations, in particular the Algerian Dinar and the Euro.
Cash and cash equivalents stood at $ 846.6 million as of
31 December 2014, down from Pro Forma $ 1,570.2 million as
of 31 December 2013. The decrease in cash held at year-end is
principally attributable to cash in?ows from operations totaling
$ 720.0 million, offset by capital expenditure of $ 1,211.0 million.
OCI N.V.’s net debt of $ 4,194.1 million as at 31 December 2014 is
an 18.1% increase over 31 December 2013, driven by cash out?ows
related to our development projects in the United States.
Balance Sheet
Condensed Consolidated Statement of Financial Position as at 31 December
$ millions 2014
2013
1
Pro forma
and
unaudited
2013
restated
Total non-current assets 6,365.9 5,663.2 6,470.2
Total current assets 4,211.4 4,824.6 4,017.6
Including assets held for demerger 2,538.5 2,624.0 -
Total Assets 10,577.3 10,487.8 10,487.8
Shareholders’ Equity 2,118.9 1,721.3 1,721.3
Non-controlling interest 418.9 366.3 366.3
Total Equity 2,537.8 2,087.6 2,087.6
Total non-current liabilities 5,032.2 5,055.8 5,382.6
Total current liabilities 3,007.3 3,344.4 3,017.6
Including liabilities held for demerger 1,812.6 2,146.4 -
Total Liabilities 8,039.5 8,400.2 8,400.2
1
In the 2013 pro forma column, Construction & Engineering segment has been
presented as if it quali?ed as assets held for demerger as of year-end 2013.
The majority of OCI N.V’s total debt outstanding is held at the
operating company level and is ?nanced through operating cash
?ows. OCI N.V.’s debt pro?le is detailed in the table below:
OCI N.V. Consolidated Debt Breakdown as at 31 December 2014
$
millions Description Companies
Gross
Debt Cash
Net
Debt
Joint
venture
debt
• Debt at entities where
OCI’s stake is less than
100%
• Debt is non-recourse
to OCI N.V., although
consolidated on the
group’s balance sheet
• Sorfert
• EBIC
• OCI Beaumont
1,764.5 167.7 1,596.8
Operating
company
debt
• 100% owned operating
companies’ debt is
organized against
operating company
cash ?ow and is non-
recourse to HoldCo
• Corporate support is
available from OCI N.V.
with Board approvals
• OCI Nitrogen
• EFC
• OFT
1,119.5 107.4 1,012.1
Project
?nance
debt
• Project ?nance debt
which can remain
with companies
after completion of
construction
• All project ?nance debt
is ring-fenced and non-
recourse to OCI N.V.
• Debt is raised through
banks or capital
markets
• Long tenures ?nanced
by operating cash ?ow
• IFCo 1,172.3 426.4 745.9
Holding
Company
debt
• Full responsibility
of OCI N.V.
• Supported by
investment asset
values and dividends
received from
subsidiaries
• OCI N.V.
• Other 984.4 145.1 839.3
Total debt 5,040.7 846.6 4,194.1
Outlook
For the full year 2015, we expect improvements in EBITDA and net
income driven by:
• Compared with 2014, we expect to sell additional product volumes,
in particular from Sorfert, which was still in ramp-up phase in early
2014.
• A strong United States Dollar and lower gas prices in both Europe
and the United States have been favourable in Q1 2015, in
particular for OCI Nitrogen.
• Both ammonia and methanol lines at OCI Beaumont were of?ine
from the end of January 2015 and restarted production in April
2015. The plants will be able to produce at the increased capacity
levels from April onwards.
• The Egyptian government has taken several short and longer term
measures to address the country’s gas supply issue and we expect
these efforts to improve supply of natural gas from the second
quarter of 2015 onwards.
2015 Guidance for Capital Expenditures
We expect total capital expenditure of approximately $ 1.1 - 1.2
billion in 2015, with the majority earmarked for our growth initiatives
in the United States. OCI N.V.’s production plants are relatively new,
minimizing required maintenance capital expenditures.
Apart from Natgasoline LLC, all capital expenditure requirements for
OCI N.V.’s announced green?eld and growth-related debottlenecking
projects already under construction are fully funded as at 31
December 2014.
46 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 47
SUSTAINABILITY
By promoting
environmental
stewardship and
fostering growth in
our communities,
we seek to create
a sustainable
environment to
continue to grow
our business.
LOST TIME INJURY RATE (LTIR)
Number of lost time injuries per 200 thousand hours
worked
2010
0.85
2011
0.64
2012
1.57
2013
0.29
2014
0.16
2009
0.88 0.88
GHG EMISSIONS
Million tons of CO2 equivalent
2010
0.77
2011
0.84
2012
0.59
2013
0.62
2014
0.78
2009
4.93
NUMBER OF EMPLOYEES
AS AT 31 DECEMBER 2014
3,000
OCI N.V. Annual Report 2014 49 48 OCI N.V. Annual Report 2014
Launching Chemelot2Discover
In September 2014, the seven companies based in the industrial
site of Chemelot on which OCI Nitrogen is located launched a
new educational program for children called Chemelot2Discover.
The program introduces children to the activities at Chemelot
in combination with talent development in the ?elds of science,
chemistry and technology.
Chemelot2Discover is a follow-up to the 20-year legacy program
Youth & Chemistry, which encouraged an increase in students
pursuing technical education in the region.
Chemelot2Discover aims to encourage interest in science,
chemistry and technology through a playful and interactive
multi-component program meant for primary school pupils in the
Sittard/Geleen region. Participation in the program is a ?xed part
of the curriculum for many schools in the region, and each year
some 1,300 pupils from 50 schools participate.
CSR REPORT CONTINUED
Ralf Krewinkel, Mayor of Beek, presenting award
CORPORATE SOCIAL RESPONSIBILITY & SUSTAINABILITY
MAKING SCIENCE FUN
As a result of the demerger, we now employ
approximately 3,000 people and reach
thousands of customers around the world.
We have a commitment to maximize the
use of local resources whenever possible by
drawing local people into our company and
developing their skills, and by choosing local
partners where possible to supply materials
and other services.
Investing in our people
Our people are fundamental to the success
of our business; we have invested and are
committed to continuing to invest in the best
people and the best technologies.
A trusted corporate citizen
Our products are sold across Europe, the
Americas, Asia and Africa. Our fertilizers
optimize yields, strengthen crops and
accelerate growth and maturity on a global
level and in our local communities. Our
industrial chemicals are used in many
industries to produce sustainable and
environmentally sound manufacturing and
energy solutions.
As a leading corporate citizen in the countries
in which we operate our production facilities,
we have a vested interest in developing our
host communities through our time and
resources. We have focused our efforts on
education, which we believe is key improving
the economic and social well-being of our
communities.
Frans Scheeren
Dutch Chemical Industry Plant Manager of the Year 2014
Frans Scheeren, Plant Manager at OCI Nitrogen, won the award for Plant Manager of
the Year 2014 during the Deltavisie congress in Rotterdam.
The Plant Manager of the Year award was founded in 2008 by the Petrochem Platform
and the Dutch Chemical Industry Association (VNCI), in cooperation with Deltalinqs
and the Port of Rotterdam Authority. The award rewards plant managers’ efforts and
achievements, especially in the areas of safety, health, productivity and sustainability.
Frans was nominated by the OCI Nitrogen team, and was given the award by his
industry peers, because over the past ten years he has delivered outstanding results in
terms of ef?ciency, safety and health.
“Frans is not only a great person but also a skilled professional,” said Gert-Jan de Geus,
Chief Executive Of?cer of OCI Nitrogen. “He enjoys every facet of his work as plant
manager. He always analyses what the best, safest and most sensible choice is for the
plants, and he is thorough and effective about implementation. He’s also a genuine team
player. That has won him the appreciation of his team, who are able to work on their
personal and professional development.”
HIGHLIGHTING OUR
PEOPLE’S SUCCESS
50 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 51
CSR REPORT CONTINUED
CORPORATE SOCIAL RESPONSIBILITY & SUSTAINABILITY
Product & health, safety & environment stewardship
We are committed to meeting or exceeding international product
stewardship and health, safety, quality and environment standards.
We train all employees to implement the best sustainable practices.
We believe that the health and safety of our employees is essential to
the successful conduct and future growth of our business and are in
the best interest of our shareholders.
We are committed to being an environmental steward by
implementing the best technology available to minimize our
environmental footprint and promote sustainable business best
practices.
As part of these commitments, our Board of Directors established
a Health, Safety and Environment (HSE) Committee to assess and
review our HSE policies, programs, performance and compliance with
international standards. The Committee has worked to standardize
our HSE reporting systems at the subsidiary level, and has established
new corporate HSE standards that will be implemented in 2015. We
believe the Committee’s establishment and initiatives underscore our
continued commitment to operating at the best possible standards
and ef?ciencies, as well as promoting excellence in every aspect of
our business.
Product Stewardship
Product stewardship ensures that fertilizers and their raw materials,
additives and intermediate products are processed and manufactured,
handled, stored, distributed and used in a way which safeguards
health, occupational and public safety, the environment, and ensures
security. We comply with international standards as members of the
International Fertilizer Association, Fertilizers Europe (formerly EFMA),
The Fertilizer Institute (TFI), and the International Methanol Producers
& Consumers Association (IMPCA), among others.
Certi?cations
EFC, EBIC, and OCI Nitrogen are ISO 9001 certi?ed. EBIC and EFC
also hold ISO 14001 and OHSAS 18001 certi?cations, certifying each
plant’s commitment to excellence in product quality and management
controls and procedures as per global standards. OCI Nitrogen also
has a Product Stewardship certi?cate.
In addition, all of our North African and European plants hold
REACH registration certi?cates from the European Chemicals
Agency, ensuring a high level of protection of human health and the
environment from the risks that can be posed by chemicals.
Health & Safety First
We are committed to providing a safe and healthy workplace for all
employees by implementing the highest international safety standards.
This commitment is underscored by several safety development
initiatives undertaken at our plants, with several achievements
during the year aiming to standardize health and safety monitoring,
prevention and reporting across our plants. Highlights include:
- OCI Nitrogen achieved the lowest overall frequency index in
the plant’s history at 0.25, with the nitrates lines achieving zero
recordable incidents
- OCI Beaumont submitted its Occupational Safety and Health
Administration (OSHA) Voluntary Protection Program applications to
achieve ‘star’ quali?cation, designed for exemplary worksites with
comprehensive, successful safety and health management systems
- IFCo developed its HSE policies, programs and industry best
practices to meet legal and all other applicable requirements for the
safe operation of a nitrogen fertilizer facility. This includes acquiring
proper environmental and operating permits along with assets
necessary to administer an emergency response plan and general
safety policies
- All plants now have a Process Safety Management program and
conduct monthly safety management and departments safety
meetings, and have also made strong enhancements to their safety
cultures with the implementation of effective safety training for all
employees
Our Lost Time Injury Rates (LTIR) at our plants as outlined below are
excellent as compared to the International Fertilizer Association’s (IFA)
2012 industry average of 0.4, and are at their lowest levels since we
began operations as a fertilizer producer in 2008. The health and
safety of our employees is a core focus and we are constantly looking
for areas to improve.
LTIR 2010 2011 2012 2013 2014
OCI Nitrogen 1.00 0.86 0.77 0.14 0.14
OCI Beaumont - - 0.13 0.00 0.41
IFCo - - - - -
EFC 0.97 0.50 1.17 0.00 0.00
EBIC 0.57 0.57 4.19 0.00 0.19
Sorfert - - - 1.30 0.00
OCI Average 0.85 0.64 1.57 0.29 0.16
Occupational health is part of our overall HSE management to ensure
that everyone working with OCI N.V. remains healthy at all times. A
Fitness for Duty Process is set up to ensure all employees are able
to safely perform essential physical and mental requirements of the
job without creating risk to themselves, others or the environment. A
Health Risk Assessment Process is in place to estimate the nature
and probability of adverse health effects to people by identifying the
adverse health effects that can be caused by any exposure to any
hazardous agent or the work environment.
Environmental Excellence
We are committed to being an environmental steward by
implementing the best technology available where applicable to
minimize our environmental footprint and promote sustainable
business best practices. Our resolve to reduce our environmental
impact as nitrogen-based chemicals producer is proven by our 84%
reduction in carbon dioxide (CO2) emissions since 2009, despite the
addition of four more production facilities.
As a testament to EFC’s commitment to producing urea at the lowest
possible impact on the environment, EFC is the only plant in Egypt
that has implemented a novel solution to the large quantity of water
produced as a by-product of the urea manufacturing process. In
2010, the plant invested $ 1.2 million for the construction of two
irrigation ponds capable of holding up to 10,000 cubic meters of
water. The water is used to irrigate 50 acres of forestry near the plant
in an environmentally friendly manner. EFC was impacted by the
natural gas supply disruptions throughout 2014, which resulted in
reduced emissions ef?ciency during the year.
At EBIC, the plant supplies EFC with the excess CO2 produced in
the manufacture of ammonia. Through this shared pipeline, EFC
is able to produce additional urea and EBIC is able to decrease its
pollutant CO2 emissions. During 2014, EBIC provided approximately
110 thousand metric tons of CO2 emissions to EFC, equivalent to
CO2 emissions from the annual electricity use of 15,158 homes. In
addition, both plants have been tuned to share some utilities, primarily
electricity and waste water. This not only generates savings in capital
expenditure, but also allows each plant to depend on the other for
backup in case of a malfunction, making our operations at both
plants even more reliable.
OCI Beaumont is implementing Best Available Control Technology
(BACT), a pollution control standard mandated by the United
States Clean Air Act, during its next plant turnaround to reduce
its environmental impact. The plant installed a Selective Catalytic
Reduction Unit, a Saturator and a Prereformer in conjunction with its
debottlenecking and turnaround.
OCI Nitrogen’s plants all operate at excellent energy ef?ciency rates,
with energy consumption and CO2 emissions at levels close to
the chemical and physical minimum, thereby leading to a positive
CO2 balance under the current European Trading Scheme for CO2
emission trading. OCI Nitrogen has successfully maintained its low
CO2 emissions despite adding more than 300 thousand metric tons
of annual production capacity since 2010.
OCI Nitrogen’s award winning “COOL!” indirect cooling technology
has allowed OCI Nitrogen to reduce its annual ?ne particle emissions
from 174 metric tons to zero, the ?rst nitrogen fertilizer plant in the
world to achieve this. COOL! has also allowed OCI Nitrogen to
reduce energy consumption by 75% while increasing production
by 20%. The innovative cooling system was awarded the Dutch
Chemical Industry Association’s (VNCI) Responsible Care prize in
2013, and placed in the top three for the European Business Awards
for the Environment’s (EBAE) ‘sustainable process’ prize in 2014.
The European Business Awards for the Environment are awarded
to eco-innovation companies that successfully combine innovation,
competitiveness and outstanding environmental performance.
GHG emissions
(Million tons of CO2 equivalent) 2010 2011 2012 2013 2014
OCI Nitrogen 1.10 1.30 1.20 1.30 1.23
OCI Beaumont - - 0.26 0.49 0.46
IFCo - - - - -
EFC 0.45 0.43 0.43 0.36 0.55
EBIC 0.76 0.78 0.68 0.39 0.10
Sorfert - - 0.40 0.55 1.57
OCI Average 0.77 0.84 0.59 0.62 0.78
52 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 53
56 Board of Directors Pro?le
58 Message from the Chairman
59 Corporate Governance
62 Report of the Board of Directors
66 Risk Management and Compliance
72 Remuneration Report
77 Declarations
CORPORATE
GOVERNANCE
BOARD OF DIRECTORS PROFILE
1 Michael Bennett
Chairman
Nationality American
Age 61
Appointed Chairman January 2013
Current term of of?ce expires 2016
Committee memberships
Health Safety & Environment, Nomination &
Governance, Remuneration
Current external appointments
• Director, Alliant Energy Corporation
• Director, Arclin, Inc.
Previous relevant experience
• CEO and Director, Terra Industries Inc.
• Chairman and President, Terra Nitrogen
Company L.P.
• Chairman, The Fertilizer Institute and The
Methanol Institute in the United States
2 Nassef Sawiris
Chief Executive Of?cer
Nationality Egyptian
Age 54
Appointed CEO January 2013
Current term of of?ce expires 2017
Current external appointments
• Non-Executive Director:
- Orascom Construction Ltd.
- Lafarge S.A.
- BESIX Group
Previous relevant experience
Chairman and CEO,
Orascom Construction Industries S.A.E.
3 Salman Butt
Chief Financial Of?cer
Nationality Pakistani
Age 55
Appointed CFO January 2013
Current term of of?ce expires 2017
Current external appointments
• Non-Executive Director,
Orascom Construction Ltd.
Previous relevant experience
• Head of Investment Banking, Samba
Financial Group in Saudi Arabia
• Various positions at Citibank in Pakistan,
Hong Kong, United Kingdom, Egypt and
Saudi Arabia
4 Jan Ter Wisch
Vice-Chairman
Nationality Dutch
Age 62
Appointed January 2013
Current term of of?ce expires 2016
Committee memberships
Nomination & Governance (Chairman), Audit,
Health Safety & Environment
Current external appointments
• Chairman, Stichting De Westberg
• Director, Stichting Administratiekantoor
Grass
• Chairman of Investment Committee,
5square MKB Fund III Coöperatieve U.A.
• Director, Stichting OB N.V.
Previous relevant experience
• Partner
- Deloitte
- Loeff Claeys Verbeke
- Allen & Overy
• Member European Tax Board, Deloitte
• Director, Loeff Claeys Verbeke
• Chairman of Global Tax Board,
Allen & Overy
5 Kees van der Graaf
Senior Independent Director
Nationality Dutch
Age 64
Appointed December 2013
Current term of of?ce expires 2017
Committee memberships
Health Safety & Environment (Chairman),
Nomination & Governance
Current external appointments
• Member of the Supervisory Board
- Carlsberg
- EnPro Industries LLC
- Ben&Jerry’s
- GrandVision N.V. (Chairman)
- MyLaps B.V.
- University of Twente (Chairman)
- FSHD Foundation (Founder and
Chairman)
Previous relevant experience
• Member Board of Directors and Executive
Committee, Unilever
• Executive-in-Residence, Business school
IMD Lausanne
6 Sipko Schat
Non-Executive Director
Nationality Dutch
Age 54
Appointed December 2013
Current term of of?ce expires 2017
Committee memberships
Remuneration (Chairman), Audit
Current external appointments
• Member of the Supervisory Board
- Paris Orléans S.A.
- Vion N.V. (Chairman)
Previous relevant experience
Member of the Executive Board,
Rabobank Group
7 Robert Jan van de Kraats
Non-Executive Director
Nationality Dutch
Age 54
Appointed June 2014
Current term of of?ce expires 2018
Committee memberships
Audit (Chairman), Remuneration
Current external appointments
• CFO and Vice-Chairman of the Executive
Board, Randstad Holding N.V.
• Member of the Supervisory Board of
Schiphol Group
Previous relevant experience
• Quali?ed Chartered Accountant
• Various ?nance and operational executive
and non-executive positions in the
technology, ?nancial services and credit
insurance sectors
8 Jérôme Guiraud
Non-Executive Director
Nationality French
Age 54
Appointed June 2014
Current term of of?ce expires 2018
Committee memberships
Audit, Nomination & Governance Committee
Current external appointments
• Chief Executive Of?cer and Director, NNS
Capital Ltd.
• Member of the Board and Audit
Committee, Lafarge S.A.
• Director
- NNS Holding Sàrl
- NNS Luxembourg
- OS Luxembourg
Previous relevant experience
• 30 years of professional experience in
banking and ?nancial markets
• 15 years as a director in listed and non-
listed companies
9 Arif Naqvi
Non-Executive Director
Nationality Pakistani
Age 54
Appointed January 2013
Current term of of?ce expired
15 February 2015
Committee memberships
Audit, Nomination & Governance
Current external appointments
• Founder, CEO and Board Member,
The Abraaj Group
• Director, Orascom Construction Ltd.
• Trustee, Interpol Foundation
• Board Member, United Nations Global
Compact
• Chairman Middle East Centre Advisory
Board, London School of Economics and
Political Science
• Council Member Belfer Center International
at the Kennedy School of Government,
Harvard University
Previous relevant experience
• 30 years of experience of investing
in public and private companies
• Established The Abraaj Group in
2002 and has served as its CEO
since inception
OCI N.V. (the Company) has a one-tier Board of Directors (the Board), which is responsible for the management, general affairs, strategy, and
long-term success of the business as a whole. The Board comprises a majority of Non-Executive Directors and a minority of Executive Directors
whose responsibility is collective, taking into account their respective roles as Executive Directors and Non-Executive Directors.
1 2 3
4 5 6
7 8 9
OCI N.V. Annual Report 2014 57 56 OCI N.V. Annual Report 2013
OCI N.V.
CORPORATE GOVERNANCE
MESSAGE FROM THE CHAIRMAN
Dear Shareholders,
During 2014, the Board of Directors oversaw several landmark
projects that we believe will add substantial value to the Company.
We returned $ 1.4 billion in capital to shareholders through the
separation of the Engineering & Construction Group. This and other
?nancing initiatives have resulted in a leaner and stronger balance
sheet that has well positioned OCI N.V. to pursue exciting growth and
investment opportunities in the medium term.
We are proud of the strides made throughout 2014 to expand and
improve OCI N.V.’s corporate governance. We welcomed two new
non-executive Board members and a new Corporate Secretary, all
of whom bring a wealth of experience to OCI N.V., and established a
Health, Safety and Environment Committee.
Our new Board members, Mr. Robert Jan van de Kraats and Mr.
Jérôme Guiraud, were voted in by our shareholders at the 2014
Annual General Meeting. Mr. Arif Naqvi’s term ended on 15 February
2015. We would like to thank Mr. Naqvi for his valuable contribution.
Our Board now comprises eight members from ?ve countries with a
collective expertise that we believe is curated to serve OCI N.V. well.
Our new Corporate Secretary, Ms. Maud de Vries, brings 17 years of
legal experience to our Board and has been integral to developing our
governance processes.
For the year ended 31 December 2014, the Board reports the
following:
• The Board has reviewed and discussed the audited ?nancial
statements for the year 2014.
• The Board discussed with the external auditor the outcome of
their performed audits in accordance with International Standards
on Auditing.
• The Board has received written con?rmation of the external
auditor’s independence.
• Based on the review and discussions referred to above, the
Board has approved that the audited consolidated and Company
?nancial statements be included in the 2014 Annual Report.
The Board of Directors recommends that the General Meeting of
Shareholders adopts the 2014 ?nancial statements included in this
Annual Report.
The Board is energized to continue to develop and adopt corporate
governance guidelines that adhere to applicable standards, laws and
regulations. We are proud of our role as a global producer of essential
nutrients and environmentally sound industrial chemicals, and aim to
maintain the highest international health, safety, quality
and environmental standards at all of our operations.
With our new, more streamlined focus in place, we look forward
to pursuing growth and investment opportunities that will deliver
outstanding returns to our shareholders.
Michael Bennett
Chairman
CORPORATE GOVERNANCE
OCI N.V. (the Company) is committed to the principles of good
corporate governance. The Board believes that good corporate
governance practices align the interests of all stakeholders by putting
structures in place that ensure the business is managed with integrity
and ef?ciency, thereby maximizing the pro?tability and long-term value
of the Company. The Board is committed to continuously monitor and
strengthen the Company’s corporate governance.
OCI N.V. is a public limited liability Company under Dutch law, with its
of?cial seat in Amsterdam, the Netherlands. The authorized capital of
the Company amounts to EUR 300 million. The authorized capital is
divided into 300 million shares, having a nominal value of EUR 1 each.
All shares are registered shares. No share certi?cates are issued.
OCI N.V.’s shares are listed and quoted in Euros on NYSE Euronext’s
Amsterdam market. The Company reports its ?nancial statements in
US Dollars.
This section contains an overview of the corporate governance
structure and how it was applied in 2014. It includes the information
required by the Dutch Corporate Governance Code. Additional
information on our corporate governance can be found on the
corporate website www.oci.nl/corporate-governance.
Corporate Governance structure
The Board of Directors
OCI N.V.’s Board is a one-tier Board, which in 2014 comprised two
Executive Directors and, in a majority, seven Non-Executive Directors.
The Board has ultimate responsibility for the management, general
affairs, direction, performance and success of the business as a
whole. The responsibility of the Directors is collective, taking into
account the respective roles of the Executive-and Non-Executive
Directors.
The Board is responsible for monitoring and assessing its own
performance.
Non-Executive Directors
The role of the Non-Executive Directors is essentially supervisory
in nature. Their primary responsibilities are:
• The supervision of the Executive Directors;
• Assessing the performance of the business;
• Assessing risks and controls;
• Assessing the Internal Control function;
• Developing strategy with the Chief Executive Of?cer (CEO);
• Remuneration and succession planning;
• Selection and nomination for appointment of Executive and
Non-Executive Directors;
• Governance and Compliance.
Chairman
OCI has a Chairman and a CEO. There is a clear division of
responsibilities between their roles. The Chairman is primarily
responsible for the functioning of the Board and its Committees.
The Chairman sets the Board’s agenda and promotes effective
relationships and open communication between the Executives and
Non-Executive Directors. With the Group Company Secretary, the
Chairman will take the lead in providing an induction programme for
new Directors that is tailored to the respective Director.
Senior Independent Director
The Senior Independent Director acts as a trusted intermediary for
the individual Directors.
Executive Directors
OCI’s Executive Directors are the CEO and the Chief Financial Of?cer
(CFO) who are full time employees of the Company.
Chief Executive Of?cer
The CEO has the authority to determine which duties regarding the
strategic and operational Management will be carried out under his
responsibility. The Board has delegated the operational Management
of the business to the CEO, who can take day-to-day decisions
within the boundary conditions as being de?ned in the Articles of
Association and By-laws, without the need to revert to the Board
for approval. Matters reserved for the Board include structure, Risk
Management & Internal Control Systems, corporate governance,
approval of dividends, approval of overall strategy, approval of
signi?cant transactions, ?nancial reporting and compliance. The CEO
is responsible to the Board and is able to delegate his authorities
and powers.
Corporate Secretary
The Corporate Secretary advises the Board on matters relating to
governance of the Group and compliance with Board procedures.
Appointment of Directors
The General Meeting of Shareholders can appoint, suspend or dismiss
a Director by an absolute majority of the votes cast upon a proposal of
the Board. In addition, the General Meeting of Shareholders is able to
nominate Directors. To do so they must put a resolution to the General
Meeting of Shareholders in line with the requirements as described in
the Articles of Association. A Director is appointed for a four year term
and is eligible for reappointment. However, a Non-Executive Director
may not serve for more than 12 years.
The Non-Executive Directors are selected individually for their broad
and relevant experience and international pro?le as well as for their
independence. The Board pro?le for Non-Executive Directors (which
can be found on OCI N.V.’s website) provides guiding principles for the
composition of the Board.
Organizational structure
Prior to the demerger, OCI N.V.’s organizational structure was split
between its two main segments: the Engineering & Construction
Group and the Fertilizer & Chemicals Group. Each Group was
empowered to manage its day-to-day operations under the
supervision of its respective Chief Operating Of?cer (COO). Going
forward, the day-to-day operational structure will continue to be
supervised by the Fertilizer & Chemicals Group COO. Each subsidiary
is led by a General Manager and Chief Financial Of?cer who report to
the COO.
For 2014 the Board set the strategic mandate for the Company with
operational and ?nancial goals. The Executive Directors supervised the
achievement of these goals through regular reporting from the COO’s
and each subsidiary’s management team and reported progress to
the Executive Directors.
58 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 59
OCI N.V.
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
CONTINUED
The below simpli?ed corporate structure illustrates the governance
and each business segment’s grouping in 2014 with the engineering
and construction activities marked as discontinued operations:
Shareholders’ rights
OCI N.V.’s shareholders exercise their rights through the Annual
General Meeting of Shareholders in the Netherlands each year, no
later than six months after the end of the Company’s ?nancial year.
Additional Extraordinary General Shareholders meetings may be
convened at any time by the Board of Directors or by one or more
shareholders representing more than 10% of the issued share capital.
A notice convening a General Meeting of Shareholders shall be issued
on behalf of the Board by no later than the 42
nd
day prior to the day
of the meeting. Parties who have the right to vote and attend the
meeting and who are registered as such in a designated (sub)register
on the 28
th
day prior to the day of the meeting (“registratiedatum”) will
be entitled to attend the meeting and vote, irrespective of the identity
of the entitled party with respect to those shares at the time of the
meeting.
Votes representing shares can be cast at the General Meeting
of Shareholders either personally or by proxy. No restrictions are
imposed on these proxies, which can be granted electronically or in
writing to the Company, or to independent third parties. OCI N.V.’s
shareholders may cast one vote for each share, be it in the form of
ordinary shares or American Depository Receipts. All resolutions
adopted by the General Meeting of Shareholders are passed by an
absolute majority of the votes cast, unless the law or the Articles of
Association prescribe a larger majority. The Shareholders possess the
rights conferred by the Articles of Association and By-laws.
Information pertaining to the structure of, admission to, and
Shareholders’ voting rights at the General Meeting of Shareholders
can be found on the corporate website.
Important matters that require the approval of the (Annual) General
Meeting of Shareholders are:
• Adoption of the ?nancial statements;
• Declaration of dividends;
• Signi?cant changes to the Company’s corporate governance;
• Remuneration policy;
• Remuneration of the Non-Executive Directors;
• Discharge from liability of the Board of Directors;
• Appointment of the external auditor;
• Appointment, suspension or dismissal of the members of Board
of Directors;
• Issuance of shares or rights to shares, restriction or exclusion of
pre-emptive rights of Shareholders and repurchase or cancellation
of shares;
• Amendments to the Articles of Association.
The Company’s Articles of Association detail the proposals that the
Board may submit to the meeting, and the procedure according to
which Shareholders may submit matters for consideration by the
meeting. Within three months of the meeting, the draft minutes of the
meeting are made available for three months for comments. The ?nal
minutes are published on the corporate website.
External Auditor
The General Meeting of Shareholders appoints the external auditor.
The Audit Committee recommends to the Board the external
auditor to be proposed for (re)appointment by the General Meeting
of Shareholders. In addition the Audit Committee evaluates the
functioning of the external auditor. On 26 June 2014, the General
Meeting appointed KPMG Accountants N.V. as external auditor
for OCI N.V. for the ?nancial year 2014.
Decree Article 10 EU Takeover Directive
OCI N.V. has an authorised capital of EUR 300 million which is divided
into 300 million shares, each with a nominal value of EUR 1. One vote
can be cast for each share.
According to the Dutch Financial Supervision Act, any person or legal
entity who, directly or indirectly, acquires or disposes of an interest in
the Company’s capital or voting rights must immediately give written
notice to the Netherlands Authority for the Financial Markets (AFM) if
the acquisition or disposal of the percentage of the outstanding capital
interest or voting rights exceeds or falls below certain thresholds (3 %,
5%, 10%, 15%, 20%, 25%, 30%, 40%, 50%, 60%, 75% and 95%).
OCI N.V. is aware, on the basis of the information in the registers of
the Netherlands Authority for the Financial Markets (AFM), that the
following shareholders possessed an interest of more than 3% on 31
December 2014:
Shareholder Total Shareholding
(Real) Voting Rights Date of report
Mr. Nassef Sawiris 61,836,983 61,643,399 17-Oct-14
Mr. Onsi Sawiris 36,045,159 36,045,159 31-Jul-13
Mr. Samih Sawiris 15,527,516 15,527,516 19-Feb-13
Southeastern Asset
Management, Inc. 14,037,719 14,037,719 09-Jun-14
IGCF General
Partner Limited 12,532,310 12,532,310 30-Jan-13
Mr. W.H. Gates III 12,725,704 12,725,704 31-Jul-13
Genesis Asset
Managers, LLP 7,621,449 7,621,449 30-Aug-13
Davis Selected
Advisers, LP 8,754,054 8,754,054 31-Jul-13
Total 169,080,894 168,887,310
The above information is extracted from the AFM noti?cations and
registers website as at 31 December 2014:http://www.afm.nl/en/professionals/registers/alle-huidige-registers.
aspx?type={1331D46F-3FB6-4A36-B903-9584972675AF}
As at 31 December 2014, 45.02% of the total shares outstanding
were free-?oat. For details on the number of outstanding shares,
see note 17 of the Consolidated Financial Statements. For details on
capital structure, listings, share performance and dividend policy see
‘Shareholder Information’.
The Company con?rms that it has no anti-takeover constructions, in
the sense of constructions that are primarily intended to block future
hostile public offers for it shares. Although the members of the Sawiris
family have not entered into any formal shareholders agreement, they
have historically coordinated their voting on the OCI N.V. shares and
should therefore be regarded as parties acting in concert (“personen
die in onderling overleg handelen”) as de?ned in section 1:1 of the
Dutch Financial Supervision Act. Their collective voting rights of
54.98% as at 31 December 2014 acts as an implicit anti-takeover
element.
Audit Committee
Remuneration Committee
Nomination and Governance
Committee
Health, Safety and Environment
Committee
General meeting of Shareholders
Board of Directors
Fertilizer
Industrial Chemicals
OCI Nitrogen (100%)
Iowa Fertilizer Co. (100%)
Sorfert (51%)
EFC (100%)
EBIC (60%)
Fertilizer trading subsidiaries
(100%)
Natgasoline LLC (100%)
OCI Partners LP
(OCI Beaumont) (79.88%)
Discontinued Operations
Engineering & Construction
Fertilizer & Chemicals
This does not represent a legal structure and
is for illustrative purposes only.
60 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 61
OCI N.V.
CORPORATE GOVERNANCE
Composition and independence
The composition of the Board strives to arm the Company with
leadership that is diverse in skills, experience, and background,
thereby maximizing the Board’s ability to independently and critically
act without emphasis on particular interests. The Board maintains
independence by ensuring the majority of Non-Executive Directors
including the Chairman are independent Non-Executives. The Board’s
composition, independence, competencies, and quali?cations are
detailed in the Board Pro?le adopted on 13 May 2013 and available on
the corporate website. In 2014 Robert Jan van de Kraats and Jérôme
Guiraud were appointed by the General Meeting of Shareholders on
26 June 2014 as Non-Executive Directors. Arif Naqvi’s term ended
as per 15 February 2015 and his term was not renewed. The Board
thanks Mr. Naqvi for his contribution to the Company.
In 2014 the Board has discussed and assessed its composition
and concluded that amongst others more construction- and energy
related expertise was required. The general conclusion was that the
board is diverse in terms of nationality, experience and age. Finally,
the Board seeks to further diversify its composition, particularly by
nominating female Directors as well as US Directors. Though major
efforts were made in 2014 to ?nd female nominees who ?t the pro?le
this regrettably has not yet been successful. The search for female
Directors is continued in 2015.
Assessment and evaluation of the Board
Every year, the Board evaluates its performance based on a
questionnaire that is completed by the Directors. This evaluation was
carried out in November 2014 and included separate self-evaluations
of the Committees. Given the diverse pro?le, the evaluation shows
that the diversity leads to a constructive and multi-facetted dialogue.
The Board concluded that the composition, the processes and the
scope of its activities and the personal contribution of each Member
are satisfactory. The evaluation is performed every three years with the
aid of an external consultant. This will be done in 2015 for the
?rst time.
Board rotation schedule
The Board adopted its rotation schedule on 13 May 2013. Directors
shall retire periodically in accordance with the Rotation Plan, outlined
in the table below, in order to avoid, as far as possible, a situation in
which many Directors retire at the same time. Each Non-Executive
Director is in principle appointed for a maximum term of four years
and can be reappointed for not more than two other terms. There is
no maximum term for Executive Directors.
Name Date of ?rst Reappointment Final retirement
appointment Max. 3x4 yrs
Nassef Sawiris 16 January 2013 2017 (4 yrs) None
Salman Butt 25 January 2013 2017 (4 yrs) None
Michael Bennett 25 January 2013 2016 (3 yrs) 2024
Jan Ter Wisch 25 January 2013 2016 (3 yrs) 2024
Sipko Schat 9 December 2013 2017 (4 yrs) 2025
Kees van der Graaf 9 December 2013 2017 (4 yrs) 2025
Jérôme Guiraud 26 June 2014 2018 (4 yrs) 2026
Robert Jan
van de Kraats 26 June 2014 2018 (4 yrs) 2026
Induction
An Induction Programme for the Board was set up in 2014. It provides
an excellent governance tool to introduce new Directors with the key
people, the business and the internal governance and risk framework.
Upon nomination, Non-Executive Directors receive a comprehensive
Directors’ Information Pack and are briefed on their responsibilities
and the business with a tailored Induction Programme. The Chairman
ensures that ongoing training is provided for Directors by way of
presentations and updates. Training was provided to the Board on the
Dutch regulatory requirements on Insider Trading. Throughout the year
all members of the Board visit one of more of OCI N.V.’s businesses,
operations and other parts of the Company to gain greater familiarity
with senior Management and to develop deeper knowledge of local
operations, opportunities and challenges. In May 2014 the Board
visited the Iowa Fertilizer Company, currently under construction.
Board meetings
The Board met six times during 2014. In addition several conference
calls were held. The issues on which the Board focused during the
year comprised:
• Spin-off of the Engineering & Construction Group;
• Discuss the performance of the business;
• Private placement of EUR 151 million;
• Further implementation of the Company’s structure and governance
charters;
• Review Risks and Controls;
• Convening of AGM on 26 June 2014 and EGM on 12 November
2014;
• The gas supply situation in EBIC and EFC;
• Assess the Remuneration Policy in light of the upcoming spin-off of
the Engineering & Construction Group;
• Further implementation on topics including internal audit, internal
controls, risk and legal & compliance;
• Discussion of the audit approach and risk assessment for the year
2014 with the external auditor and approval the Charter of the
Internal Audit function;
• Approval by the General Meeting of Shareholders of the
Remuneration Policy;
• Appointment of Corporate Governance and Compliance Of?cer;
• In May 2014 the Board met in New York and Iowa to discuss
strategy and make a site visit; and
• Approval of key ?nancing, operational, investment activities and
other business developments as described below:
REPORT OF THE BOARD OF DIRECTORS
Green?eld Developments and Expansions in the United States
The Company’s expansions and green?eld projects currently include
Iowa Fertilizer Company, debottlenecking at OCI Beaumont, and
Natgasoline LLC. The Board closely monitored the development of the
Company’s United States growth strategy, including the progression of
capital expenditures and construction milestones.
Sidra Medical Centre Project in Qatar - Notice of Termination
In July 2014, a consortium consisting of Obrascón Huarte Lain (OHL)
and OCI N.V. subsidiary Contrack received a Notice of Termination
from the Qatar Foundation for Education, Science & Community
Development for the contract for the design and build of the Sidra
Medical and Research Centre in Doha, Qatar. The contract was
awarded to the JV between OHL (55%) and Contrack (45%) in
February 2008, for a total budget of approximately $ 2.4 billion.
The project is more than 95% complete and represents a negligible
amount in the Engineering & Construction Group’s backlog. The
consortium believes that the reasons given by the client lack any
legitimate grounds and the matter has been referred to the court
of arbitration in the United Kingdom. This will not be part of the
Company’s business going forward.
Approval of $ 550 million OCI N.V. Revolving Credit Facility
On 30 July 2014, the Company signed a $ 550 million Revolving
Credit Facility with a maturity of 36 months from signing. The loan is
earmarked towards general corporate purposes including retirement
of some debt with short-term maturities and partial ?nancing of capital
expenditure for Natgasoline LLC. The lending syndication comprises
of Bank of America Merrill Lynch, Barclays, Rabobank, Credit Agricole,
HSBC, and ING.
Spin-off of Engineering & Construction Group
In August 2014, the intention was announced to spin-off the
engineering and construction activities to form Orascom
Construction Limited.
After careful consideration and advice by Rothschild, the Board
approved the spin-off on 10 December 2014 and its implementation
on 6 February 2015. The spun-off entity, Orascom Construction
Limited, holds all of the Construction Group’s assets and subsidiaries,
including BESIX. The Board and management believe that this spin-
off will effectively position each business to pursue its independent
development strategy, enhance investor understanding and
transparency of each business as each business offers a distinct value
proposition to investors, and best serve our Shareholders as it will
unlock value that is currently being lost in a conglomerate discount.
The separation will allow each business to outperform separately and
is in the best interests of Shareholders, partners, and employees.
Decision of Tax Dispute between OCI S.A.E. and
the Egyptian Tax Authority
In November 2014, the Egyptian Tax Authority’s (ETA) Independent
Appeals Committee, the responsible body overseeing the tax dispute
between the Company’s subsidiary, Orascom Construction Industries
S.A.E. (OCI S.A.E.), and the ETA, ruled in favor of the Company.
The tax dispute was related to the sale of its cement assets to Lafarge
SA in 2007.
As a result of the positive ruling, the balance of the tax liability is
released through the 2014 income statement. The Board also
unanimously approved the transfer of the rights to amounts paid to
the ETA in April 2013 to the Tahya Misr (“Long Live Egypt”) Fund.
No formal agreement with the Tahya Misr social fund has been
drafted yet.
In January 2015 the ETA appealed the ruling of the Independent
Appeals Committee. The appeal did not include new facts or
documents but was rather ?led as a legal formality by the ETA, which
is customary for Egyptian government entities. The proceedings
usually take between two to three years before the court issues its
judgment. The Company believes the likelihood of a judgment issued
in favour of the ETA is weak. Please refer to note 12 of the ?nancial
statements for further information.
62 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 63
OCI N.V.
CORPORATE GOVERNANCE
REPORT OF THE BOARD OF DIRECTORS
CONTINUED
Coal-Fired Power Plant with IPIC
In November 2014, the Engineering & Construction Group and
the International Petroleum Investment Company (IPIC), signed
a Memorandum of Understanding with the Egyptian government
formalizing the parties’ cooperation in the development, construction
and operation of a 2,000 – 3,000 Megawatt (MW) coal-?red power
plant in Egypt. The plant will utilize advanced clean-coal technology
that complies with EU standards for emission control. The MoU gives
the Orascom Construction - IPIC consortium exclusivity on a site
location in the vicinity of El Hamarawein port on the Red Sea coast
for a period of 18 months and allows the consortium to conduct and
?nalize all relevant project studies, an important step in executing the
project. This will not be part of the Company’s business going forward.
Attendance
The following table shows the attendance of Directors at Board
meetings for the year 2014. If Directors are unable to attend they have
the opportunity to discuss any agenda items with the Chairman.
Board Attendance
Date of appointment
during the year
Number of
meetings held
Number of
meetings
attended
Michael Bennett 25 January 2013 6 6
Nassef Sawiris 16 January 2013 6 6
Salman Butt 16 January 2013 6 6
Jan Ter Wisch 25 January 2013 6 6
Kees van der Graaf 9 December 2013 6 6
Sipko Schat 9 December 2013 6 6
Jérôme Guiraud 26 June 2014 3 3
Robert Jan van de
Kraats*
26 June 2014 3 2
* Mr Van de Kraats attended two meetings before his appointment.
Board Committees
At the end of 2013, three committees were installed: the Audit
Committee, the Nomination and Governance Committee and the
Remuneration Committee. The Health, Safety and Environment
Committee was established in 2014. Terms of Reference were drafted,
approved and implemented for all Committees and the Committee
meetings were conducted in line with those Terms of Reference. All
committees are made up of Non-Executive members who meet the
independence and experience requirements to the extent required
under applicable securities laws, stock exchange regulations and By-
Laws, The Committees reported on a regular basis to the Board. The
duties of each committee are described in their respective charters,
which can be found on the corporate website. The full reports of each
committee are set out below.
Annual General Meeting & Extraordinary General Meeting
of Shareholders
On 26 June 2014 the Annual General Meeting was held, which
amongst other comprised the following resolutions:
• Appointment of Robert Jan van de Kraats as an Independent Non-
Executive member of the Board;
• Appointment of Jérôme Guiraud as Non-Executive member of the
Board;
• Approval of the Remuneration Policy; and
• Cancelation of 45,000 ordinary shares.
All resolutions were adopted and the minutes of the Annual General
Meeting are published on the corporate website.
On 12 November 2014, an Extraordinary General Meeting was held
which comprised the following resolutions in regard of the spin-off of
the Engineering & Construction Group:
• Increase of the issued share capital by $ 1.4 billion; and
• Decrease of the issued share capital by $ 1.4 billion.
All resolutions were adopted and the draft minutes of the Extraordinary
General Meeting are published on the corporate website.
Compliance with the Dutch Corporate Governance Code
The Board subscribes the Dutch Code’s principles and best practice
provisions. In accordance with the Corporate Governance Code’s
‘apply or explain’ principle, OCI N.V. has outlined below departures
from the Dutch Code to ensure full transparency.
• Provision IV.3.1: The General Meetings of Shareholders are not
webcasted for cost ef?ciency reasons.
• Provision II.3.2: The CEO is Non-Executive Chairman of the Board
of Directors of Orascom Construction Limited. He is appointed
to the Orascom Construction Limited Board as he has signi?cant
understanding and experience in managing the Engineering &
Construction Group. In order to give Orascom Construction Limited
a strong start as an independent company it was required that
the CEO take the Chairman position. Reference is made to the
paragraph on Con?icts of Interests on page 65. The CEO is a Non-
Executive Director of BESIX, a subsidiary of Orascom Construction
as well as a Non-Executive Board member of Lafarge S.A.
The Board con?rms that throughout the year, the Company has
complied with the Dutch Code, and any departures from the Dutch
Code are explained in accordance with the Dutch Code’s “comply
or explain” principle. Any substantial changes to the Corporate
Governance structure undertaken by the Board will be presented to
the General Meeting of Shareholders
Remuneration
The annual remuneration for Non-Executive Board Members was
determined by the General Meeting of Shareholders on 26 June,
2014. More information can be found on page 76.
The Audit Committee Report
The Audit Committee consists of ?ve (Non-Executive) members who
are mandated with monitoring and supervising activities related to the
Company’s ?nancial, internal audit, compliance and tax performance.
Six Audit Committee meetings and one conference call were
held in 2014. On 22 April 2014 the 2013 full year ?nancial results
and statements were discussed. As these were the ?rst ?nancial
statements issued for the Company, the Audit Committee extensively
discussed and reviewed signi?cant accounting topics for 2013.
In accordance with its Charter, the Audit Committee reviewed the
annual report including the ?nancial statements 2014 and non-
?nancial information, the annual report including non-?nancial
information prior to its publication. The Audit Committee also reviewed
and advised on:
• The functioning of the Company’s internal control processes and
recommended improvements for the internal audit function and the
progress of the 2014 internal audit plan and the 2015 internal audit
plan;
• Financing Strategy;
• Trading updates;
• Litigation and major legal cases such as Sidra and the GPP cases;
• Financial aspects of the spin-off of the Engineering & Construction
Group;
• Risk Management;
• The Corporate governance framework in place;
• The Compliance function and Compliance programme to be
implemented in 2015;
• Discussed Related Party Transactions;
• Tax review and Policy; and
• Accounting systems were discussed and advise was provided on
the new accounting system that was developed and introduced in
2015
Financial Reporting and External Auditor
The Company’s external auditor is KPMG Accountants N.V. The
external auditor attended all Audit Committee meetings in 2014 and
2015, before sign-off on the ?nancial statements in full. The Board
prepared and approved an Independence policy for the external
auditor on 6 March 2015 which will be applied in 2015. The Chairman
met with the internal and external auditor in advance of every Audit
Committee meeting in order to secure all relevant issues to be
addressed with suf?cient time allocation.
The Nomination and Governance Committee Report
The Nomination and Governance Committee consists of four (Non-
Executive) members. Three meetings and one conference call were
held in 2014. The Nomination and Governance Committee:
• Discussed and approved the selection and appointment criteria and
approved a procedure in this regard;
• Assessed the size and composition of the Board;
• Searched for a female board member;
• Assessed the individual functioning of Directors;
• Discussed succession and emergency planning;
• Discussed ancillary positions held by Directors, the acceptance
thereof and approved a policy in this regard;
• Evaluated the status of the corporate governance framework and
compliance with the Dutch Corporate Governance Code.
The Remuneration Committee Report
The Remuneration Committee consists of three Independent (Non-
Executive) members. Four meetings and three conference calls were
held this year. The Remuneration Committee:
• Prepared the remuneration policy for approval by the General
Meeting of Shareholders on 26 June 2014;
• Discussed and decided on the short term and long term incentives;
• Started preparations on an adjusted remuneration policy post spin-
off of the Engineering and Construction group.
More information on the remuneration policy and the 2014
remuneration of the Board can be found in the Remuneration Report
on page 72.
The Health, Safety and Environment Committee Report
The Health, Safety and Environment (HSE) Committee consists of
three (Non-Executive) members. Three meetings were held in 2014.
The HSE Committee:
• Set HSE targets for 2014;
• Discussed a reporting system on incidents to the HSE Committee;
• De?ned HSE Key Performance Indicators (KPI) for both the
Fertilizers & Chemicals Group and the Engineering & Construction
Group;
• Established a KPI reporting format to the HSE Committee;
• Discussed a HSE remuneration/bonus system for employees.
More information on HSE can be found in the HSE section in this
report on pages 52-53.
Con?icts of interest
The Board members are bound by the Company’s Code of Business
Principles and Conduct, and Code of Ethics. Potential or actual
con?icts of interest are governed by the Company’s Articles of
Association and By-Laws. A Director shall immediately report any
con?ict of interest or potential con?ict of interest that is of material
signi?cance and may not take part in any discussion or decision-
making that involves a subject or transaction in relation to which he
has a con?ict of interest with the Company. In 2014 no such situation
occurred. Due to the spin-off of the Engineering & Construction
Group a con?ict of interest may occur in 2015 since the CEO and
the CFO have been elected as Non-Executive directors on the Board
of Orascom Construction Limited following the spin-off due to their
experience, while retaining their Executive and Board positions at
OCI N.V. It has been decided that, in case a con?ict of interest arises
between the Company and Orascom Construction, the CEO will
not participate in the discussions and decision-making that involves
a transaction with Orascom Construction within the Company. In
addition, the CFO will not participate in the decision-making process
in Orascom Construction in respect of such transaction.
Indemni?cations
The Company grants an indemnity to all of its Directors to the extent
permitted by law. These indemnity amounts are uncapped in relation
to losses and liabilities which Directors may incur to third parties in the
course of acting as a Director of the Company, or in any of?ce where
such duties are performed at the request of the Board, or as a result
of their appointment as Directors.
64 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 65
OCI N.V.
CORPORATE GOVERNANCE
RISK MANAGEMENT AND COMPLIANCE
Risk Mitigating Actions
Strategic
Economic and political conditions in the markets in which we operate
OCI N.V. does business in both developed and emerging markets,
which means that we are exposed to some countries where there is a
risk of adverse sovereign action. Accordingly, developments in any of
the countries in which we operate can create an uncertain environment
for investment and business activity and may adversely impact our
business.
We mitigate the impact of any single market by diversifying our presence
with operating facilities in both emerging and developed markets. We
actively monitor economic, political and legal developments and strive to
be a ‘local’ player in each of our markets.
Inability to realize all of the anticipated bene?ts of the demerger
of the Construction Group
There can be no assurance that the Company will realise some or all of
the potential bene?ts that we expect from the demerger in the time we
expect.
In addition, we will require a period of transition to implement our
strategy and streamline our operations without the construction
business.
We anticipated the impact a demerger would have on the operation
and management of both the engineering & construction and fertilizer
& chemicals businesses and took several steps to ensure that each
business operated as an independent group. This has facilitated our
ability to demerge the construction group and we expect a short
transition period that is covered by a Shared Service Agreement.
For more information please refer to note 2.2.4 of the ?nancial
statements and to the Demerger section on page 38.
Tax Verdict Appeal
In November 2014, the Egyptian Tax Authority’s (ETA) Independent
Appeals Committee, the responsible body overseeing the tax dispute
between OCI N.V.’s subsidiary, Orascom Construction Industries S.A.E.
(OCI S.A.E.), and the ETA, ruled in favor of the Company.
The tax dispute related to the sale of OCI S.A.E.’s cement assets to
Lafarge SA in 2007. Although the management and advisors of OCI
S.A.E. believed that the aforementioned transaction was exempted of
tax, management entered into a settlement to resolve the tax dispute
whereby approximately $ 1 billion would be paid over a ?ve-year period.
The agreement was followed by payment of a ?rst installment amounting
to approximately $ 360 million in 2013.
Following the change in government, the Egyptian Public Prosecutor
thoroughly investigated the entire tax ?le over a six months period and
fully exonerated OCI S.A.E. of any tax evasion in a ?nal written opinion
published on 18 February 2014. Subsequently, OCI S.A.E. relaunched
its legal right to appeal the tax settlement and the case was referred
to the Independent Appeals Committee. On 4 November 2014, the
Independent Appeals Committee ruled in favor of the Company. As a
result of the positive ruling, the balance of the tax liability is released
through the 2014 income statement. The Board also unanimously
approved the transfer of the rights to amounts paid to the ETA in April
2013 to the Tahya Misr (“Long Live Egypt”) Fund. No formal agreement
with the Tahya Misr social fund has been drafted yet.
On 11 December 2014, OCI S.A.E. received a noti?cation that the ETA
lodged an appeal before the ?rst instance court. On 6 January 2015, the
court decided to postpone the ?rst hearing to 27 March 2015 and again
to 25 May 2015.
As this dispute does not relate to either business exclusively, any
liabilities and any recoveries are shared under the Tax Claim Agreement
on a 50% basis between OCI N.V. and Orascom Construction Limited
(excluding the EGP 2.5 billion to be paid to Tahya Misr social fund in
Egypt).
The appeal did not include new facts or documents but was rather
?led as a legal formality by the ETA which is customary for Egyptian
government entities. The proceedings usually take between two to
three years before the court issues its judgment. The Company believes
the likelihood of a judgment issued in favour of the ETA is weak.
Although, it is very rare to see judgments issued by Appeals Committees
overturned by courts there can be no assurance that the appeal will not
be accepted by the ?rst instance court, and an adverse decision could
impact the Company’s ?nancial performance. Please also refer to note
12 of the ?nancial statements.
Introduction
Our businesses inherently involve risks. Our management is
cognizant of these risks and takes a measured mitigation approach
to maximize our ability to successfully pursue sustained growth.
Our Board and management foster a transparent company-wide
approach to risk management and internal controls as outlined in
our corporate governance section, which allows our businesses to
operate effectively. We are working diligently to further enhance our
Risk Management within the Company; as part of this process Non-
Financial Letters of Representation have been issued by key operating
units.
Our risk appetite is ?exible to account for our diversi?ed market
presence and product portfolio, and is tailored to four main
categories:
• Strategic: As a leading player in our markets, we are able to
take certain calculated strategic risks that create opportunities
to maximize our ability to deliver outstanding value to our
shareholders. Our ability to adapt our risk management to meet the
requirements of our global positioning and diversi?ed exposure to
emerging and developed markets is key to maintaining our success.
• Operational: We aim to minimize operational risks while maximizing
our ability to capitalize on our leadership positions in our markets.
We strive to maximize operational ef?ciency while fostering a safe
and entrepreneurial environment for our employees.
• Financial: We implement a prudent ?nancial and reporting strategy
to maintain a strong ?nancial position. Our key ?nancial policies are
described in the notes to the ?nancial statements.
• Compliance: All employees are bound by our Code of Business
Principles & Conduct and Code of Ethics, which we are in the
process of embedding throughout the Company. It is in the values
of the Company and its employees to act with honesty, integrity
and fairness to foster a business climate that maintains such
standards. We strive to comply with applicable laws and regulations
everywhere we do business.
Key Risk Factors
Our key risks as perceived by management are outlined below,
accompanied by an overview of how these risks are mitigated and
the opportunities that can arise from these actions. The sequence
in which these risks are presented in no way re?ects any order of
importance, chance or materiality. If any of the following risks actually
occurs, the Company’s business, prospects, ?nancial condition or
results of operations may be materially affected.
Although management believes that the risks and uncertainties
described below are the most material risks, they are not the only
ones OCI N.V. may face. All of these factors are contingencies which
may or may not occur. Additional risks and uncertainties not presently
known to management or are currently deemed immaterial may also
have a material adverse effect on the Company, results of operations
or ?nancial condition.
66 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 67
OCI N.V.
CORPORATE GOVERNANCE
RISK MANAGEMENT CONTINUED
Risk Mitigating Actions
Operational
Cost of Production
Our cost of production is primarily dependent on the availability and cost
of natural gas, the primary feedstock in manufacturing our products. Our
production facilities can be adversely impacted by supply interruptions,
as seen in Egypt, where our plants have experienced volatility since
2012 due to the government prioritizing the supply of natural gas to the
electricity sector to reduce power blackouts in the country.
Our costs are also subject to ?uctuations in the cost of labour, other raw
materials, and foreign exchange rates.
We must implement, achieve and sustain cost improvement plans,
including our outsourcing projects and those related to general overhead
and workforce rationalization.
Our success is dependent, in part, on our continued ability to manage
cost ?uctuations through pricing actions and cost savings. We have
hedged our global exposure to natural gas price ?uctuations through a
mix of long-term contracts in Egypt, the United States and Algeria, and
spot prices in the United States and The Netherlands.
With regard to supply issues in Egypt, the Egyptian government has
taken several steps to address the country’s gas supply issues. We
expect these efforts to improve supply of natural gas in 2015.
Business continuity and competition risk
We rely on continued demand for and distribution of our products at
favourable prices. Our continued success is dependent on the quality
and pricing of our products, and on our continued positive reputation.
This means we must be able to obtain and manage our resources at
competitive cost. Our success is also dependent on effective marketing
programs in the competitive environments in which we operate.
To address these challenges, we have policies in place to respond
to competitive factors and maintain mutually bene?cial relationships
with our key customers, in order to effectively compete and achieve
our business plans. Since our goals include a growth component tied
to acquisitions, we manage and integrate key acquisitions, including
achieving the cost and growth synergies in accordance with stated
goals.
Commodity pricing and over-supply risk
A change in market dynamics in our fertilizer and industrial chemicals
production portfolio, such as over-supply, may result in lower product
prices, which would adversely impact our margins.
We have a diversi?ed production portfolio comprising fertilizers,
downstream products, and industrial chemicals, which mitigates the
risk of potential downturns in any natural gas linked sector. We are also
geographically diversi?ed in emerging and developed markets to reduce
market-related risks.
Risks associated with our joint ventures
We participate in joint ventures and other partnerships including Sorfert
Algérie and Egypt Basic Industries Corporation. Our investments in joint
ventures involve risks that are different from the risks involved in owning
facilities and operations independently.
The Shareholders Agreements for our joint ventures include clauses that
protect OCI N.V.’s economic and operating interests as applicable.
We maintain close working relationships with our partners and monitor
the operating and ?nancial results of the joint ventures in which we hold
minority stakes or do not have management control. In our larger joint
ventures, such as EBIC and Sorfert, we retain management control and
seats on each joint venture’s Board of Directors.
In addition, we have a policy of constantly reviewing all businesses to
determine whether they continue to be core businesses worth retaining
on a long term basis. This is particularly applicable to businesses in
which we do not have control. If a business becomes non-core or has
reached a certain level of maturity, we actively pursue monetizing the
business through divestment.
Human Capital
Our ability to employ, develop, and retain talented employees is
essential to maintain our high quality operations and management.
We have been able to attract, motivate and retain knowledgeable and
experienced employees due to our reputation and market position, our
in-house training programs, our Employee Incentive Plans (as described
in note 23 of the ?nancial statements), as well as our strategic
partnerships with industry leaders, which offer employees exposure to
high pro?le projects and advanced technologies.
Risk Mitigating Actions
Strategic
Risk of adverse sovereign action
We do business in locations where we are exposed to a greater than
average risk of adverse sovereign action, including overt or effective
expropriation or nationalisation of property, the renegotiation of contract
terms, the implementation of export controls on commodities regarded
by them as strategic, the placement on foreign ownership restrictions, or
changes in tax structures or free zone designations.
We work closely with the governments in the countries in which we do
business to maintain positive working relationships. Although there is
no guarantee that the government of a location in which we operate will
not adopt adverse policies going forward, we have worked to minimize
this risk through water-tight contracts for our assets and government
agreements. Our legal team also works diligently to monitor and review
our practices and any changes in laws or regulations in the countries
in which we operate to provide reasonable assurances that we remain
in line with all relevant laws. Management has also drafted contingency
plans for various unforeseen events and adverse scenarios.
Global economic conditions
Economic changes may result in business interruption, in?ation, de?ation
or decreased demand for our products. Our success will depend in
part on our ability to manage continued global economic uncertainty,
especially in our markets.
We aim to maintain a strong ?nancial position that would cushion any
global economic or cyclical downturns. As a fertilizer producer, our long-
term natural gas supply contracts and natural gas hedge in the United
States provide us with competitive feedstock prices, allowing us to
withstand a decline in global economic conditions.
Ability to execute large green?eld projects on time
OCI N.V. is developing two large-scale green?eld production facilities in
the United States: Iowa Fertilizer Company (IFCo) and Natgasoline LLC.
Our ability to achieve our growth targets is in part dependent on our
ability to complete these projects on time and in line with our expected
cost of construction and development.
Both green?eld projects are being executed by Orascom Construction
Limited under an arm’s length agreement. Orascom Construction has
more than 15 years of fertilizer plant construction experience and more
than 20 years’ experience in the construction of large-scale, complex
industrial projects. In addition, the existing supportive regulatory
and physical infrastructure in the United States is conducive to new
investments, as demonstrated by the early assistance received for both
projects on the state and federal levels.
68 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 69
OCI N.V.
CORPORATE GOVERNANCE
RISK MANAGEMENT CONTINUED
Risk Mitigating Actions
Financial
Ability to raise debt or meet ?nancing requirements
Our ability to complete strategic acquisitions and green?elds or
re?nancing existing debt is contingent on our access to new funding.
Although we strive to ensure that adequate levels of working capital
and liquidity are maintained, unfavorable ?nancial market conditions
may adversely affect our ?nancing costs, hinder our ability to achieve
additional ?nancing, hinder our ability to re?nancing existing debt, and/or
postpone new projects. This could therefore have an adverse effect on
business prospects, earnings and/or our ?nancial position.
We maintain a strong ?nancial position and strive to maintain our
creditworthiness with our creditors. Our treasury department closely
monitors our cash position and credit lines to ensure our ?nancial
?exibility. We have also diversi?ed our funding sources to avoid
dependence on a single market, and have staggered our debt maturity
pro?le to reduce repayment burdens.
Currency ?uctuations
A substantial portion of the company’s consolidated revenue, operating
expenses and long-term debt is denominated in foreign currencies
Signi?cant changes in the exchanges rates of operational currencies,
which include the US Dollar, the Euro, the Egyptian Pound, and the
Algerian Dinar, can have a material effect on the reported and actual
?nancial performance of the company.
We hedge our foreign exchange cash ?ow risk on a consolidated basis
by matching our foreign currency-denominated liabilities with continuing
sources of foreign currencies through a centralized treasury.
Compliance
Regulatory conditions in the markets in which we operate
Changes in laws, regulations and the related interpretations may alter
the environment in which we do business. This includes changes
in environmental, competition and product-related laws, as well
as changes in accounting standards and taxation requirements. In
addition, this includes regions where corrupt behaviour exists that could
impair our ability to do business in the future or result in signi?cant ?nes
or penalties. Our ability to manage regulatory, tax and legal matters and
to resolve pending matters within current estimates may impact our
results.
We closely monitor the legal developments in each of our markets.
Our Code of Business Principles and Conduct, and Code of Ethics set
out our commitment to comply with the laws and regulations of the
countries in which we operate.
It is in the values of the Company and its employees to act with
honesty, integrity and fairness to foster a business climate that
maintains such standards. We strive to comply with applicable laws and
regulations everywhere we do business.
Health, Safety and Environment
Ability to maintain our health, safety and environment (HSE) standards
HSE is a vital aspect at OCI N.V. We have a deep commitment to
maintaining our strong HSE track record. Despite the nature of our
businesses, we aim to prevent every accident through stringent HSE
rules, standards and training programs.
We implement strict HSE training and operating discipline at every plant
in order to minimize HSE risks, and closely monitor our plants through
regular audits. Our safety and emissions records meet or exceed
international standards, underscoring our commitment to providing
our employees with a safe, secure and environmentally conscious
workplace.
In addition, the Board of Directors established an HSE Committee
during the year and has worked diligently on OCI N.V.’s HSE monitoring
and reporting processes.
Risk management approach
Our risk management framework is being developed to align with the
Dutch Corporate Governance Code. Our risk management framework
is devised to provide reasonable assurances that the risks we face are
properly evaluated and mitigated, and that management is provided
with information necessary to make informed decisions in a timely
manner.
The key elements of our internal risk management, compliance and
control systems in 2014 were:
Code of Conduct
OCI N.V. is committed to conducting all business activities responsibly,
ef?ciently, transparently, and with integrity and respect towards all
stakeholders. Our values underpin everything we do and form the
essence of the Company’s Code of Business Principles & Conduct,
which should be read in conjunction with our Code of Ethics (together
forming the Code of Conduct). The Code of Conduct contains the
policies and principles that govern how each director, executive of?cer
and employee of OCI N.V. is expected to conduct his or her self while
carrying out his or her duties and responsibilities on behalf of the
Company.
Whistleblower Policy
The Whistleblower Policy applies to all employees, of?cers and
directors of OCI N.V. internal reporting of suspected criminal or
unethical conduct by or within the Company is vital for maintaining
our success. If received, all reports are treated with the utmost
con?dentiality and are promptly investigated without the risk of
recourse for the reporting employee so long as their report is made
in good faith.
Insider Trading Policy
The Insider Trading Policy applies to all employees, of?cers and
directors of OCI N.V. and prohibits every employee from using insider
information to a transaction in OCI N.V. securities, or executing a
transaction in OCI N.V. securities if that transaction may reasonably
appear to have been executed while the employee was in possession
or had access to inside information.
Internal Financial Reporting & Audits
Subsidiaries are required to provide management with weekly activity
reports, with a detailed monthly review of performance, ?nancials
and operating issues held for each subsidiary and led by the Chief
Executive Of?cer, Chief Financial Of?cer, and the Chief Operating
Of?cer.
A detailed budget for each subsidiary is prepared and presented
to management in the fourth quarter of each preceding year, and
includes a one year forecast. The subsidiary budgets are updated
monthly to account for actuals, and the forecasts are updated at a
mid-year review. These budgets and forecasts are consolidated into
an OCI N.V. budget and forecast, which is used by management as
a tool to evaluate the Company’s investment strategy, performance
indicators, and operations.
Periodic Internal Audits are conducted to review any speci?c issues
at the subsidiary level, and management is consulted on performance
developments and variations.
The Board of Directors is given a full ?nancial, operational, and
strategic update by the Executive directors at each Board meeting.
The Group Controller provides guidance on internal and ?nancial
controls that must exist for each process and monitors the
implementation of these controls in collaboration with the internal audit
and controls department.
Strategic and Operational Risk Management
Each subsidiary reports on the top risks it faces at its monthly review
either in writing or verbally, including the nature of the risk, the
likelihood of it materialising, and the ?nancial and operational impact
it may have on the subsidiary. Management monitors these risks and
provides guidance where necessary.
Operationally, health, safety, environmental, and quality systems are
in place at each subsidiary. All our subsidiaries have been awarded
relevant certi?cations, including ISO and REACH, among others. In
addition, insurance policies have been taken out for operating entities
to provide full coverage.
70 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 71
OCI N.V.
CORPORATE GOVERNANCE
This report gives an overview of the remuneration of the Board and
explains how the remuneration policy was applied in 2014.
Introduction
The Remuneration Committee (“the Committee”) oversees the
remuneration policy, plans and practices of OCI N.V. and recommends
changes when appropriate. The Committee is comprised solely of
Non-Executive Directors from the Company’s Board of Directors.
In 2014, the Committee, with assistance from Mercer, prepared
a new Remuneration Policy for the Executive and Non-Executive
Directors which was presented to Shareholders for approval in the
Annual Meeting of Shareholders on 26 June 2014. The approved
Remuneration Policy was introduced with effect from ?nancial year
2014. Shareholders’ approval was also received for the long-term
incentive plan of the Executive Directors and for the extension of the
long-term incentive plan of the employees.
The 2014 Remuneration Report is comprised of two sections:
1. Detail on the current Executive and Non-Executive Board
remuneration policy
2. Details of actual remuneration paid to the Executive and Non-
Executive Directors in 2014
A new Policy will be presented to the 2015 Annual General Meeting
of shareholders. The changes to the Policy are in response to the
demerger of our Engineering & Construction group in early 2015. The
new Policy does not involve substantive changes to compensation
levels or incentive plan opportunities.
Part 1: Current Remuneration Policy
Remuneration policy: objective and scope
The objective of OCI N.V.’s remuneration policy is to attract, motivate
and retain the quali?ed individuals that it needs in order to achieve
its strategic and operational objectives. The policy is designed in
the context of international competitive market trends, the relevant
provisions of statutory requirements, corporate governance best
practices, the societal context around remuneration and the interests
of OCI N.V.’s shareholders and other stakeholders. The policy is
simple and transparent, promotes the interests of the Company in
the medium and long term, and encourages a “pay for performance”
culture.
Term of Employment and severance arrangements
The Executive Directors referred to in this Remuneration Report are
the Chief Executive Of?cer (CEO) and Chief Financial Of?cer (CFO).
The details of their appointment terms are provided below:
Name Title Date of appointment Notice period
Nassef Sawiris
Chief Executive
Of?cer (CEO)
16 January 2013 3 months
Salman Butt
Chief Financial
Of?cer (CFO)
25 January 2013 3 months
If the Company terminates a service agreement with an Executive
Director other than due to an urgent cause or serious culpability, the
Executive Director is entitled to a severance payment of an amount
equal to 100% of base salary.
Peer groups
The Remuneration Committee consults multiple points of data
when setting the remuneration policy, as well as the structure and
quantum of remuneration. To ensure the competitiveness of OCI N.V.’s
remuneration levels, benchmark remuneration data from a peer group
of international companies similar in size and scope to OCI N.V. is
used for decision making. In addition, the Committee also refers to
remuneration levels at Dutch listed companies of a similar size to
OCI N.V.
International labour market peer group
• Agrium
• Akzo Nobel
• CF Industries
• Chicago Bridge & Iron (CB&I)
• DSM
• Fluor
• Leighton Holdings
• Petrofac
The peer group used for the assessment of Total Shareholder Return
(described in the LTI section below) is different to the one detailed
above as it is used for a different purpose. The Total Shareholder
Return peer group is intended to re?ect the market in which OCI N.V.
competes for investment rather than for executive talent.
The Committee has reviewed the appropriateness of both peer groups
following the spin-off of the Engineering & Construction Group and will
propose revisions for approval as part of a new Policy at the Annual
General Meeting of Shareholders in 2015.
REMUNERATION REPORT
Elements of remuneration
The remuneration policy consists of ?ve main elements:
• Base salaries: ?xed cash compensation set in line with individual
performance and contribution to Company goals with reference to
external market data;
• Short-term incentives (annual bonus): performance-based annual
bonus to encourage and reward the achievement of annual ?nancial
performance measures and other speci?ed corporate objectives;
• Matching rights over OCI N.V. shares where Executive Directors
elect to defer part of their bonus into OCI N.V. shares for at least
three years;
• Long-term incentives: share-based compensation focusing on
enterprise value creation and retention; and
• Other bene?ts: simple bene?t plans focusing on key needs.
Base salaries
The current base salaries re?ect the size and international scope
of the Executive Director roles and the calibre and experience of
the individuals. The base salaries include a ?xed cash allowance
(amounting to 25% of the total base salary) which is designed to
compensate the Executive Directors for their personal provision of
key bene?ts such as pension, car, and life and disability insurance.
Short term incentives
The annual bonus is a key element of a “pay for performance”
culture and is linked to pre-determined, measurable targets set and
assessed by the Committee. Short-term incentives provide context for
Management decisions, ensure focus on primary corporate ?nancial,
operational or strategic goals, and reward decisions that drive short-
term results and support long-term strategy. For the CEO, the STI is
capped at maximum of 150% of base salary. On-target performance
will result in a pay-out of 75% of base salary and threshold
performance 30% of salary. For the CFO, the STI is capped at 120%
of base salary, on-target performance will result in a pay-out of 60%
of base salary and threshold performance 24% of salary.
At the beginning of each year, the Remuneration Committee
establishes the performance measures and targets based on OCI
N.V.’s business priorities for the year. Speci?c targets will not be
disclosed as they are commercially sensitive. At the end of the
year the Committee will review performance against the targets
and approve STI awards based on the performance achieved.
The strategic measures will be determined and assessed by the
Committee based on key priorities for the year.
Payment of the STI to the CEO and CFO will be at least 50% in cash
(net of taxes) with the option to invest 50% (net of taxes) in the shares
of the Company for a period of three years. Any deferral of STI into
shares will result in the award of matching share rights on a 1:1 basis
to incentivise Executive Directors to increase their long-term interest
in the Company. Matching rights will be based on the pre-tax value
of the amount elected for deferral such that the matching shares
are, after tax, equivalent to the number of deferred shares. Aligned
to international best practice, the matching rights will be adjusted
to re?ect any dividends paid during the vesting period. Vesting of
the matching rights at the end of the holding period will normally be
conditional upon the incumbent still being employed by OCI N.V.
After vesting, shares arising from the matching rights (net of tax)
will be held for a further two years in line with the Dutch Corporate
Governance Code.
Other executives and senior managers will also be invited to
participate in a similar deferred bonus and matching plan.
Payments under the STI may be reduced by up to one quarter in
the event that health, safety and environment (“HSE”) performance
is judged unsatisfactory by the Remuneration Committee, taking
account of feedback from the HSE Committee.
Long term incentives
The Performance Share Plan aims to:
• Incentivise the creation of shareholder value in excess of that
achieved by comparator organisations.
• Align the interests of executives with those of shareholders.
• Comply with the Dutch Corporate Governance Code Best Practice.
• Increase retention of key executive.
Executive Directors will be granted performance share awards which
will vest after three years only if pre-speci?ed performance targets are
met. Vested shares for Executive Directors (net of tax) will then be held
for a further 2 years after vesting in line with the requirements of the
Dutch Corporate Governance Code.
The number of performance shares will be calculated based on the
face value method which calculates the number of shares granted
based on the share price at date of grant and a ?xed percentage of
base salary. The maximum award size for all Executive Directors is
100% of total salary.
Performance targets will be based on relative Total Shareholder Return
(TSR) and the following peer group of international construction and
fertilizer/chemicals/gases was approved as part of the Remuneration
Policy.
Share awards under the plan will be made annually.
TSR peer group
• Agrium
• Air Products
• Akzo Nobel
• Balfour Beatty
• Boskalis Westminster
• Celenese
• CF Industries
• Chicago Bridge & Iron
• Colas
• Koninklijke DSM
• Fluor
• Lanxess
• Leighton Holdings
• Methanex
• Petrofac
• Solvay
• Westlake Chemicals
• Yara International
72 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 73
OCI N.V.
CORPORATE GOVERNANCE
The design of the plan ensures that no pay-out will be made for
below-threshold performance. Threshold vesting will begin with
performance at the 40
th
percentile of the peer group. At threshold
performance (40
th
percentile) 25% of the award will vest, for target
performance (67
th
percentile) performance 100% of the award will
vest and at maximum performance (90th percentile) vesting will be
equivalent to 150% of the original award. Straight line vesting will
occur between these points.
TSR calculations will be externally veri?ed. Appropriate adjustments
will be made to deal with mergers and acquisitions, demergers, rights
issues and other material changes.
As a result of the demerger of the Engineering & Construction group,
the above peer group was reviewed by the Committee with the
assistance of Mercer. As a result, a new TSR peer group has been
agreed which is focused on fertilizer and chemicals companies.
Given that the demerger was agreed by the Board less than one year
into the three year TSR performance period, the new TSR peer group
will be applied for the full three year period.
The new peer group is as follows.
Other bene?ts
As mentioned, the base salaries provided to the Executive Directors
include a ?xed cash allowance, which is 25% of the total, in lieu of
pension, car and other key bene?ts. No material pension bene?ts
in excess of statutory requirements are offered and the Executive
Directors are not eligible for a car bene?t. The Committee believes that
this is a transparent approach.
The Executive Directors receive medical insurance, use of a mobile
phone, and reimbursement of business expenses. They also bene?t
from directors’ and of?cers’ liability insurance coverage. In addition,
the CEO is able to expense the use of a private aircraft for business
travel.
Loans and guarantees
No personal loans or guarantees, including mortgage loans, are
offered to members of the Board.
Claw back
A “claw-back” clause is included in the service agreements of the
Executive Directors, applicable in the situation that the ?nancial or
other information on which the pay-out of variable remuneration was
based is determined to be incorrect. This will be applied if needed with
the discretion of the Remuneration Committee.
Non-Executive Directors
The remuneration of the Non-Executive Directors consists of ?xed fee
payments for Board membership and for service on the committees.
The fees are not linked to the ?nancial results of the Company.
Non-Executive Directors do not receive any performance or equity-
related compensation and do not accrue any pension rights with
the Company. Non-Executive Directors bene?t from directors’ and
of?cers’ liability insurance coverage, and are not entitled to any
bene?ts upon the termination of their appointment.
REMUNERATION REPORT CONTINUED
Part 2: Actual Remuneration
Executive Directors
The details of the individual remuneration of the Executive and Non-
Executive Directors and its costs to the Company are presented in the
table below:
Remu-
nera-
tion Name Currency
Base
salary
Short term
incentive
pay
1
Share-
based
compen
sation Bene?ts Pension
2014 Nassef
Sawiris
$ 2,000,000 1,000,000 1,320,482 0 0
Salman
Butt
$ 1,680,000 840,000 83,545 0 0
2013 Nassef
Sawiris
$ 2,000,000 1,000,000 1,498,872 0 0
Salman
Butt
$ 1,689,180 800,000 0 0 0
1 For 2014 remuneration the short term incentive pay relates to performance in 2014
which was paid in early 2015. For 2013 remuneration the short term variable pay
relates to performance in 2013 and was paid in 2014. Both CEO and CFO have
chosen to invest 50% of the 2014 bonus in OCI N.V. shares (investment shares).
Base salary
The base salary of the Chief Executive Of?cer was $ 2,000,000
which remained unchanged from 2013. The base salary of the Chief
Financial Of?cer was $ 1,680,000 and remained unchanged from
2013. For the avoidance of doubt, the Executive Directors do not
receive housing allowances or other expatriate-style bene?ts. The
base salaries of the Executive Directors include their fees for their
positions on the OCI N.V. Board of Directors. As mentioned previously,
the Executive Director base salaries disclosed above include a ?xed
cash allowance of 25% of the total base salary in lieu of pension, car
and other key bene?ts.
No changes to salaries for the Executive Directors are proposed for
2015.
Short term incentives 2013 and 2014
The company granted bonuses to the CEO and CFO during 2014
relating to the performance of 2013. The expenses relating to this
bonus awards were recorded in the ?nancial year 2014. We have
included the bonus relating to the performance of 2013 in the
overview of actual remuneration paid for the year 2013.
With effect from the 2014 ?nancial year, bonus payments will be made
shortly after the end of the ?nancial year and disclosed in the year in
which they were earned.
For 2013 performance, bonuses were discretionary in line with the
previous Policy. Therefore the Remuneration Committee reviewed
the overall performance of the business in that year and the speci?c
contributions of the CEO and CFO in the context of a year during
which substantial change occurred. It concluded that it would be
appropriate to pay a below-target bonus of 50% of salary to both
CEO and CFO. This results in a short term incentive for the CEO of
$ 1,000,000 and for the CFO of $ 800,000 which were both paid in
2014.
In making this determination, the Committee took the following factors
and achievements into account (further details can be found in the
2013 Annual Report).
• 2013 EBITDA targets were partially achieved.
• OCI N.V. was successfully re-domiciled and re-listed in the
Netherlands.
• Sorfert Algérie was successfully commissioned.
• OCI Partners LP was listed onto the NYSE in New York.
• OCI N.V.’s 18.1% stake in the Gavilon Group was divested.
• A $ 1.2 billion bond issuance for Iowa Fertilizer Company was
closed.
For 2014, performance targets included a mix of corporate ?nancial
(80%) and strategic (20%) objectives. The ?nancial measures are pro?t
(measured as Group EBITDA) and cash ?ow, each weighted at 40%.
Revised TSR peer group
• Agrium
• Air Products
(2014 cycle only)
• Akzo Nobel
• Celenese
• CF Industries
• Intrepid Potash
• Koninklijke DSM
• Lanxess
• Methanex
• Mosaic
• Potash Corp
• Solvay
• Westlake Chemicals
• Yara International
74 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 75
OCI N.V.
CORPORATE GOVERNANCE
Introduction
This 2014 Annual Report dated 29 April 2015 (the Annual Report)
comprises regulated information within the meaning of sections
1:1 and 5:25c of the Dutch Act on Financial Supervision (“wet op
het ?nancieel toezicht”).
For the consolidated and the parent Company’s 2014 ?nancial
statements “jaarrekening” within the meaning of section 2:361 of
the Dutch Civil Code, please refer to the ?nancial statements. The
Members of the Board of Directors have signed the 2014 ?nancial
statements pursuant to their obligation under section 2:101,
paragraph 2 of the Dutch Civil Code.
The following sections of the Annual Report together constitute the
Management Report (“jaarverslag”) within the meaning of section
2:391 Civil Code: the Operational Review, the Corporate Governance
Section, the Financial Statements and the Additional Information.
For other information “overige gegevens” within the meaning of
section 2:392 of the Dutch Civil Code, please refer to the ?nancial
statements and to the section Shareholders information.
Corporate governance statement
As referred to in article 2a of the Decree laying down additional
requirements for annual reports ‘Vaststellingsbesluit nadere
voorschriften inhoud jaarverslag’ effective 1 January 2010 (the
‘Decree’), OCI N.V. is required to make a statement on corporate
governance.
The information required to be included in this corporate governance
statement as described in articles 3, 3a and 3b of the Decree can be
found in the following sections of this Annual Report and Accounts:
• The information concerning compliance with the Dutch Code, as
required by article 3 of the Decree, can be found in the section
Compliance with the Dutch Corporate Governance Code;
• The information concerning OCI N.V.’s Risk Management and
control frameworks relating to the ?nancial reporting process, as
required by article 3a(a) of the Decree, can be found in the section
‘Risk Management’;
• The information regarding the functioning of OCI N.V.’s General
Meeting of Shareholders, and the authority and rights of OCI N.V.’s
shareholders and holders of depositary receipts, as required by
article 3a(b) of the Decree, can be found within the relevant sections
under ‘Corporate Governance’;
• The information regarding the composition and functioning of OCI
N.V.’s Board and its Committees, as required by article 3a(c) of the
Decree, can be found within the relevant sections under ‘Corporate
Governance’; and
• The information concerning the inclusion of the information required
by the decree Article 10 European Takeover Directive, as required
by article 3b of the Decree, can be found in the section Decree
Article 10 EU Takeover Directive.
The Dutch Corporate Governance Code was last
amended on 10 December 2008 and is available at www.
commissiecorporategovernance.nl.
In control statement
The Board believes that, to the best of its knowledge and in
accordance with best practice provisions of section II.1.4 and II.1.5
of the Dutch Corporate Governance Code, OCI N.V. is in control of
its business processes through its internal Risk Management and
control structures, which were assessed and found to have functioned
properly during the year. In its assessment, the Board identi?ed certain
improvement areas in the accounting and reporting cycle, which will
be addressed in 2015. This provides reasonable assurance that OCI
N.V.’s ?nancial reporting for the ?nancial year 2014 does not contain
any material misstatements.
Directors’ statement pursuant to article 5:25c of the Dutch
Financial Supervision Act (Wft)
In accordance with Article 5:25C of the Dutch Financial Supervision
Act (Wft), OCI N.V.’s Board declares that to the best of its knowledge,
(i) the 2014 ?nancial statements provide a true and fair view of the
assets, liabilities, ?nancial position and results of the Company and its
subsidiaries included in the consolidated statements in accordance
with International Financial Reporting Standards as adopted by the
European Union (IFRS-EU); and (ii) the annual report provides a true
and fair view of the situation as at 31 December, 2014, and of the
Company’s state of affairs for the ?nancial year 2014, as well as the
principal risks faced by OCI N.V. (iii) the Management report includes
a description of the principal risks and uncertainties that the Company
faces.
Amsterdam, the Netherlands, April 2015
The OCI N.V. Board of Directors
Michael Bennett, Chairman
Nassef Sawiris
Salman Butt
Jan Ter Wisch
Sipko Schat
Jérôme Guiraud
Robert Jan van de Kraats
Kees van der Graaf
Arif Naqvi
DECLARATIONS REMUNERATION REPORT CONTINUED
In making a decision about the appropriate short term incentive award
for 2014, the Committee took the following factors and achievements
into account:
• underlying EBITDA for continuing operations growing 23.2%
year-on-year to $ 833.4 million;
• net income for continuing operations improving 41.7% to $ 444.1
million;
• successfully raising EUR 151 Million through a private placement of
4.2 million new shares at EUR 36 per share; and
• obtaining regulatory approval and meeting other key milestones
towards the demerger of the Engineering & Construction group.
Payment was calculated at 50% of salary for both the CEO and CFO.
This equates to 33% of the maximum for the CEO and 42% of the
maximum for the CFO. In both cases the payment is below target.
The HSE Committee judged the HSE performance as satisfactory, so
no reduction on that basis was applied.
Long term incentives 2014
As at 31 December 2014, the Executive Directors held 400,000
stock options (2013: 590,000) at a weighted average exercise price
of EUR 25.94.
Name
Outstanding
as at
31/12/2014
Exercise Price
in EUR
Value
at grant
date in $
1
Vesting
date
Value
at vesting
date in $
2
Nassef
Sawiris
190,000
200,000
200,000
26.71
26.43
25.45
2,988,652
2,685,993
1,937,400
04-01-2014
31-03-2015
02-01-2016
846,751
Salman
Butt
- - - - -
1
Fair value calculated at grant date.
2
Value of the shares at exercise date minus the exercise price to
be paid.
As at 31 December 2014, the Executive Directors were granted
92,378 conditional performance shares.
Name
Outstanding
year-end
2013
Granted
conditional
Outstanding
year-end
2014
Value
at grant
date in $
1
vesting
date
End of
lock-up
period
Nassef
Sawiris
- 51,321 51,321 553,809 01-07-2017 01-07-2019
Salman
Butt
- 41,057 41,057 443,050 01-07-2017 01-07-2019
1
Fair value calculated at grant date.
As at 31 December 2014, the Executive Directors were granted
16,409 matching rights to bonus shares.
Name
Outstanding
year-end
2013 Granted
Outstanding
year-end
2014
Value
at grant
date in $
1
vesting
date
End of
lock-up
period
Nassef
Sawiris
- 9,116 9,116 319,821 17-11-2017 17-11-2019
Salman
Butt
- 7,293 7,293 255,864 17-11-2017 17-11-2019
1
Fair value calculated at grant date.
Remuneration scenarios
The Remuneration Committee conducts pay scenario analysis
modelling on an annual basis which investigates pay-out quantum
for Executive Directors under different performance scenarios. This
modelling is undertaken in order to ensure that the remuneration
policy links directly with the performance of OCI N.V. and therefore,
is in the interests of shareholders. If speci?c short term and long term
threshold performance targets are not hit, then pay in that year for
Executive Directors will not include any variable element.
Future outlook
As noted above the Committee is reviewing, with the assistance of
Mercer, the remuneration policy in the context of the demerger of
the Engineering & Construction group and expects to propose an
adjusted remuneration policy for approval of the Annual General
Meeting of Shareholders in 2015.
Non-Executive Directors
The Non-Executive Director fee rates for 2014 were as follows. There
is no intention to change the fee rates in 2015. Jérôme Guiraud, who
was appointed by the General Meeting of Shareholders on 26 June
received a pro rata remuneration over 2014.
Main Board
Audit
Remuneration Remuneration Nomination HSE
Chairman 260,000 25,000 10,000 10,000 10,000
Member 130,000 20,000 7,500 7,500 7,500
Non-Executive Directors are reimbursed for all reasonable costs of
travel, accommodation and representation in the performance of their
duties. The Chairman received an additional ?xed fee of $ 150,000 for
service on the board of a publicly-traded subsidiary of the Company in
the United States.
On behalf of the Remuneration Committee
Sipko Schat, Chairman
76 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 77
OCI N.V.
CORPORATE GOVERNANCE
FINANCIAL
STATEMENTS
$ millions Note
31 December
2014
31 December
2013
2
Proforma / unaudited
31 December
2013
1
restated
1 January
2013
1
restated
Assets
Non-current assets
Property, plant and equipment (7) 5,272.4 4,509.3 4,773.4 4,302.0
Goodwill and other intangible assets (8) 932.9 964.1 984.3 996.2
Trade and other receivables (9) 49.7 43.1 76.8 107.7
Equity accounted investees (10) 37.9 36.1 517.1 458.4
Other investments (11) 22.9 50.0 51.0 54.0
Deferred tax assets (12) 50.1 60.6 67.6 4.4
Total non-current assets 6,365.9 5,663.2 6,470.2 5,922.7
Current assets
Inventories (13) 178.5 186.0 367.5 302.3
Trade and other receivables (9) 344.0 444.4 1,282.1 1,215.1
Contracts receivables (14) - - 375.4 406.6
Other investments (11) 31.2 - - 1,213.4
Current income tax receivables (12) 272.6 - - -
Cash and cash equivalents (15) 846.6 1,570.2 1,990.2 762.5
Assets held for sale (16) - - 2.4 371.8
Assets held for demerger (29) 2,538.5 2,624.0 - -
Total current assets 4,211.4 4,824.6 4,017.6 4,271.7
Total assets 10,577.3 10,487.8 10,487.8 10,194.4
Equity
Share capital (17) 273.3 272.1 272.1 191.6
Share premium 1,447.6 1,441.8 1,441.8 725.7
Reserves (18) 196.5 109.6 109.6 (14.4)
Retained earnings 201.5 (102.2) (102.2) 378.8
Equity attributable to owners of the Company 2,118.9 1,721.3 1,721.3 1,281.7
Non-controlling interest (19) 418.9 366.3 366.3 418.9
Total equity 2,537.8 2,087.6 2,087.6 1,700.6
Liabilities
Non-current liabilities
Loans and borrowings (20) 4,638.5 4,441.1 4,497.2 2,610.5
Trade and other payables (21) 30.9 16.7 75.8 69.0
Provisions (22) 19.4 19.2 19.2 1.2
Deferred tax liabilities (12) 343.4 371.4 375.7 309.1
Income tax payables (12) - 207.4 414.7 514.6
Total non-current liabilities 5,032.2 5,055.8 5,382.6 3,504.4
Current liabilities
Loans and borrowings (20) 402.2 677.2 1,428.0 2,864.6
Trade and other payables (21) 432.7 283.0 1,002.3 1,243.4
Billing in excess of construction contracts (14) - - 140.9 113.9
Provisions (22) 301.1 35.1 108.2 89.3
Income tax payables (12) 58.7 202.7 338.2 678.2
Liabilities held for demerger (29) 1,812.6 2,146.4 - -
Total current liabilities 3,007.3 3,344.4 3,017.6 4,989.4
Total liabilities 8,039.5 8,400.2 8,400.2 8,493.8
Total equity and liabilities 10,577.3 10,487.8 10,487.8 10,194.4
1
For the restatement reference is made to note 2.3.
2
In the 2013 proforma column, Engineering & Construction segment has been presented as if it quali?ed as assets held for demerger as of
year-end 2013 (reference is made to note 2.2).
The notes on pages 84 to 139 are an integral part of these consolidated ?nancial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT
79 Consolidated Statement of Financial Position
80 Consolidated Statement of Pro?t or Loss and other
Comprehensive Income
81 Consolidated Statement of Changes in Equity
82 Consolidated Statement of Cash Flows
84 Notes to the consolidated ?nancial statements
140 Parent Company Statement of Financial Position and Parent
Company Statement of Pro?t or Loss
141 Notes to the parent company ?nancial statements
143 Other information
144 Independent Auditor’s report
149 Miscellaneous
150 Shareholder Information
152 Key Subsidiaries
78 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 79
OCI N.V.
$ millions Note 2014
2013
1
restated
Revenue (28) 2,685.8 2,477.5
Cost of sales (23) (1,949.4) (1,864.6)
Gross pro?t 736.4 612.9
Other income (24) 15.2 294.5
Selling, general and administrative expenses (23) (265.1) (202.9)
Other expenses (25) (4.7) (85.3)
Transaction cost (23) - (89.3)
Donation cost (12) (266.2) -
Operating pro?t / (loss) 215.6 529.9
Finance income (26) 21.8 76.8
Finance cost (26) (272.2) (280.0)
Net ?nance cost (26) (250.4) (203.2)
Income from equity accounted investees (net of tax) (10) 15.8 7.4
Pro?t / (loss) before income tax (19.0) 334.1
Income tax (12) 565.0 (71.1)
Net pro?t / (loss) from continuing operations 546.0 263.0
Net pro?t / (loss) from discontinued operations (net of tax) (29) (96.1) (3.8)
Total net pro?t / (loss) 449.9 259.2
Other comprehensive income:
Items that are or may be reclassi?ed to pro?t or loss
Net change in fair value of available-for-sale ?nancial assets (1.2) (1.9)
Changes in fair value of cash ?ow hedges (6.1) 10.6
Foreign currency translation differences 70.2 (104.0)
Other comprehensive income, net of tax 62.9 (95.3)
Total comprehensive income 512.8 163.9
Pro?t / (loss) attributable to:
Owners of the Company 328.7 295.2
Non-controlling interest 121.2 (36.0)
Net pro?t / (loss) 449.9 259.2
Total comprehensive income attributable to:
Owners of the Company 415.6 199.9
Non-controlling interest 97.2 (36.0)
Total comprehensive income 512.8 163.9
Earnings / (loss) per share from total operations (in USD)
Basic earnings / (loss) per share (27) 1.604 1.449
Diluted earnings / (loss) per share (27) 1.603 1.408
Earnings / (loss) per share from continuing operations (in USD)
Basic earnings / (loss) per share (27) 2.168 1,538
Diluted earnings / (loss) per share (27) 2.161 1,493
1
For the restatement reference is made to note 2.3.
The notes on pages 84 to 139 are an integral part of these consolidated ?nancial statements.
$ millions Note
Share
capital
(17)
Share
premium
(17)
Reserves
(18)
Retained
earnings
Equity
attributable to
owners of the
Company
Non-
controlling
interest
(19)
Total
equity
Balance at 1 January 2013
before and after restatement 191.6 725.7 (14.4) 378.8 1,281.7 418.9 1,700.6
Net pro?t / (loss) - - - 295.2 295.2 (36.0) 259.2
Other comprehensive income - - (95.3) - (95.3) - (95.3)
Total comprehensive income - - (95.3) 295.2 199.9 (36.0) 163.9
Corporate restructuring (17) 78.1 653.8 105.6 (1,044.2) (206.7) - (206.7)
OCI Partnership IPO - - - 268.0 268.0 23.0 291.0
Treasury shares sold (18) - - 91.2 - 91.2 - 91.2
Treasury shares acquired (18) - - (20.5) - (20.5) - (20.5)
Dividends - - - - - (39.6) (39.6)
Share issuance (17) 2.4 62.3 - - 64.7 - 64.7
Share-based payments (23) - - 11.6 - 11.6 - 11.6
Convertible bond issuance
(net of taxes)
(20) - - 31.4 - 31.4 - 31.4
Balance at 31 December 2013
restated
272.1 1,441.8 109.6 (102.2) 1,721.3 366.3 2,087.6
Net pro?t / (loss) - - - 328.7 328.7 121.2 449.9
Other comprehensive income - - 86.9 - 86.9 (24.0) 62.9
Total comprehensive income - - 86.9 328.7 415.6 97.2 512.8
Dividends - - - - - (57.1) (57.1)
Change in ownership of OCI
Partners LP - - - (12.5) (12.5) 12.5 -
Treasury shares sold (18) - - 50.2 (12.5) 37.7 - 37.7
Treasury shares acquired (18) - - (62.1) - (62.1) - (62.1)
Change in capital (17) 1.2 5.8 - - 7.0 - 7.0
Share-based payments (23) - - 11.9 - 11.9 - 11.9
Balance at 31 December 2014 273.3 1,447.6 196.5 201.5 2,118.9 418.9 2,537.8
The notes on pages 84 to 139 are an integral part of these consolidated ?nancial statements.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
FOR THE YEARS ENDED 31 DECEMBER
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
80 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 81
OCI N.V.
$ millions Note 2014
2013
1
restated
Net pro?t / (loss) 449.9 259.2
Adjustments for:
Net pro?t / (loss) from discontinued operations (29) 96.1 3.8
Depreciation and amortization (7),(8) 308.4 218.3
Interest income (26) (9.0) (6.0)
Interest expense (26) 199.2 278.5
Foreign exchange gain / (loss) and others 60.2 (69.3)
Share in income of equity accounted investees (10) (15.8) (7.4)
Gain from assets held for sale (9.0) (262.1)
Share-based payment transactions (23) 11.9 11.6
Income tax expense (12) (565.0) 71.1
Transaction cost - 89.3
Changes in:
Inventories (13) 7.5 (25.8)
Trade and other receivables (9) 88.6 11.5
Trade and other payables (21) 140.8 (69.1)
Provisions (22) 262.3 15.3
Cash ?ows:
Interest paid (26) (284.5) (308.1)
Interest received from equity accounted investees (10) 9.0 6.0
Income taxes paid (12) (30.6) (48.8)
Income tax litigation payment (12) - (180.2)
Transaction cost paid - (242.0)
Cash ?ow from / (used in) operating activities (continuing operations) 720.0 (254.2)
Investments in property, plant and equipment (1,211.0) (687.0)
Proceeds from sale of investments 9.0 1,829.9
Dividends from equity accounted investees 33.0 33.0
Cash ?ow from / (used in) investing activities (continuing operations) (1,169.0) 1,175.9
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED 31 DECEMBER
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED 31 DECEMBER (CONTINUED)
$ millions Note 2014
2013
1
restated
Proceeds from share issuance (17) - 355.6
Proceeds from sale of treasury shares (18) 37.7 91.2
Purchase of treasury shares (18) (62.1) (20.5)
Proceeds from borrowings (20) 550.0 2,573.3
Repayment of borrowings (20) (433.2) (2,098.9)
Orascom Construction Industries S.A.E. shares acquired - (90.0)
Dividends paid to non-controlling interest (57.1) (39.7)
Financing related to discontinued operations (390.0) (459.0)
Cash ?ows from / (used in) ?nancing activities (continuing operations) (354.7) 312.0
Net cash ?ows from / (used in) continuing operations (803.7) 1,233.7
Cash ?ows from / (used in) operating activities (27.4) (423.4)
Cash ?ows from / (used in) investing activities (69.6) 5.0
Cash ?ows from / (used in) ?nancing activities 45.9 410.6
Net cash ?ows from / (used in) discontinued operations (29) (51.1) (7.8)
Net increase (decrease) in cash and cash equivalents (854.8) 1,225.9
Cash and cash equivalents at 1 January 1,990.2 762.5
Currency translation adjustments (20.2) 1.8
Cash and cash equivalents at 31 December 1,115.2 1,990.2
Presentation in the statement of ?nancial position
Cash and cash equivalents (15) 846.6 1,990.2
Bank overdrafts (20) (100.3) -
Cash and cash equivalents (as held for demerger) (29) 368.9 -
Cash and cash equivalents at 31 December 1,115.2 1,990.2
1
For the restatement reference is made to note 2.3.
The notes on pages 84 to 139 are an integral part of these consolidated ?nancial statements.
82 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 83
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER
1. General
OCI N.V. (‘OCI’, ‘the Group’ or ‘the Company’) was established on 2 January 2013 as a public limited liability company incorporated under
Dutch law, with its head of?ce located at Honthorststraat 19, Amsterdam, the Netherlands. OCI is registered in the Dutch commercial register
under No. 56821166 dated 2 January 2013. The consolidated ?nancial statements comprise the ?nancial statements of the Company, its
subsidiaries and joint operations (together referred to as the ‘Group’) and the Group’s interests in associates and joint ventures.
The Group is primarily involved in the production of nitrogen based fertilizers and industrial chemicals; engineering and construction activities
have been discontinued.
2. Basis of preparation
2.1 General
These consolidated ?nancial statements have been prepared in accordance with International Financial Reporting Standards as endorsed by
the European Union (IFRS-EU).
The consolidated ?nancial statements have been prepared on the historical cost basis, except when otherwise indicated.
The ?nancial year of the Group commences on 1 January and ends on 31 December.
The parent company statement of pro?t or loss is presented in abbreviated format in accordance with article 2:402 of Part 9 of the Dutch
Civil Code.
These consolidated ?nancial statements are presented in US dollars (‘USD’), which is the Group’s presentation currency. The euro (‘EUR’) is
the functional currency of OCI N.V. All values are rounded to the nearest tenth million (in millions of USD), except when stated otherwise.
The ?nancial statements have been authorised for issue by the Company’s Board of Directors on 28 April 2015. The ?nancial statements are
subject to adoption of the Annual General Meeting of Shareholders on 10 June 2015.
2.2 Demerger of Construction and Engineering business
2.2.1 General
On 6 November 2014, the Board of Directors of OCI N.V. announced its intention to seek a dual listing for the Engineering & Construction
business of OCI N.V., through the separation of OCI’s Engineering & Construction business from OCI’s Fertilizer & Chemicals business (“the
Demerger”). The Board of Directors of OCI N.V. con?rmed its intention to implement the Demerger at its meeting on 10 December 2014.
The Demerger was completed successfully in March 2015, with the listing of shares on Nasdaq Dubai as of 9 March 2015 and a secondary
listing on the Egyptian Exchange as of 11 March 2015. The Demerger has resulted in the Engineering & Construction and Fertilizer & Chemicals
businesses being owned by two, separately-listed companies. OCI N.V. remains listed on Euronext Amsterdam and owns the Fertilizer &
Chemicals business and Orascom Construction Limited, is dual-listed on the Nasdaq Dubai and the Egyptian Exchange and owns the
Engineering & Construction business.
The Demerger was achieved by OCI N.V. carrying out a reduction of its share capital. At an Extraordinary General Meeting of Shareholders of
OCI N.V. held on 12 November 2014, shareholders approved the proposal to reduce the share capital of OCI N.V. to facilitate the Demerger.
On 16 January 2015, the mandatory creditor objection period related to the resolutions passed on 12 November 2014, expired without any
objections being made. Accordingly, the Board of Directors of OCI N.V. have passed a resolution to execute the Demerger.
2.2.2 Accounting for the Demerger
In order to ensure that suf?cient share capital will be available to account for such reduction, OCI N.V. will apply IFRS 1 ‘First time adoption of
IFRS‘ in 2015 to its Company ?nancial statements and will apply a deemed cost approach for the initial valuation of its subsidiaries using fair
value (market capitalization as a substitute for cost). The resulting revaluation reserve was partially converted to capital. Subsequently, OCI
N.V.’s capital was reduced by the same amount, representing the fair value of the shares of Orascom Construction Limited (the ultimate parent
company of the Engineering & Construction business) which were distributed to OCI N.V.’s shareholders on 7 March 2015.
Following the guidance under IFRS 5, the Engineering & Construction business is accounted for as “Assets held for demerger / discontinued
operations” (further reference is made to note 29 of the notes to the consolidated ?nancial statements). OCI has chosen to add an additional
column to its consolidated statement of ?nancial position to show the effect of the Demerger on the 31 December 2013 consolidated statement
of ?nancial position as if the Engineering & Construction business was already discontinued at 31 December 2013. This ?nancial information is
“Proforma”, and is unaudited.
2.2.2 Accounting for the Demerger (continued)
The consolidated net results of the discontinued operations (Engineering & Construction business) are presented under discontinued operations
in the consolidated statement of pro?t or loss and other comprehensive income and the consolidated statement of cash ?ows. The comparative
information in the consolidated statements of pro?t or loss and other comprehensive income and the consolidated statement of cash ?ows are
reclassi?ed as if the operation had been discontinued from the start of the comparative period in accordance with the requirements IFRS 5. In
the statement of ?nancial position, the comparative numbers are not reclassi?ed. The demerger is considered a non-adjusting event after the
balance sheet date, an estimate of the ?nancial effect of the demerger cannot yet be made reliably.
2.2.3 Ongoing relationship between OCI N.V. and Orascom Construction Limited
After the Demerger, OCI N.V. and Orascom Construction Limited each operate as separately listed companies. There are no cross-directorships,
other than Nassef Sawiris who is Chief Executive Of?cer of OCI N.V. and chairman of Orascom Construction Limited, and Salman Butt, who is
Chief Financial Of?cer of OCI N.V. and non-executive director of Orascom Construction Limited. The senior management teams of OCI N.V. and
Orascom Construction Limited are different and all agreements between the two companies are entered into on an arms’ length basis.
Orascom Construction Limited’s objective is to increase self-generated opportunities in the future to replace the work awarded by OCI N.V.
However, Orascom Construction Limited and OCI N.V. will remain party to continuing commercial arrangements, in particular, in relation to the
construction of certain fertilizer plants. The existing commercial arrangements were entered into on an arms’ length basis and are not materially
different from the terms on which Orascom Construction Limited has contracted with other customers and future commercial arrangements.
2.2.4 Shared services agreement
On 5 February 2015, OCI N.V. and Orascom Construction Limited entered into a shared services agreement whereby each of the parties
has agreed to supply certain transitional services to the other. These services include: the provision by OCI N.V. to Orascom Construction
Limited of accounting and consolidation, and any general corporate support services as required and the provision by Orascom Construction
Limited to OCI N.V. of accounting, treasury, information technology, administration, corporate human resources, and of?ce space services. It is
expected that the services will be provided for a transitional period of up to 12 months, following which each of the parties will make their own
arrangements for the provision of these services. The consideration payable for the services will be on a cost-plus basis.
2.2.5 Conditional sale agreement
On 5 February 2015, OC IHC 4 B.V. (a subsidiary of Orascom Construction Limited) and OCI MENA B.V. (a subsidiary of OCI N.V.) entered
into an Agreement for the Conditional Sale and Purchase of the Share Capital of Construction Egypt. Under the Conditional Sale Agreement,
OCI MENA B.V. has agreed to sell to OC IHC 4 B.V. all of the shares it will receive as a result of the Egypt Demerger. These shares (the
Construction Egypt Shares) will be shares in an Egyptian joint stock company (Construction Egypt) which, as a result of the Egypt Demerger,
will hold the construction projects and construction business of Orascom Construction Industries S.A.E in the Middle East and North Africa
which, in order to comply with local law and regulation, cannot be transferred to the Group prior to completion of the Demerger. The transfer
of the Construction Egypt Shares will be conditional on the completion of the Egypt Demerger, the approval of EFSA regarding the issue of
the Construction Egypt shares to OCI MENA B.V. and incorporation of Construction Egypt. In addition, OCI MENA B.V. commits to appoint
management personnel in the construction operations, such personnel to be nominated by OC IHC 4 B.V.; to appoint accounting personnel
responsible for the preparation of the carve out ?nancials of the construction operations, such personnel to be nominated by OC IHC 4 B.V.,
and to vote on the board of directors of Orascom Construction Industries S.A.E. in matters related to the construction operations based on the
recommendation of OC IHC 4 B.V. The Conditional Sale Agreement also provides for the economic bene?ts/liabilities of the Construction Egypt
Shares including the underlying Relevant Construction Projects (together with the right to any dividends) to pass from OCI MENA B.V. to OC
IHC 4 B.V. with effect from the date of the Conditional Sale Agreement as if such shares had been in existence since 30 September 2014. This
transfer of economic bene?t will remain in force until the earlier of completion of the Egypt Demerger and transfer of the Construction Egypt
Shares to the Company and completion of all of the Relevant Construction Projects, while any new awards will be sought through wholly-owned
subsidiaries of Orascom Construction Limited.
2.2.6 Tax indemnity agreement
On 6 February 2015, Orascom Construction Limited and Orascom Construction Industries S.A.E. entered into a tax indemnity agreement
which sets out the obligations of the parties in respect of the tax claim lodged by the tax authorities in Egypt relating to the sale of the Orascom
Construction Industries S.A.E.’s cement business to Lafarge SA in 2007 (further reference is made to note 12). The parties have agreed that, to
the extent that any liability is incurred by Orascom Construction Industries S.A.E. in relation to the Tax Claim (including the costs of dealing with
the Tax Claim), this will be shared between the parties on a 50%/50% basis. In addition, to the extent that any recoveries are made in relation
to the Tax Claim, these will be shared between the parties on a 50%/50% basis (excluding the amount of EGP 2.5 billion for which it was
announced that the rights will be transferred to Tahya Misr social fund in Egypt). This agreement is in accordance with informal agreements as
reached before year-end.
84 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 85
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
2.2.7 Construction contracts
A commercial relationship between OCI N.V. and Orascom Construction Limited will remain on-going in respect of the construction of two
projects for the fertilizer business on an arms’ length basis. Orascom E&C USA (subsidiary of Orascom Construction Limited) is:
• party to an Engineering, Procurement and Construction (EPC) contract in respect of the Iowa Fertilizer Company (IFCo), a 2 million metric
ton per annum (mmtpa) fertilizer and industrial chemicals green?eld plant under construction for OCI N.V. in Iowa, USA. Under the terms of
the EPC contract, the new plant will utilize proven state-of-the-art production process technologies to produce between 1.5-2 million metric
tons per year of ammonia, urea, urea ammonium nitrate (UAN) as well as diesel exhaust ?uid (DEF), an environmentally friendly fuel additive;
and
• in the process of ?nalizing the terms of an EPC contract for the construction of a methanol plant at Beaumont, Texas, USA for Natgasoline
LLC. The plant is expected to have a capacity of up to 5,000 metric tons per day (tpd), equivalent to approximately 1.75 million metric tons
per annum (mtpa).
2.2.8 Reimbursement agreement
As part of the Demerger of the Orascom Construction Group, OCI N.V. and Orascom Holding Cooperatief U.A., a company that is part of
Orascom Construction Limited, entered into a letter agreement in relation to the construction contracts entered into between companies within
the fertiliser business of OCI N.V. (Fertilizer Business) and companies within the construction business of OCI N.V. (Construction Business). The
agreement provides that if the Construction Business incurs costs, expenses or liabilities under the Contracts or for other works and services
performed or to be performed for the Fertilizer Business, which are not otherwise reimbursable to the Construction Business under the terms
of the Contracts and which exceed the amounts that will, in aggregate, have been and will be payable to the Construction Business under all
of the Contracts (the excess being referred to as the Aggregate Group Shortfall), OCI N.V. will pay an amount equal to the Aggregate Group
Shortfall. The amount payable by OCI N.V. to the Construction Business under the agreement is capped at USD 150 million.
2.3 Changes in accounting policies
Except for the changes below, the Group has consistently applied the accounting policies set out in note 3 to all periods presented in these
consolidated ?nancial statements.
With reference to paragraph 4 “New accounting standards and policies”, the Group has adopted new accounting standards, amendments and
revisions to existing standards and interpretations for which IFRS 10 “Consolidated Financial Statements” and IFRS 11 “Joint Arrangements”
have a signi?cant impact on the Group’s consolidated ?nancial statements:
• IFRS 10 ‘Consolidated Financial Statements’ IFRS 10 is effective for annual periods beginning on or after 1 January 2014. IFRS 10
establishes principles for the presentation and preparation of consolidated ?nancial statements when an entity controls one or more other
entities. IFRS 10 replaces the consolidation requirements in SIC-12 ‘Consolidation-Special Purpose Entities’ and IAS 27 ‘Consolidated and
Separate Financial Statements’. IFRS 10 builds on existing principles by identifying the concept of control as the determining factor in
whether an entity should be included within the consolidated ?nancial statements of the parent company. The standard provides additional
guidance to assist in the determination of control where this is dif?cult to assess.
• IFRS 11 ‘Joint Arrangements’ IFRS 11 is applicable for annual periods beginning on or after 1 January 2014. IFRS 11 provides for a more
realistic re?ection of joint arrangements by focusing on the rights and obligations of the arrangement, rather than its legal form (as was the
case). The standard addresses inconsistencies in the reporting of joint arrangements by requiring a single method to account for interests
in jointly controlled entities. IFRS 11 supersedes IAS 31 ‘Interests in Joint Ventures’ and SIC-13 ‘Jointly Controlled Entities / Non-monetary
Contributions by Ventures’. The application of this new standard impacts the ?nancial position of the Group by eliminating proportionate
consolidation of the joint ventures such as BESIX, Orasqualia for Development, Orasqualia for Construction, Alico, Fitco and some other
entities. With the application of the new standard, the investment in these entities are accounted for using the equity method of accounting.
The tables in paragraph 4.3 summarise the impact of the above changes on the Group’s consolidated ?nancial statements. Both new
accounting standards have been applied as from 1 January 2014 retrospectively. Consequently, the 2013 comparative ?nancial statements have
been adjusted for this change in accounting principles.
3. Summary of signi?cant accounting policies
3.1 Consolidation
The consolidated ?nancial statements include the ?nancial statements of OCI N.V., its subsidiaries and the proportion of OCI’s ownership of joint
operations.
Subsidiaries
Subsidiaries are all companies to which OCI N.V. is exposed or has rights to variable returns from its involvement with the investee and has
the ability to affect those returns through its control over the investee, generally accompanying a shareholding of more than half of the shares
issued and related voting power. In assessing control, potential voting rights that are presently exercisable or convertible are taken into
account. Subsidiaries are fully consolidated from the date that control commences until the date that control ceases. When the Group ceases
to have control over a subsidiary, it derecognizes the assets and liabilities of the subsidiary, and any related non-controlling interest and other
components of equity. Any resulting gain or loss is recognized in pro?t or loss including related cumulative translation adjustments accumulated
in other comprehensive income. If it becomes an associate, the interest retained is subsequently valued in accordance with the equity method.
The principal subsidiaries are listed in the section ‘Miscellaneous’.
Transactions eliminated in the consolidated ?nancial statements
Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated in
preparing the consolidated ?nancial statements. Unrealized gains arising from transactions with equity accounted investees are eliminated
against the investment to the extent of the Group’s interest in the investees. Unrealized losses are eliminated in the same way as unrealized
gains, but only to the extent that there is no evidence of impairment.
3.2 Discontinued operations / assets held for demerger or sale
A discontinued operation is a component of the Group’s business which:
• has operations and cash ?ows that can be clearly distinguished from the rest of the Group;
• represents a separate major line of business or geographical area of operations;
• is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations.
Classi?cation as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classi?ed as held for sale or
demerger. When an operation is classi?ed as a discontinued operation, the comparative information in the statement of comprehensive income
and the consolidated statement of cash ?ows are reclassi?ed as if the operation had been discontinued from the start of the comparative
period. In the statement of ?nancial position, the comparative numbers are not reclassi?ed.
3.3 Business combinations
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the
consideration transferred measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. For each
business combination, the Group elects whether to measure the non-controlling interest in the acquiree at fair value or at the proportionate
share of the acquiree’s identi?able net assets. Acquisition-related costs are expensed as incurred and included in administrative expenses.
When the Group acquires a business, it assesses the ?nancial assets and liabilities assumed for appropriate classi?cation and designation
in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the
separation of embedded derivatives in host contracts by the acquiree.
If the business combination is achieved in stages, the previously held equity interest is remeasured at its acquisition date fair value and any
resulting gain or loss is recognized in pro?t or loss. Any contingent consideration to be transferred by the acquirer will be recognized at fair value
at the acquisition date. Contingent consideration classi?ed as an asset or liability that is a ?nancial instrument and within the scope of IAS 39
‘Financial Instruments: Recognition and Measurement’, is measured at fair value with changes in fair value recognized either in pro?t or loss or
as a change to other comprehensive income. If the contingent consideration is not within the scope of IAS 39, it is measured in accordance with
the appropriate IFRS. Contingent consideration classi?ed as equity is not remeasured and subsequent settlement is accounted for within equity.
Non-controlling interests
Non-controlling interests are presented as a separate component in equity. Changes in the Group’s interest in a subsidiary or joint operation that
do not result in a loss of control are accounted for as an equity transaction.
86 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 87
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
3.4 Associates
Associates are those companies in which the Group exercises signi?cant in?uence, but does not have control over the ?nancial and operating
policies, which is presumed to exist when the Group holds 20 percent to 50 percent of the shareholding and related voting rights of the other
entity. Associates are accounted for by applying the ‘equity method’. The Group’s share of pro?t or loss of an investee is recognized in pro?t
or loss from the date when signi?cant in?uence begins up to the date when that in?uence ceases. Investments in associates with negative
shareholder’s equity are impaired and a provision for its losses is recognized only if the Group has a legal or constructive obligation to cover
the losses. Equity changes in investees accounted for using the equity method that do not result from pro?t or loss are recognized directly
in other comprehensive income. Unrealized gains on transactions between the Group and its associates are eliminated to the extent of the
Group’s interest in the associates. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset
transferred. Unrealized gains on transactions between two associates are not eliminated.
3.5 Joint arrangements
Under IFRS 11 investments in joint arrangements are classi?ed as either joint ventures or joint operations depending on the contractual rights
and obligations of each investor. Those joint arrangements that are assessed as joint ventures are accounted for using the equity method. Joint
operations are accounted for using the line-by-line accounting.
Under the equity method of accounting, interests in joint ventures are initially recognized at cost and adjusted subsequently for the group’s share
in the post-acquisition pro?t or losses and movements in comprehensive income. When the Group‘s share of losses in a joint venture equals or
exceeds its interest in the joint venture (which includes any long-term interest that, in substance, forms part of the Group’s net investment in joint
ventures), the Group does not recognize further losses, unless it has incurred obligations or made payments on behalf of the joint venture.
A joint operation is proportionately consolidated until the date on which the Group ceases to have joint control over the joint operation. Upon
loss of joint control, the Group reassesses the joint operation.
3.6 Foreign currency translation
Foreign currency transactions
The ?nancial statements of subsidiaries and joint operations are prepared in the currencies which are determined based on the primary
economic environment in which they operate (‘the functional currency’). Transactions in currencies other than the functional currency are
recorded at the rates of exchange prevailing on the transaction dates. At each balance sheet date, monetary items denominated in foreign
currencies are translated into the entity’s functional currency at the then prevailing closing-rates. Exchange differences arising on the settlement
and translation of monetary items are included in pro?t or loss for the period except when deferred to other comprehensive income for available-
for-sale assets and the effective part of qualifying cash ?ow hedges.
Foreign currency operations
Upon consolidation, the assets and liabilities of subsidiaries with a functional currency other than the US dollar are translated into US dollars
using the exchange rates prevailing at the balance sheet date. Income and expense items are translated using exchange rates prevailing at the
date of the transactions. Investments in joint ventures and associates with a functional currency other than the US dollar are translated into US
dollar using exchange rates prevailing on the balance sheet date. Exchange rate differences arising during consolidation and on the translation
of investments in subsidiaries, joint arrangements and associates are included in other comprehensive income, as ‘currency translation
adjustments’. When a foreign operation is (partly) disposed of or sold, (the proportionate share of) the related currency translation differences
that were recorded in other comprehensive income are recycled to pro?t or loss as part of the gain and loss on disposal or sale. Goodwill and
fair value adjustments arising on the acquisition of a foreign subsidiary are considered as assets and liabilities denominated in the functional
currency of the foreign subsidiary.
3.7 Financial instruments
The Group classi?es ?nancial instruments into the following categories: (i) ?nancial instruments at fair value through pro?t or loss, (ii) derivatives
designated in a hedge relationship, (iii) loans and receivables and (iv) available-for-sale ?nancial assets. Financial instruments are classi?ed as
current liabilities unless the remaining term of the ?nancial instruments or the remaining term of the facility, under which the ?nancial instruments
are drawn, is 12 months or more. The Group derecognizes a ?nancial asset when the contractual rights to the cash ?ows from the asset expire,
or it transfers the rights to receive the contractual cash ?ows in a transaction in which substantially all of the risks and rewards of ownership of
the ?nancial asset are transferred, or it neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain
control over the transferred asset. Any interest in such derecognized ?nancial assets that is created or retained by the Group is recognized as
a separate asset or liability. The Group derecognizes a ?nancial liability when its contractual obligations are discharged, cancelled or expire.
Financial assets and ?nancial liabilities are offset and the net amount presented in the statement of ?nancial position when, and only when,
the Group has a legal right to offset the amounts and intends either to settle them on a net basis or to realize the asset and settle the liability
simultaneously. Compound ?nancial instruments are bifurcated and the components are presented separately as ?nancial liabilities, ?nancial
assets or equity instruments.
3.7 Financial instruments (continued)
Financial instruments at fair value through pro?t or loss
A ?nancial instrument is classi?ed at fair value through pro?t or loss if it is classi?ed as held-for-trading or designated into this category. Directly
attributable transaction costs are recognized in pro?t or loss when incurred. Financial instruments at fair value through pro?t or loss are
measured at fair value and changes therein, including any interest or dividend income, are recognized in pro?t or loss. Financial instruments
classi?ed as ‘at fair value through pro?t or loss’ are initially recognized on the trade date and changes in fair value are accounted for under
?nance income and cost.
Embedded derivatives
Embedded derivatives are separated from the host contract and accounted for separately if the economic characteristics and risks of the
host contract and the embedded derivative are not clearly and closely related, a separate instrument with the same terms as the embedded
derivative would meet the de?nition of a derivative, and the combined instrument is not measured at fair value through pro?t or loss. Changes in
the fair value of separated embedded derivatives are recognized immediately in pro?t or loss.
Other non-trading derivatives
When a derivative ?nancial instrument is not designated in a hedge relationship that quali?es for hedge accounting, all changes in its fair value
are recognized immediately in pro?t or loss.
Derivatives designated in a hedge relationship
In order to mitigate risk, the Group applies hedging in case by case situations. The Group holds derivative ?nancial instruments to hedge
its foreign currency risk, interest rate risk, and ?uctuating natural gas price exposures. On initial designation of the derivative as a hedging
instrument, the Group formally documents the relationship between the hedging instrument and hedged item, including the risk management
objectives and strategy in undertaking the hedge transaction and the hedged risk, together with the methods that will be used to assess the
effectiveness of the hedging relationship. The Group makes an assessment, both at the inception of the hedge relationship as well as on an
ongoing basis, of whether the hedging instruments are expected to be highly effective in offsetting the changes in the fair value or cash ?ows of
the respective hedged items attributable to the hedged risk on a prospective and retrospective basis.
For a cash ?ow hedge of a forecast transaction, the transaction should be highly probable to occur and should present an exposure to
variations in cash ?ows that ultimately could affect reported pro?t or loss. Derivatives are recognized initially at fair value. Attributable transaction
costs are recognized in pro?t or loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value and changes therein
are accounted for as described below:
Cash ?ow hedges
When a derivative is designated as the hedging instrument in a hedge of the variability in cash ?ows attributable to a particular risk associated
with a recognized asset or liability, or a highly probable forecast transaction that could ultimately affect pro?t or loss, the effective portion of
changes in the fair value of the derivative is recognized in other comprehensive income as ‘hedging reserve’, net of related tax. Any ineffective
portion of changes in the fair value of the derivative is recognized immediately in pro?t or loss. When the hedged item is a non-?nancial asset,
the amount otherwise accumulated in equity is included in the carrying amount of the asset. In other cases, the amounts recognized as other
comprehensive income are reclassi?ed to pro?t or loss when the hedged transaction affects pro?t or loss. If the hedging instrument no longer
meets the criteria for hedge accounting, expires or is sold, terminated or exercised, or the designation is revoked, then hedge accounting
is discontinued prospectively. In these cases, the cumulative gain or loss on the hedging instrument that has been recognized in other
comprehensive income from the period when the hedge was effective shall remain separately in equity until the forecast transaction occurs. If
the forecast transaction is no longer expected to occur, the balance in equity is reclassi?ed to pro?t or loss.
Loans and receivables
Loans and receivables are initially recognized at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they
are measured at amortized cost, using the effective interest method less any impairment losses.
The Group recognizes a ?nancial asset arising from a service concession arrangement when it has an unconditional contractual right to receive
cash or another ?nancial asset from, or at the direction of the grantor for the construction, or upgrade services provided. Such ?nancial assets
are measured at fair value on initial recognition and classi?ed as loans and receivables. Subsequent to initial recognition, the ?nancial assets are
measured at amortized cost. If the Group has paid for the construction services partly by a ?nancial asset and partly by an intangible asset, then
each component of the consideration is accounted for separately and is initially recognized at the fair value of the consideration.
88 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 89
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
3.7 Financial instruments (continued)
Available-for-sale ?nancial assets
Available-for-sale ?nancial assets are non-derivative instruments that are either designated in this category or not classi?ed in any of the other
categories of ?nancial instruments under IAS 39. Available-for-sale ?nancial assets include debt and equity securities. For available-for-sale debt
securities interest income is recognized using the effective interest method. Available-for-sale ?nancial assets are accounted for using trade date
accounting and are carried at fair value. The change in fair value is recognized in other comprehensive income net of taxes. When securities
classi?ed as available-for-sale are sold or impaired, the accumulated gains and losses are reclassi?ed to pro?t or loss. Available-for-sale ?nancial
assets are included in non-current assets unless the Group intends to dispose of the available-for-sale ?nancial assets within 12 months after
the balance sheet date. The dividend income from equity instruments is recognized in pro?t or loss as ‘Other income’ when the Group’s right to
receive payment is established.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with maturities of three months or less from the acquisition date (original
maturity) that are subject to an insigni?cant risk of changes in their fair value and are used by the Group in the management of its short-term
commitments. Restricted cash comprises cash balances where speci?c restrictions exist on the Company’s ability to use this cash. Restricted
cash includes cash deposited as collateral for letters of credit issued by the Company.
3.8 Share capital
Ordinary shares are classi?ed as equity. Share premium is the excess amount received over the par value of the shares. Incremental costs
directly attributable to the issue of new shares are recognized in equity as a deduction, net of tax, from the proceeds. When ordinary shares are
repurchased, the amount of the consideration paid, which includes directly attributable costs, net of tax effects, is recognized as a deduction
from ‘Reserves’. Repurchased shares are classi?ed as treasury shares and are presented in ‘Reserves’. When treasury shares are sold or
reissued subsequently, the amount received is recognized as an increase in ‘Reserves’, and the resulting surplus or de?cit on the transaction is
presented in share premium.
3.9 Property, plant and equipment
Items of property, plant and equipment are measured at cost less accumulated depreciation and any impairment. Cost includes expenditure that
is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes cost of material, direct labour, other directly
attributable cost incurred to bring the asset ready to its intended use, cost of asset retirement obligations and any capitalized borrowing cost.
Purchased software that is integral to the functionality of the related equipment is capitalized as part of that equipment. When parts of property,
plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment (calculated as the difference between the net proceeds from disposal
and the carrying amount of the item) is recognized in pro?t or loss. Subsequent expenditures are capitalized only when it is probable that the
future economic bene?ts associated with the expenditure will ?ow to the Group. Ongoing repairs and maintenance costs are expensed as
incurred. Spare parts of property, plant and equipment are recognized under property, plant and equipment if the average turn-over exceeds 12
months or more, otherwise they are recognized within inventories.
Finance leases
Leased assets in which the Group bears substantially all the risks and rewards incidental to ownership are classi?ed as ?nance leases and
recognized under property, plant and equipment. Upon initial recognition, the leased asset is measured at the lower of its fair value and
the present value of minimum lease payments. Minimum lease payments made under ?nance leases are apportioned between the interest
expenses and the reduction of the outstanding liability. The interest expenses are recognized as other ?nancing cost over the lease term. The
?nance cost is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of
the liability.
Property, plant and equipment under construction
Expenditures incurred for purchasing and constructing property, plant and equipment are initially recorded as ‘under construction’ until the asset
is completed and becomes ready for use. Upon the completion of the assets, the recognized costs are reclassi?ed from ‘under construction’
to its ?nal category of property, plant and equipment. Assets under construction are not depreciated and measured at cost less any impairment
losses.
3.9 Property, plant and equipment (continued)
Depreciation
Items of property, plant and equipment are depreciated on a straight line basis through pro?t or loss over the estimated useful lives of each
component, taking into account any residual values. Finance lease assets are depreciated over the shorter of the lease term and their useful
lives. If it is reasonably certain that the Group will obtain ownership by the end of the lease term, the ?nance lease assets are depreciated over
their useful lives. Land is not depreciated. Items of property, plant and equipment are depreciated from the date that they are installed and are
ready for use, or in respect of internally constructed assets, from the date that the asset is completed and ready for use.
The estimated useful lives for items of property, plant and equipment are as follows: Years
Buildings 10 - 50
Plant and equipment 5 - 25
Fixtures and ?ttings 3 - 10
Depreciation methods, useful lives and residual values are reviewed at each reporting date by the Group.
Borrowing costs
Borrowing costs attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to get
ready for their intended use or sale, are recognized as part of the cost of those assets. All other borrowing costs are recognized as ‘Finance
cost’ in the period in which they are incurred.
3.10 Goodwill and other intangible assets
Goodwill
Goodwill represents the excess of the cost, being the excess of the aggregate of the consideration transferred including the amount recognized
for non-controlling interest, of an acquisition over the fair value of the Group’s share in the net identi?able assets and liabilities assumed of the
acquired subsidiary at the date of acquisition.
If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the gain is recognized in pro?t or loss.
Goodwill on acquisition of entities that qualify as subsidiaries is presented under ‘Intangible assets’. Goodwill on acquisitions of entities that
qualify as associates or joint ventures is included in ‘Associates’. Goodwill on acquisition of subsidiaries is allocated to cash-generating units for
the purpose of impairment testing. The allocation is made to those cash-generating units or group of units that are expected to bene?t from the
business combination through which the goodwill arose, based on past experience.
Goodwill is initially measured at cost. After initial recognition, goodwill is measured at cost less any impairment losses. Goodwill is tested
annually for impairment; an impairment loss is recognized for the amount by which the cash-generating unit’s carrying amount exceeds its
recoverable amount. The recoverable amount of the cash-generating unit is determined by the higher of its fair value less cost to sell and its
value in use. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of
goodwill related to the entity sold. All other expenditures on internally generated goodwill and other intangible assets is recognized in pro?t or
loss as incurred.
Other intangible assets
Other intangible assets with a ?nite useful life (licenses, customer relations, brand names and other rights that are acquired separately or
through business combinations) are amortized on a straight-line basis in pro?t or loss over their estimated useful lives taking into account any
residual value, from the date that they are available for use.
The estimated useful lives of intangible assets are as follows: Years
Licenses and trade names 3 - 10
Purchased rights and other 4 - 10
Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted if necessary.
90 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 91
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
3.11 Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of inventories of raw materials, spare parts and supplies cost
are based on weighted average principle or the ?rst-in-?rst-out method, and includes expenditure incurred in acquiring the inventories and
bringing them to their existing location and condition. In case of manufactured inventories and work in progress, cost includes an appropriate
share of production overheads based on normal operating capacity. Net realisable value is the estimated selling price in the ordinary course of
business, less the estimated costs of completion and selling expenses.
3.12 Impairment of assets
Non-derivative ?nancial assets
The Group assesses at each balance sheet date whether there is objective evidence that a non-derivative ?nancial asset or a group of non-
derivative ?nancial assets is impaired. An impairment loss is recognized for the amount by which the carrying amount of a non-derivative
?nancial asset exceeds its estimated discounted future cash ?ows using the original interest rate. Impaired non-derivative ?nancial assets are
tested periodically to determine whether the estimated future cash ?ows have increased and the impairment has to be reversed. Reversal
of impairments is only permitted if in a subsequent period after an impairment loss has been recognized, the amount of the impairment loss
decreases and the decrease can be related objectively to an event after the impairment loss was recognized. In the case of a ?nancial asset
classi?ed as available-for-sale, a signi?cant or prolonged decline in the fair value of the available-for-sale ?nancial asset below its acquisition cost
is considered as an indicator that the available-for-sale ?nancial asset is impaired. If any such evidence exists for an available-for-sale ?nancial
asset, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that
?nancial asset previously recognized in pro?t or loss – is removed from other comprehensive income and recognized in pro?t or loss. Impairment
losses recognized in pro?t or loss on equity instruments classi?ed as available-for-sale are not reversed through pro?t or loss.
Derivative ?nancial assets
Derivative ?nancial assets are measured at fair value and the Group investigates whether the counterparty creditworthiness gives rise to an
impairment.
Non-?nancial assets
Non-?nancial assets that have an inde?nite useful life, for example goodwill, are not subject to amortization but are tested annually for
impairment or more frequently when indicators arise. Assets with a ?nite useful life are subject to depreciation or amortization and are reviewed
(at least at the balance sheet date) for impairment whenever events or changes in circumstances indicate that the carrying amount may not be
fully recoverable. An impairment loss is recognized for the amount by which the assets’ carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset’s fair value less costs of disposal and its value in use. For the purposes of assessing impairment,
assets are grouped based on the lowest level for which there are separately identi?able cash ?ows (cash-generating units). Impairment
is recognized as an expense in pro?t or loss. Non-?nancial assets, which are impaired, are tested periodically to determine whether the
recoverable amount has increased and the impairment has to be (partially) reversed. Impairment losses on goodwill are not reversed. Reversal
of impairments is only permitted if in a subsequent period after an impairment loss has been recognized, the amount of the impairment loss
decreases and the decrease can be related objectively to an event after the impairment loss was recognized.
3.13 Provisions
Provisions are recognized when a present legal or constructive obligation as a result of a past event exists, and it is probable that an out?ow of
economic bene?ts is required to settle the obligation. The non-current part of provisions are determined by discounting the expected future cash
?ows at a pre-tax rate that re?ects current market assessments of the time value of money and the risks speci?c to the liability. The unwinding of
the discount is recognized as ?nance cost.
Warranties
A provision for warranties is recognized with respect to services performed and goods sold.
Restructuring
A provision for restructuring is recognized when the Group has approved a detailed and formal restructuring plan, and the restructuring either
has commenced, the Group has committed itself by public announcement or is expected to commit itself to a restructuring plan.
Asset retirement obligations
The Group recognizes a provision if the Group has an obligation to restore a leased asset in its original condition at the end of its lease term and
in case of legal requirements with respect to clean-up of contamination of land.
3.13 Provisions (continued)
Onerous contracts
A provision for onerous contracts is recognized if the Group expects that the unavoidable costs of meeting the obligations under a contract
exceed the economic bene?ts expected to be received under it. A provision for onerous contracts is measured at the present value of the lower
of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the
Group recognizes any impairment loss on the assets associated with that contract.
Legal
The Group is subject to legal and regulatory proceedings in various jurisdictions. Such proceedings may result in criminal or civil sanctions,
penalties or disgorgements against the Company. If it is probable that an obligation to the Group exists, which will result in an out?ow of
resources and the amount of the out?ow can be reliably estimated, a provision is recognized.
3.14 Revenue recognition
Revenues comprise the fair value of the considerations received or receivable from the sale of goods and services to third parties in the ordinary
course of the Group’s activities, excluding the taxes levied and taking into account any discounts granted. OCI recognizes revenue when the
amount of revenue can be reliably measured, it is probable that future economic bene?ts will ?ow to OCI and speci?c criteria have been met as
described below.
Construction contracts
Construction contracts are stated at cost incurred and allocated result in line with the progress of the construction, less total expected losses
and invoiced instalments. The cost price consists of all costs which are directly related to the project and directly attributable indirect cost based
on the normal production capacity. If the outcome of a contract can be estimated reliably, project revenue and cost are recognized in pro?t or
loss based on the progress of work performed. If the outcome of a contract cannot be estimated reliably, revenue is recognized only to the
extent of the contract costs incurred that are likely to be recoverable. Onerous sales contracts are identi?ed by monitoring the progress of the
project and updating the estimate of total contract costs, which also requires signi?cant judgment relating to achieving certain performance
standards as well as estimates involving warranty costs and estimates regarding project delays, including the assessment of responsibility
splits between the contract partners for these delays. If it is probable that the total contract cost exceeds the total contract revenue, the total
expected loss is recognized as an expense. The Group uses the ‘percentage of completion method’ to determine the appropriate amount
of revenue (and cost) to be recognized in a given period. The stage of completion is measured by reference to the contract cost incurred
as a percentage of total actual, compared to the estimated project cost. In case of ?xed price contracts, revenue is recognized when the
total contract revenue can be measured reliably, it is probable that future economic bene?ts will ?ow to the entity, both the contract cost and
the stage of completion can be measured reliably at the end of the period and the contract cost attributable to the contract can be clearly
identi?ed so that actual cost incurred can be compared with prior periods. For cost plus contract revenue is recognized when it is probable
that future economic bene?ts associated with the contract will ?ow to the entity and the contract cost attributable to the contract, whether or
not speci?cally reimbursable, can be clearly identi?ed and measured reliably. Projects are presented in the statement of ?nancial position as
‘Contract receivables‘ or ‘Billing in excess of construction contracts‘. If the costs incurred (including the result recognized) exceed the invoiced
instalments, the net contract position is presented as a receivable. If the invoiced instalments exceed the costs incurred (including the result
recognized) the net contract position is presented as a liability.
Contracts comprising the construction of a project and the possibility of subsequent long-term maintenance of that project as separate
components, or for which these components could be negotiated individually in the market, are accounted for as two separate contracts.
Revenue and results are recognized accordingly in the consolidated statement of comprehensive income as construction contract revenue or
the rendering of services, respectively.
Service concession arrangements
Revenue related to construction or upgrade services under a service concession arrangement is recognized based on the stage of completion
of the work performed, consistent with the Group’s accounting policy on recognizing revenue on construction contracts. Operation or service
revenue is recognized in the period in which the services are provided by the Group. If the Group provides more than one service in a service
concession arrangement, then the consideration received is allocated with reference to the relative fair values of the services delivered if the
amounts are separately identi?able.
Goods sold
Revenue on goods sold is recognized, in addition to abovementioned criteria, when persuasive evidence exists, usually in the form of an
executed sales agreement, that the signi?cant risks and rewards of ownership of the goods have transferred to the customer, the associated
costs and possible return of goods can be estimated reliably and there is no continuing management involvement with the goods. If it is
probable that discounts will be granted and the amount can be measured reliably, then the discount is recognized as a reduction of revenue
as the sales are recognized. The timing of the transfer of risks and rewards varies depending on the individual terms of the sales agreement,
whereby usually the transfer occurs when the product is received at the customer’s warehouse or the products leave the Company’s
warehouse; however, for some international shipments transfer occurs on loading the goods onto the relevant carrier at the port. Generally for
such products the customer has no right of return.
92 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 93
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
3.15 Government grants
An unconditional government grant related to an asset is recognized in pro?t or loss as ‘Other income’ when the grant becomes receivable.
When the grant relates to an asset, it is recognized as income in equal amounts over the expected useful life of the related asset. Grants that
compensate the Group for expenses incurred are recognized in pro?t or loss as ‘Other income’ on a systematic basis in the periods in which the
expenses are recognized. Other government grants are recognized initially as deferred income at fair value when there is reasonable assurance
that they will be received and the Group will comply with the conditions associated with the grant, and are then recognized in pro?t or loss as
‘Other income’ on a systematic basis over the useful life of the asset.
3.16 Operating leases
Leases in which a signi?cant portion of the risks and rewards incidental to ownership are retained by the lessor are classi?ed as operating
leases. Payments made by OCI under operating leases (net of any incentives received from the lessor) are charged to the consolidated
statement of pro?t or loss and other comprehensive income on a ‘straight-line’ basis over the period of the lease.
3.17 Finance income and cost
Finance income comprises:
• interest income on funds invested (including available-for-sale ?nancial assets);
• gains on the disposal of available-for-sale ?nancial assets;
• fair value gains on ?nancial assets at fair value through pro?t or loss;
• gains on the re-measurement to fair value of any pre-existing interest in an acquired business combination;
• gains on hedging instruments that are recognized in pro?t or loss and reclassi?cations of amounts previously recognized in other
comprehensive income; and
• interest income is recognized as it accrues in pro?t or loss, using the effective interest method.
Dividend income is recognized in pro?t or loss on the date that the Group’s right to receive payment is established, which in the case of quoted
securities is normally the ex-dividend date.
Finance cost comprise:
• interest expense on borrowings;
• unwinding of the discount on provisions and contingent consideration;
• losses on disposal of available-for-sale ?nancial assets;
• fair value losses on ?nancial assets at fair value through pro?t or loss; and
• impairment losses recognized on ?nancial assets (other than trade receivables).
Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognized in pro?t or
loss are expensed as incurred.
Foreign currency gains and losses are recognized on a net basis as either ?nance income or ?nance cost depending on whether foreign
currency movements are in a net gain or net loss position.
3.18 Employee bene?ts
De?ned contribution plan
Certain Group subsidiaries provide ‘pension plans’, ‘end of service remuneration plans’ and ‘long-term service bene?ts’. These pension plans
qualify as de?ned contribution plans. Obligations for contributions to de?ned contribution plans are expensed as the related service is provided.
Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in future payments is available.
Short-term employee bene?ts
Short-term employee bene?ts are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the
Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation
can be estimated reliably.
3.18 Employee bene?ts (continued)
Long-term employee bene?ts
The Group long-term employee bene?ts are recognized if the Group has a present legal or constructive obligation to pay this amount as a
result of past service provided by the employee and the obligation can be estimated reliably to determine its present value. The discount rate
is the yield at the balance sheet date on triple-A (‘AAA’) credit rated bonds that have maturity dates approximating to the terms of the Group’s
obligations. Re-measurements are recognized in pro?t or loss in the period in which they arise.
Termination bene?ts
Employee termination bene?ts are payable when employment is terminated before the normal retirement date, or whenever an employee
accepts voluntary redundancy in exchange for these bene?ts. OCI recognizes termination bene?ts when OCI is demonstrably committed to
either terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal, or when OCI is
providing termination bene?ts as a result of an offer made to encourage voluntary redundancy. Bene?ts falling due more than 12 months after
balance sheet date are discounted to present value.
Share-based payments
Employees (including senior executives) of the Group receive remuneration in the form of share-based payments, whereby employees render
services as consideration for equity instruments (equity-settled share-based payments arrangements). The grant date fair value of share-based
payment awards granted to employees is recognized as an employee expense, with a corresponding increase in equity, over the period (the
vesting period) that the employees render service and becomes unconditionally entitled to the awards. The amount recognized as an expense
is adjusted to re?ect the number of awards for which the related service and non-market performance conditions are expected to be met,
such that the amount ultimately recognized as an expense is based on the number of awards that meet the related service and non-market
performance conditions at the vesting date.
3.19 Income tax
Current tax
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively
enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Current tax payable also includes any tax liability
arising from the declaration of dividends. Current income tax assets and liabilities are offset when there is a legally enforceable right to offset and
when the current income tax relates to the same ?scal authority.
Deferred tax
Deferred income tax liabilities are recognized for all taxable temporary differences arising between the tax bases of assets and liabilities and
their carrying amounts in the consolidated ?nancial statements (‘liability’ method). Deferred income tax assets are recognized for all deductible
temporary differences, unused carry forward losses and unused carry forward tax credits, to the extent that it is probable that future taxable
pro?t will be available against which the deferred income tax assets can be utilized.
Deferred income tax is not recognized if it arises from initial recognition of an asset or liability in a transaction that is not a business combination
and at the time of the transaction affects neither accounting nor taxable pro?t or loss. Also, no deferred income tax is recognized regarding the
initial recognition of goodwill.
Deferred income tax is measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled,
based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. Deferred income tax assets
and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred
income tax relates to the same ?scal authority.
3.20 Segment reporting
An operating segment is a component of an entity that engages in business activities for which it may earn revenues and incur expenses
(including revenues and expenses relating to transactions with other components of the same entity), whose operating results are regularly
reviewed by the entity’s Chief Operating Decision Maker (CODM) to make decisions about resource allocation to the segment and to assess its
performance and for which discrete ?nancial information is available. The Group determines and presents operating segments on the basis of
information that internally is provided to the CODM during the period.
94 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 95
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
3.21 Consolidated statement of cash ?ows
The consolidated statement of cash ?ows has been prepared using the ‘indirect’ method. Cash ?ows in foreign currencies have been
translated applying average exchange rates. Currency translation differences are shown separately in the consolidated statement of cash ?ows.
Cash ?ows from investing activities consist mostly of investments and divestments in property, plant and equipment, intangible assets, and
acquisitions insofar as these are paid for in cash. Acquisitions or disposals of subsidiaries are presented as aquisition of subsidiary, net of cash,
aquired. Cash ?ows relating to capitalized borrowing cost are presented as cash ?ows from investment activities similar as other cash ?ows to
acquire the qualifying asset.
3.22 Earnings per share
Earnings per ordinary share are calculated by dividing the pro?t or loss (net) attributable to holders of ordinary shares by the weighted average
number of ordinary shares outstanding during the year. In making this calculation the (ordinary) treasury shares are deducted from the number
of ordinary shares outstanding. The calculation of the diluted earnings per share is based on the weighted average number of ordinary shares
outstanding plus the potential increase as a result of the conversion of convertible bonds and the settlement of share-based compensation
plans (share option plans). Anti-dilutive effects are not included in the calculation. With regard to the convertible notes it is assumed that these
are converted in full. An adjustment is made to pro?t or loss (net) to eliminate interest charges, whilst allowing for effect of taxation. Regarding
equity-settled share option plans it is assumed that all outstanding plans will vest. The potential increase arising from share option plans is
based on a calculation of the value of the options outstanding. This is the number of options multiplied by the exercise price, divided by the
average share price during the ?nancial year. This potential increase is only applied if the option has intrinsic value.
4. New accounting standards and policies
On a regular basis, the IASB issues new accounting standards, amendments and revisions to existing standards and interpretations. These new
accounting standards, amendments and revisions to existing standards and interpretations are subject to endorsement by the European Union.
In 2014, the following new accounting standards, amendments and revisions to existing standards and interpretations were issued by the IASB,
which will become or became effective to OCI.
4.1 Standards, amendments, revisions and interpretations effective to OCI in 2014
IAS 27 (as revised in 2011) ‘Separate Financial Statements‘ IAS 27 is applicable for annual periods beginning on or after 1 January 2013. As a
consequence of the new IFRS 10 and IFRS 12, what remains of IAS 27 is limited to accounting for subsidiaries, jointly controlled entities, and
associates in separate ?nancial statements. The revision had no impact on the consolidated ?nancial statements.
IAS 28 Amendment ‘Investments in Associates and Joint Ventures‘ IAS 28 is applicable for annual periods beginning on or after 1 January
2013. As a consequence of the new IFRS 11 and IFRS 12, IAS 28 has been renamed ‘Investments in associates and Joint Ventures‘, and
describes the application of the equity method to investments in joint ventures in addition to associates. The revision had no impact on the
consolidated ?nancial statements.
IAS 36 Impairment of Assets: Recoverable Amounts Disclosures for Non-Financial Assets The amendments are to be applied retrospectively for
annual periods beginning on or after 1 January 2014. Earlier application is permitted for periods when the entity has already applied IFRS 13.
The amendments clarify the IASB’s original intention: that the scope of those disclosures is limited to the recoverable amount of impaired assets
that is based on fair value less costs of disposal. The amendments did not have an impact on the consolidated ?nancial statements.
IFRS 10 ‘Consolidated Financial Statements’ IFRS 10 is effective for annual periods beginning on or after 1 January 2014. IFRS 10 establishes
principles for the presentation and preparation of consolidated ?nancial statements when an entity controls one or more other entities. IFRS 10
replaces the consolidation requirements in SIC-12 ‘Consolidation-Special Purpose Entities’ and IAS 27 ‘Consolidated and Separate Financial
Statements’. IFRS 10 builds on existing principles by identifying the concept of control as the determining factor in whether an entity should
be included within the consolidated ?nancial statements of the parent company. The standard provides additional guidance to assist in the
determination of control where this is dif?cult to assess. For the impact of this standard and IFRS 11 on the consolidated ?nancial statements,
reference is made to note 4.3.
4.1 Standards, amendments, revisions and interpretations effective to OCI in 2014 (continued)
IFRS 11 ‘Joint Arrangements’ IFRS 11 is applicable for annual periods beginning on or after 1 January 2014. IFRS 11 provides for a more
realistic re?ection of joint arrangements by focusing on the rights and obligations of the arrangement, rather than its legal form (as was the case).
The standard addresses inconsistencies in the reporting of joint arrangements by requiring a single method to account for interests in jointly
controlled entities. IFRS 11 supersedes IAS 31 ‘Interests in Joint Ventures’ and SIC-13 ‘Jointly Controlled Entities / Non-monetary Contributions
by Ventures’. The application of this new standard impacts the ?nancial position of the Group by eliminating proportionate consolidation of the
joint ventures in, BESIX, Orasqualia for Development, Orasqualia for Construction, Alico and some other small entities. With the application
of this new standard, the investment in these entities are accounted for using the equity method. For the impact of this standard on the
consolidated ?nancial statements, reference is made to note 4.3.
IFRS 12 ‘Disclosure of interest in other Entities‘ IFRS 12 is applicable for annual periods beginning on or after 1 January 2013, however the
European Union provided an 1-year relief. IFRS 12 is a new and comprehensive standard on disclosure requirements for all forms of interests
in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. As a result of IFRS 12,
the Group provides additional disclosures regarding interest in other entities.
Amendment to IAS 19 ‘De?ned Bene?t Plans: Employee Contributions’ The amendment issued on 21 November 2013 are effective for annual
periods beginning on or after 1 January 2014. The amendments apply to contributions from employees or third parties to de?ned bene?t plans.
The objective of the amendments is to simplify the accounting for contributions that are independent of the number of years of employee
service, for example, employee contributions that are calculated according to a ?xed percentage of salary. The amendments did not have a
signi?cant impact on the consolidated ?nancial statements, because OCI does not have any signi?cant de?ned bene?t plans.
Amendments to IAS 32 ‘Offsetting Financial Assets and Financial Liabilities’ The amendments are effective for annual periods beginning on or
after 1 January 2014. The amendments to IAS 32 clarify existing application issues relating to the offset of ?nancial assets and ?nancial liabilities
requirements. Speci?cally, the amendments clarify the meaning of ‘currently has a legally enforceable right of set-off’ and that some gross
settlement systems may be considered equivalent to net settlement. The amendment did not have a signi?cant impact on the consolidated
?nancial statements upon adoption.
Amendment to IAS 39 ‘Novation of Derivatives and Continuation of Hedge Accounting’ The amendment issued on 27 June 2013 is effective
for annual periods beginning on or after 1 January 2014. The amendment allows hedge accounting to continue in a situation where a derivative,
which has been designated as a hedging instrument, is novated to effect clearing with a central counterparty as a result of laws or regulation,
if speci?c conditions are met. The amendment did not have a signi?cant impact on the consolidated ?nancial statements.
IFRIC Interpretation 21 ‘Levies’ The interpretation issued on 20 May 2013 is effective for annual periods beginning on or after 1 January 2014.
IFRIC 21 is an interpretation of IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets‘. IAS 37 sets out criteria for recognition of a
liability, one of which is the requirement for an entity to have a present obligation as a result of a past event (known as an obligating event). The
interpretation clari?es that the obligating event that gives rise to a liability to pay levy is the activity described in the relevant legislation that trigger
the payment of the levy. The amendments did not have an impact on the consolidated ?nancial statements.
Amendment to IFRS 10, IFRS 12, and IAS 27 ‘Investment Entities’ The amendments issued in October, 2012 are effective for annual periods
beginning on or after 1 January 2013 and apply to particular classes of business that qualify as investment entities. The IASB uses the term
investment entity to refer to an entity whose ?nancial statements business purpose is to invest funds solely for returns from capital appreciation,
investment income or both. The amendments are subject to endorsement by the European Union. The amendments did not have an impact on
the consolidated ?nancial statements, because OCI does not qualify as an investment entity.
96 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 97
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
4.2 Standards, amendments, revisions and interpretations not yet effective to OCI:
IFRS 9 ‘Financial Instruments’ IFRS 9 is effective for annual periods beginning on or after 1 January 2018 (tentative). IFRS 9 addresses the
classi?cation and measurement of ?nancial assets. The publication of IFRS 9 represents the completion of the ?rst part of a three-part project
to replace IAS 39 ‘Financial Instruments: Recognition and Measurement’. IFRS 9 enhances the ability of investors and other users of ?nancial
information to understand the accounting of ?nancial assets and reduces complexity. OCI is currently investigating the impact of IFRS 9 on the
consolidated ?nancial statements.
IFRS 14 ‘Regulatory Deferral Accounts’
The Standard was issued in January 2014 and is effective from 1 January 2016, with earlier application permitted. IFRS 14 permits an entity
which is a ?rst-time adopter of International Financial Reporting Standards to continue to account, with some limited changes, for ‘regulatory
deferral account balances’ in accordance with its previous GAAP, both on initial adoption of IFRS and in subsequent ?nancial statements.
Regulatory deferral account balances, and movements in them, are presented separately in the statement of ?nancial position and statement
of pro?t or loss and other comprehensive income, and speci?c disclosures are required. IFRS 14 will not have an impact on the consolidated
?nancial statements, because OCI is not a ?rst-time adopter.
IFRS 15 ‘Revenue from Contracts with Customers’
The Standard was issued in January 2014 and is effective from 1 January 2017. IFRS 15 speci?es how and when an IFRS reporter will
recognise revenue as well as requiring such entities to provide users of ?nancial statements with more informative, relevant disclosures. The
standard provides a single, principles based ?ve-step model to be applied to all contracts with customers. The group does not expect a
signi?cant impact from the application of this standard on its continuing operations.
Amendments to IAS 1 ‘Disclosure Initiative’
The amendments issued on 18 December 2014 are effective for annual periods beginning on or after 1 January 2016, with earlier application
being permitted. The amendments aim at clarifying IAS 1 to address perceived impediments to preparers exercising their judgement in
presenting their ?nancial reports. OCI is currently investigating the impact of the amendments.
Amendments to IFRS 10 and IAS 28 ‘Sale or Contribution of Assets between an Investor and its Associate or Joint Venture’
The amendments issued on 11 September 2014 are effective for annual periods beginning on or after 1 January 2016. When a parent losses
control of a subsidiary in a transaction with an associate or joint venture, there is a con?ict between the existing guidance on consolidation
and equity accounting. In response to this con?ict and the resulting diversity in practice, the amendments requires the recognition of the full
gain when the assets transferred meet the de?nition of a business combination under IFRS 3. OCI is currently investigating the impact of the
amendments.
Amendments to IAS 27 ‘Equity Method in Separate Financial Statements’
The amendment to IAS 27 issued on 12 August 2014 will be effective for reporting period starting on or after 1 January 2016, but is subject to
EU endorsement. In some countries, local regulations require entities to apply the equity method for accounting for investments in subsidiaries
in their separate ?nancial statements. The amendment allows for the use of the equity method. OCI N.V. does not currently apply IFRS for its
separate ?nancial statements. In 2015 OCI N.V. will convert to IFRS, but will apply the cost method in accounting for subsidiaries.
Amendments to IAS 16 and IAS 38 ‘Clari?cation of Acceptable Methods of Depreciation and Amortization’
The amendments issued on 12 May 2014 are effective for annual periods beginning on or after 1 January 2016, with earlier application being
permitted. These amendments clarify the principle in IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets that revenue re?ects
a pattern of economic bene?ts that are generated from operating a business (of which the asset is part) rather than the economic bene?ts that
are consumed through use of the asset. As a result, the ratio of revenue generated to total revenue expected to be generated cannot be used
to depreciate property, plant and equipment and may only be used in very limited circumstances to amortise intangible assets. OCI is currently
investigating the impact of the amendments.
Amendments to IFRS 11 ‘Accounting for Acquisitions of Interests in Joint Operations’
The amendment was issued on 6 May 2014 and will be effective for reporting periods starting on or after 1 January 2016. The amendment
states that, where a joint operator acquires an interest in a joint operation in which the activity of the joint operation constitutes a business, it
must apply all of the principles on business combinations accounting as set out in IFRS 3 Business Combinations, and other standards. In
addition, the joint operator must disclose the information required by IFRS 3 and other IFRSs for business combinations. The amendment will
only affect OCI’s consolidated ?nancial statements if the entity would enter into a signi?cant joint operation.
4.3. Restatement of comparative information as a result of the application of IFRS 10 and IFRS 11
4.3.1. Restatement of consolidated statement of ?nancial position as at 31 December
$ millions Note
2013
before restatement
Effect of
IFRS 10 / 11
2013
restated
Assets
Non-current assets
Property, plant and equipment (7) 4,918.4 (145.0) 4,773.4
Goodwill and other intangible assets (8) 986.0 (1.7) 984.3
Trade and other receivables 198.7 (121.9) 76.8
Equity accounted investees (10) 188.2 328.9 517.1
Other investments 51.9 (0.9) 51.0
Deferred tax assets 76.1 (8.5) 67.6
Total non-current assets 6,419.3 50.9 6,470.2
Current assets
Inventories (13) 479.7 (112.2) 367.5
Trade and other receivables 1,865.1 (583.0) 1,282.1
Contracts receivables 414.0 (38.6) 375.4
Cash and cash equivalents (15) 2,266.1 (275.9) 1,990.2
Assets held for sale 2.4 - 2.4
Total current assets 5,027.3 (1,009.7) 4,017.6
Total assets 11,446.6 (958.8) 10,487.8
Equity
Share capital 272.1 - 272.1
Share premium 1,441.8 - 1,441.8
Reserves 109.6 - 109.6
Retained earnings (102.2) - (102.2)
Equity attributable to owners of the Company 1,721.3 - 1,721.3
Non-controlling interest 366.3 - 366.3
Total equity 2,087.6 - 2,087.6
Liabilities
Non-current liabilities
Loans and borrowings (20) 4,591.9 (94.7) 4,497.2
Trade and other payables 118.9 (43.1) 75.8
Provisions 48.2 (29.0) 19.2
Deferred tax liabilities 393.3 (17.6) 375.7
Income tax payables 414.7 - 414.7
Total non-current liabilities 5,567.0 (184.4) 5,382.6
Current liabilities
Loans and borrowings (20) 1,474.2 (46.2) 1,428.0
Trade and other payables 1,616.3 (614.0) 1,002.3
Billing in excess of construction contracts 218.9 (78.0) 140.9
Provisions 130.5 (22.3) 108.2
Income tax payables 352.1 (13.9) 338.2
Total current liabilities 3,792.0 (774.4) 3,017.6
Total liabilities 9,359.0 (958.8) 8,400.2
Total equity and liabilities 11,446.6 (958.8) 10,487.8
98 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 99
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
4.3.2. Restatement of consolidated statement of pro?t or loss (before effect of IFRS 5 ‘discontinued operations‘)
for the year ended
$ millions Note
2013
before restatement
Effect of
IFRS 10 / 11
2013
restated
Revenue 6,131.8 (1,730.9) 4,400.9
Cost of sales (5,270.4) 1,557.0 (3,713.4)
Gross pro?t 861.4 (173.9) 687.5
Other income (24) 316.9 (6.1) 310.8
Selling, general and administrative expenses (23) (434.4) 93.8 (340.6)
Other expenses (25) (97.5) 12.2 (85.3)
Transaction cost (89.3) - (89.3)
Operating pro?t / (loss) 557.1 (74.0) 483.1
Finance income (26) 178.5 (22.7) 155.8
Finance cost (26) (412.1) 23.1 (389.0)
Net ?nance cost (26) (233.6) 0.4 (233.2)
Income from equity accounted investees (net of tax) (10) 21.7 62.0 83.7
Pro?t / (loss) before income tax 345.2 (11.6) 333.6
Income tax (12) (86.0) 11.6 (74.4)
Net pro?t / (loss) 259.2 - 259.2
Attributable to owners of the Company 295.2 - 295.2
Non-controlling interest (36.0) - (36.0)
Net pro?t / (loss) 259.2 - 259.2
Earnings / (loss) per share (in USD)
Basic earnings (loss) per share (27) 1.449 1.449
Diluted earnings (loss) per share (27) 1.408 1.408
4.3.4 Restatement of consolidated statement of cash ?ows for the year ended
$ millions Note
2013
before restatement
Effect of
IFRS 10 / 11
2013
restated
Net pro?t / (loss) 259.2 - 259.2
Adjustments for non-cash pro?t or loss items / changes in items of
?nancial position: (971.9) (20.7) (992.6)
Cash ?ow from / (used in) operating activities (712.7) (20.7) (733.4)
Cash ?ow from / (used in) investing activities 1,084.6 87.7 1,172.3
Cash ?ow from / (used in) ?nancing activities 849.5 (62.5) 787.0
Net increase (decrease) in cash and cash equivalents 1,221.4 4.5 1,225.9
Cash and cash equivalents at 1 January (15) 1,033.4 (270.9) 762.5
Currency translation differences 11.3 (9.5) 1.8
Cash and cash equivalents at 31 December (15) 2,266.1 (275.9) 1,990.2
5. Critical accounting judgement, estimates and assumptions
The preparation of the ?nancial statements in compliance with IFRS requires management to make judgements, estimates and assumptions
that affect amounts reported in the consolidated ?nancial statements. The estimates and assumptions are based on experience and various
other factors that are believed to be reasonable under the circumstances and are used to judge the carrying values of assets and liabilities
that are not readily apparent from other sources. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognized in the period in which the estimate is revised or in the revision period and future periods, if the changed
estimates affect both current and future periods. The most critical accounting policies involving a higher degree of judgment and complexity in
applying principles of valuation and for which changes in the assumptions and estimates could result in signi?cantly different results than those
recorded in the ?nancial statements are the following:
Intangible assets
Intangible assets with ?nite useful lives are carried at cost less cumulative amortization and any impairment. Amortization is calculated using
the ‘straight-line’ method based on the estimated useful lives. Management makes estimates regarding the useful lives and residual values
and assumes that amortization takes place on a ‘straight-line’ basis. The assets’ useful lives are reviewed, and adjusted if appropriate, at each
balance sheet date. For intangible assets with ?nite useful lives, OCI assesses annually or more frequently whether indicators exist that suggest
the intangible asset might be impaired by comparing the recoverable amounts with their carrying amounts. In determining the recoverable
amounts of intangible assets, OCI makes estimates and assumptions about future cash ?ows based on the value in use. In doing so, OCI also
makes assumptions and estimates regarding the discount rates in order to calculate the net present value of the future cash ?ows.
OCI tests at least annually whether goodwill is impaired by comparing the recoverable amounts of cash-generating units with their carrying
amounts. The recoverable amount is the higher of the fair value less cost to sell and the value in use. In determining the recoverable amount,
OCI makes estimates and assumptions concerning future revenues, future costs, future working capital, future investments, Weighted Average
Cost of Capital (WACC) and future in?ation rates.
Property, plant and equipment
Depreciation is calculated using the ‘straight-line’ method based on the estimated useful lives, taking into account any residual values.
Management makes estimates regarding the useful lives and residual values and assumes that depreciation takes place on a ‘straight-line’
basis. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. OCI assesses annually,
or more frequently, whether indicators exist that suggest that an item of property, plant and equipment might be impaired by comparing the
recoverable amounts with their carrying amounts. In determining the recoverable amounts of property, plant and equipment, OCI makes
estimates and assumptions about future cash ?ows based on the value in use. In doing so OCI also makes assumptions and estimates
regarding the discount rates to be used in order to calculate the net present value of the future cash ?ows.
Financial instruments
The fair value of ?nancial instruments traded in active markets (?nancial instruments in the fair value hierarchy category 1) is based on quoted
market prices at the balance sheet date. The fair value of ?nancial instruments that are not traded in an active market (?nancial instruments in
the fair value hierarchy category 2) is determined using generally accepted valuation techniques. These valuation techniques include estimates
and assumptions about forward rates, discount rates based on a single interest rate, or on a yield-curve based on market conditions existing
at the balance sheet date. The fair value of borrowings and interest rate swaps is calculated based on the present value of the estimated future
cash ?ows based on the yield-curve applicable at the balance sheet date. If the ?nancial instrument contains a ?oating interest rate, the future
expected interest rates are determined based on the ‘boot-strap’ method. The fair value of forward foreign exchange contracts is determined
using quoted forward exchange rates at the balance sheet date. The net carrying amount of trade receivables and trade payables is assumed
to approximate the fair value due to the short term nature. The fair value of non-current ?nancial liabilities is estimated by discounting the future
cash ?ows using yield-curves. For unlisted equity securities in the available-for-sale category (?nancial instruments in the fair value hierarchy
category 3) the equity-method is used as a proxy for fair value. In using the equity method, input is derived from the ?nancial statements of
the unlisted equity investments. Counterparty risk in connection with triggers for impairment is based on judgment of the ?nancial position of
the counterparty. A signi?cant and prolonged decline in fair value of available-for-sale ?nancial assets is depends on the average volatility of
the instrument, if an instrument exceeds certain ranges in both time frame and negative volatility, a trigger for impairment is considered. This is
considered on an item by item basis.
Impairment ?nancial instruments (including trade receivables)
Objective evidence may exist in circumstances in which a counterparty has been placed in bankruptcy, or has failed on the repayments of
principal and interest. In other circumstances OCI uses judgment in order to determine whether a ?nancial assets may be impaired. OCI
uses judgement in order to determine whether an impairment can be reversed, an assumption in doing so might be an improvement in the
debtor’s credit rating or receipt of payments due. For listed equity securities in the available-for-sale ?nancial assets category, the Group uses
the assumption that if the market value declined by more than 25 percent and more than 6 months, the asset is assumed to be impaired. For
debt-securities, an impairment trigger exist when the counterpart fails to meet its contractual payment obligations or there is evidence that the
counterpart has encountered ?nancial dif?culties. The impairment is determined based on the carrying amount and the recoverable amount. The
recoverable amount is determined as the present value of estimated future cash ?ows using the original effective interest rate.
100 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 101
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
5. Critical accounting judgement, estimates and assumptions (continued)
Inventories
In determining the net realisable value of inventories, OCI estimates the selling prices in the ordinary course of business, cost of completion and
cost to sell. In doing so, OCI makes estimates and assumptions based on current market prices, historical usage of various product categories
versus current inventory levels and speci?c identi?ed obsolescence risks (e.g. end of life of speci?c goods and spare parts and the impact of
new environmental legislation).
Provisions
Recognition of provisions include signi?cant estimates, assumptions and judgements. IFRS requires only those provisions to be recognized if
there is an expected out?ow of resources in the near future and if the cost of these out?ows can be estimated reliably. Accordingly, management
exercises considerable judgment in determining whether there is a present obligation as a result of a past event at the end of the reporting
period, whether it is probable that such a proceeding will result in an out?ow of resources and whether the amount of the obligation can be
reliably estimated. These judgements are subject to change as new information becomes available. The required amount of a provision may
change in the future due to new developments in the particular matter. Revisions to estimates may signi?cantly impact future pro?t or loss. Upon
resolution, the Group may incur charges in excess of the recorded provisions for such matters.
The group uses past experiences to estimate the likelihood and cost of future warranties with respect to services provided and goods sold.
OCI recognizes a provision for restructuring regarding cost-saving restructuring measures. Provisions for restructuring include, amongst other,
estimates and assumptions about severance payments and termination fees.
Provisions for asset retirement obligations, represent estimated costs of decommissioning. Due to the long time frame over which future cash
out?ows are expected to occur including the respective interest accretion require assumptions. Amongst others, the estimated cash out?ows
could alter signi?cantly if, and when, political developments affect future laws and regulation with respect to asset retirements.
In case of onerous contracts the Group estimates the present value of the lower of the expected cost of terminating the contract and the
expected net cost of continuing with the contract. In doing so, the Group has to estimate the future cash ?ows and the discount rates used. In
addition to this the Group has to estimate any possible impairments.
With respect to legal cases, the Group has to estimate the outcome of the legal cases. Regulatory and legal proceedings as well as government
investigations often involve complex legal issues and are subject to substantial uncertainties. The Company periodically reviews the status of
these proceedings with both the internal and external legal counsels.
Revenue recognition on construction contracts
The Company conducts a signi?cant portion of its business under construction contracts with customers. The Company generally accounts for
construction projects using the percentage-of-completion method, recognizing revenue as performance on contract progresses. This method
places considerable importance on accurate estimates of the extent of progress towards completion and may involve estimates on the scope
of deliveries and services required for ful?lling the contractually de?ned obligations. Depending on the methodology to determine contract
progress, the signi?cant estimates include total contract costs, remaining costs to completion, total contract revenues, contract risks, including
technical, political and regulatory risks, and other judgments. Management of the operating divisions continually review all estimates involved
in such construction contracts, including commercial feasibility, and adjusts them as necessary. Under the percentage-of-completion method,
such changes in estimates may lead to an increase or decrease of revenues in the respective reporting period.
Income taxes
OCI is subject to income taxes in numerous jurisdictions. Estimates are required in determining the worldwide provision for income taxes.
There are some transactions and calculations for which the ultimate tax position is uncertain during the ordinary course of business. The Group
recognizes provisions for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the ?nal tax outcome
of these matters is different from amounts that were initially recorded, such differences will impact the current income tax and deferred tax
provisions in the period in which such determination is made. OCI recognizes deferred tax assets to the extent that it is probable that future
taxable pro?ts will be available for the deferred tax asset to be recovered. This is based on estimates of taxable future income by jurisdiction
in which OCI operates and the period over which deferred tax assets are expected to be recoverable. In the event that actual results or new
estimates differ from previous estimates and depending on the possible tax strategies that may be implemented, changes to the recognition of
deferred tax assets could be required, which could impact the ?nancial position and pro?t or loss.
Asset held sale for sale / demerger, discontinued operations
OCI used judgment in determining what a disposal group or a discontinued operation is and when it quali?es for reclassi?cation according to
IFRS 5 (management commitment, ready for sale / demerger, highly probable, completion within one year). In determining what is a disposal
group or a discontinued operation, OCI judges whether the cash ?ows of the disposal group or a discontinued operation can be distinguished
from the rest of the group, what determines a major line of operation and whether a single coordinated plan to dispose exists and at what date
it was formally approved.
6. Financial risk and capital management
Overview
The Group has exposure to the following risks arising from ?nancial instruments:
• Credit risk
• Liquidity risk
• Market risk
These risks arise from exposures that occur in the normal course of business and are managed on a consolidated company basis. This note
presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and
managing risk, and the Group’s management of capital.
Risk management framework
Senior management has an overall responsibility for the establishment and oversight of the Group’s risk management framework. The Board is
responsible for developing and monitoring the Group’s risk management policies.
The Group’s risk management policies are established to identify and analyze the risks faced by the Group, to set appropriate risk limits and
controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to re?ect changes in
market conditions and the Group’s activities. The Group, through its training and management standards and procedures, aims to develop a
disciplined and constructive control environment in which all employees understand their roles and obligations.
The Audit Committee oversees how management monitors compliance with the Group’s risk management policies and procedures, and reviews
the adequacy of the risk management framework in relation to the risks faced by the Group. The Audit Committee is assisted in its oversight role
by the Internal Audit Department. The Internal Audit Department undertakes both regular and ad hoc reviews of risk management controls and
procedures, the results of which are reported to the Audit Committee.
6.1 Exposure to credit risk
The Company mitigates the exposure to credit risk on outstanding cash balances by placing funds at multiple ?nancial institutions with a
suf?cient credit rating. As of 31 December 2014, IFCo has a maximum concentration risk of USD 410.2 million in relation to its outstanding
cash at UMB Bank (treasury bills). The Group’s exposure to customer credit risk is monitored and mitigated by performing credit checks before
selling any goods. The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and
other receivables. The main components of this allowance are a speci?c loss component that relates to individually signi?cant exposures, and
a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identi?ed. The
collective loss allowance is determined based on historical data of payment statistics for similar ?nancial assets. The carrying amount of ?nancial
assets represents the maximum credit exposure. With respect to transactions with ?nancial institutions, the group sets limits to the credit
worthiness rating of the counterparty. The maximum credit risk is the carrying amount of ?nancial instruments, for an overview reference is made
to the tables ?nancial instruments by category.
The major exposure to credit risk at the reporting date was as follows:
$ millions Note 2014
2013
restated
Trade and other receivables (9) 393.7 1,358.9
Available-for-sale ?nancial assets (11) 54.1 51.0
Contract receivables (14) - 375.4
Cash and cash equivalents (15) 846.6 1,990.2
Total 1,294.4 3,775.5
The major exposure to credit risk for trade and other receivables by geographic region was as follows:
$ millions 2014
2013
restated
Middle East and Africa 202.8 650.7
Asia and Oceania 7.4 225.2
Europe and United States 183.5 483.0
Total 393.7 1,358.9
102 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 103
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
6.2 Liquidity risk
Liquidity risk is the risk that the Group will encounter dif?culty in meeting the obligations associated with its ?nancial liabilities that are settled by
delivering cash or another ?nancial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have
suf?cient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking
damage to the Group’s reputation. This is also safeguarded by using multiple ?nancial institutions in order the mitigate any concentration of
liquidity risk.
The following risk is monitored internally at Group level, on an ongoing basis the Group prepares liquidity forecasts to verify whether the Group
is able to meet its future debt obligations.
The following are the contractual maturities of ?nancial liabilities, including estimated interest payments and exclude the impact of netting
agreements:
At 31 December 2014
$ millions Note
Carrying
amount
Contractual
cash ?ow
6 months
or less
6–12
months
1–5
years
More than
5 years
Financial liabilities
Cash out?ows:
Loans and borrowings (20) 5,040.7 6,466.2 336.8 249.3 4,013.7 1,866.4
Trade and other payables (21) 463.6 515.0 454.1 - 60.9 -
Derivatives (21) - 26.4 26.4 - - -
Cash in?ows:
Derivatives (21) - 26.4 26.4 - - -
Total 5,504.3 6,981.2 790.9 249.3 4,074.6 1,866.4
The Group entered into construction agreements regarding the building of new plants, reference is made to note 31 ‘Capital commitments‘. The
building of these new plants is ?nanced by cash held by the operating company, new loans or shares issued or dividends received.
At 31 December 2013 restated
$ millions Note
Carrying
amount
Contractual
cash ?ow
6 months
or less
6–12
months
1–5
years
More than
5 years
Financial liabilities
Loans and borrowings (20) 5,925.2 7,730.4 284.1 410.4 4,522.0 2,513.9
Trade and other payables (21) 1,078.1 1,078.1 1,002.3 - 75.8 -
Total 7,003.3 8,808.5 1,286.4 410.4 4,597.8 2,513.9
The interest on ?oating rate loans and borrowings is based on forward interest rates at period-end. This interest rate may change as the market
interest rate changes.
6.3 Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates, commodity prices and equity prices will
affect the Group’s income or the value of its holdings of ?nancial instruments. The objective of market risk management is to manage and
control market risk exposures within acceptable parameters, while optimizing the return.
The Group is exposed to foreign currency risk arising in separate ways:
Foreign exchange translation exposure
Due to the Group’s international presence, OCI’s Financial Statements are exposed to foreign exchange ?uctuations as these affect the
translation of the subsidiaries’ assets and liabilities presented in foreign currencies to the US dollar (the Group’s presentation currency). The
currencies concerned are mainly the Egyptian pound, the Algerian Dinar and the Euro. Foreign exchange translation exposure is considered a
part of doing business on an international level; this risk is not actively managed, nor is it hedged.
Foreign exchange transaction exposure
The Group entities predominantly execute their activities in their respective functional currencies. Some Group subsidiaries are, however,
exposed to foreign currency risks in connection with the scheduled payments in currencies that are not their functional currencies. In general
this relates to foreign currency denominated supplier payables due to capital expenditures and receivables. The Group monitors the exposure
to foreign currency risk arising from operating activities. The Group does not use foreign exchange contracts for hedge accounting purposes,
therefore all changes in fair value adjustments are recognized in pro?t or loss.
The Group is exposed to foreign exchange transaction exposure to the extent that there is a mismatch between the currencies in which sales,
purchases and borrowings are denominated and the respective functional currencies of Group companies. The functional currencies of Group
companies are primarily the Euro, US Dollar, Egyptian Pound and Algerian Dinar.
As of 31 December 2014, if the functional currencies had strengthened/weakened by 7 percent against the Euro, 1 percent against the
Egyptian Pound with all other variables held constant, the translation of foreign currency receivables, payables and loans and borrowings that
would have resulted in an increase/decrease of USD 40.1 million of the pro?t of the year.
The Group uses foreign exchange contracts to manage its foreign exchange transaction exposure.
The summary of quantitative data about the Group’s exposure to foreign exchange transaction exposure provided to management of the Group
based on its risk management policy for the main currencies was as follows:
At 31 December 2014
$ millions USD EUR EGP
Trade and other receivables 42.7 7.0 21.3
Trade and other payables (8.5) (24.5) (92.8)
Loans and borrowings - - (1,015.0)
At 31 December 2013 restated
$ millions USD EUR EGP
Trade and other receivables 223.3 55.6 1,636.3
Trade and other payables (49.8) (92.2) (2,428.8)
Loans and borrowings (128.4) (63.5) (1,039.4)
104 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 105
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
6.3 Market risk (continued)
Signi?cant rates
The following signi?cant exchange rates applied during the year:
Average
2014
Average
2013
Closing
2014
Closing
2013
Euro 1.3282 1.3284 1.2155 1.3761
Egyptian pound 0.1412 0.1454 0.1398 0.1439
Algerian Dinar 0.0124 0.0124 0.0114 0.0127
The following tables demonstrate the sensitivity to a reasonably possible change in EUR and EGP exchange rates, with all other variables
held constant. The impact on the Group’s pro?t before tax is due to changes in the fair value of monetary assets and liabilities, including inter
company positions. The Group’s exposure to foreign currency changes for all other currencies is not material.
2014
$ millions
Change in
FX rate*
Effect on pro?t
before tax**
Effect on
equity**
EUR - USD 7 percent 40.1 -
EGP - USD 1 percent 0.1 -
* Determined based on the volatility of last year for the respective currencies
** Effects are displayed in absolute amounts
Interest rate risk
The Group‘s cash ?ow interest rate risks arise from the exposure to variability in future cash ?ows of ?oating rate ?nancial instruments. The
Group reviews its exposure in light of global interest rate environment after consulting with a consortium of global banks.
The Group analyses its interest rate exposure on a dynamic basis. The Group calculates the impact on pro?t or loss of a de?ned interest rate
shift. The same interest rate shift is used for all currencies. The following table demonstrates the sensitivity to a reasonably possible change in
interest rates on that portion of borrowings affected, after the impact of hedge accounting. With all other variables held constant, the Group’s
pro?t before tax is affected through the impact on ?oating rate borrowings, as follows:
$ millions in basis points 2014
2013
restated
Effect on pro?t before tax for the coming year +10 bps (1.5) (5.1)
- 10 bps 1.4 4.8
The assumed movement in basis points for the interest rate sensitivity analysis is based on the currently observable market environment,
showing a signi?cantly lower volatility than in prior years. As of 31 December 2014, the Group applied no cash ?ow hedge accounting; the
hedge reserve recognized in other comprehensive income relates to the joint venture Besix.
Commodity price risk
The group is exposed to natural gas price commodity risk, as natural gas is one of the primary raw materials used in the fertilizer and chemicals
production process. The Group enters into gas swaptions in order to hedge acceptable future gas price levels over a certain period of time. This
commodity hedge policy is only applied in those regions (mainly the USA) in which natural gas commodity hedging is possible. In other areas,
the Group enters into long-term gas supply contracts in order to manage its natural gas commodity risk.
6.3 Market risk (continued)
Categories of ?nancial instruments
2014
$ millions Note
Loans and
receivables
at amortized cost
Derivatives
at fair value
Available-for-sale
?nancial asset
at fair value
Assets
Trade and other receivables (9) 388.9 4.8 -
Other investments (11) - - 54.1
Cash and cash equivalents (15) 846.6 - -
Total 1,235.5 4.8 54.1
Liabilities
Loans and borrowings (20) 5,040.7 - -
Trade and other payables (21) 463.6 - -
Total 5,504.3 - -
2013 restated
$ millions Note
Loans and
receivables
at amortized cost
Derivatives
at fair value
Available-for-sale
?nancial asset
at fair value
Assets
Trade and other receivables (9) 1,330.8 28.1 -
Other investments (11) - - 51.0
Cash and cash equivalents (15) 1,990.2 - -
Total 3,321.0 28.1 51.0
Liabilities
Loans and Borrowings (20) 5,925.2 - -
Trade and other payables (21) 1,078.1 - -
Total 7,003.3 - -
Most ?nancial instruments are in the fair value hierarchy category level 2, with the exception of ?nancial assets in the available-for-sale category.
An amount of USD 54.1 million (2013: 51.0 million) was recognized as level 3 and was measured using the equity-method, reference is made
to note 11. In 2014, there were no transfers between the fair value hierarchy categories.
6.4 Capital management
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market con?dence and to sustain future
development of the business. Capital consists of ordinary shares, retained earnings and non-controlling interest of the Group. The Board of
Directors monitors the return on capital as well as the level of dividends to ordinary shareholders.
The Group’s net debt to equity ratio at the reporting date was as follows:
$ millions Notes 2014
2013
restated
Loans and borrowings (20) 5,040.7 5,925.2
Less: cash and cash equivalents (15) 846.6 1,990.2
Net debt 4,194.1 3,935.0
Total equity 2,537.8 2,087.6
Net debt to equity ratio at 31 December 1.65 1.88
The group is required by external ?nancial institutions to maintain certain capital requirements compared to its debt. Reference is made to note
20 ‘Loans and borrowings’ for a speci?cation of ?nancial covenants.
106 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 107
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
7. Property plant and equipment
$ millions
Land and
buildings
Plant and
equipment
Fixtures and
?ttings
Under
construction Total
Cost 263.8 2,706.5 24.9 2,190.5 5,185.7
Accumulated depreciation (52.1) (815.6) (16.0) - (883.7)
At 1 January 2013 restated 211.7 1,890.9 8.9 2,190.5 4,302.0
Movements in the carrying amount:
Additions 169.2 47.7 5.2 512.5 734.6
Disposals (2.6) (27.2) (1.1) - (30.9)
Depreciation (12.4) (255.6) (4.7) - (272.7)
Transfers (4.0) 2,056.1 0.8 (2,052.9) -
Effect of movement in exchange rate (4.5) 52.8 (0.7) (7.2) 40.4
At 31 December 2013 restated 357.4 3,764.7 8.4 642.9 4,773.4
Cost 408.2 4,724.5 30.2 642.9 5,805.8
Accumulated depreciation (50.8) (959.8) (21.8) - (1,032.4)
At 31 December 2013 restated 357.4 3,764.7 8.4 642.9 4,773.4
Movements in the carrying amount:
Additions 19.3 155.4 7.1 1,227.4 1,409.2
Disposals (17.0) (8.4) (1.3) (0.7) (27.4)
Depreciation (15.3) (323.3) (8.9) - (347.5)
Transfers (0.2) 64.9 16.5 (81.2) -
Effect of movement in exchange rates (16.0) (229.2) (10.2) (7.7) (263.1)
Assets reclassi?ed as held for demerger (122.8) (137.2) (5.3) (6.9) (272.2)
At 31 December 2014 205.4 3,286.9 6.3 1,773.8 5,272.4
Cost 234.5 4,140.3 17.2 1,773.8 6,165.8
Accumulated depreciation (29.1) (853.4) (10.9) - (893.4)
At 31 December 2014 205.4 3,286.9 6.3 1,773.8 5,272.4
As at 31 December 2014, the group had land with a carrying amount of USD 62.4 million (2013: USD 78.1 million).
In 2013, primarily due to Sorfert’s completion of the commissioning and testing period, USD 2,052.9 million of asset under construction were
transferred to ‘plant and equipment’. Additions to assets under construction in 2013 and 2014 are mainly related to the construction of Iowa
Fertilizer Company (IFCo) and Natgasoline in Iowa and Texas respectively.
The capitalized borrowing costs during the year ended 31 December 2014 amounted to USD 67.3 million (2013: USD 40.7 million) and relate
mainly to IFCo.
The amount of USD 263.1 million under effect of movement in exchange rates mainly relates to the Sorfert plant (Algeria), which has a different
functional currency (Algerian Dinar), than the Group’s presentation currency. The Algerian Dinar decreased by approximately 10% during 2014.
For capital commitments reference is made to note 31.
8. Goodwill and other intangible assets
$ millions Goodwill
Licenses and
trademarks
Purchase rights
and other Total
Cost 1,826.0 86.2 36.5 1,948.7
Accumulated amortization and impairment (900.0) (46.0) (6.5) (952.5)
At 1 January 2013 restated 926.0 40.2 30.0 996.2
Movements in the carrying amount:
Additions - - 4.1 4.1
Purchase price adjustment on previously acquired subsidiary 4.6 - - 4.6
Amortization - (15.1) (7.2) (22.3)
Effect of movement in exchange rates 0.4 1.3 - 1.7
At 31 December 2013 restated 931.0 26.4 26.9 984.3
Cost 1,831.0 87.5 40.6 1,959.1
Accumulated amortization and impairment (900.0) (61.1) (13.7) (974.8)
At 31 December 2013 restated 931.0 26.4 26.9 984.3
Movements in the carrying amount:
Disposals - - (0.6) (0.6)
Amortization - (14.5) (7.2) (21.7)
Impairment loss (7.0) - - (7.0)
Other - - (4.8) (4.8)
Effect of movement in exchange rates (3.0) (1.9) - (4.9)
Assets reclassi?ed as held for demerger (12.4) - - (12.4)
At 31 December 2014 908.6 10.0 14.3 932.9
Cost 1,808.6 85.6 35.2 1,929.4
Accumulated amortization and impairment (900.0) (75.6) (20.9) (996.5)
At 31 December 2014 908.6 10.0 14.3 932.9
Goodwill
Goodwill amounting to USD 0.9 billion is almost entirely related to the 2007 acquisition of EFC in Egypt which is part of the continuing
operations. This goodwill did not change during 2014.
Certain measurement period adjustments relating to real estate for sale, an investment in a joint operation and a judgement on other contract
receivables totalling USD 4.6 million have been adjusted through goodwill during the year ended 31 December 2013 as purchase price
adjustments.
In 2014, OCI Egypt (discontinued operation) impaired goodwill for an amount of USD 7.0 million relating to the National Steel Fabrication
company (NSF).
Licenses and trademarks
As at 31 December the 2014, the total licenses and trademarks have a carrying amount of USD 10.0 million as compared to an amount of USD
26.4 million as at 31 December 2013. The licenses and trademarks mainly relate to the customer relationships, trademarks and technology
assets of OCI Nitrogen B.V. These intangible assets were identi?ed during the acquisition of OCI Nitrogen B.V. in 2010. The useful life of
the customer relationships, trademarks and technology assets are respectively 5 to 10 years, 3 years and 5 years except the brand name
‘Nutramon’ which has an inde?nite useful life.
Purchase rights and other
As at 31 December 2014, the ‘Purchase rights and other’ have a carrying amount of USD 14.3 million (2013: USD 26.9 million). The purchase
rights and other mostly relates to the Ammonium Sulphate supply agreement between Fertiva GmbH and Orascom Construction Industries
S.A.E., where Orascom Construction Industries S.A.E. is entitled to all rights, bene?ts and obligations relating the supply of Ammonium Sulphate
by LANXESS. The term of the contract is from 1 November 2012 through 31 December 2016.
108 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 109
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
8. Goodwill and other intangible assets (continued)
Goodwill impairment testing Fertilizer & Chemicals Group
Goodwill amounting to USD 0.9 billion is almost entirely related to EFC. Historically, OCI allocated all goodwill from the EFC acquisition to the
CGU EFC and was also monitored and tested for impairment on this level. In 2014 OCI reorganized its entire internal reporting structure by
setting up a separate reporting structure for Fertilizer and Chemicals and Engineering and Construction. In addition to the change in internal
reporting structure the legal structure was changed to align the legal structure with the revised managerial and internal reporting structure.
The changes in the legal and internal reporting structure re?ected changes in the goods ?ow within the Fertilizer and Chemicals operations
and changes in management responsibilities within the Fertilizer and Chemicals operations. The goods ?ow within the Fertilizer and Chemicals
Group changed in 2014 as several fertilizer plants started to sell their products to 2 centralized trading of?ces within the group. These trading
of?ces subsequently sell ?nished products to the ultimate customers.
The Company appointed a COO for the entire Fertilizer and Chemicals business in 2014, as the changes in the setup of the Fertilizer and
Chemicals operations warranted managing the business at a more aggregated level. Following the appointment of the COO and the
aforementioned changes, the Fertilizer and Chemicals group is monitored as a group rather than on an individual production facility basis. Due
to the aforementioned changes, goodwill is tested for impairment on the level of a group of CGU’s, being the entire Fertilizer and Chemicals
group.
Goodwill has been allocated to the cash generating units as follows:
Cash generating units
$ millions 2014
Fertilizer & Chemicals Group 908.6
Weitz 12.4
Goodwill reclassi?ed as held for demerger (12.4)
Total 908.6
Cash generating units
$ millions
2013
restated
EFC Co SAE (EFC) - Fertilizer & Chemicals segment 877.6
Other - Fertilizer & Chemicals segment 34.4
Other - Engineering & Construction segment 19.0
Total 931.0
For the Fertilizer and Chemicals Group, details of the goodwill impairment test are as follows:
Key assumptions and method of quanti?cation
The Group recognizes its intangible assets in accordance with IAS 38 and IFRS 3. In accordance with IAS 36, the Group has performed an
impairment test on the capitalized goodwill of the Fertilizer and Chemicals group. The test was carried out by discounting future cash ?ows to
be generated from the continuing use of the cash-generating units to which the goodwill applies and on the assumption of an inde?nite life.
Key assumptions used in the calculation of recoverable amounts are the discount rate, the terminal value growth rate, selling price outlook per
product, natural gas availability and the number of expected operating days per plant. Selling prices assumptions are based on a published
independent price outlook prepared by global fertilizer experts. The other assumptions used are based on past experience and external
sources, but that are unpredictable and inherently uncertain.
The impairment test is based on speci?c estimates for the cash ?ow projections for the years 2015 to 2019 which are approved by the COO
and the Board of Directors. For the subsequent years the residual value was calculated on the basis of the results in the last year of relevant
forecasts and whereby a perpetual growth rate of 2.0% was taken into account. The estimated pre-tax cash ?ows are discounted to their
present value using a pre-tax weighted average cost of capital of 11.2%.
The determination of the recoverable amount for the cash generating unit requires signi?cant judgments and estimates, including projections of
future cash ?ows from the businesses.
Discount rate
In determining the pre-tax discount rate, ?rst the post-tax average cost of capital was calculated for the Fertilizer and Chemicals group. The
post-tax rate is based on a debt leveraging compared to the market value of equity of 10%.
8. Goodwill and other intangible assets (continued)
Percentage 2014 2013
1
Discount rate (pre tax weighted average cost of capital) 11.2% 13.9%
Perpetual growth rate 2.0% 2.5%
1
The 2013 percentage of the discount rate and perpetual rate relates to the CGU EFC. In 2013 this was monitored and tested for impairment
on this level.
Result of the impairment test
For 2014, the result of the impairment test was that the recoverable amount exceeded the carrying value by USD 5.3 billion and no further
impairment was identi?ed.
Sensitivity analysis
When performing the annual impairment test, we performed sensitivity analyses. The effect on the recoverable amount of 100 bps modi?cations
in the assumed WACC and the terminal growth rate can be summarized as follows:
$ billions In basis points 2014
Change in discount rate (pre-tax WACC) + 100 bps (1.6)
- 100 bps 2.1
Change in assumed perpetual growth rate + 100 bps 1.7
- 100 bps (1.3)
9. Trade and other receivables
$ millions 2014
2013
restated
Trade receivables (gross) 256.4 1,080.2
Allowance for trade receivables - (37.4)
Trade receivables (net) 256.4 1,042.8
Trade receivables due from related parties (note 33) 24.1 6.9
Prepayments 14.9 28.9
Derivative ?nancial instruments 4.8 28.1
Loans granted to personnel in relation to share-based payment arrangement 19.5 36.2
Other tax receivable 45.1 140.6
Other receivables due from related parties 22.4 -
Other receivables 6.5 75.4
Total 393.7 1,358.9
Non-current 49.7 76.8
Current 344.0 1,282.1
Total 393.7 1,358.9
The carrying amount of ‘Trade and other receivables’ as at 31 December 2014 approximates its fair value.
110 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 111
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
9. Trade and other receivables (continued)
The aging of current gross trade receivables at the reporting date that were as follows:
$ millions 2014
2013
restated
Neither past due nor impaired 237.4 383.1
Past due 1 - 30 days 17.1 132.6
Past due 31 - 90 days 0.3 222.1
Past due 91 - 360 days 0.5 256.3
More than 360 days 1.1 86.1
Total 256.4 1,080.2
Management believes that the unimpaired amounts that are past due by more than 30 days are collectible in full, based on historic payment
behavior and extensive analysis of customer credit risk, including underlying customers’ credit ratings if they are available. For trade and other
receivables pledged as securities, reference is made to note 20.
The movement in the allowance for impairment in respect of trade receivables during the year was as follows:
$ millions 2014
2013
restated
At 1 January (37.4) (49.2)
Additions (24.4) (18.6)
Unused amounts reversed - 26.6
Used amounts 10.2 -
Impairment losses recognized - 2.2
Exchange rates differences 0.8 1.6
Reclassi?ed as assets held for demerger 50.8 -
At 31 December - (37.4)
Derivative ?nancial instruments include the following:
Gas price derivative
Although the IFCo plant is still under construction, the company has entered into a swaption (option to swap) to mitigate the potential impact
of the increase in natural gas prices for a portion of the expected usage. The group does not apply hedge accounting therefore all fair value
changes related to this ?nancial instrument are recognized in pro?t or loss. The derivative has a quantity of 95,887,500 MMBTU against a strike
price of USD 6.0/ MMBTU for years 2015-2018 and USD 6.5/ MMBTU for years 2019-2022. On 31 December 2014, the fair value of the
derivative amounted to USD 4.8 million (2013 USD 9.5 million).
Foreign exchange contracts
On 23 March 2012, the Group entered into forward exchange contracts to hedge its currency risk exposure to the Japanese Yen that matures
in October 2015. The contract has a notional amount of USD 320.7 million at the inception of the contract. The Group does not apply hedge
accounting, therefore all fair value changes related to this ?nancial instrument are recognized in pro?t or loss. As at December 2013, the foreign
exchange hedge had a fair value of USD 18.1 million. These derivatives relate to construction operations of Besix, which are presented under
‘Assets held for demerger’ in 2014.
OCI Nitrogen B.V. interest rate swap
As of 27 April 2012, OCI Nitrogen B.V. entered into an interest rate swap for a notional amount of EUR 150 million (equivalent to USD 206.4
million) with Commerzbank by means of an amortizing plain vanilla interest rate swap. The swap matured during 2014.
10. Equity accounted investees
(i) The following table shows the movement in the carrying amount of the Groups’ associates and joint ventures:
$ millions 2014
2013
restated
At 1 January 517.1 458.4
Share in income (152.9) 81.1
Investment/divestment 96.9 1.4
Dividend (42.0) (35.8)
Movement in hedge reserve (6.1) -
Provisions on associates recognized under ‘Trade and other payables’ 21.4 -
Effect of movement in exchange rates (25.3) 12.0
Associates reclassi?ed as held for demerger (371.2) -
At 31 December 37.9 517.1
Joint ventures 11.0 378.5
Associates 26.9 138.6
Total 37.9 517.1
The share of income of associates of USD 152.9 million loss (2013: USD 81.1 million pro?t) is composed of a gain of USD 15.8 million relating
to the continuing operations and a loss of USD 168.7 million (2013: USD 73.7 million pro?t) relating to discontinued operations (2013: USD 7.4
million pro?t). The 2014 loss in discontinued operations relates mainly to the associate Sidra Medical Center in the amount of USD 188.0 million
(2013: USD 0.7 million loss) partly off-set by a pro?t of Besix of USD 31.2 million (2013: USD 77.9 million).
(ii) The Group has interests in a number of associates and joint ventures relating to continuing operations:
Name Type Participation via Country Participation %
Sitech Manufacturing Services C.V. Associate OCI Nitrogen B.V. The Netherlands 35.0
Sitech Utility Holding Beheer B.V. Associate OCI Nitrogen B.V. The Netherlands 40.0
Sitech Utility Holding C.V. Associate OCI Nitrogen B.V. The Netherlands 39.9
Sitech Services B.V. Associate OCI Nitrogen B.V. The Netherlands 23.0
Nitrogen Iberian Company SL. Joint venture OCI Nitrogen B.V. Spain 50.0
Shanxi Fenghe Melamine Company Ltd. Joint venture OCI Nitrogen B.V. China 50.0
Fitco OCI Agro S.A. Joint venture OCI Fertilizers B.V. Uruguay 50.0
Fitco OCI Agronegocios do Brazil Joint venture OCI Fertilizers B.V. Brazil 50.0
112 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 113
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
10. Equity accounted investees (continued)
(iii) The following table summarizes the ?nancial information of OCI N.V.’s associates and joint ventures (on a 100% basis) of continuing
operations:
$ millions
2014
Associates
2014
Joint venture
2014
Total
2013
Associates
2013
Joint ventures
2013
Total
Non-current assets 127.3 24.4 151.7 121.1 27.5 148.6
Current assets 75.4 72.0 147.4 180.7 72.2 252.9
Non-current liabilities - - - (9.9) (3.1) (13.0)
Current liabilities (85.9) (74.4) (160.3) (151.5) (72.1) (223.6)
Net assets 116.8 22.0 138.8 140.4 24.5 164.9
Income 382.4 417.7 800.1 390.8 413.3 804.1
Expenses (363.4) (412.4) (775.8) (372.7) (407.4) (780.1)
Net pro?t / (loss) 19.0 5.3 24.3 18.1 5.9 24.0
The associates include the Sitech entities, which are used to operate the Chemelot site in Geleen, the Netherlands for OCI Nitrogen B.V. The
Chemelot site is used by several other companies. The Sitech entities generated USD 382.4 million revenues and USD 19.0 million net income
in 2014. The net assets amounted to USD 116.8 million in 2014. Dividends were distributed to OCI NItrogen B.V. in 2014 for the amount of
USD 6.1 million (2013: USD 3.1 million).
The joint ventures consist mainly of OCI’s investment in Fitco OCI Agro S.A. (Uruguay), for which 2014 revenues amounted to USD 266.9 million
with a net pro?t of USD 5.3 million.
(iv) The following chart summarizes the ?nancial information of Fitco OCI Agro S.A.
$ millions 2014 2013
Non-current assets - -
Current assets (excluding cash and cash equivalents) 29.6 21.3
Cash and cash equivalents 3.2 0.4
Non-current liabilities - (3.1)
Current liabilities (23.2) (9.8)
Net assets 9.6 8.8
Group’s share of net assets (50%) 4.8 4.4
Revenues 266.9 234.9
Depreciation - -
Interest income - -
Interest expense (0.1) (0.1)
Pro?t (loss) before taxes 5.3 4.3
Tax expense - -
Pro?t (loss) after taxes 5.3 4.3
Other comprehensive income - -
Total comprehensive income 5.3 4.3
11. Other investments
$ millions 2014
2013
restated
Available-for-sale / debt securities - 0.9
Available-for-sale / equity securities 54.1 50.1
Total 54.1 51.0
Non-current 22.9 51.0
Current 31.2 -
Total 54.1 51.0
Available-for-sale debt securities
Available-for-sale debt securities in 2013 are primarily comprised of investments in hedge funds and corporate bonds held by the Weitz Group.
Available-for-sale equity securities
The amount of the equity securities in 2014 includes USD 24.3 million (2013: USD 26.0 million) representing the Group’s 16.7 percent share
in Notore Chemicals Industries (Mauritius), which is expected to be sold in 2015. The remaining USD 6.9 million represent the market value of
308,976 shares of a 0.4 percent shareholding in ABU KIR Fertilizer and Chemical Industries Co (bloomberg ticker: ABUK:EY), which are held by
one of the subsidiaries and which are expected to be sold in 2015. USD 22.9 million (2013: USD 24.1 million) represents the Group’s interest in
the Infrastructure and Growth Capital Fund LP. The fund is managed by the Abraaj Group, which is a related party.
12. Income taxes
12.1 Income tax in the statement of pro?t or loss
The income tax on pro?t before income tax of continuing operations amounts to USD 565.0 million (2013: USD 71.1 million) and can be
summarized as follows:
$ millions 2014
2013
restated
Current tax 518.5 (66.1)
Deferred tax 46.5 (5.0)
Total Income tax in pro?t or loss 565.0 (71.1)
The amount excludes the tax income from the discontinued operation of USD (263.0) million (2013: USD 3.6 million), which is included in ‘pro?t
(loss) from discontinued operation, net of tax’ (see note 29).
114 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 115
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
12.2 Reconciliation of effective tax rate
OCI’s operations are subject to income taxes in various foreign jurisdictions. The statutory income tax rates vary from 0.0% to 36.5%, which
results in a difference between the weighted average statutory income tax rate and the Netherlands’ statutory income tax rate of 25.0%
(2013: 25.0%).
Reconciliation of the statutory income tax rate in the Netherlands with the effective tax rate can be summarized as follows:
$ millions 2014 %
2013
restated %
Pro?t / (loss) before income tax (19.0) 334.1
Enacted income tax rate in the Netherlands 25% 25%
Tax calculated at statutory tax rate 4.8 (25.0) (83.5) (25.0)
Effect tax rates in foreign jurisdictions 4.4 (23.2) 34.0 10.2
Unrecognized tax losses (72.2) 380.0 - -
Recognition of previously unrecognized tax losses 26.3 (138.4) (16.9) (5.1)
Non-taxable income on sale of Gavilon 0.9 (4.7) 26.2 7.8
Expenses non-deductible (38.0) 200.0 (43.3) (13.0)
Income not subject to tax 69.3 (364.7) 10.0 3.0
Reversal of tax liability relating to the tax evasion claim 557.4 (2,933.7) - -
Other 12.1 (63.7) 2.4 0.7
Total Income tax in pro?t or loss 565.0 (2,973.4) (71.1) (21.4)
The effective income tax rate is higher than the weighted average statutory income tax rate in 2014, mainly due to the reversal of tax liability
relating to the tax evasion claim. Furthermore, unrecognized tax losses include the tax impact of the donation cost.
Orascom Construction Industries S.A.E. Financial Tax liability
In April 2013, Orascom Construction Industries S.A.E. and the Egyptian Tax Authority (“ETA”) reached agreement on the accusation of
tax evasion following the sale of Orascom Building Materials Holding S.A.E. to Lafarge in 2007. Although the management of Orascom
Construction Industries S.A.E. and their advisors believed that the aforementioned transaction was exempted of tax, management entered into
an agreement to resolve the tax dispute. A modi?ed tax ?ling was made and cheques were issued to the ETA for approximately USD 1.0 billion.
The agreement was followed by payment of a ?rst installment amounting to approximately USD 360 million in 2013.
On 18 February 2014, the Egyptian general prosecutor exonerated Orascom Construction Industries S.A.E. from tax evasion. Following this
court ruling, Orascom Construction Industries S.A.E. started proceedings to have the tax settlement and cheques reversed. As the outcome of
this litigation was uncertain at year-end 2013, management concluded that the full liability, amounting to USD 674 million including interest, had
to be accrued. On 4 November 2014, the Egyptian Tax Authorities’ Independent Appeals Committee ruled in favor of the Company. Despite
the fact that the Egyptian Prosecutor started an appeal on 30 November 2014, the Company’s management, supported by its legal experts
concluded that the tax liability of USD 674 million should be released. The release has been accounted for in the 2014 Consolidated Statement
of Pro?t and Loss and Comprehensive Income, under the lines Income taxes (USD 557.4 million) and Finance income and expenses (USD 46.1
million) and includes foreign currency translation gains amounting to USD 9.5 million.
In March 2015, the Company received a cheque for approximately USD 266.2 million from the ETA, which refunded part of the ?rst installment
paid in 2013. This amount has been recognized as a receivable in the 2014 Consolidated Statement of Financial Position and as a gain on the
Income tax line in the Statement of Pro?t and Loss and Comprehensive Income.
Transfer of rights to the Tahya Misr Fund
On 13 November 2014, the Company announced that it had decided to transfer the rights to the amounts receivable from the ?rst instalment
already paid to the tax authorities in 2013 (USD 360 million) to the Tahya Misr (“Long Live Egypt”) social fund. No formal agreement has been
drafted with the Tahya Misr social fund yet and no payments have been made to the fund. The transfer of rights has been approved by OCI
N.V.’s Board of Directors on 12 November 2014.
In the 2014 ?nancial statements, and following the guidance under IAS 37 (constructive obligations) the Company has recognized operating
expenses (donation costs) and a provision for the transfer of rights to the fund amounting to USD 266.2 million.
Tax indemnity agreement
With reference to note 2.2.6 “Tax indemnity agreement” it should be noted that OCI N.V. and Orascom Construction Limited have entered into
a tax indemnity agreement in which it has been agreed that the outcome of the tax evasion case (both positive and negative) will be allocated to
the “Fertilizer & Chemicals” segment and the “Engineering & Construction” segment on a 50%/50% basis.
12.3 Deferred income tax assets and liabilities
Changes in deferred tax asset and liabilities
$ millions 2014
2013
restated
At 1 January (308.1) (304.7)
Pro?t or loss from continuing opertions 46.5 (5.0)
Pro?t or loss from discontinued operations (29.3) -
Effect of movement in exchange rates (23.8) 1.6
Assets reclassi?ed as held for demerger 21.4 -
At 31 December (293.3) (308.1)
Recognized deferred tax assets and liabilities
Assets Liabilities Net
$ millions 2014
2013
restated 2014
2013
restated 2014
2013
restated
Property, plant and equipment - 0.6 (215.8) (179.0) (215.8) (178.4)
Inventories - - - (6.6) - (6.6)
Intangible assets - 0.7 (50.5) (47.9) (50.5) (47.2)
Subsidiaries - - (58.8) - (58.8)
Provisions - 1.0 - (11.1) - (10.1)
Trade and other receivables 0.7 - (9.4) - (8.7)
Loans and borrowings 14.8 - - - 14.8 -
Trade and other payables - 7.9 (8.9) (131.1) (8.9) (123.2)
Carry forward losses 34.6 57.4 - - 34.6 57.4
Total 50.1 67.6 (343.4) (375.7) (293.3) (308.1)
Deferred tax liabilities recognized in relation to property, plant and equipment will be realized over the amortization period of the related asset.
Carry forward losses recognized in the balance sheet are expected to be realized in the period 2015-2018.
12.4 Current income tax
EBIC tax exemption arbitration
In 1997, Egypt Basic Industries Corp. (EBIC), a subsidiary of the OCI group, was established as a free zone company under the then prevailing
investments laws. In 2008, the tax exemption for activities related to fertilizers, iron and steel, oil production and liquidation and transmission of
natural gas in free zones has been canceled, and those activities became subject to taxes for the year 2008 onwards.
On 20 April 2013, the Administrative Court ruled in favor of EBIC and ordered for the revocation of the disputed Decision, and reinstating
EBIC to its previous status as a free zone entity in Egypt. On 1 June 2013, the General Authority for Investment and Free Zones (GAFI) ?led an
appeal to stop the execution of the ruling. The appeal has been lodged, however, it has not been reviewed by the court nor has a hearing been
scheduled (‘?rst appeal’).
GAFI ?led a motion to remain the execution of the verdict before the Administrative Court as an interim measure while the appeal is ongoing
(‘second appeal’).
On the hearing on 21 March 2015 the Administrative Court rejected the motion of GAFI (‘second appeal’) and ruled in favor of EBIC. The
hearing on the 21 March 2015 did not suspend the ?rst appeal of GAFI. This was a separate claim ?led by GAFI to the Administrative Court to
freeze the court decision of the ?rst degree court till the appeal is decided on. No tax ?lings have been done by the company since the ?ling for
the year 2011.
The Group, despite its strong position, awaits the ?nal judgement and assessed that winning the case is not yet probable. Consequently, OCI
concluded based on guidance in IAS 37 and IAS 12 not to release the (deferred) tax liabilities totaling USD 140 million at year-end 2014, of
which USD 52.8 million is recognized in ‘current tax liabilities‘.
116 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 117
OCI N.V.
13. Inventories
$ millions 2014
2013
restated
Finished goods 91.0 96.5
Raw materials and consumables 19.4 180.2
Spare parts, fuels and others 68.1 79.7
Real estate - 11.1
Total 178.5 367.5
In 2014, the total write-downs amount to USD 1.5 million which all related to raw materials. In 2014 there were no reversals of write downs
(2013: nil). For inventory pledged as securities, reference is made to note 20.
The real estate in 2013 relates to the land bank owned by Suez industrial Development Company in Egypt (discontinued operation), which owns
and develops an industrial park.
14. Contract receivables / billing in excess of construction contracts
$ millions 2014
2013
restated
Costs incurred on incomplete contracts - 10.307.4
Estimated earnings - 1.072.8
- 11.380.2
Less: billings to date - (11.145.7)
Total - 234.5
Presented in the consolidated statements of ?nancial position as follows:
Construction contracts in progress - current assets - 375.4
Billing in excess on construction contracts - current liabilities - (140.9)
Total - 234.5
As a result of the Demerger of the Construction activities, the ‘Contract receivables / billing in excess of construction contracts’ are presented
as assets and liabilities held for demerger as at 31 December 2014. Reference is made to note 29.
15. Cash and cash equivalents
$ millions 2014
2013
restated
Cash on hand 2.5 2.7
Bank balances 413.4 792.6
Restricted funds 427.7 1,194.2
Restricted cash 3.0 0.7
Total 846.6 1,990.2
Restricted funds
On May 2013, Iowa Fertilizer Company (IFCo) entered into a Bond Financing Agreement with Iowa Finance Authority for the construction of
the plant. IFCo entered into a Collateral Agency and Account Agreement with Citibank, N.A. The cash was invested under an Investment
Agreement with Natixis Funding Corporation and are restricted to the requisition procedures in the agreement. As at 31 December 2014, the
invested funds had a carrying amount of USD 410.2 million (2013: USD 1,142.8 million).
Restricted cash
The restricted cash is an amount held as collateral. The reason for this collateral is letters of credit and letters of guarantees issued to foreign
creditors by the subsidiary Sorfert.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
16. Assets held for sale
As at 31 December 2014, the total current assets held for sale amounted to nil as compared to an amount of USD 2.4 million in 2013.
17. Share capital
The movements in the number of shares can be summarized as follows:
2014 2013
Interest of less than 100% (and therefore another company has a non-controlling interest in group equity). 204,840,744 -
Establishment of Company - 45,000
Number of issued shares in restructuring 1,070,826 203,067,159
Number of issued shares - 1,773,585
Shares cancelled in AGM December 2013 - (45,000)
On issue at 31 December - fully paid 205,911,570 204,840,744
At 31 December (in millions of USD) 273.3 272.1
On 2 January 2013, the Company was incorporated with an authorised share capital amounting to EUR 225 thousand. The issued capital,
paid up in full amounted to EUR 45 thousand, owned by OCI Overseas Holding Limited (indirectly owned by Orascom Construction Industries
S.A.E., Egypt, the former ultimate parent company of the Group). Soon after the establishment of OCI N.V. in January 2013, the Company
launched exchange offers to acquire both all outstanding Regulation S global depositary receipts (GDRs) of Orascom Construction Industries
S.A.E. in exchange for ordinary shares in OCI N.V. and to acquire all the outstanding ordinary shares of Orascom Construction Industries
S.A.E. listed on the Egyptian Stock Exchange. The latter was structured by means of a Mandatory Tender Offer by which the shareholders of
Orascom Construction Industries S.A.E. could exchange an ordinary share of Orascom Construction Industries S.A.E by an ordinary share
of OCI N.V. at a ratio of 1:1 or to make use of the cash alternative. By the end of 2013, the exchanges were successfully completed and OCI
N.V.’s share in Orascom Construction Industries S.A.E. was further increased to 99.44% at year-end 2013. Following the exchanges, the
Company’s authorized share capital was EUR 300 million and the issued capital, paid up in full, has increased to EUR 204,840,744, divided into
204,840,744 shares at the par value per share of EUR 1 per share at year-end 2013.
In March 2014, another 1,070,826 shares in Orascom Construction Industries S.A.E. were swapped for ordinary shares. This transaction
resulted to an increase of share premium by approximately USD 5.8 million. Consequently, at year-end 2014, the issued and fully paid up share
capital amounted to 205,911,570 shares of EUR 1 per share.
Transaction costs
For the Exchange Offer and the Tender Offer in 2013, the Company incurred total transaction costs of USD 242 million. Transaction costs
totaling USD 89.0 million, including underwriter fees of USD 84 million to the Sawiris Family and Abraaj and professional advisory fees
amounting to USD 5 million have been expensed through pro?t or loss. The remaining transaction costs (net of taxes) are considered an
integral part of the equity transaction and were debited to both the share premium reserve and retained earnings in shareholders’ equity in the
statement of ?nancial position as at 31 December 2013.
118 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 119
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
18. Reserves
$ millions
Hedge
reserve
Available-
for-sale
Currency
translation
Other
reserve
Convertible
note
1
Treasury
shares
Employees
stock option Total
At 31 December 2012 (17.3) - (104.0) 119.1 - (87.6) 75.4 (14.4)
Changes in cash ?ow hedge
reserve 10.6 - - - - - - 10.6
Currency translation differences - - (104.0) - - - - (104.0)
Available-for-sale ?nancial
assets
- (1.9) - - - - - (1.9)
Other comprehensive
income 10.6 (1.9) (104.0) - - - - (95.3)
Corporate restructuring - - - 105.6 - - - 105.6
Treasury shares acquired - - - - - (20.5) - (20.5)
Share-based payments
transactions - - - - - - 11.6 11.6
Convertible note issue - - - - 31.4 - - 31.4
Treasury shares sold - - - - - 91.2 - 91.2
At 31 December 2013 (6.7) (1.9) (208.0) 224.7 31.4 (16.9) 87.0 109.6
Changes in cash ?ow hedge
reserve (6.1) - - - - - - (6.1)
Currency translation differences - - 94.2 - - - - 94.2
Available-for-sale ?nancial
assets
- (1.2) - - - - - (1.2)
Other comprehensive
income (6.1) (1.2) 94.2 - - - - 86.9
Treasury shares acquired - - - - - (62.1) - (62.1)
Share-based payments
transactions - - - - - - 11.9 11.9
Treasury shares sold - - - - - 50.2 - 50.2
At 31 December 2014 (12.8) (3.1) (113.8) 224.7 31.4 (28.8) 98.9 196.5
1
Relates to equity component convertible Euro-notes, net of taxes (note 20).
OCI N.V. is a company incorporated under Dutch law. In accordance with the Dutch Civil Code, legal reserves have to be established in certain
circumstances. The hedging reserve, the available-for-sale reserve, the currency translation reserve and other legal reserves are legal reserves
that limit distributions to shareholders to the extent that these reserves individually have a credit balance. ‘Other reserves’ include amongst other
the reserve for non-distributed income of minority share holdings.
18. Reserves (continued)
Treasury shares
During the ?nancial year ended 31 December 2014 the company sold 1,108,946 of its own shares and acquired 1,475,200 shares.
2014 2013
Number of shares 757,574 391,320
Cost of acquiring the shares (In millions of USD) 28.8 16.9
Average cost per share (USD) 38.07 43.2
19. Non-controlling interest
2014
$ millions
OCI
Partners LP
Egyptian Basic
Industries
Corporation
Sorfert
Algeria Spa
Discontinued
and other Total
Non-controlling interest percentage 20.96% 40.00% 49.01% - -
Non-current assets 114.6 176.5 863.8 74.8 1,229.7
Current assets 24.6 30.2 49.7 142.2 246.7
Non-current liabilities (79.4) (59.6) (557.9) (32.0) (728.9)
Current liabilities (20.4) (57.5) (143.8) (106.9) (328.6)
Net assets 39.4 89.6 211.8 78.1 418.9
Revenues 84.4 33.6 268.2 170.1 556.3
Pro?t 25.0 (1.0) 80.0 17.2 121.2
Other comprensive income - (0.8) (22.3) (0.9) (24.0)
Total comprehensive income 25.0 (1.8) 57.7 16.3 97.2
Dividend cash ?ows (30.9) (17.0) - (9.2) (57.1)
2013
$ millions
OCI
Partners LP
Egyptian Basic
Industries
Corporation
Sorfert
Algeria Spa
Discontinued
and other Total
Non-controlling interest percentage 21.70% 40.00% 49.01% - -
Non-current assets 79.9 189.2 1,024.5 66.5 1,360.1
Current assets 51.3 37.9 37.6 104.5 231.3
Non-current liabilities (85.0) (65.5) (645.3) (39.9) (835.7)
Current liabilities (13.3) (55.5) (262.3) (58.3) (389.4)
Net assets 32.9 106.1 154.5 72.8 366.3
Revenues 92.9 60.0 20.8 117.0 290.7
Pro?t 33.5 19.1 (80.2) (8.4) (36.0)
Other comprensive income - - 2.1 (2.1) -
Total comprehensive income 33.5 19.1 (78.1) (10.5) (36.0)
Dividend cash ?ows - (32.2) - (7.5) (39.7)
120 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 121
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
20. Loans and borrowings
Borrowing Company
Type
of loan Interest rate Date of maturity Carrying amount Long term portion
Short term
portion
Bank facility
and overdraft Collateral / Guarantee given (if applicable)
Sorfert Algeria SPA Secured
Interest rate is ?xed during the plant construction period to 5.95% per annum. After completion
of the construction period it will be referred to Algerian bank interest rate plus rate of 1.95% per
annum
April 2024 1,732.0 1,316.7 415.3 -
Debt service reserve account, ban for any disposal or
decrease of the company share and assets.
Iowa Fertilizer Company (IFCo.) Secured
Current Yields and pricing:
2019: 4.9% on 100,48
2022: 5.59% on 99,375
2025: 5.68% on 96,346
December 2025 1,168.7 1,168.7 - - All assets pledged.
EFC Secured LIBOR +3% margin and CEB Mid Corridor +2.25% margin for EGP denominated borrowings October 2016 733.6 572.4 161.2 -
Pledge EFC shares 99.9% owned by 'Orascom Fertilizer plant
maintenance'. Power of Attorney for perfection of commercial
and real estate mortgages. OCI N.V. will pay for shortfalls.
OCI Nitrogen B.V.
Secured Variable December 2014 81.7 - 81.7 -
Pledge of OCI Fertilizer International shares in OCI Nitrogen,
Pledge of moveable assets, trade
receivables and company accounts, property mortgage. Secured LIBOR /EURIBOR + a variable margin based on leverage ratio ranging 2.25%-3.5% December 2016 498.4 498.4 - -
OCI N.V. Unsecured Fixed at 3.875% September 2018 420.4 420.4 - -
OCI Partners LP Secured USD LIBOR + 4% margin, with USD LIBOR Floor of 1% August 2019 397.7 391.1 6.6 - All assets pledged.
Orascom Construction Unsecured
Variable LIBOR + margin ranging:
USD: 2.28 - 4% (including LIBOR)
EUR: 2.21 - 5% (including LIBOR)
EGP: 9.8-12.95%
Renewed
annually
385.4 - - 385.4
Corporate guarantee from Orascom Construction Industries
S.A.E. and promissory notes from Orascom Construction.
Orascom Construction Industries Unsecured
Variable LIBOR + margin ranging:
USD: 2.28 - 4% (including LIBOR)
EUR: 2.21 - 5% (including LIBOR)
EGP: 9.8-12.95%
Renewed
annually
221.2 - - 221.2 Promissory notes.
Egypt Basic Industries Corporation
(EBIC)
Unsecured LIBOR +3.25% December 2017 85.9 73.4 12.5 -
Orascom Saudi
Secured LIBOR +2.0% 2014 34.1 - - 34.1
Guarantee letter with 710M signed by the client and
guarantor, obligation letter for the client invoices to be paid in
ANB Bank. Secured LIBOR +2.75% 2014 42.6 21.3 21.3 -
Orascom Construction Industries -
Algeria
Secured Variable 6.5% 2014 61.4 - 53.1 8.3 USD 62.4 mln cash cover at Citi Bank Dubai.
Contrack international
Unsecured LIBOR +3.7% 2014 10.0 - - 10.0
Corporate guarantee from Orascom Construction Industries
S.A.E.
Unsecured LIBOR +2.5% 2014 13.5 - - 13.5
The Weitz Group, LLC Unsecured Multiple rates March 2018 38.6 34.8 3.8 -
Total as per 31 December 2013 5,925.2 4.497.2 755.5 672.5
Borrowing Company
Type
of loan Interest rate Date of maturity Carrying amount Long term portion
Short term
portion
Bank facility
and overdraft Collateral / Guarantee given (if applicable)
Sorfert Algeria SPA Secured Algerian bank interest rate plus rate of 1.95% per annum April 2024 1,306.7 1,138.4 168.3 -
Debt service reserve account, ban for any disposal or
decrease of the company share and assets.
Iowa Fertilizer Company (IFCo.) Secured
Current Yields and pricing:
2019: 2.80% on 109.63
2022: 3.79% on 105.91
2025: 3.83% on 110.43
December 2025 1,171.0 1,171.0 - - All assets pledged.
EFC Secured LIBOR + 5.00% margin and CEB Mid Corridor + 2.90% margin for EGP denominated borrowings October 2019 663.9 607.1 56.8 -
Pledge EFC shares 99.9% owned by ‘Orascom Fertilizer plant
maintenance’. Power of Attorney for perfection of commercial
and real estate mortgages. OCI N.V. will pay for shortfalls.
OCI Nitrogen B.V. Secured LIBOR /EURIBOR + a variable margin based on leverage ratio ranging 2.25%-3.5% December 2016 450.2 392.5 57.7 -
Pledge of OCI Fertilizer International shares in OCI Nitrogen,
Pledge of moveable assets, trade
receivables and company accounts, property mortgage.
OCI N.V. Unsecured Fixed at 3.875% September 2018 379.6 379.6 - -
OCI N.V. Secured EURIBOR + 2.75% July 2017 511.2 511.2 OCI Fertilizers B.V.
OCI N.V. Unsecured - - 94.8 - - 94.8
OCI Fertilizer Trading Ltd Secured LIBOR + 2.50% - 5.5 - - 5.5
OCI Fertilizers B.V. as guarantor and pledge over
commodities and bank accounts.
OCI Partners LP Secured USD LIBOR + 4.00% margin, with USD LIBOR Floor of 1% August 2019 384.0 377.4 6.6 - All assets pledged.
Egypt Basic Industries Corporation
(EBIC)
Unsecured LIBOR + 3.25% December 2017 73.8 61.3 12.5 -
Total 31 December 2014 5,040.7 4,638.5 301.9 100.3
122 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 123
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
20. Loans and borrowings (continued)
$ millions 2014
2013
restated
Non-current liabilities:
Secured bank loans 3,026.6 2,799.9
Unsecured bank loans 61.3 108.2
IFCo ?nancing arrangement 1,171.0 1,168.7
Convertible notes 379.6 420.4
Sub-total 4,638.5 4,497.2
Current liabilities:
Secured bank loans 289.4 739.2
Unsecured bank loans 12.5 16.3
Bank facilities and overdrafts 100.3 672.5
Sub-total 402.2 1,428.0
Total 5,040.7 5,925.2
Information about the Group’s exposure to interest rate, foreign currency and liquidity risk is disclosed in the ?nancial risk and capital management
paragraph in note 6.
The fair value of loans and borrowings is USD 31.4 million lower than the carrying amount (2013: USD 31.3 million higher). The fair value of the
convertible notes is USD 409.8 million as of 31 December 2014 (2013: USD 459.0 million).
New and amended Financing Arrangements in 2014:
EFC Finance Restructuring
In March 2014, EFC signed restructuring agreements to extend the maturity to October 2019. Instalments of 1.85 percent of original Facility
amounts are payable quarterly, and with interest rate of USD: LIBOR plus margin of 5.0 percent and for EGP loan: CBE Mid Corridor plus margin
of 2.9 percent. OCI N.V. will fund any payment shortfall that EFC has in relation to this loan.
OCI N.V.
In July 2014, OCI N.V. signed a credit facility agreement for a total amount of USD 550 million and with an interest rate of USD:LIBOR or
EUR:EURIBOR plus margin of 2.75 percent. The maturity date of the agreement is July 2017.
In December 2014 the agreement has been amended and restated due to the Demerger of the Construction business.
OCI Fertilizer Trading
On 15 January 2014, OCI Fertilizer Trading signed an uncommitted trade ?nance facility for USD 75.0 million. The facility carries an interest rate
of USD: LIBOR plus margin of 2.50 percent. In December 2014 the agreement was amended, the facility amount was increased to USD 115.0
million.
Covenants
Certain covenants apply to the aforementioned borrowings. Covenants include compliance with the following ?nancial ratios: Debt to equity ratio,
debt-service coverage ratio, leverage ratio, interest coverage ratio, cash ?ow coverage threshold, and tangible net worth threshold.
20. Loans and borrowings (continued)
Convertible note terms
In September, 2013, OCI N.V. issued convertible Euro notes with proceeds of USD 466.5 million. The notes have a 5 year maturity date and
a coupon rate of 3.875 percent per annum, payable semi-annually in arrears. The issued convertible notes qualify as compound ?nancial
instruments, since each note contains both an equity and liability component. These notes contain an equity component which entitles the
holder to convert into shares at a conversion ?xed price of EUR 34.45 per share and so contain a liability component for the issuer’s obligation
to pay interest and potentially, to redeem the note in cash. In March 2015, post the Demerger of the Construction and Engineering segment, the
conversion price was adjusted to EUR 28.4690. The conversion price was calculated based on the 5-day weighted average price (WAP) of OCI
N.V. prior to the Demerger and the 5-day WAP of Orascom Limited post the Demerger.
Transaction costs that are directly attributable for the issuance of the shares and convertible notes totalled USD 11.7 million This includes fees
and commissions paid to advisers, brokers, dealers and lawyers. These costs are allocated to the liability and equity component on a pro rate
basis. The transaction costs related to the liability component will be recognized in accordance with the effective interest rate method over the
term of the convertible bond and will be recognized under ?nance expenses in the pro?t or loss statement.
Management has measured the liability component by establishing the fair value of a similar note, with similar terms, credit status and
containing similar non-equity derivative features, yet without the conversion option. This results in a fair value of the liability component of EUR
308.2 million (USD equivalent 420.2 million). The group did not recognize separately an embedded derivative as it is closely related to the
host contract and therefore it is included as part of the liability component. Transaction costs allocated to the liability component represent 90
percent of the total transaction cost, totalling USD 10.5 million.
The equity component is calculated by deducting the fair value attributable to the bonds (USD 466.5 million) from the liability component (USD
424.1 million). The amount recognized, net of taxes, for the equity component is USD 31.4 million. Transaction costs allocated to the equity
component represent 10 percent of the total transaction cost, totalling USD 1.2 million. As per 31 December 2014, the carrying amount of the
debt element is USD 379.6 million (31 December 2013: 420.4 million).
21. Trade and other payables
$ millions 2014
2013
restated
Trade payables 215.7 684.6
Trade payable due to related party (note 33) 31.1 -
Other payables 97.1 133.8
Accrued expenses 103.8 198.3
Deferred revenues - 10.0
Other tax payable 15.9 15.3
Retentions payable - 35.1
Derivative ?nancial instrument - 1.0
Total 463.6 1,078.1
Non-current 30.9 75.8
Current 432.7 1,002.3
Total 463.6 1,078.1
Information about the Group’s exposure to currency and liquidity risk is included in note 6. The carrying amount of ‘Trade and other payables’
approximated the fair value.
Retentions payable relate to amounts withheld from sub-contractors.
124 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 125
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
22. Provisions
$ millions Warranties
Asset
retirement
obligation
Onerous
contracts
Claims
and other
contingencies
Donation
provision Other Total
At 1 January 2014 72.4 10.5 14.1 11.7 - 18.7 127.4
Provision made during the year - - 15.5 29.8 266.2 5.5 317.0
Provision used during the year - - - (4.2) - (5.7) (9.9)
Provision reversed during the year (5.5) - (7.6) - - (1.2) (14.3)
Unwinding of discount - 0.6 - - - - 0.6
Reclassi?cations (51.7) (0.3) 19.5 35.6 - (3.1) -
Effect of movement in exchange rates (0.5) (0.8) (2.1) (5.0) - (0.4) (8.8)
Provisions reclassi?ed as held for demerger (14.7) - (39.4) (34.5) - (2.9) (91.5)
At 31 December 2014 - 10.0 - 33.4 266.2 10.9 320.5
Non-current - 10.0 - - - 9.4 19.4
Current - - - 33.4 266.2 1.5 301.1
Total - 10.0 - 33.4 266.2 10.9 320.5
Warranties
The warranties are based on historical warranty data and a weighting of possible outcomes against their associated probabilities.
Asset retirement obligation
The provision includes an asset retirement obligation of USD 10.0 million relating to the Group’s Algerian plant (Sorfert). According to the
agreement, the land must be restored to its original state at the end of the lease term.
Litigations and claims
The Group is involved in various litigations and arbitrations. In cases where it is probable that the outcome of the proceedings will be unfavorable,
and the ?nancial outcome can be measured reliably, a provision has been recognized. Reference is made to note 30 for detailed information with
respect to major ongoing litigations and claims.
Donation provision
Includes the donation provision of Orascom Construction Industries S.A.E. for an amount of USD 266.2 million, reference is made to note 12
‘Income taxes‘.
23. Development of cost of sales and selling, general and administrative expenses
a. Expenses by nature
$ millions 2014
2013
restated
Changes in raw materials and consumables, ?nished goods and work in progress 1,456.7 1,572.3
Employee bene?t expenses (c) 232.2 173.0
Depreciation, amortization 308.4 218.3
Transaction cost (b) - 89.3
Consultancy expenses 16.6 62.6
Other 200.6 41.3
Total 2,214.5 2,156.8
The expenses by nature comprise ‘cost of sales’ and ‘selling and general and administrative expenses’.
23. Development of cost of sales and selling, general and administrative expenses (continued)
b. Transaction cost
The transaction costs of USD 89.3 million in 2013 relate to the Group restructuring in 2013. For the Exchange Offer and the Tender Offer made
in 2013, the Company incurred total transaction costs of USD 242 million. Transaction costs totalling USD 89.3 million, including underwriter
fees of USD 84 million to the Sawiris Family and Abraaj and professional advisory fees amounting to USD 5 million have been expensed through
pro?t or loss. The remaining transaction costs (net of taxes) are considered an integral part of the equity transaction and were debited to both
the share premium reserve and retained earnings in shareholders’ equity in the statement of ?nancial position as at 31 December 2013.
Selling, general and administrative expenses include provisions for USD 2.7 million (2013: USD 12.0 million).
c. Employee bene?t expenses
$ millions 2014
2013
restated
Wages and salaries 165.2 128.3
Social securities 5.7 1.2
Employee pro?t sharing 30.1 27.5
Pension cost 0.9 0.2
Share-based payment expense (d) 11.9 11.6
Other employee expenses 18.4 4.2
Total 232.2 173.0
During the ?nancial year ended 31 December 2014, the number of key executives was 2 (2013: 2 key executives), which represents the
Executive Board members; Nassef Sawiris (CEO), and Salman Butt (CFO). During the ?nancial year ended 31 December 2014, the average
number of staff employed in the Group converted into full-time equivalents amounted to 33,282 employees (2013: 72,418 employees*). Of
these employees 2,911 (2013: 2,768 employees) were employed in the Fertilizer & Chemicals segment, 30,371 (2013: 69,460*) were employed
in the Engineering & Construction segment.
* the numbers of employees in 2013 included employees employed by associates and joint ventures.
d. Share-based payment arrangements
OCI N.V. currently has four incentive plans which are intended to (i) attract and retain the best available personnel for positions of substantial
responsibility, (ii) provide additional incentive to management and employees, (iii) promote the success of the Company’s business, and (iv)
align the economic interests of key personnel directly with those of shareholders. Under the ?rst two plans, stock options have been granted to
management and employees. The other plans comprise of share incentive plans. All plans are ‘equity-settled share-based compensation plans’.
Share option plans
As a result of the reverse takeover and group restructuring that took place during 2013, OCI N.V. acquired the assets and liabilities of the
Orascom Construction Industries S.A.E. Stock Incentive Plan (the ?rst plan). Under the terms of the Orascom Construction Industries S.A.E.
incentive plan, in the event of a change of control of Orascom Construction Industries S.A.E., each outstanding option or right shall be
assumed or an equivalent option, or right substituted by the successor company or a subsidiary of the successor company. In the event that
the successor company refuses to assume or substitute for the option or right, all outstanding options or rights shall fully vest and become
immediately exercisable. OCI N.V. elected that holders of options or rights under the Orascom Construction Industries S.A.E. incentive plan
exchange each of their existing options or rights for an option or right in respect of shares of OCI N.V. on the same terms and conditions as the
existing options or rights. The options under the Orascom Construction Industries S.A.E. plan were generally granted at the fair market value
on the date of grant, vested after four years (cliff vesting) and expired after ?ve years. On 28 August 2013, following the commencement of OCI
N.V. ‘s share trading in Euros, the options under the Orascom Construction Industries S.A.E. plan were replaced by the Company’s options and
accounted for as a modi?cation of the original grant of options. Furthermore, under existing authority, 1,529,598 shares were repurchased from
employees to facilitate the administration of the Orascom Construction Industries S.A.E. plan during the year.
Under the terms of the Orascom Construction Industries S.A.E. plan, certain employees were allowed to vest their options immediately and
purchase the respective shares with a promissory note (as a payment method in order to be able to ?nance the exercise price) bearing interest
at the “applicable federal rate prescribed under the United States Internal Revenue Code” at the time of purchase, secured by a pledge of the
shares purchased by the note pursuant to a security agreement. The notes generally have a term of nine years, and may not be prepaid until
four years after issuance which necessitates that the employee remain a shareholder for at least four years. As of 31 December 2013, 926,700
shares were pledged by employees as security against their notes valued at USD 36,096,988.75. As at 31 December 2014, 500,000 shares
were pledged by employees as security against their notes valued at USD 19,383,350.14. Employees held 687,000 vested options which were
exercisable as at 31 December 2014 for which payment of the purchase price could be made with a promissory note.
126 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 127
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
23. Development of cost of sales and selling, general and administrative expenses (continued)
On 20 December 2013, the non-executive board members of OCI N.V. adopted an additional Employees Incentive Plan (the second plan). The
second plan authorized the issuance of up to 1 million shares to employees and excludes the executive directors. The exercise price of the
options granted to employees is equal to the fair market value of the shares on the date of grant. The options granted under this plan generally
vest after three years (cliff vesting) and expire after seven years.
The company did not modify the plans as at 31 December 2014 due to the planned Demerger.
The following table summarizes information about the stock options outstanding at 31 December 2014
Grant date
(1)
Number of options
outstanding at
31 December 2014
Fertilizer
Number of options
outstanding at
31 December 2014
Construction
Number of options
outstanding at
31 December 2014
Total
Exercise price per
share (EUR)
Remaining life as at
31 December 2014
(in years)
Number of options
exercisable at
31 December 2014
1 June 2010 154,000 - 154,000 29.99 0.42 154,000
31 March 2011 642,500 615,000 1,257,500 26.43 1.25 -
31 March 2011 202,400 - 202,400 31.48 1.25 -
28 November 2012 804,800 667,500 1,472,300 25.45 2.91 -
28 November 2012 120,000 413,000 533,000 26.46 2.91 533,000
31 December 2013 472,140 456,349 928,489 32.74 6.00 -
Total 2,395,840 2,151,849 4,547,689 - - 687,000
(1)
In the table above, options granted between 2010 and 2012 are a part of the ?rst plan described above replaced in August 2013. Options
granted in December 2013 are a part of the second plan described above.
Measurement of fair values
The inputs used in the measurement of the fair values at grant date of plans were as follows:
Options granted in: 2013 2012 2011 2011
Fair value at grant date EUR 9.75 USD 9.69 USD 17.69 EGP 79.74
Share price at grant date EUR 32.74 EUR 25.45 EUR 31.48 EUR 26.43
Exercise price EUR 32.74 EUR 25.45 EUR 31.48 EUR 26.43
Expected volatility (weighted average) 31.86% 39.80% 59.00% 48.00%
Expected life (weighted average in years) 5.0 3.5 4.1 4.3
Expected dividends none 1.5% 3.0% 3.0%
Risk-free interest rate (based on government bonds) 1.07% 0.35% 1.90% 10.0%
Performance conditions No No No Yes
Expected volatility has been based on an evaluation of the historical volatility of the Company’s share price, particularly over the historical period
commensurate with the expected term. The expected term of the instruments has been based on historical experience and general option
holder behavior. The fair value for the 2010 options were completely expensed as at 31 December 2014. The fair value for the 2010 and 2011
options were calculated using Monte-Carlo simulations. The fair value calculation took into account the performance condition as a market
condition. The fair value of the options granted at 28 November 2012 and 31 December 2013 were calculated using the Black-Scholes model.
23. Development of cost of sales and selling, general and administrative expenses (continued)
Reconciliation of outstanding share options
The number and weighted-average exercise prices of share options under the share option plans and replacement awards were as follows:
Options
Number of options
2014
Weighted-average
exercise price
2014 (EUR)
Number of options
2013
(1)
Weighted-average
exercise price
2013 (EUR)
Outstanding at 1 January 5,805,440 27.52 7,091,011 26.77
Forfeited during the year (209,251) 26.53 (502,100) 25.24
Granted during the year - - 940,740 32.74
Exercised during the year (1,048,500) 26.71 (1,095,892) 18.15
Expired during the year - - (628,319) 57.87
Outstanding at 31 December 4,547,689 27.75 5,805,440 27.52
Exercisable at 31 December 687,000 27.25 548,000 26.46
(1)
In August 2013 options under the Orascom Construction Industries S.A.E. plan were replaced by the Company’s options
The options outstanding at 31 December 2014 had an exercise price in the range of EUR 25.45 to EUR 32.74 (2013: EUR 25.45 to EUR 32.74)
and a weighted-average contractual life of 2.54 years (2013: 3.36 years).
Performance share plans
In 2014 a new performance share plan was introduced for the Executive Board. The share plan comprises the conditional granting of shares
in OCI N.V. Each year a plan with a 3-year vesting period starts in which the company’s performance is measured on total shareholder return
(TSR) against a peer group of companies. The fair value of these awards have been calculated using Monte-Carlo simulations. The number
of conditional shares corresponds to a percentage (at most 150%) of the ?xed reference salary divided by the price of the share on the stock
market on the ?rst day of the vesting period. The relative ranking that OCI achieves in the peer group determines the de?nitive number of shares
that are granted at the end of the vesting period. The remaining shares vested must be retained by the members of the Executive Board for a
period of 2 years. In 2014, in total 127,652 conditional shares have been granted with a fair value of EUR 1 million (fair value at grant date
EUR 7.90 per share, using a volatility of 49%, a risk-free rate of 0.10 percent).
Bonus matching plan
In 2014 a new bonus matching plan was introduced for the members of the Executive Board and Senior Management. In this plan members
of the Executive Board and Senior Management are entitled to buy shares from their annual bonus. The shares will be withheld for a period of
three years. After the 3-year period, the participants will receive a bonus share for each share of the plan. For the members of the Executive
Board, the shares vested must be retained for a period of 2 years. In 2014 60.028 shares were granted in the bonus matching plan with a fair
value of EUR 1.7 million (with a fair value of EUR 28.02 at grant date equal to the share price at grant date).
The total expense for share-based payments recognized in the statement of pro?t or loss for 2014 amounts to USD 11.9 million.
24. Other income
$ millions 2014
2013
restated
Net gain on sale of investment - 1.0
Result on sale of non-controlling interest (Gavilon) 9.0 262.1
Other income 6.2 31.4
Total 15.2 294.5
Other income
The USD 9.0 million of ‘Result of sale of non-controlling interest’ in 2014 relates to the partial release of the escrow account created during the
sales transaction of Gavilon in 2013. During 2013, OCI Fertilizer Holding Limited (‘OCI FH’) sold its full ownership in Gavilon Group for a total
consideration of USD 666.7 million, resulting into a gain of USD 262.1 million.
The group’s management believes there is great uncertainty surrounding the collection of these escrow amounts. Given that these amounts
are held back by the sellers’ representative to deal with any post-closing expenses and claims, management has not recorded these escrow
amounts as an asset and therefore resulted in a reduction of consideration value.
Other income in 2013 includes USD 7.2 million insurance claims received.
128 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 129
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
25. Other expenses
Other expenses in 2014 of USD 4.7 million are mainly related to IFCo’s loss on the gas price derivative for USD 4.2 million. Other expenses in
2013 of USD 85.3 million relates for USD 31.0 million to IFCo’s loss on the gas price hedge and for USD 54.3 million to the start-up cost and
idle capacity of the plant in Algeria (Sorfert).
26. Net ?nance cost
$ millions 2014
2013
restated
Interest income on loans and receivables 9.0 6.0
Fair value gain on derivatives 0.5 -
Foreign exchange gain 12.3 70.8
Finance income 21.8 76.8
Interest expense on ?nancial liabilities measured at amortized cost (199.2) (278.7)
Foreign exchange loss (73.0) -
Changes in fair values of cash ?ow hedges - (1.3)
Finance cost (272.2) (280.0)
Net ?nance cost recognized in pro?t or loss (250.4) (203.2)
Interest expense includes USD - 36.6 million (2013: USD 36.6 million) representing the reversal of interest on the tax dispute liability that was
recognized in 2013. Foreign exchange gain in 2014, includes the foreign currency result from the tax dispute liability USD 9.5 million (2013:
USD 44.2 million).
The above ?nance income and ?nance costs include the following interest income and expense in respect of assets (liabilities) not measured at
fair value through pro?t or loss:
$ millions 2014
2013
restated
Total interest income on ?nancial assets 9.0 6.0
Total interest expenses on ?nancial liability (199.2) (278.7)
27. Earnings per share
27.1 Earnings per share from total operations
2014 2013
i. Basic
Net Pro?t / (Loss) attributable to shareholders 328.7 295.2
Weighted average number of ordinary share (Basic) 204,871,270 203,751,864
Basic earnings per ordinary share 1.604 1.449
ii. Diluted
Net Pro?t / (Loss) attributable to holders of ordinary shareholders 328.7 295.2
Interest expense on convertible notes anti-dilutive 6.1
Net Pro?t / (Loss) attributable to holders of ordinary shareholders based on full conversion 328.7 301.3
Weighted average number of ordinary shares (Basic) 204,871,270 203,751,864
Adjustment for assumed conversion of convertible notes anti-dilutive 9,840,348
Adjustment for assumed equity - settled share-based compensation 236,648 365,315
Weighted average number of ordinary shares outstanding on the basis of full conversion 205,107,918 213,957,527
Diluted earnings per ordinary share 1.603 1.408
At 31 December 2014, the effect of conversion of convertible notes was excluded from the calculation of the diluted earnings per share for total
operations because the effect would be anti-dilutive. Further reference on the details of the effect of conversion of convertible notes is made in
note 27.2.
(i) Weighted average number of ordinary shares calculation
shares 2014 2013
Issued ordinary shares at 1 January 204,840,744 203,127,669
Effect of treasury shares held (779,195) 127,677
Effect of shares issued during the year 809,721 496,518
Weighted average number of ordinary shares outstanding 204,871,270 203,751,864
The average market value of the Company’s shares for the purpose of calculating the dilutive effect of share options was based on quoted
market prices for the year during which the options were outstanding.
In January 2015, new shares have been issued, reference is made to note 35 ‘Subsequent events’.
130 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 131
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
27.2 Earnings per share from continued operations
2014 2013
i. Basic
Net Pro?t / (Loss) attributable to shareholders 444.1 313.3
Weighted average number of ordinary share (Basic) 204,871,270 203,751,864
Basic earnings per ordinary share 2.168 1.538
ii. Diluted
Net Pro?t / (Loss) attributable to holders of ordinary shareholders 444.1 313.3
Interest expense on convertible notes 20.4 6.1
Net Pro?t / (Loss) attributable to holders of ordinary shareholders based on full conversion 464.5 319.4
Weighted average number of ordinary shares (Basic) 204,871,270 203,751,864
Adjustment for assumed conversion of convertible notes 9,840,348 9,840,348
Adjustment for assumed equity - settled share-based compensation 236,648 365,315
Weighted average number of ordinary shares outstanding on the basis of full conversion 214,948,266 213,957,527
Diluted earnings per ordinary share 2.161 1.493
(i) Weighted average number of ordinary shares calculation
shares 2014 2013
Issued ordinary shares at 1 January 204,840,744 203,127,669
Effect of treasury shares held (779,195) 127,677
Effect of shares issued during the year 809,721 496,518
Weighted average number of ordinary shares outstanding 204,871,270 203,751,864
The average market value of the Company’s shares for the purpose of calculating the dilutive effect of share options was based on quoted
market prices for the year during which the options were outstanding.
28. Segment reporting
The Group has identi?ed 2 reportable segments, ‘Fertilizer & Chemicals’ and ‘Engineering & Construction’. Both segments are managed
separately because they require different operating strategies and use their own assets and employees. Prices for transactions between
segments are determined on an arm’s length basis. Segment results, assets and liabilities include items directly attributable to a segment as
well as those that can reasonably and consistently be allocated. Selected information on a country and regional basis is provided in addition
to the information about operating segments. The ‘Engineering & Construction’ segment has been presented as asset held for demerger /
discontinued operations as of 2014.
Geographical information of continuing operations
The geographic information below analyses the Group’s revenue (by destination of the goods) and non-current assets (by the Company where
the activities are being operated). OCI N.V. has no single customer that represents 10 percent or more of revenues and therefore information
about major customers is not provided.
Revenue Non-current assets
1
$ millions 2014
2013
restated 2014
2013
restated
Europe & America 2,446.8 2,266.7 2,415.2 2,149.9
Africa & Middle East 181.2 145.9 3,886.6 4,234.5
Asia & Oceania 57.8 64.9 9.3 -
Total 2,685.8 2,477.5 6,311.1 6,384.4
1
The non-current assets exclude deferred taxes and derivative ?nancial instruments based on the disclosure requirements of IFRS 8.
29. Assets classi?ed for demerger / discontinued operations
On 6 November 2014, the Board of Directors of OCI N.V. announced its intention to seek a dual listing for the Engineering & Construction
business of OCI N.V., through the separation of OCI’s Engineering & Construction and OCI’s Fertilizer & Chemicals business (“the Demerger”).
The Board of Directors of OCI N.V. decided to continue the implementation of the Demerger at its meeting on 10 December 2014.
The Demerger was completed successfully in March 2015, with the listing of shares on Nasdaq Dubai as of 9 March 2015 and a secondary
listing on the Egyptian Exchange on 11 March 2015. The Demerger has resulted in the Engineering & Construction and Fertilizer & Chemical
businesses being owned by two, separately-listed companies as of March 2015. OCI N.V. remains listed on Euronext Amsterdam and holds the
Fertilizer & Chemicals business and Orascom Construction Limited, is dual-listed on the Nasdaq Dubai in Dubai and the Egyptian Exchange and
holds the Engineering & Construction business.
Following the Demerger and following the guidance under IFRS 5, the Engineering & Construction business are accounted for as “Assets held
for demerger / discontinued operations”. Consequently, the net assets and net liabilities of the Engineering & Construction are presented as
“Assets held for demerger” and “Liabilities held for demerger” in the consolidated statement of ?nancial position as at 31 December 2014,
while the 2014 consolidated net results of the discontinued operations (Engineering & Construction business) are presented under discontinued
operations in the consolidated statement of pro?t or loss and other comprehensive income and the consolidated statement of cash ?ows. The
2013 comparative information in the consolidated statements of pro?t or loss and other comprehensive income and the consolidated statement
of cash ?ows are reclassi?ed as if the operation had been discontinued from the start of the comparative period. In the statement of ?nancial
position, the comparative numbers are not reclassi?ed.
Statement of pro?t or loss for ‘discontinued operations’ for the year ended 31 December:
$ millions 2014 2013
Total revenue 3,067.9 2,350.4
Inter-segment revenue from Fertilizer & Chemicals group (1,020.7) (427.0)
Revenue 2,047.2 1,923.4
Expense (2,237.7) (1,999.7)
Income of associates (net of tax) (168.6) 76.3
Pro?t / (loss) before income tax (359.1) (0.2)
Income tax 263.0 (3.6)
Net pro?t / (loss) (96.1) (3.8)
132 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 133
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
29. Assets classi?ed for demerger / discontinued operations (continued)
Statement of ?nancial position for ‘assets held for demerger’ as at 31 December:
$ millions 2014
Non-current assets 777.4
Current assets (excluding cash and cash equivalents) 1,392.2
Cash and cash equivalents 368.9
Non-current liabilities (67.6)
Current liabilities (1,745.0)
Net assets / equity 725.9
Inter-segment revenues
Orascom E&C and Iowa Fertilizer Corporation and OCI Beaumont
Orascom E&C is engaged in the construction of the Iowa Fertilizer Company plant and the debottlenecking of the OCI Beaumont plant (owned
by OCI Partners LP) during 2013 and 2014. Both the Iowa Fertilizer Company and OCI Partners LP are part of OCI N.V. Fertilizer Group. The
total amount of revenues of Orascom E&C in 2014 amount to USD 1,020.7 million (2013: USD 427.0 million) including revenues from Weitz for
an amount of USD 275.5 million as a sub-contractor. The construction / debottlenecking of these plants will continue in 2015. These inter-
segment revenues have been fully eliminated and are therefore not included in of above disclosed revenues.
Equity accounted investees included in assets held for demerger
‘Equity accounted investees’ that are signi?cant to the Group are Sidra Medical Center (associate) and BESIX (joint venture). Established in
1909 in Belgium, BESIX is a global multi-service group offering engineering, procurement and construction (EPC) services. BESIX operates
in the construction, real estate and concession sectors in 15 countries covering Europe, Africa, the Middle East and Australia. Their core
construction competencies include buildings, infrastructure and environmental projects, industrial civil engineering, maritime and port works and
real estate development. In addition to EPC services, BESIX is active in real estate development and holds concessions in several Public Private
Partnerships (PPP) and design, build, ?nance, and maintain/operate (DBFM) contracts, through which it develops, operates and maintains
projects. In 2004, OCI acquired 50% of BESIX in a joint leverage buyout in partnership with BESIX management.
30. Contingencies
Contingent liabilities
Letters of guarantee / letters of credit (Continuing operations)
Letters of guarantee issued by banks for continuing operations in favor of others as at 31 December 2014 amounted to USD 0.2 million (2013:
USD 1.0 million). Outstanding letters of credit as at 31 December 2014 (uncovered portion) amounted to nil (2013: USD 14.6 million).
Letters of guarantee / letters of credit (Discontinued operations)
Letters of guarantee issued by banks for discontinued operations in favor of others as at 31 December 2014 amounted to USD 1.0 billion
(2013: USD 0.7 billion). Outstanding letters of credit as at 31 December 2014 (uncovered portion) amounted to USD 72.5 million (2013: USD
37.6 million).
Litigations and claims
In the normal course of business, the Group entities and joint ventures are involved in some arbitration or court cases as defendants or
claimants. These litigations are carefully monitored by the entities’ management and legal counsels, and are regularly assessed with due
consideration for possible insurance coverage and recourse rights on third parties. OCI does not expect these proceedings to result in liabilities
that have a material effect on the company’s ?nancial position. In cases where it is probable that the outcome of the proceedings will be
unfavorable, and the ?nancial outcome can be measured reliably, a provision has been recognized in the ?nancial statements which is disclosed
in note 22 ‘Provisions’. It should be understood that, in light of possible future developments, such as (a) potential additional lawsuits, (b)
possible future settlements, and (c) rulings or judgments in pending lawsuits, certain cases may result in additional liabilities and related costs.
At this point in time, OCI cannot estimate any additional amount of loss or range of loss in excess of the recorded amounts with suf?cient
certainty to allow such amount or range of amounts to be meaningful. Moreover, if and to the extent that the contingent liabilities materialize,
they are typically paid over a number of years and the timing of such payments cannot be predicted with con?dence. While the outcome of
said cases, claims and disputes cannot be predicted with certainty, we believe, based upon legal advice and information received, that the ?nal
outcome will not materially affect our consolidated ?nancial position but could be material to our results of operations or cash ?ows in any one
accounting period.
30. Contingencies (continued)
Administrative court against Suez Industrial Development Company (Discontinued operations)
A decision was issued against Suez Industrial Development Company, which operates in the ?eld of land development in the North West of
the Gulf of Suez in Egypt, for the cessation of dealings on any of its allocated plots of land as of mid-November 2011 until the investigations,
conducted by the Public Fund Prosecution and Military Prosecution and relating to the allocation and sale of lands located in the North West of
the Gulf of Suez, are concluded. On 28 May 2012, the company has submitted a request to the Dispute Settlement Committee at the General
Authority of Investment and Free Zones to cancel the said decision. On 25 July 2012, the decision issued by the Prime Minister to withdraw the
plot of land allocated to the company was challenged before the Administrative Court and the hearing was postponed to 2 November 2013.
On the hearing of November 2, 2013, the hearing was referred to a different court on the grounds of jurisdiction and accordingly the case was
referred to the 8th District Contracts and during the hearing of 4 March 2014 the case was referred to the commissioners to prepare their
report. OCI is waiting for the commissioners report.
For the Suez case a reliably outcome of the ?nancial impact cannot be estimated.
Administrative court against Egyptian Gypsum Company S.A.E (Discontinued operations)
A lawsuit was ?led before the Administrative Court against Egyptian Gypsum Company S.A.E. which operates in the ?eld of gypsum
manufacturing, to nullify the sale contract of the company on the grounds that it is one of the companies sold under the privatization scheme.
Currently, the report of the commissioners is being prepared. The hearing initially scheduled for 20 April 2015 was postponed until the
commissioners submit their report to the court. If the ?nal award is against the company, the ownership of the plant will be transferred to its
original owner and the company will get the sales price back. The company’s management, supported by its legal expert, believes it is likely that
the award will be issued in favor of Egyptian Gypsum Company.
Court against former owner of Weitz (Discontinued operations)
The previous owner of The Weitz Company (‘Weitz’) ?led a variety of claims against Weitz arising out of alleged breaches of the Separation
Agreement and Buy-Sell Agreements executed upon his departure from Weitz. He also ?led a claim for tortious interference with contract
against Orascom Construction Industries S.A.E., arising out of the same alleged breaches of the Separation Agreement and Buy-Sell
Agreements. Weitz ?led a motion for summary judgment on the ground that the proper purchase price had been paid for his stock pursuant to
the Separation Agreement and Buy-Sell Agreements.
On 6 February 2015, the court dismissed all claims ?led by the previous owner against both Weitz and Orascom Construction Industries S.A.E.
On 11 February 2015, the previous owner ?led a notice of appeal to the Supreme Court of Iowa from the ?nal order entered following the trial
and from all adverse rulings and orders against the previous owner and in favor of OCI and the Weitz defendants. The alleged legal and factual
basis for the appeal have not yet been set out by the claimant. Currently, the Company’s management cannot make a reliable estimate of the
outcome of the appeal and in accordance with IAS 37 has disclosed the litigation as a contingent liability.
Sidra Medical Center (Discontinued operations)
The contract for the design and build of the Sidra Medical and Research Centre in Doha, Qatar was awarded by the Qatar Foundation for
Education, Science & Community Development in February 2008 to the associate owned by Obrascón Huarte Lain (55%) and Contrack (45%),
for a total contract value of approximately USD 2.4 billion. The project is more than 95% complete and is not part of the Construction Group’s
backlog as the project is accounted for under the equity method.
In July 2014, the consortium received a Notice of Termination from the Qatar Foundation for Education, Science & Community Development
(“the Foundation). In relation to this termination, the Foundation claims damages for material amounts from the associates. The claim and
asserted damages have not yet been substantiated by the Foundation. At this stage, the Company believes there is no merit to the claim and
intends to vigorously oppose the claim. The Company issued a counter claim for asserted damages and claimable costs. The matter has
been referred to the UK court of arbitration. Although the Company and their lawyers expect a favorable outcome, there is, given the fact that
the arbitration is in its initial phase, uncertainty associated with these matters, and an unfavorable outcome of the proceedings could have a
materially adverse effect on the demerged entity’s consolidated ?nancial position, results of operations and cash ?ows.
At year-end 2014, OCI has valued its interest in the associate at nil and, additionally, recorded a USD 20 million liability for expected costs
including legal fees. This resulted in a cost charge of USD 188 million for the year, mainly stemming from the guarantee / performance bond
executed by the Foundation (USD 94 million) and the write off of the equity investment in the joint venture (USD 66 million), re?ecting the
uncertainties related to the arbitration. When concluding on the accounting for the interest in the associate, OCI management considered the
views of their external lawyer who stated that even if the associate would be successful in arbitration, enforcing rights against the Foundation
will be a time consuming and complex process.
EBIC tax free zone (Continuing operations)
Reference is made to note 12 to the consolidated ?nancial statements.
Tax evasion claim
We refer to note 12 to the consolidated ?nancial statements.
Reimbursement agreement
The amount payable by OCI N.V. to the Construction Business under the agreement is capped at USD 150 million.
134 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 135
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
30. Contingencies (continued)
Contingent assets
Arbitration against the Golden Pyramids Plaza (Discontinued operations)
Orascom Construction Industries S.A.E. and Consolidated Contractors International Co. SAL ?led an arbitration claim against Golden Pyramids
Plaza regarding the performance of its obligations relating to the City Stars Project. The claim related to the value of additional work performed,
extension of time for all delays, return of the improperly liquidated bonds and payment for outstanding re-measurement items.
On 17 December 2014, the Court dismissed all objections to jurisdiction and admissibility of claims against Golden Pyramids Plaza. Orascom
Construction Industries S.A.E. and Consolidated Contractors International Co. SAL were awarded compensation for damages resulting from
the delayed and disrupted completion of the work and the cost of the arbitration. The total award, of which Orascom Constructions Industries
S.A.E.’s share is 50%, amounts to approximately USD 80.0 million at the prevailing exchange rate on the date of the award.
Following the guidance under IAS 37, OCI management assessed the award as not being “virtually certain” at year-end 2014. Consequently,
the award is disclosed as a contingent asset in the Group’s consolidated ?nancial statements.
31. Capital commitments
As at 31 December 2014, the Group entered into contracts to buy property, plant and equipment for USD 443.1 million (2013: USD 1.39
billion), of which USD 251.6 million represents capital commitments pertaining to OCI Partners and USD 180.5 million relating to the Iowa
Fertilizer Company (IFCo) (2013: USD 1.09 billion).
32. Operating lease commitments
The Group leases a number of of?ce space, computers, machinery and cars under operating leases. The leases typically run for a period of
10 years, with an option to renew the lease after that date. Lease payments are renegotiated every ?ve years to re?ect market rentals. Some
leases provide for additional rent payments that are based on changes in local price indices.
(i) Future minimum lease payments
$ millions 2014 2013
Less than one year 9.3 28.8
Between one and ?ve years 22.2 14.0
More than ?ve years 35.3 0.9
Total 66.8 43.7
(ii) Amount recognized in pro?t or loss
$ millions 2014 2013
Lease expense 2.7 9.3
Contingent rent expense - 2.2
Total 2.7 11.5
33. Related party transactions
Transactions with related parties – Normal course of business
Transactions with related parties occur when a relationship exists between the company, its participating interest and their directors and key
management personnel. In the normal course of business, the company buys and sells goods and services from and to various related parties
(including associates) within the Group. The CEO is able to expense the use of a private aircraft for business travel. These transactions are
conducted on a commercial basis under comparable conditions that apply to transactions with third parties.
The following is a list of signi?cant related party transactions and outstanding amounts as at 31 December 2014:
Related party Relation
Revenue
transactions
during the year
AR outstanding
at year end
Purchases
transactions
during the year
AP outstanding
at year end
Loans
outstanding to
associates
Continuing operations:
Fitco Agro S.A. Associate 157.7 21.4 - - -
Sitech Manufactoring Services C.V. Associate - - - 29.1 -
Sitech Utility Holding Beheer B.V. Associate 33.2 2.4 - 1.5 16.9
Sitech Services B.V. Associate - - 185.9 0.1 -
OCI Nitrogen Iberian Company Joint venture 65.7 - - 0.4 -
Shanxi Fenghe Melamine Co Ltd. Joint venture 0.4 0.3 - - 5.5
Total 257.0 24.1 185.9 31.1 22.4
Discontuning operations:
Orascom Trading Associate - 2.1 3.2 0.3 -
Alico Associate 0.4 29.6 - - -
Medrail Associate - 11.2 - - -
Orasqualia Associate - 3.3 - - -
Obrascon Huarte Lain SA /
Contrack Cyprus Limited JV Associate 15.7 - - - -
OPTD
Related by member of key
management personnel - 0.6 - 1.3 -
United Yamama Orascom Associate - 1.2 - - -
Watts Webcor Obayashi Joint venture 16.0 1.0 22.7 5.0 -
URS Contrack Pacer Forge IV Joint venture 6.1 - 5.2 0.2 -
Lafarge S.A.
Related by member of key
management personnel - - 19.2 12.9 -
Other 1.5 1.8 0.8 0.7 -
Total 39.7 50.8 51.1 20.4 -
In addition to the related party transactions in the table above, the company incurs certain operating expenses for immaterial amounts in relation
to services provided by related parties.
OCI Foundation and Sawiris Foundation (Discontinued operations)
The OCI Foundation invests company resources in educational programs that improve the communities in which the company operates.
OCI has cultivated strong ties with several leading universities, including the University of Chicago (Onsi Sawiris Scholars Exchange Program),
Stanford (The American Middle Eastern Network Dialogue) and Yale (Master of Advanced Management program and Global Network for
Advanced Management program).
In 2013, through the Onsi Sawiris Scholarship Program, the Group provided scholarships to ?ve students who are attending Yale, Stanford,
Wharton, and Northwestern for graduate studies.
Furthermore, the Sawiris Foundation for Social Development also provides grants to fund projects implemented by charitable organizations,
educational institutions, local government and private business. These related charitable organizations have a total transaction amount during
2014 of USD 1.0 million (2013: USD 1.3 million).
136 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 137
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
34. Remuneration of the Board of Directors (Key management personnel)
During 2014, we considered the members of the Board of Directors (Executive and Non-executive) and the Chief Operating Of?cer for the
Fertilizer and Chemicals Group to be the key management personnel as de?ned in IAS 24 ‘Related parties’. The key management personnel
have not entered into any related party transactions. No other bene?ts or remuneration were provided to or have been entered into with above
mentioned key management personnel except as disclosed below. The total remuneration of the key-management personnel amounts in 2014
to USD 8.9 million.
Remuneration of the Directors
In 2014, the total remuneration relating to the Executive Directors amounted to USD 6.9 million (2013: USD 7.0 million) consisting of the
elements in the table below:
2014 Age Base salary Annual bonus
Share-based
compensation Total remuneration
N. Sawiris 53 2,000,000 1,000,000 1,320,482 4,320,482
S. Butt 55 1,680,000 840,000 83,545 2,603,545
Total 3,680,000 1,840,000 1,404,027 6,924,027
2013 Base salary Annual bonus
1
Share-based
compensation Total remuneration
N. Sawiris 2,000,000 1,000,000 1,498,872 4,498,872
S. Butt 1,689,180 800,000 - 2,489,180
Total 3,689,180 1,800,000 1,498,872 6,988,052
1
In 2014, OCI granted a bonus to Mr. Sawiris of USD 1.0 million and to Mr. Butt of USD 0.8 million relating to the performance of 2013, which
was expensed to the statement of pro?t or loss in 2014.
As at 31 December 2014, the Executive Directors held 400,000 stock options (2013: 590,000) at a weighted average exercise price of EUR
25.94.
Outstanding
Year end ‘13 Granted Exercised Expired
Outstanding Year
End ‘14 Exercise Price Expiration
N. Sawiris 190,000 - 190,000 - - EUR 26.71
200,000 - - - 200,000 EUR 26.43 31-03-2016
200,000 - - - 200,000 EUR 25.45 02-01-2017
S. Butt - - - - - - -
Total 590,000 - 190,000 - 400,000 - -
At 31 December 2014, the Executive Directors were granted 92,378 conditional performance shares.
Outstanding
Year end ‘13
Granted
conditional
Outstanding Year
End ‘14 Vesting date
N. Sawiris - 51,321 51,321 01-07-2017
S. Butt - 41,057 41,057 01-07-2017
Total - 92,378 92,378 -
As at 31 December 2014, the Executive Directors held 16,409 bonus matching shares
Outstanding
Year end ‘13 Granted
Outstanding Year
End ‘14 Vesting date
N. Sawiris - 9,116 9,116 17-11-2017
S. Butt - 7,293 7,293 17-11-2017
Total - 16,409 16,409 -
34. Remuneration of the Board of Directors (Key management personnel) (continued)
In 2014, the total remuneration costs relating to the Non-Executive Directors amounted to USD 1,343,149 (2013: USD 710,000) consisting of the
elements in the table below:
2014 Annual ?xed fee
Audit
Committee
membership
Additional
fee
Nomination
governance
committee
Remuneration
committee
Health safety
environment
committee Total
M. Bennett 260,000 - 150,000 3,750 7,500 7,500 428,750
J.A. Ter Wisch 130,000 20,000 - 10,000 - 1,875 161,875
A. Naqvi 130,000 20,000 - 7,500 - 7,500 165,000
S. N. Schat 130,000 20,000 9,041 - 10,000 - 169,041
K. van der Graaf 130,000 - - 7,500 - 10,000 147,500
R.J. van de Kraats 130,000 25,000 10,045 - 7,500 - 172,545
J. Guiraud 81,250 12,500 - 4,688 - - 98,438
Total 991,250 97,500 169,086 33,438 25,000 26,875 1,343,149
The additional fee for Mr. Bennett is for service on the Board of the publicly traded company OCI Partners in the US. The additional fee for Mr.
Schat and Mr. van de Kraats relates to 2013 fees which were paid in 2014.
2013 Annual ?xed fee
Audit
Committee
membership
Additional
fee
Nomination
governance
committee
Remuneration
committee
Health safety
environment
committee Total
M. Bennett 260,000 - 150,000 - - - 410,000
J.A. Ter Wisch 130,000 20,000 - - - - 150,000
A. Naqvi 130,000 20,000 - - - - 150,000
S. N. Schat - - - - - - -
K. van der Graaf - - - - - - -
Total 520,000 40,000 150,000 - - - 710,000
The additional fee for Mr. Bennett is for service on the Board of the publicly traded company OCI Partners in the US.
36. External auditors’ fee
The service fees recognized in the ?nancial statements 2014 for the service of KPMG amounted to USD 9.1 million (2013: USD 7.7 million).
The amounts per service category are shown in the following table:
Total service fee
of which KPMG Accountants N.V.
(the Netherlands)
$ millions 2014 2013 2014 2013
Audit of Group Financial Statements 6.2 4.6 1.5 1.6
Other assurance services 1.8 1.9 0.9 0.3
Total assurance services 8.0 6.5 2.4 1.9
Tax services 0.8 0.8 - -
Sundry services 0.3 0.4 - -
Total 9.1 7.7 2.4 1.9
138 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 139
OCI N.V.
PARENT COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER (BEFORE NET INCOME APPROPRIATION)
$ millions Note 2014 2013
Assets
Non-current assets
Tangible ?xed assets 0.9 -
Financial ?xed assets (38) 2,813.9 2,002.2
Deferred tax assets 1.7 47.6
Total non-current assets 2,816.5 2,049.8
Current assets
Receivables
(39) 233.7 679.2
Cash and cash equivalents 111.3 5.4
Total current assets 345.0 684.6
Total assets 3,161.5 2,734.4
Equity
Share capital (40) 273.3 272.1
Share premium 1,447.6 1,441.8
Other reserves 69.3 (287.8)
Net pro?t/ (loss) for the year 328.7 295.2
Total equity 2,118.9 1,721.3
Liabilities
Non-current liabilities
Loans and borrowings (41) 896.6 969.8
Deferred tax liabilities - -
Total non-current liabilities 896.6 969.8
Current liabilities
Trade payables and other liabilities (42) 46.4 43.3
Loans and borrowings 94.8 -
Income tax payable 4.8 -
Total current liabilities 146.0 43.3
Total liabilities 1,042.6 1,013.1
Total equity and liabilities 3,161.5 2,734.4
PARENT COMPANY STATEMENT OF PROFIT OR LOSS
FOR THE YEARS ENDED 31 DECEMBER
$ millions Note 2014 2013
Net pro?t / (loss) from subsidiaries, joint arrangements and associates 414.8 393.9
Other net income / (loss) (86.1) (98.7)
Net pro?t / (loss) for the year 328.7 295.2
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
37. General
The Parent Company ?nancial statements of OCI N.V. have been prepared in accordance with provisions of Part 9, Book 2 of the Dutch Civil
Code. OCI N.V. has applied the option in article 2:362 paragraph 8 of Part 9, of the Dutch Civil Code to use the same accounting principles for
the recognition and measurement of assets and liabilities and determination of results for the corporate ?nancial statements as the consolidated
?nancial statements. Investments in subsidiaries are carried at net asset value. The net asset value is established by valuing assets, provisions
and liabilities and calculating the result in accordance with the accounting policies applied in the consolidated ?nancial statements. For a list
of principal subsidiaries reference is made to the section ‘Miscellaneous’ in this report. Investments in Group companies are included at the
pro rata value of OCI’s share in their net assets value. For principles of recognition and measurement of assets, liabilities and results, reference
is made to the notes to the consolidated ?nancial statements. OCI N.V. has the Euro as its functional currency, to align with the consolidated
?nancial statements, the parent company ?nancial statements are also presented in US dollars.
38. Financial assets
Subsidiaries
$ millions Share in capital Loans Other loans Total
Balance at 1 January 2013 - - - -
Acquisitions/ capital contributions 1,674.7 - - 1,674.7
Share in pro?t 393.9 - - 393.9
Exchange rate differences (104.0) - - (104.0)
Loans - 1.5 36.1 37.6
Balance at 31 December 2013 1,964.6 1.5 36.1 2,002.2
Share in pro?t 414.8 - - 414.8
Change in ownership OCI Partners (12.5) - - (12.5)
Settlement loans - - (16.6) (16.6)
Change in cash ?ow hedge (6.1) - - (6.1)
Change in available-for-sale ?nancial assets (1.2) - - (1.2)
Dividend from associates (30.4) - - (30.4)
Capital contributions in subsidiaries 777.8 - - 777.8
Dividends form subsidiaries (408.3) - - (408.3)
Exchange rate differences 94.2 - - 94.2
Balance at 31 December 2014 2,792.9 1.5 19.5 2,813.9
The loans included under ‘Other loans’ fully consist of loans granted to employees as part of a share incentive plan. For details see note 23(d) in
the consolidated ?nancial statements.
39. Receivables
$ millions 2014 2013
Receivables from subsidiaries 227.1 649.9
Other receivables 6.6 29.3
Total 233.7 679.2
No receivables have a maturity longer than one year.
40. Shareholders’ equity
For details on the statement of changes in equity of the Parent Company see the consolidated statement of changes in equity.
140 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 141
OCI N.V.
41. Loans and borrowings
$ millions 2014 2013
Convertible bond 379.6 420.4
Revolving credit facility 511.2 -
Loans from subsidiaries 5.8 549.4
Total 896.6 969.8
Reference is made to note 20 ‘Loans and borrowings’ of the consolidated ?nancial statements for detailed information on the convertible bond
and the revolving credit facility.
The maturity dates of loans and borrowings is as follows:
$ millions 2014 2013
2015 - 48.3
2017 511.2 -
2018 379.6 420.4
2019 5.8 501.1
Total 896.6 969.8
42. Trade payables and other current liabilities
$ millions 2014 2013
Owing to subsidiaries 30.8 36.9
Other current liabilities 15.6 6.4
Total 46.4 43.3
43. Contingent liabilities
OCI N.V. has provided ?nancial guarantees to certain subsidiaries including EFC related to its International Finance Corporation (‘IFC’) bank
loan, and OCI Construction B.V. regarding its bank loan with Credit Agricole. For OCI Fertilizers B.V. and OCI Nitrogen B.V. comfort letters were
provided by OCI N.V.
44. Employees
The total number of employees in 2014 was 26 (2013: 7 employees).
45. Fiscal unity
OCI N.V. forms a ?scal unity with several Dutch entities for corporation tax purposes. The full list of Dutch entities which are part of the ?scal
unity is included in the list containing the information referred to in article 2:379 and article 2:1 of the Dutch Civil Code, which is ?led at the of?ce
of the Chamber of Commerce. In accordance with the standard conditions, a company and its subsidiaries that form the ?scal unity are jointly
and severally liable for taxation payable by the ?scal unity.
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
CONTINUED
OTHER INFORMATION
PROPOSED APPROPRIATION OF NET PROFIT / (LOSS)
$ millions 2014 2013
Cash dividend interim - -
Cash dividend ?nal - -
Added to retained earnings 328.7 295.2
Total net pro?t / (loss) attributable to shareholders 328.7 295.2
Upon adoption of this proposed Net Pro?t / (Loss) appropriation, the dividend for the 2014 ?nancial year will be nil. This proposed Net Pro?t /
(Loss) appropriation is in conformity with article 26 of the Company’s Articles of Association.
Extract from the Articles of Association relating to Net Pro?t / (Loss) appropriation
Article 26. ‘Pro?ts and Distributions’.
26.1 The Board may decide that the pro?ts realized during a ?nancial year will fully or partially be appropriated to increase and/or from reserves.
26.2 The pro?ts remaining after application of Article 26.1 shall be put at the disposal of the General Meeting. The Board shall make a proposal
for that purpose. A proposal to pay a dividend shall be dealt with as a separate agenda item at the General Meeting of Shareholders.
26.3 Distributions from the Company’s distributable reserves are made pursuant to a resolution of the General Meeting at the proposal of the
Board.
26.4 Provided it appears from an interim statement of assets signed by the Board that the requirement mentioned in Article 26.8 concerning the
position of the Company’s assets has been ful?lled, the Board may make one or more interim distributions to the holders of Shares.
26.5 The Board may decide that a distribution on Shares shall not take place as a cash payment but as a payment in Shares, or decide that
holders of Shares shall have the option to receive a distribution as a cash payment and/or as a payment in Shares, out of the pro?t and/or at
the expense of reserves, provided that the Board is designated by the General Meeting pursuant to Articles 6.2. The Board shall determine the
conditions applicable to the aforementioned choices.
26.6 The Company’s policy on reserves and dividends shall be determined and can be amended by the Board. The adoption and thereafter
each amendment of the policy on reserves and dividends shall be discussed and accounted for at the General Meeting of Shareholders under a
separate agenda item.
26.7 The Company may further have a policy with respect to pro?t participation for employees which policy will be established by the Board.
26.8 Distributions may be made only insofar as the Company’s equity exceeds the amount of the paid in and called up part of the issued
capital, increased by the reserves which must be kept by virtue of the law or these Articles of Association.
Amsterdam, the Netherlands, 28 April 2015
The OCI N.V. Board of Directors
Michael Bennett, Chairman
Nassef Sawiris
Salman Butt
Jan Ter Wisch
Arif Naqvi
Kees van der Graaf
Sipko Schat
Jérôme Guiraud
Robert Jan van de Kraats
142 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 143
OCI N.V.
INDEPENDENT AUDITOR’S REPORT
To: the Annual General Meeting of Shareholders of OCI N.V.
Report on the audit of the Financial Statements 2014
Opinion
We have audited the ?nancial statements 2014 of OCI N.V. (OCI N.V. or the Company), based in Amsterdam. The ?nancial statements
include the consolidated ?nancial statements and the Company ?nancial statements.
In our opinion:
• the consolidated ?nancial statements give a true and fair view of the ?nancial position of OCI N.V. as at 31 December 2014, and
of its result and cash ?ows for the year then ended in accordance with International Financial Reporting Standards as adopted by
the European Union (EU-IFRS) and with Part 9 of Book 2 of the Netherlands Civil Code, and
• the Company ?nancial statements give a true and fair view of the ?nancial position of OCI N.V. as at 31 December 2014, and of its
result for the year then ended in accordance with Part 9 of Book 2 of the Netherlands Civil Code.
The consolidated ?nancial statements comprise:
• the consolidated statement of ?nancial position as at 31 December 2014;
• the following consolidated statements for 2014: the statement of pro?t or loss and comprehensive income, changes in equity
and cash ?ows; and
• the notes, comprising a summary of the accounting policies and other explanatory information.
The Company ?nancial statements comprise:
• the Company statement of ?nancial position as at 31 December 2014;
• the Company statement of pro?t or loss for 2014; and
• the notes, comprising a summary of the accounting policies and other explanatory information.
Basis for our opinion
We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our responsibilities under those standards
are further described in the “Our responsibilities for the audit of the ?nancial statements” section of our report.
We are independent of OCI N.V. in accordance with the “Verordening inzake de onafhankelijkheid van accountants bij assurance-opdrachten”
(ViO) and other relevant independence requirements in the Netherlands. Furthermore we have complied with the “Verordening gedrags- en
beroepsregels accountants” (VGBA).
We believe that the audit evidence we have obtained is suf?cient and appropriate to provide a basis for our opinion.
Materiality
Misstatements can arise from fraud or errors and will be considered material if, individually or in aggregate, they could reasonably be expected
to in?uence the economic decisions of users taken on the basis of these ?nancial statements. The materiality affects the nature, timing and
extent of our audit procedures and the evaluation of the effect of identi?ed misstatements on our opinion.
Based on our professional judgment we determined the materiality for the ?nancial statements as a whole at USD 30 million, with reference to
a benchmark of normalized pro?t before tax from continuing operations (approximately 10%) and total revenues from discontinued operations
(approximately 1.7%). Normalized pro?t before tax has been determined as the Result before income tax from continuing operations adjusted
for the one-off items at the operating pro?t level as included on page 44 of the report of the Board of Directors. Considering the differences in
nature and characteristics of the continuing and discontinued operations, we deem these benchmarks most relevant. The continuing operations
represent high volume production and sales of fertilizer and chemicals, for which oftentimes global market prices are available. The discontinued
operations are characterized by signi?cant construction contracts, with contract speci?c terms and conditions and often relatively low margins.
We have also taken into account misstatements and possible misstatements that are in our opinion material for qualitative reasons to the users
of the ?nancial statements.
Audits of group entities (components) were performed using materiality levels determined by the judgment of the group audit team, having
regard to the materiality for the consolidated ?nancial statements as a whole. Component materiality for components within the Fertilizer &
Chemicals Group did not exceed USD 11.5 million, whereas for components within the Engineering & Construction Group materiality did not
exceed USD 7.5 million.
The difference in component materiality for components within the Fertilizer & Chemical Group and components within the Engineering &
Construction Group has been based on both quantitative and qualitative factors.
We agreed with the Board of Directors that misstatements in excess of USD 1.25 million, which are identi?ed during the audit, would be
reported to them, as well as smaller misstatements that in our view must be reported on qualitative grounds.
Scope of the group audit
OCI N.V. is head of a group of entities. The ?nancial information of this group is included in the ?nancial statements of OCI N.V.
Because we are ultimately responsible for the opinion, we are also responsible for directing, supervising and performing the group audit. In this
respect we have determined the nature and extent of the audit procedures to be carried out for components. Decisive were the size and / or the
risk pro?le of the components or operations. On this basis, we selected components for which an audit had to be performed on the complete
set of ?nancial information or on speci?c items.
Based on these scoping criteria, we selected 18 components from 7 countries for a full scope audit. This resulted in a coverage of
approximately 99% and 84% of revenues for continued and discontinued operations respectively, and approximately 93% and 94% of total
assets for continued and discontinued operations respectively. The remaining revenues and assets result from a number of components, none
of which individually represented more than 2.6% of total revenues or 1.4% of total assets. For these remaining components we performed
analytical procedures to corroborate our assessment that there are no signi?cant risks of material misstatement and performed additional
veri?cation procedures whenever deemed necessary.
The group audit team provided detailed instructions to all component auditors, covering the signi?cant audit areas, including the relevant risks
of material misstatement identi?ed by us, and set out the information required to be reported back to the group audit team. The group audit
team visited component auditors and performed ?le reviews for components in the Netherlands, Belgium, Egypt and Algeria. Conference calls
were held with all the component auditors. During these visits and calls, the planning, risk assessment, procedures performed, ?ndings and
observations reported were discussed and reviewed in more detail by us, where considered necessary. Any further work deemed necessary
was subsequently performed by the component auditors and reviewed by us.
By performing the procedures mentioned above at components, together with additional procedures at group level, we have been able to
obtain suf?cient and appropriate audit evidence to provide an opinion on the ?nancial statements.
Our key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most signi?cance in our audit of the ?nancial statements. We
have communicated the key audit matters to the Board of Directors. The key audit matters are not a comprehensive re?ection of all matters
discussed.
These matters were addressed in the context of our audit of the ?nancial statements as a whole and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Assets and liabilities classi?ed as held for demerger and discontinued operations
In November 2014, the Company announced its intention to pursue a dual listing of its Engineering & Construction Group in both United Arab
Emirates and Egypt. Meanwhile, listings have been obtained in the United Arab Emirates on 7 March 2015 and in Egypt on 9 March 2015. In
preparing the Company’s consolidated ?nancial statements, the Company applied IFRS 5. The Company presented the assets and liabilities
of the Engineering & Construction Group as “Assets held for demerger” and “Liabilities held for demerger” and the operations have been
presented net as “Net pro?t/(loss) from discontinued operations”. The assessment process whether this presentation is in accordance with
IFRS 5, is complex and judgmental, especially in determining if and when the demerger is highly probable.
As part of our audit we challenged the appropriateness of management’s judgments with documentation available within the Company and
external documentation, amongst others from legal advisors and other third parties. We also assessed the adequacy of the Company’s
disclosure notes 2.2 and 29 in the ?nancial statements in respect of assets and liabilities classi?ed as held for demerger and discontinued
operations.
Accounting for income tax positions – in particular the tax evasion claim in Egypt
The Company has extensive international operations and makes judgments and estimates in relation to tax issues and exposures resulting in
the recognition of tax liabilities. Income tax was signi?cant to our audit because the assessment process is complex and the amounts involved
are material to the ?nancial statements as a whole, especially with respect to tax positions in Egypt following changes in interpretations of tax
laws and regulations.
In 2012, a tax claim was initiated in Egypt, accusing Orascom Construction Industries S.A.E., the former Egyptian parent company of the
group, of tax evasion in relation to a divestment of part of the group in 2007. In 2013, Orascom Construction Industries S.A.E. entered into an
agreement with the Egyptian Tax Authority (“ETA”) to pay approximately USD 1 billion of tax in several installments to resolve the tax dispute.
The ?rst installment was paid in 2013 and for the remaining installments a liability was recorded in the 2013 ?nancial statements. During 2014,
the ETA independent appeal committee overseeing the tax dispute ruled in favor of Orascom Construction Industries S.A.E. and OCI N.V.
released the liability. The Board of Directors of the Company decided to transfer the rights to the installment paid in 2013 to the “Long Live
Egypt Fund”.
We have tested the completeness and accuracy of the amounts reported in the ?nancial statements for current and deferred tax, including the
assessment of disputes with tax authorities. In this area our audit procedures included, amongst others, assessment of correspondence with
the relevant tax authorities, obtaining and reviewing letters from (tax) lawyers and testing the recording and re-assessment of tax positions. We
144 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 145
OCI N.V.
INDEPENDENT AUDITOR’S REPORT
CONTINUED
engaged and visited component audit teams, which included local tax specialists, to assist us in analyzing and challenging the assumptions
used to determine tax positions and we corroborated the assumptions with (external) evidence.
We also assessed the adequacy of the Company’s disclosure note 12 in the ?nancial statements in respect of income tax and the accounting
for the tax evasion claim as well as the accounting for and the disclosure of the intended donation to the “Long Live Egypt Fund”.
Valuation of work in progress and related revenue
OCI N.V. is involved in construction projects for which the Company applies the percentage of completion method. The amount of revenue and
pro?t recognized in a year is dependent, inter alia, on the assessment of the percentage of completion of long-term contracts, the forecasted
cost of each project, the accounting for variation orders and claims as well as the recoverability of retention receivables. The nature of these
estimates implies that continual re-assessments can have a signi?cant effect on pro?ts for the year. This re-assessment process is complex and
judgmental due to the size of the construction projects and uncertainties related to future performance and disputes.
For our audit we evaluated the processes of the accounting for construction contracts. Speci?c procedures have been performed by
component auditors to determine that variation orders and claims have been properly taken into account. Furthermore, component auditors
evaluated that the valuation of work in progress, other project related receivables and liabilities were timely recognized and properly measured,
and the resulting estimated cumulative result on contracts is appropriately accounted for. They challenged the appropriateness of these
estimates for signi?cant projects and assessed whether or not the estimates showed any evidence of management bias, amongst others by
vouching changes in estimates to underlying documentation.
We speci?cally focused on the valuation of the Company’s share in the partnership with OHL to construct the Sidra Medical Center in Doha,
which investment is accounted for as an associate by OCI N.V. Management of the partnership was unable to conclude on the ?nancial
information for the year 2014 as a result of substantial differences in views on the value of the working capital. OCI N.V. has completely written
off its share in the equity accounted associate, and has also written off the performance bond that was called by the customer in the year
2014. We discussed the matter with the component auditor, obtained external legal con?rmation letters on the matter and received further
con?rmation on relevant facts and circumstances from the component auditor and in-house counsel. We tested amounts paid under the
executed performance bond with supporting documentation such as contracts and bank statements. We also evaluated the adequacy of the
related disclosure in disclosure note 30.
Long term debt and covenants requirements
In order to ?nance the construction of its Fertilizer & Chemicals property, plant & equipment, OCI N.V. has entered into various loan agreements,
which often contain speci?c covenant requirements. Most of the loan agreements have been concluded at the component level. The
covenants, if applicable, relate to the ?nancial information of these components. If covenants are not met, and no waivers are received, long
term debt may need to be classi?ed as a short term liability.
As part of our audit procedures we assessed compliance with ?nancial ratios included in the covenants, if applicable, as at the balance sheet
date. These procedures included obtaining and reading the loan agreements, challenging the Company’s understanding of the ?nancial ratios
by reviewing underlying contracts and correspondence and by verifying the mathematical accuracy of the ?nancial ratios. For covenants with
limited headroom, we evaluated the assumptions applied by management when making estimates for potential management bias. For loans
with covenants for which waiver letters were received from ?nancial institutions, we obtained and inspected these waiver letters. We further
evaluated the adequacy of the Company’s disclosures about the loans, borrowings and covenants in disclosure note 20.
Changes in accounting policies (IFRS 11)
Especially within the Engineering & Construction Group, the Company has entered into joint arrangements with third party companies for
construction projects. As of 1 January 2014, the Company has applied the new accounting standard IFRS 11 to all joint arrangements.
Under IFRS 11 investments in joint arrangements are classi?ed as either joint ventures or joint operations, depending on the contractual rights
and obligations of each investor. The new guidance requires the company to assess and interpret the substance of a substantial number
of contractual agreements. Some of these assessments required signi?cant management judgment. The most notable consequence is the
accounting for the company’s 50% share in Besix Group S.A., which was proportionally consolidated in the ?nancial statements 2013 and is
accounted for as an associate in the ?nancial statements 2014, including the comparative 2013 ?nancial information.
We obtained and assessed management’s analysis of the contracts for signi?cant joint arrangements, read the relevant parts of the contracts
obtained, con?rmed management’s assessment of facts and circumstances were in line with the contracts and challenged management’s
interpretations and conclusions. We evaluated whether the effects of the new accounting standards were adequately disclosed in note 4.3.
Responsibilities of the Board of Directors for the ?nancial statements
The Board of Directors is responsible for:
• the preparation and fair presentation of the ?nancial statements in accordance with EU-IFRS and Part 9 of Book 2 of the
Netherlands Civil Code, and for the preparation of the report of the Board of Directors in accordance with Part 9 of Book 2 of the
Netherlands Civil Code;
• such internal control as the Board of Directors determines is necessary to enable the preparation of ?nancial statements that are free
from material misstatement, whether due to fraud or error;
• assessing the Company’s ability to continue as a going concern. Based on the ?nancial reporting frameworks mentioned, the
Board of Directors should prepare the ?nancial statements using the going concern basis of accounting unless the Board of
Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. The Board of
Directors should disclose events and circumstances that may cast signi?cant doubt on the Company’s ability to continue as a going
concern.
• overseeing the Company’s ?nancial reporting process.
Our responsibilities for the audit of the ?nancial statements
Our objective is to plan and perform the audit assignment in a manner that allows suf?cient and appropriate audit evidence to be obtained for
our ?nal opinion.
Our audit has been performed with a high, but not absolute, level of assurance, which means we may have not uncovered all errors and fraud.
We have exercised professional judgment and have maintained professional skepticism throughout the audit, in accordance with Dutch
Standards on Auditing, ethical requirements and independence requirements.
Our audit included e.g.:
• Identifying and assessing the risks of material misstatement of the ?nancial statements, whether due to fraud or error, designing and
performing audit procedures responsive to those risks, and obtaining audit evidence that is suf?cient 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.
• Obtaining an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
• Evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by management.
• Concluding on the appropriateness of management’s use of the going concern basis of accounting, and based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast signi?cant doubt on the Company’s ability
to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the ?nancial 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 our auditor’s report. However, future events or conditions may
cause the Company to cease to continue as a going concern.
• Evaluating the overall presentation, structure and content of the ?nancial statements, including the disclosures; and
• Evaluating whether the ?nancial statements represent the underlying transactions and events in a manner that achieves fair
presentation.
We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and signi?cant audit
?ndings, including any signi?cant ?ndings in internal control that we identify during our audit.
We provide the Board of Directors 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 the Board of Directors, we determine those matters that were of most signi?cance in the audit of the
?nancial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law
or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, not communicating the matter is in the
public interest.
146 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 147
OCI N.V.
INDEPENDENT AUDITOR’S REPORT
CONTINUED
Report on other legal and regulatory requirements
Report on the report of the Board of Directors and the other information
Pursuant to legal requirements of Part 9 of Book 2 of the Netherlands Civil Code (concerning our obligation to report about the report of the
Board of Directors and other information):
• we have no de?ciencies to report as a result of our examination whether the report of the Board of Directors, as set out on pages 1 to 77,
to the extent we can assess has been prepared in accordance with Part 9 of Book 2 of this Code, and whether the information as required
by Part 9 of Book 2 of the Netherlands Civil Code has been annexed;
• we report that the report of the Board of Directors, to the extent we can assess, is consistent with the ?nancial statements.
Appointment
Our ?rst appointment as auditor of OCI N.V. was in 2013. On 26 June 2014, we have been re-appointed by the Annual General Meeting of
Shareholders as auditor of OCI N.V. for 2014.
Amstelveen, 28 April 2015
KPMG Accountants N.V.
P.J.G. ter Steeg RA
MISCELLANEOUS
List of principal subsidiaries, associates and joint ventures
Companies Country
Percentage of
interest
Consolidation
Method
Fertilizer entities (continuing operations):
OCI N.V. The Netherlands 100.00 Full
Sorfert Algérie Spa Algeria 50.99 Full
Orascom Construction Industries Egypt 99.84 Full
OCI Fertilizer Trading Limited Cyprus 100.00 Full
Egypt Basic Industries Corporation Egypt 60.00 Full
Egyptian Fertilizers Company Egypt 99.90 Full
OCI Nitrogen B.V. The Netherlands 100.00 Full
Iowa Fertilizer Company LLC USA 100.00 Full
OCI Partners LP USA 79.04 Full
Natgasoline LLC USA 100.00 Full
Construction entities (discontinued operations):
Cementech BVI 100.00 Full
Orascom Construction Industries Algeria Spa Algeria 99.90 Full
BESIX Group SA Belgium 50.00 Equity
OCI Construction Limited Cyprus 100.00 Full
Orascom Construction Egypt 100.00 Full
Orascom Road Construction Egypt 99.98 Full
Orasqualia for the Development of the Wastewater Treatment Plant Egypt 50.00 Equity
National Steel Fabrication Egypt 99.90 Full
Alico Egypt Egypt 50.00 Equity
Suez Industrial Development Company Egypt 60.50 Full
Orascom Saudi Company Kingdom of Saudi Arabia 60.00 Full
Contrack International Inc USA 100.00 Full
Orascom E&C USA Inc USA 100.00 Full
The Weitz Group LLC USA 100.00 Full
A full list of af?liated companies will be available for public inspection at the Commercial Registry in conformity with the provisions of Article 2:379
of the Dutch Civil Code.
148 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 149
OCI N.V.
Share Listing
OCI N.V.’s shares have been listed on the NYSE Euronext in
Amsterdam as of 25 January 2013. In March 2014, OCI N.V. became
a constituent of the AEX-Index, the NYSE Euronext Amsterdam’s
largest index.
The OCI N.V. Share in 2014
1
Number of outstanding ordinary shares
as at 31 December 2014 205,911,570
Average share price € 24.22
Lowest share price € 19.11
Highest share price € 30.54
Share price at year end € 23.70
Market capitalization at year end
2
€ 5.95 billion
1 Adjusted for Orascom Construction demerger
2 Including demerged Orascom Construction
Demerger of the Engineering & Construction Business
At an OCI N.V. extraordinary general meeting held on 12 November
2014, shareholders approved the proposal to facilitate the demerger
of the company’s engineering and construction business from its
fertilizer and chemicals business (the “Spin-Off”). The demerged
engineering and construction business formed Orascom Construction
Limited (“OC”). The Spin-Off was effected after the close of trading on
6 March 2015 (the “Record Date”) through a $ 1.4 billion repayment
of capital in kind to OCI N.V. shareholders as registered on the Record
Date in the form of OC shares. An OCI N.V. shareholder received one
OC share for every two OCI N.V. shares held. OC shares commenced
trading on 9 March 2015 on NASDAQ Dubai and on 11 March 2015
on the Egyptian Exchange.
After close of trading on the Record Date, Euronext announced a
reference price of $ 13.33 per OC share and a EUR:USD exchange
rate of 1.087 (https://www.euronext.com/en/products/equities/
NL0010558797-XAMS), to calculate an adjustment of EUR 6.13 per
OCI N.V. share. The $ 13.33 reference price is based on the $ 1.4
billion capital repayment divided by the number of OC shares available
for transfer to the OCI N.V. shareholders. Based on a closing price of
EUR 34.095, Euronext adjusted the OCI N.V. shares to EUR 27.965
as at 18:00 CET on 6 March 2015.
Share capital
All of the Company’s issued shares are ordinary shares with
authorized par value of 1 Euro. The number of paid-up ordinary shares
outstanding is disclosed in note 17 of the ?nancial statements.
Dividend Policy
OCI N.V. has a ?exible dividend policy designed to balance the
availability of funds for dividend distribution with pursuing growth
opportunities that generate attractive returns. We currently have two
large green?eld projects under construction in the US. Accordingly,
the Board has decided to focus cash ?ows on completing these
signi?cant growth initiatives in a timely manner and therefore has not
announced a dividend for FY2014.
Financial Calendar
20 May 2015 Publication of trading update Q1
10 June 2015 General Meeting of Shareholders
26 August 2015 Publication of Interim Financial Statements
12 November 2015 Publication of trading update Q3
17 March 2016 Q4 & FY 2015 Results
SHAREHOLDER INFORMATION
Investor Relations
OCI N.V. places great importance on maintaining active dialogue with
existing and potential shareholders, banks, and analysts. OCI N.V. is
committed to providing relevant, high-quality and timely information
to all stakeholders, and to giving current and potential shareholders,
analysts and ?nancial press broader insight into the Company and the
industries in which we operate. To this end, OCI N.V. strives to ensure
that relevant information is provided equally and simultaneously to all
interested parties.
As per the Company’s by-laws, OCI N.V. observes a ‘black-out’
period during which analysts’ meetings and presentations to and/or
direct discussions with current or potential shareholders do not take
place shortly before the publication of the regular ?nancial information.
Investor Relations contacts
Corporate website: www.oci.nl
Hans Zayed
Investor Relations Director
E-mail: [email protected]
Tel: (+31) 06 18 25 13 67
Erika Wakid
E-mail: [email protected]
[email protected]
150 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 151
OCI N.V.
KEY SUBSIDIARIES
OCI NITROGEN (100%)
Nitrates and melamine manufacturer, the Netherlands
IOWA FERTILIZER COMPANY (100%)
Nitrates and diesel exhaust ?uid manufacturer, USA
OCI PARTNERS LP (79.88%)
Owner and operator of OCI Beaumont, ammonia and methanol
manufacturer, USA
NATGASOLINE LLC (100%)
Methanol manufacturer, USA
SORFERT ALGÉRIE (51%)
Ammonia and granular urea manufacturer, Algeria
EGYPTIAN FERTILIZERS COMPANY (100%)
Granular urea manufacturer, Egypt
EGYPT BASIC INDUSTRIES CORPORATION (60%)
Ammonia manufacturer, Egypt
OCI FERTILIZER TRADING (100%)
Fertilizer trading and distribution arm
OCI TERMINAL EUROPOORT B.V. (100%)
Ammonia tank owner and operator, Netherlands
152 OCI N.V. Annual Report 2014
OCI N.V.
Designed and produced by dmicreative www.dmicreative.com
Contents
This annual report is available online at www.oci.nl
OCI N.V.
Honthorststraat 19
1071 DC Amsterdam
The Netherlands
T: (+31) 20 723 45 00
[email protected]
OCI N.V. stock symbols: OCI / OCI.NA / OCI.AS / OCINY
CONTACT US
OVERVIEW
01 About OCI N.V.
02 Highlights 2014
06 Letter to Shareholders from Nassef Sawiris
10 Company Overview
OPERATIONAL REVIEW
12 Global Fertilizer & Industrial Chemicals Player
30 Market Performance
34 Year in Review
38 The Demerger
42 Financial Performance
SUSTAINABILITY
48 CSR Report
CORPORATE GOVERNANCE
56 Board of Directors Pro?le
58 Message from the Chairman
59 Corporate Governance
62 Report of the Board of Directors
66 Risk Management and Compliance
72 Remuneration Report
77 Declarations
FINANCIAL STATEMENTS
79 Consolidated Statement of Financial Position
80 Consolidated Statement of Pro?t or Loss and other
Comprehensive Income
81 Consolidated Statement of Changes in Equity
82 Consolidated Statement of Cash Flows
84 Notes to the consolidated ?nancial statements
140 Parent Company Statement of Financial Position and
Parent Company Statement of Pro?t or Loss
141 Notes to the parent company ?nancial statements
143 Other information
144 Independent Auditor’s report
149 Miscellaneous
150 Shareholder Information
152 Key Subsidiaries
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2014 ANNUAL REPORT
GLOBAL ENTREPRENEURIAL GROWTH
WERELDWIJD ONDERNEMENDE GROEI
doc_918211596.pdf
Global Entrepreneurial Growth Wereldwijd Ondernemende Groei
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OCI N.V.
2014 ANNUAL REPORT
GLOBAL ENTREPRENEURIAL GROWTH
WERELDWIJD ONDERNEMENDE GROEI
Designed and produced by dmicreative www.dmicreative.com
Contents
This annual report is available online at www.oci.nl
OCI N.V.
Honthorststraat 19
1071 DC Amsterdam
The Netherlands
T: (+31) 20 723 45 00
[email protected]
OCI N.V. stock symbols: OCI / OCI.NA / OCI.AS / OCINY
CONTACT US
OVERVIEW
01 About OCI N.V.
02 Highlights 2014
06 Letter to Shareholders fromNassef Sawiris
10 Company Overview
OPERATIONAL REVIEW
12 Global Fertilizer &Industrial Chemicals Player
30 Market Performance
34 Year in Review
38 The Demerger
42 Financial Performance
SUSTAINABILITY
48 CSRReport
CORPORATEGOVERNANCE
56 Board of Directors Pro?le
58 Message fromthe Chairman
59 Corporate Governance
62 Report of the Board of Directors
66 Risk Management and Compliance
72 Remuneration Report
77 Declarations
FINANCIAL STATEMENTS
79 Consolidated Statement of Financial Position
80 Consolidated Statement of Pro?t or Loss and other
Comprehensive Income
81 Consolidated Statement of Changes in Equity
82 Consolidated Statement of Cash Flows
84 Notes to the consolidated ?nancial statements
140 Parent Company Statement of Financial Position and
Parent Company Statement of Pro?t or Loss
141 Notes to the parent company ?nancial statements
143 Other information
144 Independent Auditor’s report
149 Miscellaneous
150 Shareholder Information
152 Key Subsidiaries
OCI N.V. is a global producer and
distributor of natural gas-based
fertilizers and industrial chemicals
based in the Netherlands.
We produce nitrogen fertilizers, methanol
and other natural gas based products,
serving agricultural and industrial customers
around the world. We rank among the world’s
largest nitrogen fertilizer producers, and can
produce nearly 7.7 million metric tons of
nitrogen fertilizers and industrial chemicals at
production facilities in the Netherlands, the
United States, Egypt and Algeria. We expect
total production capacity to exceed 12 million
metric tons in 2017.
OCI N.V. is listed on the NYSE Euronext in
Amsterdam.
Contents
OVERVIEW
01 About OCI N.V.
02 Highlights 2014
06 Letter to Shareholders fromNassef Sawiris
10 Company Overview
OPERATIONAL REVIEW
12 Global Fertilizer &Industrial Chemicals Player
30 Market Performance
34 Year in Review
38 The Demerger
42 Financial Performance
SUSTAINABILITY
48 CSRReport
CORPORATEGOVERNANCE
56 Board of Directors Pro?le
58 Message fromthe Chairman
59 Corporate Governance
62 Report of the Board of Directors
66 Risk Management and Compliance
72 Remuneration Report
77 Declarations
FINANCIAL STATEMENTS
79 Consolidated Statement of Financial Position
80 Consolidated Statement of Pro?t or Loss and other
Comprehensive Income
81 Consolidated Statement of Changes in Equity
82 Consolidated Statement of Cash Flows
84 Notes to the consolidated ?nancial statements
140 Parent Company Statement of Financial Position and
Parent Company Statement of Pro?t or Loss
141 Notes to the parent company ?nancial statements
143 Other information
144 Independent Auditor’s report
149 Miscellaneous
150 Shareholder Information
152 Key Subsidiaries
2014
HIGHLIGHTS
$ million 2014 2013
1
Revenue 2,685.8 2,477.5
Adjusted EBITDA 833.4 676.3
Net income attributable to shareholders
(continuing operations) 444.1 313.3
Net income attributable to shareholders
(including discontinued operations) 328.7 295.2
Earnings per share (continuing operations) ($) 2.17 1.54
Total assets
2
10,577.3 10,487.8
Total assets (continuing operations) 8,038.8 7,863.8
Total equity 2,537.8 2,087.6
Gross interest-bearing debt 5,040.7 5,118.3
Net debt 4,194.1 3,548.1
Capital expenditures 1,211.0 687.0
$
2.7
BN
+8.4% over 2013
Revenue
$
833.4
M
+23.2% over 2013
EBITDA
+41.7% over 2013
Net Income
1 2013 information included in the balance sheet is proforma/unaudited information. 2013 and 2014
results represent continuing operations (the Fertilizer &Chemicals business).
In addition, certain joint ventures (JVs) that were previously proportionately consolidated in the
2013 accounts, are nowaccounted for under the equity method (IFRS11)
2 Including $ 2,538.5 million “Assets held for demerger”
$
444.1
M
OVERVIEW
FINANCIAL
HIGHLIGHTS
2 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 3
OPERATIONAL
HIGHLIGHTS
Total nitrogen fertilizers
and industrial chemicals
volume sold reached
7.4
million metric tons
an 11.7%
improvement over 2013
First full year of
operations at
Sorfert Algérie, the
largest nitrogen
fertilizer producer in
Algeria, achieving 1.4
million tons of sales.
CORPORATE
HIGHLIGHTS
OCI N.V.’s subsidiary, Orascom
Construction Industries (OCI S.A.E.),
was fully exonerated of the tax evasion
claim to bring an end to the two year tax
dispute in Egypt
Expanded our Board composition with
the appointment of two non-executive
directors at the Annual General Meeting
of Shareholders on 26 June 2014
Included in the AEX Index, the ?agship
index for Netherlands-listed companies,
in March 2014
Successfully demerged the Engineering
& Construction Group to form Orascom
Construction Limited in March 2015.
The Engineering & Construction Group
is treated as discontinued operations in
the 2014 Annual Report.
Began construction of
Natgasoline LLC, a 1.75
million metric ton per year
methanol production
facility in the United
States, after receiving
the EPA permit on
29 September 2014.
OVERVIEW
.
Construction at Iowa Fertilizer
Company is currently on schedule
and was 84.32% complete as at
31 December 2014.
4 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 5
WITH THE DEMERGER OF OUR
ENGINEERING & CONSTRUCTION
GROUP COMPLETE, WE ARE NOW WELL
POSITIONED TO FOCUS ON MAXIMIZING
OUR GROWTH AS A GLOBAL FERTILIZER
AND INDUSTRIAL CHEMICALS COMPANY.
Michael Bennett
Chairman
Nassef Sawiris
Chief Executive Of?cer
LETTER TO
SHAREHOLDERS
Rationale
OCI N.V.’s Board of Directors and
management believe that the construction
and fertilizers businesses offer distinct value
propositions to investors and that a spin-off
effectively allows each business to pursue its
independent development strategy, enhance
investor understanding and transparency
of each business, and best serves our
shareholders to unlock value as independent
businesses.
Orascom Construction Limited
The spun-off entity, Orascom Construction
Limited, holds all of the former Engineering &
Construction Group’s assets and subsidiaries.
Orascom Construction continues to
operate under three distinct and separate
brands: Orascom, Contrack, and The Weitz
Company. These core brands are supported
by a network of subsidiaries and af?liates in
complementary industries to construction as
well as a 50% stake in The BESIX Group.
From the date of Orascom Construction’s
listing OCI N.V.’s the Board of Directors and
executive management no longer supervise
or are responsible for the engineering and
construction activities’ management or
operational and ?nancial performance.
Orascom Construction is an independent
company with its own management
and Board of Directors. Accordingly, the
engineering and construction activities are
treated as discontinued operations in OCI
N.V.’s 2014 ?nancial statements.
Further information on the demerger can be
found in the Demerger section beginning
page 38 and at www.oci.nl/demerger
OCI N.V. post spin-off
OCI N.V. continues to trade on the NYSE
Euronext in Amsterdam under the symbol
‘OCI’ and holds the fertilizer and chemicals
assets that comprised the OCI Fertilizer &
Chemicals Group.
OCI N.V. is a leading global producer and
distributor of nitrogen fertilizers and natural
gas-based industrial chemicals, with
production facilities in the Netherlands, the
United States, Egypt, and Algeria. OCI N.V.
serves agricultural and industrial customers
from around the world. OCI N.V. ranks
among the world’s largest nitrogen fertilizer
producers, with current nitrogen fertilizer and
industrial chemicals production capacity of
nearly 7.7 million metric tons, growing to
more than 12 million metric tons by 2017.
Going forward, our strategy will focus on
three key goals:
1. Leading Nitrogen Fertilizer Producer and
Distributor
We are uniquely positioned as a sustainably
low cost producer of nitrogen based fertilizers
on a global scale, with production assets in
both developed and emerging markets. We
are on-track to be a top three global nitrogen
fertilizer producer with 8.9 million tons of
annual sellable nitrogen fertilizer capacity by
2016 once Iowa Fertilizer Company (IFCo),
a wholly owned green?eld nitrogen fertilizer
production facility, starts production.
We continuously look for avenues to
streamline and incrementally increase our
production capacity through debottlenecking
projects and intercompany tie-ins, and
expect to add approximately 22% to OCI
Beaumont’s total production capacity through
a debottlenecking and turnaround that was
completed in April 2015.
In addition to our global production capacity,
we are a global ‘one-stop-shop’ for nitrogen
fertilizers through our trading arm, OCI
Fertilizer Trading (OFT). OFT is capable of
trading in-house and third party products with
a distribution presence around the world.
2. Growing Industrial Chemicals Platform
through Gas Monetization Opportunities
We are growing our industrial chemicals
production capacity by capitalizing on natural
gas monetization opportunities in the United
States where we have taken a view on the
long-term sustainability of low natural gas
prices. This is evidenced by the Chicago
Mercentile Board’s (CME) February 2025
Henry Hub Natural Gas Futures consistently
dropping to an average of $ 4.63 / mmbtu
during the ?rst quarter of 2015 as compared
to $ 5.35 / mmbtu during the ?rst quarter
of 2014 and $ 7.18 / mmbtu during the ?rst
quarter of 2013.
Dear Shareholders,
OCI N.V. delivered strong results in 2014, with
revenue growing 8.4% year-on-year to $ 2.7
billion, underlying EBITDA growing 23.2%
year-on-year to $ 833.4 million, and net
income growing 41.7% to $ 444.1 million.
We announced exciting strategic structural
developments during the year, which will
completely transform our business and allow
us to streamline our focus to best deliver
exceptional value to our shareholders.
Spin-off of the Construction Group
In August 2014, we announced our intention
to spin-off our engineering and construction
activities to form Orascom Construction
Limited (“Orascom Construction” or “OC”).
The method of separation as approved by
shareholders at the OCI N.V. Extraordinary
General Meeting (EGM) held on 12
November 2014 was a spin-off by means
of a repayment of capital in kind consisting
of the shares in Orascom Construction. The
demerger was formally effected on 7 March
2015, with OCI N.V. shareholders receiving
one Orascom Construction share for every
two OCI N.V. shares held as at 18:00 CET
on 6 March 2015.
Orascom Construction was admitted to the
of?cial list of securities of the Dubai Financial
Services Authority (DFSA) and began trading
on the NASDAQ Dubai 9 March 2015,
signalling the successful culmination of the
demerger from OCI N.V. It subsequently
began trading on the Egyptian Exchange
on 11 March 2015 in conjunction with an
offering of 11% of its share capital raising
approximately $ 185 million.
Henry Hub Natural Gas Futures
$ / mmbtu
Q1 2013
7.18
Q1 2014
OVERVIEW
Q1 2015
5.25
4.63
CME Feb 2025
6 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 7
As a pure-play nitrogen fertilizer
and industrial chemicals player,
we are now in a position to fully
dedicate our time and resources
to pursuing our growth strategies
and investment mandate and
enhancing investor understanding
of our operations through our
continued commitment to business
transparency. We are con?dent that
we will achieve our 2015 targets
and continue to deliver outstanding
returns to our shareholders.
Michael Bennett
Chairman
Nassef Sawiris
Chief Executive Of?cer
LETTER TO SHAREHOLDERS
CONTINUED
Direct equity placement
In January 2015, we successfully raised EUR
151 million through a private placement of
4.2 million new shares at EUR 36 per share.
OCI N.V.’s shares outstanding now total
210,113,854 ordinary shares following the
placement. The proceeds of this capital raise
are being utilized in our on-going green?eld
initiatives in the United States.
Resolution of tax dispute in Egypt
In November 2014, our Egyptian subsidiary,
Orascom Construction Industries S.A.E. (OCI
S.A.E.), received a favourable ?nal decision
in relation to its tax dispute with the Egyptian
Tax Authority (ETA). The tax dispute was
initiated in 2012 and was related to the sale
of OCI S.A.E.’s cement assets in 2007. The
claim was settled for approximately $ 1 billion
in 2013, and was appealed in 2013. The
decision resulted in a net positive reversal of
$ 336.9 million (50% of the total release) in
the 2014 ?nancial statements. The remaining
50% has been allocated to discontinued
operations. The Board unanimously approved
the transfer of the rights to amounts paid
to the ETA in April 2013 (EGP2.5 billion or
approximately $360 million) to the Tahya Misr
(“Long Live Egypt”) Fund.
We remain fully committed to Egypt as a core
country for OCI N.V. as approximately 30% of
our total 2014 production capacity is located
in Egypt at Egyptian Fertilizers Company
(EFC) and Egypt Basic Industries Corporation
(EBIC).
Further information is found in the Report of
the Board of Directors on pages 63 and 67
and note 12 of our ?nancial statements.
To that end, we have increased OCI
Beaumont’s methanol production capacity by
25% through the debottlenecking project and
have broken ground on Natgasoline LLC, a
wholly owned green?eld methanol production
facility with available infrastructure for further
expansions in the future. As a result of these
projects, we expect to become a top ?ve
global methanol producer by 2017 when
Natgasoline LLC comes online.
Natgasoline will have a production capacity
of 1.75 million metric ton per year and is
located in Beaumont, Texas. It will be one
of the largest methanol production facilities
in the world based on nameplate capacity.
The United States Environmental Protection
Agency (EPA) issued a ?nal greenhouse gas
(GHG) Prevention of Signi?cant Deterioration
(PSD) construction permit for Natgasoline on
29 September 2014.
In addition to its industrial uses, we believe
methanol has further potential as a clean
direct fuel substitute for vehicles as is already
the case in China. We are also diversifying
into other environmentally friendly emissions
control chemicals such as Diesel Exhaust
Fluid (DEF), which will be produced at IFCo.
We are also the world’s largest producer of
melamine with plants in the Netherlands and
China.
We are continually evaluating opportunities
where we can bene?t from the US’s global
natural gas price advantage and from our
position as a ?rst mover.
3. Operational Excellence:
As a global leader, we are committed to
maintaining international product stewardship
and health, safety, quality and environment
standards. We aim to be an environmental
steward by implementing the best technology
available to minimize our environmental
footprint and promote sustainable business
best practices. We train our employees
to operate our plants meeting the highest
international health, safety, environmental,
and quality standards.
Commitment to generating
shareholder value
I would like to thank our Board of Directors
for their guidance and commitment in
executing the demerger and in implementing
sound corporate governance processes at
OCI N.V. to reinforce our success. I would
also like to thank our employees for their
unwavering loyalty to the OCI family and for
the excellence they strive for in every aspect
of our business.
As a pure-play nitrogen fertilizer and
industrial chemicals player, we are now in
a position to fully dedicate our time and
resources to pursuing our growth strategies
and investment mandate and enhancing
investor understanding of our operations
through our continued commitment to
business transparency. I am con?dent
that we will achieve our 2015 targets and
continue to deliver outstanding returns to our
shareholders.
OVERVIEW
8 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 9
COMPANY
OVERVIEW
OUR STRATEGY
Be a leading global nitrogen
fertilizer producer and distributor
uniquely positioned as a sustainably
low cost producer on a global scale,
with production assets in both
developed and emerging markets.
Grow our industrial chemicals
platform by capitalizing on natural
gas monetization opportunities in
the United States where we have
taken a view on the sustainability
of competitive natural gas prices
to become a leader in downstream
natural gas based chemicals.
Commit to being a good corporate
citizen wherever we operate by
investing in the best people and
technologies and maintaining the
highest international standards of
quality and safety.
Continue to deliver exceptional
value to our shareholders.
We aspire to be a leading global
producer and distributor of high
quality nitrogen fertilizer products that
provide essential nutrients to feed
the world, and high quality industrial
chemicals that provide clean,
environmentally sound solutions to
our customers. We aim to create a
safe and encouraging workplace for
our employees, and are committed
to delivering exceptional value to our
shareholders
OUR VALUES
Excellence in every aspect through
our expertise, ef?ciency, attention to
detail and passion.
Creating exceptional value based
on the depth of our ?nancial resources,
our local knowledge and our technical
expertise.
Safety focused in every aspect
of our operations.
Ensuring our people and
operations to match global
standards and maintaining a
commitment to develop our
host communities.
OUR CORE
STRENGTHS
Our people – their expertise,
hunger for knowledge and passion
to excel. Above all, their loyalty and
commitment to OCI N.V.
Our resources – capital resources
that enable us to respond faster than
our competitors.
Our experience – a tradition of
excellence and achievement.
Our entrepreneurial attitude – a
strong appetite for investment and
diversi?cation to grow our business
and increase revenue streams.
OVERVIEW
10 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 11
GLOBAL
FERTILIZER &
INDUSTRIAL
CHEMICALS
PLAYER
OCI N.V. is a leading global producer
and distributor of nitrogen fertilizers and
natural gas-based chemicals, with plants
in the Netherlands, the United States,
Egypt, and Algeria.
We produce a diversi?ed portfolio of nitrogen fertilizers and industrial chemicals, including
anhydrous ammonia, granular urea, urea ammonium nitrate (UAN), calcium ammonium nitrate
(CAN), methanol, and melamine. We are the world’s largest melamine producer, Europe’s
second largest CAN producer, and are on track to be a top ?ve global methanol producer
by 2017.
In addition to our production capacity, we are the world’s largest distributor of ammonium
sulphate (AS), with up to 1.75 million metric tons worth of capacity available for distribution
from two off-take agreements with Lanxess and DFI, a Royal DSM subsidiary.
With the completion of the OCI Beaumont debottlenecking, we have the capacity to produce
nearly 8 million metric tons of nitrogen-based fertilizers and industrial chemicals, and growth
initiatives will take our global capacity to more than 12 million metric tons in 2017.
Design capacities
1
Ammonia
Plant Country Gross Net
6
Urea UAN
7
CAN
Total
Fertilizer
for sale* Methanol Melamine
8
DEF
Total
product
for sale*
Egyptian Fertilizers
Company
2
Egypt 800 - 1,550 - - 1,550 - - - 1,550
Egypt Basic Industries
Corporation
Egypt 730 730 - - - 730 - -
-
730
OCI Nitrogen
3
Netherlands 1,150 350 - 350 1,450 2,150 - 200 - 2,350
Sorfert Algérie Algeria 1,600 800 1,260 - - 2,060 - - - 2,060
OCI Beaumont USA 265 265 - - - 265 730 - - 995
Year end 2014 4,545 2,145 2,810 350 1,450 6,755 730 200 - 7,685
OCI Beaumont (after
Expansion
4
)
USA 305 305 - - - 305 913 - - 1,218
Iowa Fertilizer Company
5
USA 770 185 420 1,505 - 2,110 - - 315 2,425
Year end 2015 5,355 2,370 3,230 1,855 1,450 8,905 913 200 315 10,333
Natgasoline LLC USA - - - - - - 1,750 - - 1,750
Year end 2016 5,355 2,370 3,230 1,855 1,450 8,905 2,663 200 315 12,083
Note: all tonnage is in thousand metric tons per year and refers to total design capacity, Iowa Fertilizer Company and Natgasoline LLC volumes are
estimates. Design capacities at OCI Nitrogen and IFCo cannot all be achieved at the same time
¹ Table not adjusted for OCI N.V.’s stake in considered plant; ² Also has a 325 thousand metric ton per year (ktpa) UAN line to capitalize on seasonal
UAN price premiums over urea (swing capacity); ³ Also has 500 ktpa of captive urea liquor capacity used to produce downstream products;
4
OCI Beaumont Expansion is expected design capacity once the debottlenecking initiative is completed;
5
IFCo design capacities apart from net
ammonia are maximum expected capacities and cannot all be achieved at the same time;
6
Net ammonia is remaining capacity after downstream
products are produced;
7
Excludes EFC UAN swing capacity; OCI Nitrogen max. UAN capacity cannot be achieved when producing max. CAN
capacity;
8
split as 150 ktpa in Geleen and 50 ktpa in China (Chinese capacity does not account for 49% stake and exclusive right to offtake 90%).
OPERATIONAL REVIEW
12 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 13
OCI NITROGEN
It is capable of producing over 2 million metric tons of sellable fertilizer
products annually through eight interconnected plants located on a fully
integrated management site in Geleen, the Netherlands.
OCI Nitrogen’s melamine production capacity in Geleen is complemented by
a melamine production facility in China.
OCI Nitrogen was fully acquired in 2010.
EMPLOYEES
640
OWNERSHIP
100
%
1.4
CALCIUM AMMONIUM NITRATE
ANNUAL CAPACITY / MILLION TONS
350
UREA AMMONIUM NITRATE
ANNUAL CAPACITY / THOUSAND TONS
2014 SALES BY REGION
South
America 14.3%
Other 8.8%
Europe 76.8%
OCI Nitrogen is Europe’s second largest
integrated nitrates fertilizer producer and
the world’s largest melamine producer.
200
MELAMINE
ANNUAL CAPACITY / THOUSAND TONS
1.15
ANHYDROUS AMMONIA
ANNUAL GROSS CAPACITY / MILLION TONS
OPERATIONAL REVIEW
www.ocinitrogen.com
14 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 15
OCI Partners LP is a master limited
partnership that owns and operates
OCI Beaumont, an integrated methanol
and ammonia production facility that is
strategically located on the Texas Gulf
Coast near Beaumont. The Partnership is
headquartered in Nederland, Texas.
The plant also has an ammonia tank with a capacity of 18,000 tons and two methanol
storage tanks with a capacity of 22,000 tons each. The plant has pipeline connections
to adjacent customers and port access with dedicated methanol and ammonia import/
export jetties to ship both products along the Gulf Coast.
The integrated methanol-ammonia facility uses Lurgi GmbH’s Low Pressure Methanol
technology and Haldor Topsøe technology.
OCI Partners LP is listed on the NYSE in New York under the symbol “OCIP”. OCI N.V.
owns 79.88% of OCI Partners LP.
EMPLOYEES
121
OWNERSHIP
79.88
%
2014 SALES BY REGION
USA 100%
913
METHANOL
ANNUAL CAPACITY / THOUSAND TONS
305
ANHYDROUS AMMONIA
ANNUAL CAPACITY / THOUSAND TONS
OCI PARTNERS LP
(OCI BEAUMONT)
OPERATIONAL REVIEW
www.ocipartnerslp.com
16 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 17
IFCo is a wholly owned greenfield
nitrogen fertilizer complex currently under
construction in Wever County, Iowa. Once
operational in 2016, the plant is expected
to produce north of 1.5 million tons of
nitrogen fertilizers and diesel exhaust
fluid per year.
IFCo was first envisioned in November 2011 as part of the Company’s strategic expansion
into the United States. The plant is the first world scale natural gas-based fertilizer plant
built in the United States in nearly 25 years.
IFCo will utilize proven state-of-the-art production process technologies from world
leaders. Kellogg Brown & Root LLC (KBR), Maire Tecnimont Stamicarbon (Tecnimont),
and Uhde are supplying the process technologies for the plant.
IFCo will have 100 thousand metric tons of ammonia storage, 120 thousand metric tons
of UAN storage and 40 thousand metric tons of urea storage.
Construction work on the plant broke ground on 19 November 2012. The project is
funded by a combination of equity and a non-recourse project finance tax-exempt
municipal bond issuance. IFCo’s peak construction activity created approximately 2,500
jobs and the plant is expected to create approximately 200 permanent jobs once it is
operational.
OWNERSHIP
100
%
1.5
UREA AMMONIUM NITRATE
MAXIMUM ANNUAL CAPACITY / MILLION TONS
0.8
ANHYDROUS AMMONIA
MAXIMUM ANNUAL GROSS CAPACITY /
MILLION TONS
IOWA FERTILIZER
COMPANY
(IFCo)
420
GRANULAR UREA
MAXIMUM ANNUAL CAPACITY /
THOUSAND TONS
315
DIESEL EXHAUST FLUID
MAXIMUM ANNUAL CAPACITY /
THOUSAND TONS
OPERATIONAL REVIEW
www.iowafertilizer.com
18 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 19
NATGASOLINE LLC
The plant is expected to have a capacity of up to approximately 1.75 million metric tons
per year, and is expected to start commissioning in 2017. It will be one of the world’s
largest methanol production facilities based on nameplate capacity.
The project will use state-of-the-art Lurgi MegaMethanol® technology and will
incorporate best available environmental control technology. The plant will take up
a portion of a 514 acre plot of land recently acquired by OCI N.V., adjacent to OCI
Beaumont.
The project has been awarded a grant of $ 2.1 million from the Texas Enterprise Fund,
as well as incentive commitments from local entities, including the city of Beaumont,
Jefferson County, the Beaumont Independent School District, the Port of Beaumont
and the Sabine-Neches Navigation District. The United States Environmental Protection
Agency (EPA) issued a final greenhouse gas (GHG) Prevention of Significant Deterioration
(PSD) construction permit for Natgasoline on 29 September 2014, and construction at
the site has begun.
Natgasoline LLC is estimated to create approximately 3,000 construction jobs and
240 permanent jobs.
OWNERSHIP
100
%
1.75
METHANOL
EXPECTED ANNUAL CAPACITY / MILLION TONS
Natgasoline LLC is a new wholly
owned greenfield world-scale methanol
production complex being developed in
Beaumont, Texas.
OPERATIONAL REVIEW
20 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 21
SORFERT ALGÉRIE
Formed in 2006, Sorfert is a 51% OCI N.V. owned joint venture with Algeria’s state-owned
oil and gas authority, Sonatrach. The plant is located in the Arzew industrial complex in
northwest Algeria 35 kilometers east of Oran, near three Algerian ports.
Sorfert began commercial production in August 2013 and exports primarily to Europe.
Sorfert’s first full year of operations was 2014.
OCI constructed the plant in partnership with Uhde, which supplied the process
technology. As a local Algerian company, Sorfert provided significant employment
opportunities during its construction and continues to do so as an operational plant.
EMPLOYEES
761
OWNERSHIP
51
%
1.26
GRANULAR UREA
ANNUAL CAPACITY / MILLION TONS
2014 SALES BY REGION
North Africa 10.8%
Europe 89.2%
Sorfert Algérie is the largest nitrogen
fertilizer producer in Algeria, capable of
producing 1.26 million metric tons of urea
and 1.6 million metric tons
of gross anhydrous ammonia per year.
1.6
ANHYDROUS AMMONIA
ANNUAL NET CAPACITY / MILLION TONS
OPERATIONAL REVIEW
22 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 23
EFC is the largest private sector granular
urea producer in Egypt.
The plant is capable of producing 1.55 million metric tons per year through two
identical production lines. The production lines were constructed by OCI in 2000
and 2006 in collaboration with Uhde. The facility also includes a 325 thousand
metric ton per year urea ammonium nitrate blending unit, which was added on-
site in 2010. EFC was fully acquired in 2008.
OWNERSHIP
100
%
1.55
GRANULAR UREA
ANNUAL CAPACITY / MILLION TONS
EGYPTIAN
FERTILIZERS
COMPANY (EFC)
EMPLOYEES
847
2014 SALES BY REGION
North America 21.3%
North Africa 41.1%
OPERATIONAL REVIEW
Europe 37.6%
24 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 25
EGYPT BASIC
INDUSTRIES
CORPORATION (EBIC)
It is the only merchant ammonia producer in the Middle East and utilizes KBR’s latest
and commercially proven KBR Advanced Ammonia Process (KAAP) technology.
The plant also owns and is connected by pipeline to two 40 thousand metric ton
refrigerated ammonia storage tanks next to the loading jetty at Sokhna Port.
The plant was established in 2005 in partnership with KBR, government-owned EGAS,
and a number of private investors. OCI completed construction of the plant in 2009
and increased its stake to 60% from 30% by buying out several minority investors.
EMPLOYEES
324
OWNERSHIP
60
%
2014 SALES BY REGION
Middle East 41.0%
Europe 29.1%
EBIC is a state-of-the-art 0.73 million
metric ton per year ammonia plant.
730
ANHYDROUS AMMONIA
ANNUAL CAPACITY / THOUSAND TONS
Asia 29.9%
OPERATIONAL REVIEW
26 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 27
OFT is our in-house global trading
and distribution arm operating
through offices in Dubai, U.A.E.
and Geleen, the Netherlands.
OFT has strategically focused on
developing a global trading and
distribution network that positions
us as a fully accessible nitrogen
fertilizer company.
OCI maintains good relations with major international fertilizer traders, but
mainly sells directly to customers through a strong distribution presence in
Europe and the Americas.
OFT benefits from strategic access to ports in Europe, North Africa, and the
Gulf Coast. OCI Terminal Europoort, our wholly owned ammonia terminal, is
located at the port of Rotterdam in the Netherlands; OCI Beaumont has access
to jetties on the Gulf Coast; EFC and EBIC are located directly at Sokhna Port
on the Red Sea in Egypt, and Sorfert has direct access to two ports in Algeria
on the Mediterranean.
In addition, OFT is the a key importer of nitrogen-based fertilizers into Brazil
through FITCO, a 50/50 joint venture with Fertipar, the country’s largest fertilizer
compounder and distributor. OFT has also captured a significant share of the
Brazilian AS market through the joint venture.
With branches in Europe, North Africa, the Americas and the Middle East and
sales in over 20 countries, our global presence with centralized management
allows us to mitigate the effects of regional demand seasonality and maximize
freight advantages across locations and product mix.
OWNERSHIP
100
%
1.75
AS DISTRIBUTION
ANNUAL CAPACITY / MILLION TONS
OCI FERTILIZER
TRADING (OFT)
2014 TRADING BY REGION
North America 19.1%
Middle East 1.3%
OPERATIONAL REVIEW
Europe 79.6%
28 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 29
Agricultural and industrial chemicals are
our two main end markets. Nitrogen
fertilizers play an essential role in improving
agricultural yields, which is essential to meet
the increasing global demand for food.
Population growth, changing diets and future
agricultural plantings are some of the main
drivers of longer term global fertilizer demand.
In the short-term, demand can be affected
by factors such as ?uctuations in crop prices
and farm income, as well as adverse weather
conditions.
We are also the world’s largest producer of
melamine and are on track to becoming a top
?ve global producer of methanol. Historically,
demand for methanol in chemical derivatives
has been closely correlated to levels of global
economic activity, industrial production,
consumer spending and energy prices, the
latter due to the growing use of methanol
in energy applications. Global melamine
demand is primarily driven by GDP growth
and sentiment in the construction sector.
Natural Gas
Natural gas is the primary feedstock for
the production of fertilizers and methanol.
In recent years, increased natural gas
production from shale formations in the
United States has increased domestic
supplies of natural gas, resulting in a
relatively low natural gas price environment.
As a result, the competitive position of
U.S. methanol and ammonia producers
has been positively impacted relative to the
competitive position of producers outside of
the United States where the natural gas price
environment is generally higher.
Natural gas prices in the United States were
relatively stable and at favourable levels
during 2014, despite some upward spikes
in the ?rst quarter of 2014 due to extreme
cold winter conditions which resulted in
an increase in demand and a reduction in
supply reserves. Towards the end of the year
gas prices started falling and approached
ten-year lows of below $ 3.0 / mmbtu at the
beginning of 2015.
European gas prices fell steadily during the
?rst half of 2014, from around $ 10.7 / mmbtu
at the beginning of the year to reach a low of
under $ 6 / mmbtu at the beginning of July,
mainly caused by price pressure from high
gas inventories resulting from low demand
for natural gas during the very mild winter
of 2013/14. Even the threat of gas supply
disruptions due to the unrest in Ukraine did
not cause any serious upward pressure on
gas prices. In the summer months, gas prices
reached the UK coal ?oor, leading to stronger
demand for natural gas by the power sector
in the UK. During the autumn gas prices
increased mainly due to seasonal higher
demand. This trend was reversed at the end
of the year, when natural gas spot prices
started following the downward trend of oil
prices, combined with low demand due to
relatively high winter temperatures.
Nitrogen Fertilizers
Ammonia
Ammonia prices increased throughout the
year to reach near-record levels in the fourth
quarter. Following lower application levels
in the United States in the autumn of 2013
due to adverse weather conditions, 2014
bene?ted from a strong spring application
driving global demand and prices up. This
coincided with a reduction in global supply,
resulting from major shutdowns in the
Ukraine and Egypt in particular. Production
units in eastern Ukraine were shut down due
to socio-political unrest. In addition, plants
suffered natural gas supply shortages due to
natural gas pricing disputes between Russia’s
Gazprom and the Ukraine. Egypt continued
to face natural gas supply issues resulting in
a drop in ammonia exports.
Global demand for ammonia was supported
by good Diammonium Phosphate (DAP) sales
and high Lique?ed Natural Gas (LNG) prices
in India, which resulted in an increase in
ammonia imports against lower LNG imports.
The autumn dip in prices was primarily due
to a seasonal lull in demand coinciding with
falling prices and a weakening of the Euro
against the US Dollar.
Granular Urea prices
Egypt, FOB ($/TON)
469
414
380
359
335
349
356 353
Q1 Q2 Q3 Q4
2014 2013
MARKET
PERFORMANCE
OPERATIONAL REVIEW
AMMONIA PRICES
North West Europe, FOB ($/TON)
654
528
592
581
499 496
573
685
Q1 Q2 Q3 Q4
2013 2014
269
253
Q1
CALCIUM AMMONIUM
NITRATE PRICES
Germany, CIF (EUR/TON)
257 256
229
217
231
248
Q2 Q3 Q4
2013 2014
30 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 31
MARKET PERFORMANCE
CONTINUED
OPERATIONAL REVIEW
247
215
Q1
UREA AMMONIUM
NITRATE PRICES
France, FOT ($/TON)
237
193 196
185
191
207
Q2 Q3 Q4
2013 2014
1455
Q1
MELAMINE PRICES
Europe Contract (EUR/TON)
Q2 Q3 Q4
2013 2014
1353
1445
1368 1353 1325 1340
1304
492
629
Q1
METHANOL PRICES
North America Contract, FOB ($/TON)
526
560
532
580
471 483
Q2 Q3 Q4
2013 2014
Urea
Urea prices were on average relatively
stable during 2014, despite a record level of
Chinese exports, which reached 13.6 million
tons in 2014, an increase of nearly 5 million
tons as compared to 2013. This resulted
in prices moving towards the coal-based
Chinese urea price ?oor of slightly below
$ 300 per metric ton during the second half
of the year.
The increase in supply from China was
partially mitigated by delays in the execution
of expansion projects, and overall favourable
urea demand that is seeing continuous
growth. A combination of low domestic
inventories, lower urea prices and a corn-to-
soybean price ratio favouring corn planting
over soybeans, resulted in record imports
into the United States of an estimated 8.0
million metric tons. Urea demand in Europe
was strong and imports into Brazil surged
by about 30% in 2014. In addition, restricted
availability of granular urea from Egypt kept
the premium of granular over prilled urea at
healthy levels.
Nitrates
The European nitrates market enjoyed a
relatively tight supply-demand balance during
2014 due to production shortfalls at several
plants coupled with good overall demand.
Prices increased towards the spring season
and favourable conditions during the summer
resulted in relatively small price decreases
supporting the traditional summer pre-
storage activities. During the summer, the
nitrate premium over urea stayed at relatively
high levels, and was maintained at these
levels despite a falling exchange rate as a
result of seasonal CAN price increases. UAN
prices tracked the CAN price development,
also bene?tting from the relative tightness of
the nitrate market.
Industrial Chemicals
Methanol
The primary use of methanol is to make
other chemicals, with approximately 60-
65% of global methanol demand being used
to produce formaldehyde, acetic acid and
a variety of other GDP-cyclical products.
These derivatives are used to produce a wide
range of products, including adhesives for
the lumber industry, plywood, particle board
and laminates, resins to treat paper and
plastic products, paint and varnish removers,
solvents for the textile industry and polyester
?bers for clothing and carpeting.
Energy-related applications consume the
remaining 35-40% of global methanol
demand. In recent years, there has
been a strong demand for methanol in
energy applications such as gasoline
blending, biodiesel and as a feedstock in
the production of dimethyl ether (“DME”)
and Methyl tertiary-butyl ether (“MTBE”),
particularly in China. Methanol blending in
gasoline is currently not permitted in the
United States, but outside of the United
States, methanol is used as a direct fuel
for automobile engines, as a fuel blended
with gasoline and as an octane booster in
reformulated gasoline. MTO (methanol to
ole?ns), a feedstock for the production of
polyethylene and propylene for packaging,
automotive, furniture and ?ber segments, is a
relatively new segment.
Methanol demand continued to be healthy
in 2014. Main growth drivers included use of
methanol as a fuel (MTBE and fuel blending
industries), and MTO segments (especially
in China). Improving consumer con?dence
on the back of GDP developments led to a
healthy demand for formaldehyde in wood
based panels for housing and coating resins,
and for automotive applications.
On the supply side, capacity developments
in China, the US and improved operations of
existing plants in the Middle East and Asia
outpaced the demand growth. This was the
main cause for the price drops observed in
global markets in 2014. Despite the crude
oil values drop in Q4 of 2014, methanol
prices especially in the US did not show any
further weakening in Q4, due to global supply
disruptions caused by production issues and
natural gas supply restrictions.
Melamine
Melamine is a white powder made from
urea and is mainly used to make amino-
formaldehyde resins for the creation of safe,
hard, durable glossy surfaces, resistant to
heat, chemicals and moisture. Products
include surface laminates, laminate ?ooring,
wood-based panels coating resins, moulding
compounds, ?ame retardants, paper and
textile resins and superplasticizers for
concrete.
In 2014, global melamine demand growth
was in line with GDP developments. Demand
growth in Europe, our main market for
melamine, was limited in line with European
macroeconomic developments. In the
Americas, growth was somewhat subdued as
higher demand in North America was offset
by a decline in South America. In the Asia-
Paci?c region, growth was healthy in all our
end markets including China, India, Japan
and South Korea.
Starting at the end of 2013 and into 2014,
supply turned from tight to more balanced,
as melamine plants came back on stream.
Melamine prices were stable throughout 2014
on the back of healthy demand.
32 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 33
YEAR
IN REVIEW
During 2014, we focused on achieving
our full run-rate at Sorfert and on the
development and construction of
our greenfield projects in the United
States. We are on track to increase
our total sellable capacity by nearly
60% to exceed 12 million metric tons
by 2017.
OPERATIONAL REVIEW
Despite volatile natural gas supply to our
Egyptian plants throughout the year, our
revenue grew 8.4% year-on-year to $ 2.7
billion, driven by the ?rst full year of operations
at Sorfert. We achieved a 12.9% improvement
in total produced and traded nitrogen fertilizer
volumes sold over 2013 reaching more than
6.6 million metric tons during the year. We also
sold 779 thousand metric tons of industrial
chemicals, a 2.9% improvement over 2013.
In total, OCI N.V. sold 7.4 million tons of
nitrogen-based fertilizer and industrial
chemical products in 2014 to customers in
more than 20 countries across Europe, the
Americas, Asia and Africa. Total OCI-produced
sales reached 5.1 million metric tons during
2014, a 23.2% increase over 2013, primarily
driven by a strong contribution from Sorfert.
000 metric tons 2014 2013 % change
Granular urea
OCI Product Sold 1,470.0 834.0 76.3%
Third Party Traded 56.2 594.1 nm
Total Granular Urea 1,526.2 1,428.1 6.9%
Ammonia
OCI Product Sold 1,333.4 1,029.9 29.5%
Third Party Traded 528.8 179.6 194.4%
Total Ammonia 1,862.2 1,209.5 54.0%
Calcium Ammonium Nitrate (CAN)
OCI Product Sold 1,158.7 1,131.0 2.4%
Total CAN 1,158.7 1,131.0 2.4%
Urea Ammonium Nitrate (UAN)
OCI Product Sold 321.1 358.1 (10.3%)
Third Party Traded 76.0 105.9 (28.2%)
Total UAN 397.1 464.0 (14.4%)
Ammonium Sulphate (AS)
Third Party Traded 1,694.6 1,648.5 2.8%
Total AS 1,694.6 1,648.5 2.8%
Total Fertilizers
OCI Product Sold 4,283.2 3,353.0 27.7%
Third Party Traded 2,355.6 2,528.1 (6.8%)
Total Fertilizers 6,638.8 5,881.1 12.9%
Industrial Chemicals
Melamine 165.5 146.5 13.0%
Methanol 613.7 610.9 0.5%
Total Industrial Chemicals 779.2 757.4 2.9%
Total
OCI Product Sold 5,062.4 4,110.4 23.2%
Third Party Traded 2,355.6 2,528.1 (6.8%)
Total Product Volumes 7,418.0 6,638.5 11.7%
OCI N.V. Annual Report 2014 35 34 OCI N.V. Annual Report 2014
YEAR IN REVIEW
CONTINUED
OPERATIONAL REVIEW
Operational Excellence
Our underlying EBITDA margin stood at
31.0% for the year, a strong improvement
over the 27.3% margin achieved during
2013. Our performance was positively
impacted by solid operations at Sorfert and
OCI Nitrogen, coupled with a downward
trend in natural gas prices bene?tting the cost
position of OCI Nitrogen and OCI Beaumont.
Sorfert in its ?rst full year of operations sold
nearly 1.4 million tons. The complex achieved
good capacity utilization with increasing
utilization rates throughout the year, at times
reaching above design capacity during the
second half of the year. Sorfert bene?ts from
a competitive long-term natural gas price
contract and was a signi?cant contributor
to EBITDA during the year.
OCI Nitrogen performed smoothly throughout
the year, maintaining its leadership position in
Europe. CAN, OCI Nitrogen’s most important
product, bene?ted from a tight supply-
demand balance, resulting in a favourable
pricing environment. OCI Nitrogen further
bene?ted from a sustained drop in natural
gas prices in Europe in 2014, with TTF prices
averaging $ 8.1 / mmbtu versus $ 10.5 /
mmbtu in 2013, a 22.7% reduction year-
on-year in dollar terms. The nitrate premium
remained at a high level during 2014 and was
above the premium achieved during 2013.
OCI Beaumont also performed well,
and bene?ted in the fourth quarter from
management’s decision to delay the planned
debottlenecking and turnaround from the
fourth quarter of 2014 to the ?rst quarter
of 2015.
Both EFC and EBIC suffered from limited
availability of natural gas during the second
half of 2014 resulting in low utilization rates
during the year, due to the government
prioritizing the supply of natural gas to the
electricity sector to reduce power blackouts
in the country.
The Egyptian government has taken several
short and longer term measures to address
the country’s gas supply issue and has
organized substantial LNG imports from April
2015, which are expected to improve gas
supplies to the fertilizer industry from the
second quarter of 2015 onwards.
Distribution Reach
Our centralized distribution capabilities allow
us to act as a ‘one-stop-shop’ for customers
around the world. Our vast distribution
network stretches across the Americas,
Europe, Africa and parts of Asia, cultivated
both organically through OFT and through
strategic investments and partnerships in
distribution companies to support our global
presence.
Our ability to trade third party products,
both on a spot basis and through long-
term distribution contracts, supports our
own product portfolio and gives us supply
?exibility to mitigate against potential
production disruptions at our plants.
We worked to enhance our sales and
distribution presence in North America
during 2014 in preparation for Iowa Fertilizer
Company and Natgasoline coming on-stream
in the next two years.
Green?elds and Expansions
During 2014, we focused on executing our
green?eld projects in the United States,
which will add an estimated 4.4 million tons
of nitrogen fertilizer and industrial chemical
capacity to our product portfolio by 2017.
Early Mover Advantage
We have bene?ted from a strong ?rst
mover advantage in the United States,
where the barriers to entry have increased
signi?cantly since we broke ground on
our green?eld projects. Today, there is
limited new announced nitrogen fertilizer
capacity expected in the United States,
as new capacity has become increasingly
time consuming and capital intensive to
as compared to when we began work
in 2012. Factors affecting this include
limited availability of skilled labour, few
EPC contractors with industrial green?eld
experience, and dif?culty in attaining
project ?nancing, while the timeline for the
development of a nitrogen fertilizer plant can
take as long as seven years to complete.
Accordingly, we believe the United States will
remain a net importer of nitrogen fertilizer for
the medium term.
Iowa Fertilizer Company
Iowa Fertilizer Company, our nitrogen fertilizer
plant located in Wever County, Iowa, is the
?rst world scale natural gas-based green?eld
fertilizer plant built in the United States in
nearly 25 years. Construction at IFCo was
84.32% complete as at 31 December 2014.
IFCo will sell its products domestically and, as
a ?rst mover, will be a key player in the effort
to reduce the United States’ dependence on
imported fertilizers.
IFCo is primarily ?nanced through a $ 1.194
billion non-recourse project ?nance municipal
bond issuance through the Iowa Finance
Authority’s private activity tax-exempt
Midwestern Disaster Area bond program.
The bonds were rated BB- by both ratings
agencies Standard & Poor’s (S&P) and
Fitch. The issuance represents the largest
nonrecourse project ?nance transaction
ever sold in the US tax-exempt market. In
November 2014, we announced that the
current estimate of the cost to complete
the project has increased by about $ 100
million to a total expenditure of approximately
$ 1.9 billion. The increase will be funded
by Additional Senior Obligations worth
approximately $ 60 million and additional
equity of approximately $ 40 million as
permitted by the Bond Financing Agreement.
Natgasoline LLC
On 21 November, 2013, OCI N.V. announced
the establishment of Natgasoline LLC, a
wholly owned subsidiary that will construct
a new world-scale green?eld methanol plant
in Beaumont, Texas. OCI N.V. signed Basic
Engineering and License agreements with Air
Liquide in February 2014 and an Engineering
and Procurement contract with Air Liquide in
March 2014. On 20 March 2014, OCI N.V.
held a ground-breaking ceremony to mark
the start of site preparation works and has
since then signed an agreement with Air
Liquide for the supply of 2,400 metric tons of
oxygen per day in addition to the supply of
other industrial gases.
On 29 September 2014, Natgasoline LLC
received a ?nal greenhouse gas (GHG)
Prevention of Signi?cant Deterioration (PSD)
permit from the United States Environmental
Protection Agency (EPA). Natgasoline is
expected to have a production capacity of
approximately 1.75 million metric tons per
annum and is scheduled to commission in
2017. Engineering and procurement by Air
Liquide at Natgasoline was approximately
33.4% complete as at 31 December 2014.
OCI Beaumont Debottlenecking
OCI Beaumont has undertaken a
debottlenecking project that is expected to
increase the facility’s methanol and ammonia
production lines by 25% to approximately
913 thousand metric tons and 15% to
approximately 305 thousand metric tons,
respectively. During the summer of 2014,
the debottlenecking project received all
necessary permits, including the Texas
Commission for Environmental Quality (TCEQ)
permit and the EPA permit.
The plant upgrade and turnaround was
completed in April 2015.
To fund the debottlenecking project cost
increases, OCI N.V. injected two capital
contributions of $60 million each in 2014 and
2015, in exchange for a total of 6,497,590
common units. This increased OCI N.V.’s total
unit ownership to 69,497,590 common units
resulting in an ownership 79.88% of the total
common units outstanding.
Divestments
It is part of our business model to develop
and nurture businesses relevant to our
core businesses. However, we have a
policy of evaluating the performance of
minority investments in which we have no
management control as ?nancial investment
assets. If a business becomes non-core or
has reached a certain level of maturity, we
actively pursue monetizing the business
through divestment.
Notore Chemical Industries
We expect to divest our minority stake in
Notore Chemical Industries, a granular
urea and bulk blended NPK producer and
exporter in Nigeria, in 2015. OCI’s stake in
Notore was inherited during our acquisition of
EFC in 2008. OCI reduced its stake in 2010
posting a capital gain of $ 19.1 million or 2.5x
book value.
36 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 37
THE
DEMERGER
On 16 February 2015, OCI
N.V. announced the formal
commencement of proceedings
to effect a demerger of the
engineering and construction
business from the fertilizer and
chemicals business (the Demerger).
OPERATIONAL REVIEW
OCI N.V.’s shareholders approved the proposal to reduce the share
capital of OCI N.V. by $ 1.4 billion to facilitate the Demerger at an
extraordinary general meeting of shareholders held on 12 November
2014. On 16 January 2015, the creditor objection period in relation
to the resolutions passed on 12 November 2014 expired without any
objections being made.
Return of Capital to OCI N.V. Shareholders
The Demerger was effected on 7 March 2015 whereby OCI N.V.
shareholders received one Orascom Construction share for every
two OCI N.V. shares they owned as at 18:00 CET on 6 March 2015.
Accordingly, the shareholding structure of Orascom Construction was
identical to that of OCI N.V. upon demerger.
Admission to Listing and Egyptian Offer
Orascom Construction Limited, demerged construction business,
was admitted to the Of?cial List of Securities of the Dubai Financial
Services Authority (DFSA) and began trading on the NASDAQ Dubai
on 9 March 2015. Orascom Construction completed its dual listing on
the Egyptian Exchange on 11 March 2015.
Concurrently with the implementation of the Demerger, Orascom
Construction offered new ordinary shares representing 11% of its
ordinary shares (the New Shares) to persons reasonably believed to
be Egyptian Quali?ed Institutional Buyers (QIBs) or Professional High
Net Worth Investors, and through a private placement to quali?ed
institutional investors and high net worth individuals (the Egyptian
Offer). The Egyptian Offer successfully raised approximately $ 185.4
million for Orascom Construction, to be used for general corporate
purposes including debt settlement.
OCI N.V. Annual Report 2014 39 38 OCI N.V. Annual Report 2014
THE DEMERGER
CONTINUED
OPERATIONAL REVIEW
Rationale
The Board of Directors announced the following bene?ts of the spin-
off:
• Streamline shareholder base: Creates two separately listed pure-
play companies offering distinct investment propositions, each with
clear market valuations. This should serve to attract a wider investor
base in each company’s shares and bene?t liquidity.
• Business transparency: Allows for a better understanding of each
company’s business, prospects and impact of sector-focused
events on its performance.
• Flexibility: Provides greater ?exibility for each business to manage
its own resources and pursue strategic options appropriate to their
respective markets.
• Growth opportunities: Allows each business to actively participate
in consolidation opportunities and value-accretive partnerships and
joint ventures in their respective markets.
• Ef?cient capital structure: Enables each business to adopt a
capital structure, balance sheet and ?nancing strategy which more
ef?ciently meet its individual requirements.
• Enhanced credit pro?le: Improves lenders’ ability to evaluate
each independent business, thereby increasing balance sheet
effectiveness.
• Improved management focus: Sharpens management focus,
helping the two businesses to maximize their performance and
make full use of their available resources.
• Alignment of incentives: Aligns management’s and employees’
rewards more directly with business and stock market performance,
helping to attract, retain and motivate the best people.
OCI N.V. following the Demerger
The Demerger resulted in OCI N.V. continuing to be listed on the
Euronext Amsterdam as a global producer of nitrogen fertilizers,
methanol and other industrial chemical products.
Following the demerger, OCI N.V.’s operating production complexes
comprise:
• OCI Nitrogen (100% owned): one of Europe’s largest integrated
nitrogen fertilizer and melamine production sites. It is capable
of producing over 2 million metric tons of sellable fertilizer and
chemicals products annually through eight interconnected
plants located on a fully integrated production site in Geleen, the
Netherlands, complemented by additional melamine production
capacity in China. OCI Nitrogen’s product portfolio primarily includes
calcium ammonium nitrate, ammonia, urea ammonium nitrate, and
melamine.
• OCI Partners LP (LP (79.88% owned) (NYSE: OCIP): a master
limited partnership (MLP) that owns and operates OCI Beaumont,
an integrated methanol and ammonia production facility that is
strategically located on the Texas Gulf Coast near Beaumont.
The MLP is headquartered in Nederland, Texas. The facility
started a debottlenecking program in 2014 to increase methanol
and ammonia production capacities by 25% and 15% to 0.91
million metric tons and 0.31 million metric tons respectively. The
debottlenecking program was completed in April 2015.
• Sorfert Algérie (51% owned): the largest integrated nitrogen
fertilizer producer in Algeria, capable of producing 1.26 million
metric tons of urea and 1.6 million metric tons of gross anhydrous
ammonia per year. The green?eld plant was constructed by
Orascom Construction.
• Egyptian Fertilizers Company (100% owned)
: a 1.55 million metricton per year granular urea plant located in Ain Sokhna, Egypt.
The facility also includes a 325 thousand metric ton per year urea
ammonium nitrate blending unit, which was added on-site in 2010.
The green?eld plant was constructed by Orascom Construction.
• Egypt Basic Industries Corporation (60% owned): a 0.73 million
metric ton per year anhydrous ammonia plant located in Ain
Sokhna, Egypt. The plant also owns and is connected by pipeline
to two 40 thousand metric ton refrigerated ammonia storage tanks
next to the loading jetty at Sokhna Port. The green?eld plant was
constructed by Orascom Construction.
OCI N.V. is also constructing two green?eld production complexes in
the United States:
• Iowa Fertilizer Company (100% owned): nitrogen fertilizer complex
currently under construction by Orascom Construction in Wever
County, Iowa. The plant is expected to produce north of 1.5 million
tons of nitrogen fertilizers and diesel exhaust ?uid per year. The
plant is the ?rst world scale natural gas-based fertilizer plant built in
the United States in nearly 25 years. As at 31 December 2014, the
plant was 84.32% complete.
• Natgasoline LLC (100% owned): methanol production complex
under construction by Orascom Construction in Beaumont, Texas.
The world-class plant is expected to have a capacity of up to
approximately 1.75 million metric tons per year, and is expected
to start commissioning in 2017. It will be one of the world’s largest
methanol production facilities based on nameplate capacity.
OCI N.V. is also a global distributor of nitrogen fertilizers primarily
through its wholly owned trading arm OCI Fertilizer Trading (OFT),
beni?tting from strategic access to ports in Europe, North Africa, and
the US Gulf Coast, allowing it to trade both OCI N.V.’s and third party
products. OCI N.V. is also the world’s largest distributor of crystalline
and granular ammonium sulphate (AS), with up to 1.75 million metric
tons from existing off-take agreements.
Strategy Post Demerger
OCI N.V. will focus on pursuing its growth strategy as a pure-play
nitrogen fertilizer and industrial chemicals producer, focusing on three
key goals:
1. Leading Nitrogen Fertilizer Producer:
• Uniquely positioned as a sustainably low cost producer of nitrogen
based fertilizers on a global scale, with production assets in both
developed and emerging markets.
• Top 3 global nitrogen fertilizer producer with 8.9 million tons of
annual capacity by 2016.
• Production capacity ramp-up through timely completion of
green?elds.
• Streamlined production through debottlenecking and intercompany
tie-ins.
• Global ‘one-stop-shop’ for nitrogen fertilizers capable of trading in-
house and third party products.
• Leading global distributor of AS with 1.75 million tons of capacity.
• Second largest distributor in Brazil through JV with Fertipar.
2. Growing Industrial Chemicals Platform:
• Grow industrial chemicals production capacity by capitalizing on
opportunities in the United States where we have taken a view on
the long-term sustainability of low natural gas prices.
• Methanol production capacity ramp-up to top ?ve globally by 2017
through timely completion of Natgasoline LLC and debottlenecking
at OCI Beaumont.
• Largest global producer of melamine.
• Diversi?cation into Diesel Exhaust Fluid through Iowa Fertilizer
Company, and other downstream industrial chemicals where we
can bene?t from a ?rst mover advantage.
3. Operational Excellence:
• Maintain international product stewardship and health, safety,
quality and environment standards.
• Be an environmental steward by implementing the best technology
available to minimize our environmental footprint and promote
sustainable business best practices.
• Train all employees to operate our plants meeting the highest
international safety standards.
40 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 41
Financial Highlights
1
$ millions unless otherwise stated 2014
2013
restated
Revenue 2,685.8 2,477.5
Cost of Sales (1,949.4) (1,864.6)
Gross Pro?t 736.4 612.9
Gross Pro?t Margin 27.4% 24.7%
EBITDA before one-off items 833.4 676.3
EBITDA Margin 31.0% 27.3%
Operating pro?t before one-off items 525.0 458.0
One-off items (309.4) 71.9
Operating pro?t - reported 215.6 529.9
Income tax 565.0 (71.1)
Minorities (121.2) 36.0
Net Income from continuing operations
attributable to shareholders 444.1 313.3
Net Income Margin 16.5% 12.6%
Discontinued operations (115.4) (18.1)
Net income after discontinued operations
attributable to shareholders
328.7 295.2
Earnings/(loss) per share for continuing
operations ($)
Basic earnings per share 2.168 1.538
Diluted earnings per share 2.161 1.493
Total Assets 10,577.3 10,487.8
Total Assets (continuing operations) 8,038.8 7,863.8
Total Equity 2,537.8 2,087.6
Gross Interest-Bearing Debt 5,040.7 5,118.3
Net Debt 4,194.1 3,548.1
Capital expenditure 1,211.0 687.0
1
2013 and 2014 results represent continuing operations (the Fertilizer & Chemicals
business), unless otherwise stated. In addition, certain joint ventures (JVs) that were
previously proportionately consolidated in the 2013 accounts, are now accounted
for under the equity method (IFRS 11). The 2013 restated ?gures are pro forma and
unaudited.
2
After non-controlling interest.
As a result of the demerger of the Engineering & Construction Group,
only the Fertilizer & Chemicals ?nancials are reported as continuing
operations. The demerged Construction & Engineering Group has
been classi?ed as Discontinued Operations. OCI N.V.’s EBITDA from
continuing operations includes corporate costs (amounting to $ 25.5
million in 2013), which were previously not included in segmental
pro?ts.
In addition, the adoption of IFRS 11 has resulted in a change of
accounting for certain joint ventures, which has lowered 2013 revenue
by $ 155.8 million and 2013 EBITDA by $ 6.4 million, compared to the
?gures previously reported for the Fertilizer & Chemicals Group.
Revenue
OCI N.V.’s 2014 revenue from continuing operations reached
$ 2,685.8 million, an 8.4% increase compared to 2013. Revenue
increased primarily due to an increase of 11.7% in product
volumes sold.
In total, OCI N.V. sold 7.4 million metric tons of nitrogen-based
fertilizer and industrial chemical products in 2014 to customers in
more than 20 countries across Europe, the Americas, Asia and Africa.
Product prices were on average relatively stable and at a comparable
level as 2013.
EBITDA
EBITDA from continuing operations, excluding one-off items, reached
$ 833.4 million in 2014, a 23.2% increase from $ 676.3 million in
2013. Our performance was positively impacted by solid operations at
Sorfert and OCI Nitrogen in particular, coupled with a downward trend
in natural gas prices bene?ting our spot-based plants and despite a
lower result at both EFC and EBIC due to lower utilization rates.
Sorfert, in its ?rst full year of operations, was a signi?cant contributor
to EBITDA in 2014. The plant has been operating at high capacity
utilization rates as of April 2014, at times at or even above design
capacity. Sorfert bene?ts from a competitive low price long-term gas
contract.
OCI Nitrogen performed smoothly throughout the year, resulting in
a higher operating result compared to 2013. OCI Nitrogen’s most
important product, CAN, bene?ted from a tight supply-demand
balance, resulting in a favourable pricing environment. The nitrate
premium remained at a high level during 2014 and was above the
premium achieved in 2013. OCI Nitrogen also bene?ted from a
sustained drop in natural gas prices in Europe in 2014, with TTF
prices averaging $ 8.1 / mmbtu versus $ 10.5 / mmbtu in 2013,
a 22.7% reduction year-on-year in dollar terms.
The EBITDA margin from continuing operations, excluding one-off
items, reached 31.0% for the year, compared to 27.3% achieved
over 2013.
FINANCIAL
PERFORMANCE
OPERATIONAL REVIEW
OCI N.V. Annual Report 2014 43 42 OCI N.V. Annual Report 2014
FINANCIAL PERFORMANCE
CONTINUED
OPERATIONAL REVIEW
One-off items
One-off items have had a material impact on the operating pro?t and
net income results in 2014:
• A negative $ 309.4 million on EBITDA / operating pro?t
• A positive impact of $ 236.0 million on net income
In November 2014, our Egyptian subsidiary, Orascom Construction
Industries S.A.E. (OCI S.A.E.), received a favourable ?nal decision in
relation to its tax dispute with the Egyptian Tax Authority (ETA).
The tax dispute was initiated in 2012 when OCI S.A.E. received an
unsubstantiated tax evasion claim from the ETA related to the sale
of its cement assets in 2007. The company was forced to settle for
approximately $ 1 billion, payable in instalments over a four-year
period. The ?rst instalment of approximately $ 360 million (equivalent
to EGP 2.5 billion) was paid on 10 May 2013.
Following the change in government in Egypt in 2013, the company
appealed the settlement. The ETA’s Independent Appeals Committee
issued a ruling in favour of the Company in November 2014.
Despite the fact that the Egyptian Prosecutor started an appeal on
30 November 2014, the Company’s management, supported by
its legal experts concluded that the tax liability of $ 673.7 million
as at 31 December 2013 should be released through the 2014
income statement. The reversal is allocated evenly to continuing and
discontinuing operations. As a result OCI N.V. reported a net positive
reversal of $ 336.9 million in the 2014 Statement of Pro?t or Loss,
which contains the following elements:
• A net positive reversal of $ 36.6 million interest and a net foreign
exchange rate gain of $ 9.5 million in the net ?nance income line
• A positive reversal of $ 290.8 million in the tax expense line
In November 2014, the Board of Directors of OCI N.V. unanimously
approved the transfer of the rights from the ?rst instalment already
paid to the ETA in 2013 to the Tahya Misr (“Long Live Egypt”) Fund.
In March 2015, OCI S.A.E received an amount of EGP 1.9 billion
(equivalent to $ 266.2 million) from the ETA, as a refund of the ?rst
instalment paid net of taxes considered to be valid. In the 2014
Statement of Pro?t or Loss, this amount is recognized as a donation
cost in the Operating Pro?t line and as a gain in the Income Tax line.
Other one-off items had a net negative impact of $ 43.2 million
on EBITDA. Selling, General and Administrative (SG&A) included
expenses of $ 37.4 million related to our development projects in the
United States and $ 10.0 million expenses associated with the appeal
in the tax liability dispute case in Egypt. This was partially offset by
a positive of $ 9.0 million related to the partial release of the escrow
account created during the sales transaction of Gavilon in 2013.
One-off items’ impact on EBITDA
$ millions unless otherwise stated 2014
2013
restated
One-off item in
Income Statement
Operating pro?t as reported 215.6 529.9
Depreciation & amortization 308.4 218.3
Donation cost 266.2 - Donation Costs
Transaction cost - 89.3 Transaction Costs
Gain on sale of Gavilon (9.0) (262.1) Other income
Change in fair value of natural gas hedge 4.8 31.0 Other expenses
Reported EBITDA 786.0 606.4
Expenses related to expansion projects 37.4 - SG&A
Expenses related to tax dispute 10.0 - SG&A
Sorfert idled capacity expenses - 54.3 Other expenses
Prepayment of long-term contract - 15.6 SG&A
Total one-off items (309.4) 71.9
Operating pro?t excluding one-off
items
525.0 458.0
EBITDA excluding one-off items 833.4 676.3
One-off items at the net income level comprise one-off items at the
EBITDA level net of tax, the positive impact of the tax dispute liability
and net foreign exchange losses of $ 72.9 million on intercompany
balances. The foreign exchange losses are related to intercompany
?nancing of our activities in the United States through Euro-
denominated funding. The loss has no impact on our external ?nancial
position.
One-off items impact on net income from continuing operations
$ millions 2014 2013
One-off
item in P&L
Net income from continuing
operations 444.1 313.3
One-off items in EBITDA 309.4 (71.9)
Tax dispute settlement reversal (557.0) Income tax
Interest on tax settlement (non-cash) (36.6) 36.6 Finance expenses
Forex gain on tax settlement (9.5) (44.1) Finance income
Forex loss on intercompany loans 72.9 Finance expenses
Tax relief one-off items (15.2) (22.3) Income tax
Sorfert idled capacity expenses -
adjustment for minorities (26.6)
Non-controlling
interest
Total one-off items in net income (236.0) (128.3)
Net income fromcontinuing
operations excl. one-offs 208.1 185.0
Gross pro?t and cost of sales
Cost of sales from continuing operations of $ 1,949.4 million in 2014
increased 4.5% from $ 1,864.6 in 2013, solely the result of higher
depreciation & amortization charges. Excluding depreciation &
amortization cost of sales was at the same level in 2014 as in 2013
despite higher revenue. Cost of sales as a percentage of revenue
decreased to 72.6% as compared to 75.3% in 2013,
The gross pro?t margin increased from 24.7% in 2013 to 27.4% in
2014, resulting in an increase in gross pro?t of 20.2%.
Selling, General and Administrative Expenses
SG&A expenses as a percentage of revenue were 9.9% in 2014
compared to 8.2% in 2013, and amounted to $ 265.1 million in 2014.
The increase was due to the ?rst-year of operations of Sorfert, low
utilization rates at our Egyptian plants, and the one-off expenses
explained above. Excluding one-off costs, SG&A as a percentage of
revenue would have been approximately in line with the 2013 level
(8.1% and 8.2% respectively).
Operating Pro?t
Depreciation and amortization expenses are a signi?cant component
of the cost of our operations. Depreciation and amortization expenses
stood at $ 308.4 million, a 41.3% increase as compared to 2013,
solely the result of the ?rst-time inclusion of Sorfert.
One-off items, in particular $ 266.2 million donation expenses
recorded in operating pro?ts had a material impact on reported
operating pro?ts. Accordingly, operating pro?t from continuing
operations amounted to $ 215.6 million compared to $ 529.9 million
in 2013. Excluding one-off items, operating pro?t increased 14.6%
from $ 458.0 million in 2013 to $525.0 million in 2014.
Net ?nancing cost
Net ?nance costs consist of interest income, gain or loss on foreign
exchange, and interest expense on interest-bearing liabilities.
Net ?nance costs include interest of $ 36.6 million related to the tax
dispute liability mentioned above in 2013 and the subsequent reversal
in 2014. A foreign exchange gain related to tax dispute liability stood
at $ 44.1 million in 2013 and $ 9.5 million in 2014. In 2014, non-
recurring foreign exchange losses related to intercompany balances
were $ 72.9 million.
Including those one-off items net ?nance costs were $ 250.4 million,
an increase from $ 203.2 million in 2013.
Net income attributable to shareholders and earnings
per share (EPS)
Net income from continuing operations improved 41.7% from
$ 313.3 million in 2013 to $ 444.1 million in 2014. Total one-off items
had a positive impact of $ 236.0 million on net income in 2014,
mostly related to the reversal of the tax liabilities discussed above.
Net income excluding one-off items stood at $ 208.1 million
compared to $ 185.0 million in 2013.
Following the successful demerger of the Engineering & Construction
Group, all demerged entities have been treated as discontinued
operations. Discontinued operations reported a net loss after non-
controlling interest of $ 115.4 million and $ 18.1 million in 2014 and
2013 respectively.
As a result, net income including discontinued operations and
including the impact of non-controlling interests amounted to $ 328.7
million, an 11.3% improvement on the $ 295.2 million reported in
2013.
Basic EPS for continuing operations stood at $ 2.168 per share in
2014, compared to $ 1.538 during 2013. Diluted EPS for continuing
operations stood at $ 2.161 per share in 2014, compared to $ 1.493
during 2013.
Dividends
OCI has a ?exible dividend policy designed to balance the availability
of funds for dividend distribution with pursuing growth opportunities
that generate attractive returns. We currently have two large green?eld
projects under construction in the United States. Accordingly, the
Board of Directors has decided to focus cash ?ows on completing
these signi?cant growth initiatives in a timely manner and therefore has
not announced a dividend for FY2014.
Number of employees
During the ?nancial year ended 31 December 2014, the average
number of staff employed in the Group converted into full-time
equivalents (FTE) amounted to 33,282 employees compared to
72,418 in 2013, where the latter ?gure included employees employed
by associates and joint ventures. Of these employees 2,911 were
employed in the continuing Fertilizer & Chemicals segment, an
increase of 5.2% from 2,768 employees in 2013.
Cash ?ow
Condensed Consolidated Statement of Cash Flows
for the years ended 31 December
$ millions 2014
2013
restated
Pro?t for the year 449.9 259.2
Adjustments:
Net pro?t / (loss) from discontinued operations 96.1 3.8
Depreciation of PPE and amortization 308.4 218.3
Gain on sale of Gavilon (9.0) (262.1)
Adjustments related to tax dispute liability in Egypt (565.0) 71.1
Changes in working capital 236.9 (83.4)
Changes in provisions 262.3 15.3
Other cash ?ows from operating activities (59.6) (476.4)
Cash ?ows from operating activities (continuing
operations) 720.0 (254.2)
Investments in property, plant and equipment (1,211.0) (687.0)
Proceeds from sale of other investments 9.0 1,829.9
Dividends from equity accounted investees 33.0 33.0
Cash ?ow from investing activities (continuing
operations)
(1,169.0) 1,175.9
Proceeds from share issuance - 355.6
Proceeds from sale of treasury share 37.7 91.2
Proceeds from borrowings 550.0 2,573.3
Repayment of borrowings (433.2) (2,098.9)
Other cash ?ows from ?nancing activities (119.2) (150.2)
Financing related to discontinued operations (390.0) (459.0)
Cash ?ows from ?nancing activities (continuing
operations) (354.7) 312.0
Net cash ?ows from / (used in) continuing
operations (803.7) 1,233.7
Net cash ?ows from / (used in) discontinued
operations (51.1) (7.8)
Net increase (decrease) in cash and cash
equivalents (854.8) 1,225.9
Cash and cash equivalents at 1 January 1,990.2 762.5
Currency translation adjustments (20.2) 1.8
Cash and cash equivalents at 31 December 1,115.2 1,990.2
Presentation in the statement of ?nancial position
Cash and cash equivalents
846.6 1990.2
Bank overdraft (100.3) -
Cash and cash equivalents (as held for demerger) 368.9 -
Cash and cash equivalents at 31 December 1,115.2 1,990.2
44 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 45
FINANCIAL PERFORMANCE
CONTINUED
OPERATIONAL REVIEW
Cash Flows from Operating Activities
Cash in?ows from continuing activities in 2014 totaled $ 720.0
million, compared to a negative of $ 254.2 million in 2013. This was
principally generated from cash ?ow generated by our operating
companies and changes in working capital items, most notably
payables of $ 140.8 million and receivables of $ 88.6 million.
Cash Flows from Investing Activities
Cash used in investing activities (continuing operations) reached
$ 1,169.0 million. Total capital expenditures in 2014 increased to
$ 1,211.0 million compared to $ 687.0 million in 2013, principally
used for the construction of the Iowa Fertilizer Company, the
debottlenecking and turnaround program at OCI Beaumont and the
start of construction at Natgasoline LLC.
Cash Flows from Financing Activities
Cash out?ows used in ?nancing continuing activities in 2014 totaled
$ 354.7 million, compared to $ 312.0 million in?ows in 2013.
This consisted principally of the issuance of a $ 550 million revolving
credit facility in the third quarter of 2014 at the OCI N.V. level, offset
by repayment of borrowings ($ 433.2 million). Financing related to
Discontinued Operations amounted to out?ows of $ 390.0 million,
mainly to deleverage the construction business.
The revolving credit facility was earmarked towards general corporate
purposes including retirement of some debt with short-term maturities
and partial ?nancing of capital expenditure for Natgasoline LLC.
Net debt
Net Debt as at 31 December
$ millions 2014
2013
1
restated
Long-term interest-bearing debt 4,638.5 4,441.1
Short-term interest-bearing debt 402.2 677.2
Gross interest-bearing debt 5,040.7 5,118.3
Cash and cash equivalents 846.6 1,570.2
Net debt 4,194.1 3,548.1
1
2013 restated ?gures are pro forma and unaudited.
Total gross debt outstanding was slightly down from $ 5,118.3 million
as at 31 December 2013 to $ 5,040.7 million as at 31 December
2014, with no major debt maturing over the next twelve months. Our
total interest-bearing debt decreased by $ 77.6 million during the
year primarily due to the issuance of the revolving credit facility at the
OCI N.V. level, offset by repayments of $ 433.2 million and currency
?uctuations, in particular the Algerian Dinar and the Euro.
Cash and cash equivalents stood at $ 846.6 million as of
31 December 2014, down from Pro Forma $ 1,570.2 million as
of 31 December 2013. The decrease in cash held at year-end is
principally attributable to cash in?ows from operations totaling
$ 720.0 million, offset by capital expenditure of $ 1,211.0 million.
OCI N.V.’s net debt of $ 4,194.1 million as at 31 December 2014 is
an 18.1% increase over 31 December 2013, driven by cash out?ows
related to our development projects in the United States.
Balance Sheet
Condensed Consolidated Statement of Financial Position as at 31 December
$ millions 2014
2013
1
Pro forma
and
unaudited
2013
restated
Total non-current assets 6,365.9 5,663.2 6,470.2
Total current assets 4,211.4 4,824.6 4,017.6
Including assets held for demerger 2,538.5 2,624.0 -
Total Assets 10,577.3 10,487.8 10,487.8
Shareholders’ Equity 2,118.9 1,721.3 1,721.3
Non-controlling interest 418.9 366.3 366.3
Total Equity 2,537.8 2,087.6 2,087.6
Total non-current liabilities 5,032.2 5,055.8 5,382.6
Total current liabilities 3,007.3 3,344.4 3,017.6
Including liabilities held for demerger 1,812.6 2,146.4 -
Total Liabilities 8,039.5 8,400.2 8,400.2
1
In the 2013 pro forma column, Construction & Engineering segment has been
presented as if it quali?ed as assets held for demerger as of year-end 2013.
The majority of OCI N.V’s total debt outstanding is held at the
operating company level and is ?nanced through operating cash
?ows. OCI N.V.’s debt pro?le is detailed in the table below:
OCI N.V. Consolidated Debt Breakdown as at 31 December 2014
$
millions Description Companies
Gross
Debt Cash
Net
Debt
Joint
venture
debt
• Debt at entities where
OCI’s stake is less than
100%
• Debt is non-recourse
to OCI N.V., although
consolidated on the
group’s balance sheet
• Sorfert
• EBIC
• OCI Beaumont
1,764.5 167.7 1,596.8
Operating
company
debt
• 100% owned operating
companies’ debt is
organized against
operating company
cash ?ow and is non-
recourse to HoldCo
• Corporate support is
available from OCI N.V.
with Board approvals
• OCI Nitrogen
• EFC
• OFT
1,119.5 107.4 1,012.1
Project
?nance
debt
• Project ?nance debt
which can remain
with companies
after completion of
construction
• All project ?nance debt
is ring-fenced and non-
recourse to OCI N.V.
• Debt is raised through
banks or capital
markets
• Long tenures ?nanced
by operating cash ?ow
• IFCo 1,172.3 426.4 745.9
Holding
Company
debt
• Full responsibility
of OCI N.V.
• Supported by
investment asset
values and dividends
received from
subsidiaries
• OCI N.V.
• Other 984.4 145.1 839.3
Total debt 5,040.7 846.6 4,194.1
Outlook
For the full year 2015, we expect improvements in EBITDA and net
income driven by:
• Compared with 2014, we expect to sell additional product volumes,
in particular from Sorfert, which was still in ramp-up phase in early
2014.
• A strong United States Dollar and lower gas prices in both Europe
and the United States have been favourable in Q1 2015, in
particular for OCI Nitrogen.
• Both ammonia and methanol lines at OCI Beaumont were of?ine
from the end of January 2015 and restarted production in April
2015. The plants will be able to produce at the increased capacity
levels from April onwards.
• The Egyptian government has taken several short and longer term
measures to address the country’s gas supply issue and we expect
these efforts to improve supply of natural gas from the second
quarter of 2015 onwards.
2015 Guidance for Capital Expenditures
We expect total capital expenditure of approximately $ 1.1 - 1.2
billion in 2015, with the majority earmarked for our growth initiatives
in the United States. OCI N.V.’s production plants are relatively new,
minimizing required maintenance capital expenditures.
Apart from Natgasoline LLC, all capital expenditure requirements for
OCI N.V.’s announced green?eld and growth-related debottlenecking
projects already under construction are fully funded as at 31
December 2014.
46 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 47
SUSTAINABILITY
By promoting
environmental
stewardship and
fostering growth in
our communities,
we seek to create
a sustainable
environment to
continue to grow
our business.
LOST TIME INJURY RATE (LTIR)
Number of lost time injuries per 200 thousand hours
worked
2010
0.85
2011
0.64
2012
1.57
2013
0.29
2014
0.16
2009
0.88 0.88
GHG EMISSIONS
Million tons of CO2 equivalent
2010
0.77
2011
0.84
2012
0.59
2013
0.62
2014
0.78
2009
4.93
NUMBER OF EMPLOYEES
AS AT 31 DECEMBER 2014
3,000
OCI N.V. Annual Report 2014 49 48 OCI N.V. Annual Report 2014
Launching Chemelot2Discover
In September 2014, the seven companies based in the industrial
site of Chemelot on which OCI Nitrogen is located launched a
new educational program for children called Chemelot2Discover.
The program introduces children to the activities at Chemelot
in combination with talent development in the ?elds of science,
chemistry and technology.
Chemelot2Discover is a follow-up to the 20-year legacy program
Youth & Chemistry, which encouraged an increase in students
pursuing technical education in the region.
Chemelot2Discover aims to encourage interest in science,
chemistry and technology through a playful and interactive
multi-component program meant for primary school pupils in the
Sittard/Geleen region. Participation in the program is a ?xed part
of the curriculum for many schools in the region, and each year
some 1,300 pupils from 50 schools participate.
CSR REPORT CONTINUED
Ralf Krewinkel, Mayor of Beek, presenting award
CORPORATE SOCIAL RESPONSIBILITY & SUSTAINABILITY
MAKING SCIENCE FUN
As a result of the demerger, we now employ
approximately 3,000 people and reach
thousands of customers around the world.
We have a commitment to maximize the
use of local resources whenever possible by
drawing local people into our company and
developing their skills, and by choosing local
partners where possible to supply materials
and other services.
Investing in our people
Our people are fundamental to the success
of our business; we have invested and are
committed to continuing to invest in the best
people and the best technologies.
A trusted corporate citizen
Our products are sold across Europe, the
Americas, Asia and Africa. Our fertilizers
optimize yields, strengthen crops and
accelerate growth and maturity on a global
level and in our local communities. Our
industrial chemicals are used in many
industries to produce sustainable and
environmentally sound manufacturing and
energy solutions.
As a leading corporate citizen in the countries
in which we operate our production facilities,
we have a vested interest in developing our
host communities through our time and
resources. We have focused our efforts on
education, which we believe is key improving
the economic and social well-being of our
communities.
Frans Scheeren
Dutch Chemical Industry Plant Manager of the Year 2014
Frans Scheeren, Plant Manager at OCI Nitrogen, won the award for Plant Manager of
the Year 2014 during the Deltavisie congress in Rotterdam.
The Plant Manager of the Year award was founded in 2008 by the Petrochem Platform
and the Dutch Chemical Industry Association (VNCI), in cooperation with Deltalinqs
and the Port of Rotterdam Authority. The award rewards plant managers’ efforts and
achievements, especially in the areas of safety, health, productivity and sustainability.
Frans was nominated by the OCI Nitrogen team, and was given the award by his
industry peers, because over the past ten years he has delivered outstanding results in
terms of ef?ciency, safety and health.
“Frans is not only a great person but also a skilled professional,” said Gert-Jan de Geus,
Chief Executive Of?cer of OCI Nitrogen. “He enjoys every facet of his work as plant
manager. He always analyses what the best, safest and most sensible choice is for the
plants, and he is thorough and effective about implementation. He’s also a genuine team
player. That has won him the appreciation of his team, who are able to work on their
personal and professional development.”
HIGHLIGHTING OUR
PEOPLE’S SUCCESS
50 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 51
CSR REPORT CONTINUED
CORPORATE SOCIAL RESPONSIBILITY & SUSTAINABILITY
Product & health, safety & environment stewardship
We are committed to meeting or exceeding international product
stewardship and health, safety, quality and environment standards.
We train all employees to implement the best sustainable practices.
We believe that the health and safety of our employees is essential to
the successful conduct and future growth of our business and are in
the best interest of our shareholders.
We are committed to being an environmental steward by
implementing the best technology available to minimize our
environmental footprint and promote sustainable business best
practices.
As part of these commitments, our Board of Directors established
a Health, Safety and Environment (HSE) Committee to assess and
review our HSE policies, programs, performance and compliance with
international standards. The Committee has worked to standardize
our HSE reporting systems at the subsidiary level, and has established
new corporate HSE standards that will be implemented in 2015. We
believe the Committee’s establishment and initiatives underscore our
continued commitment to operating at the best possible standards
and ef?ciencies, as well as promoting excellence in every aspect of
our business.
Product Stewardship
Product stewardship ensures that fertilizers and their raw materials,
additives and intermediate products are processed and manufactured,
handled, stored, distributed and used in a way which safeguards
health, occupational and public safety, the environment, and ensures
security. We comply with international standards as members of the
International Fertilizer Association, Fertilizers Europe (formerly EFMA),
The Fertilizer Institute (TFI), and the International Methanol Producers
& Consumers Association (IMPCA), among others.
Certi?cations
EFC, EBIC, and OCI Nitrogen are ISO 9001 certi?ed. EBIC and EFC
also hold ISO 14001 and OHSAS 18001 certi?cations, certifying each
plant’s commitment to excellence in product quality and management
controls and procedures as per global standards. OCI Nitrogen also
has a Product Stewardship certi?cate.
In addition, all of our North African and European plants hold
REACH registration certi?cates from the European Chemicals
Agency, ensuring a high level of protection of human health and the
environment from the risks that can be posed by chemicals.
Health & Safety First
We are committed to providing a safe and healthy workplace for all
employees by implementing the highest international safety standards.
This commitment is underscored by several safety development
initiatives undertaken at our plants, with several achievements
during the year aiming to standardize health and safety monitoring,
prevention and reporting across our plants. Highlights include:
- OCI Nitrogen achieved the lowest overall frequency index in
the plant’s history at 0.25, with the nitrates lines achieving zero
recordable incidents
- OCI Beaumont submitted its Occupational Safety and Health
Administration (OSHA) Voluntary Protection Program applications to
achieve ‘star’ quali?cation, designed for exemplary worksites with
comprehensive, successful safety and health management systems
- IFCo developed its HSE policies, programs and industry best
practices to meet legal and all other applicable requirements for the
safe operation of a nitrogen fertilizer facility. This includes acquiring
proper environmental and operating permits along with assets
necessary to administer an emergency response plan and general
safety policies
- All plants now have a Process Safety Management program and
conduct monthly safety management and departments safety
meetings, and have also made strong enhancements to their safety
cultures with the implementation of effective safety training for all
employees
Our Lost Time Injury Rates (LTIR) at our plants as outlined below are
excellent as compared to the International Fertilizer Association’s (IFA)
2012 industry average of 0.4, and are at their lowest levels since we
began operations as a fertilizer producer in 2008. The health and
safety of our employees is a core focus and we are constantly looking
for areas to improve.
LTIR 2010 2011 2012 2013 2014
OCI Nitrogen 1.00 0.86 0.77 0.14 0.14
OCI Beaumont - - 0.13 0.00 0.41
IFCo - - - - -
EFC 0.97 0.50 1.17 0.00 0.00
EBIC 0.57 0.57 4.19 0.00 0.19
Sorfert - - - 1.30 0.00
OCI Average 0.85 0.64 1.57 0.29 0.16
Occupational health is part of our overall HSE management to ensure
that everyone working with OCI N.V. remains healthy at all times. A
Fitness for Duty Process is set up to ensure all employees are able
to safely perform essential physical and mental requirements of the
job without creating risk to themselves, others or the environment. A
Health Risk Assessment Process is in place to estimate the nature
and probability of adverse health effects to people by identifying the
adverse health effects that can be caused by any exposure to any
hazardous agent or the work environment.
Environmental Excellence
We are committed to being an environmental steward by
implementing the best technology available where applicable to
minimize our environmental footprint and promote sustainable
business best practices. Our resolve to reduce our environmental
impact as nitrogen-based chemicals producer is proven by our 84%
reduction in carbon dioxide (CO2) emissions since 2009, despite the
addition of four more production facilities.
As a testament to EFC’s commitment to producing urea at the lowest
possible impact on the environment, EFC is the only plant in Egypt
that has implemented a novel solution to the large quantity of water
produced as a by-product of the urea manufacturing process. In
2010, the plant invested $ 1.2 million for the construction of two
irrigation ponds capable of holding up to 10,000 cubic meters of
water. The water is used to irrigate 50 acres of forestry near the plant
in an environmentally friendly manner. EFC was impacted by the
natural gas supply disruptions throughout 2014, which resulted in
reduced emissions ef?ciency during the year.
At EBIC, the plant supplies EFC with the excess CO2 produced in
the manufacture of ammonia. Through this shared pipeline, EFC
is able to produce additional urea and EBIC is able to decrease its
pollutant CO2 emissions. During 2014, EBIC provided approximately
110 thousand metric tons of CO2 emissions to EFC, equivalent to
CO2 emissions from the annual electricity use of 15,158 homes. In
addition, both plants have been tuned to share some utilities, primarily
electricity and waste water. This not only generates savings in capital
expenditure, but also allows each plant to depend on the other for
backup in case of a malfunction, making our operations at both
plants even more reliable.
OCI Beaumont is implementing Best Available Control Technology
(BACT), a pollution control standard mandated by the United
States Clean Air Act, during its next plant turnaround to reduce
its environmental impact. The plant installed a Selective Catalytic
Reduction Unit, a Saturator and a Prereformer in conjunction with its
debottlenecking and turnaround.
OCI Nitrogen’s plants all operate at excellent energy ef?ciency rates,
with energy consumption and CO2 emissions at levels close to
the chemical and physical minimum, thereby leading to a positive
CO2 balance under the current European Trading Scheme for CO2
emission trading. OCI Nitrogen has successfully maintained its low
CO2 emissions despite adding more than 300 thousand metric tons
of annual production capacity since 2010.
OCI Nitrogen’s award winning “COOL!” indirect cooling technology
has allowed OCI Nitrogen to reduce its annual ?ne particle emissions
from 174 metric tons to zero, the ?rst nitrogen fertilizer plant in the
world to achieve this. COOL! has also allowed OCI Nitrogen to
reduce energy consumption by 75% while increasing production
by 20%. The innovative cooling system was awarded the Dutch
Chemical Industry Association’s (VNCI) Responsible Care prize in
2013, and placed in the top three for the European Business Awards
for the Environment’s (EBAE) ‘sustainable process’ prize in 2014.
The European Business Awards for the Environment are awarded
to eco-innovation companies that successfully combine innovation,
competitiveness and outstanding environmental performance.
GHG emissions
(Million tons of CO2 equivalent) 2010 2011 2012 2013 2014
OCI Nitrogen 1.10 1.30 1.20 1.30 1.23
OCI Beaumont - - 0.26 0.49 0.46
IFCo - - - - -
EFC 0.45 0.43 0.43 0.36 0.55
EBIC 0.76 0.78 0.68 0.39 0.10
Sorfert - - 0.40 0.55 1.57
OCI Average 0.77 0.84 0.59 0.62 0.78
52 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 53
56 Board of Directors Pro?le
58 Message from the Chairman
59 Corporate Governance
62 Report of the Board of Directors
66 Risk Management and Compliance
72 Remuneration Report
77 Declarations
CORPORATE
GOVERNANCE
BOARD OF DIRECTORS PROFILE
1 Michael Bennett
Chairman
Nationality American
Age 61
Appointed Chairman January 2013
Current term of of?ce expires 2016
Committee memberships
Health Safety & Environment, Nomination &
Governance, Remuneration
Current external appointments
• Director, Alliant Energy Corporation
• Director, Arclin, Inc.
Previous relevant experience
• CEO and Director, Terra Industries Inc.
• Chairman and President, Terra Nitrogen
Company L.P.
• Chairman, The Fertilizer Institute and The
Methanol Institute in the United States
2 Nassef Sawiris
Chief Executive Of?cer
Nationality Egyptian
Age 54
Appointed CEO January 2013
Current term of of?ce expires 2017
Current external appointments
• Non-Executive Director:
- Orascom Construction Ltd.
- Lafarge S.A.
- BESIX Group
Previous relevant experience
Chairman and CEO,
Orascom Construction Industries S.A.E.
3 Salman Butt
Chief Financial Of?cer
Nationality Pakistani
Age 55
Appointed CFO January 2013
Current term of of?ce expires 2017
Current external appointments
• Non-Executive Director,
Orascom Construction Ltd.
Previous relevant experience
• Head of Investment Banking, Samba
Financial Group in Saudi Arabia
• Various positions at Citibank in Pakistan,
Hong Kong, United Kingdom, Egypt and
Saudi Arabia
4 Jan Ter Wisch
Vice-Chairman
Nationality Dutch
Age 62
Appointed January 2013
Current term of of?ce expires 2016
Committee memberships
Nomination & Governance (Chairman), Audit,
Health Safety & Environment
Current external appointments
• Chairman, Stichting De Westberg
• Director, Stichting Administratiekantoor
Grass
• Chairman of Investment Committee,
5square MKB Fund III Coöperatieve U.A.
• Director, Stichting OB N.V.
Previous relevant experience
• Partner
- Deloitte
- Loeff Claeys Verbeke
- Allen & Overy
• Member European Tax Board, Deloitte
• Director, Loeff Claeys Verbeke
• Chairman of Global Tax Board,
Allen & Overy
5 Kees van der Graaf
Senior Independent Director
Nationality Dutch
Age 64
Appointed December 2013
Current term of of?ce expires 2017
Committee memberships
Health Safety & Environment (Chairman),
Nomination & Governance
Current external appointments
• Member of the Supervisory Board
- Carlsberg
- EnPro Industries LLC
- Ben&Jerry’s
- GrandVision N.V. (Chairman)
- MyLaps B.V.
- University of Twente (Chairman)
- FSHD Foundation (Founder and
Chairman)
Previous relevant experience
• Member Board of Directors and Executive
Committee, Unilever
• Executive-in-Residence, Business school
IMD Lausanne
6 Sipko Schat
Non-Executive Director
Nationality Dutch
Age 54
Appointed December 2013
Current term of of?ce expires 2017
Committee memberships
Remuneration (Chairman), Audit
Current external appointments
• Member of the Supervisory Board
- Paris Orléans S.A.
- Vion N.V. (Chairman)
Previous relevant experience
Member of the Executive Board,
Rabobank Group
7 Robert Jan van de Kraats
Non-Executive Director
Nationality Dutch
Age 54
Appointed June 2014
Current term of of?ce expires 2018
Committee memberships
Audit (Chairman), Remuneration
Current external appointments
• CFO and Vice-Chairman of the Executive
Board, Randstad Holding N.V.
• Member of the Supervisory Board of
Schiphol Group
Previous relevant experience
• Quali?ed Chartered Accountant
• Various ?nance and operational executive
and non-executive positions in the
technology, ?nancial services and credit
insurance sectors
8 Jérôme Guiraud
Non-Executive Director
Nationality French
Age 54
Appointed June 2014
Current term of of?ce expires 2018
Committee memberships
Audit, Nomination & Governance Committee
Current external appointments
• Chief Executive Of?cer and Director, NNS
Capital Ltd.
• Member of the Board and Audit
Committee, Lafarge S.A.
• Director
- NNS Holding Sàrl
- NNS Luxembourg
- OS Luxembourg
Previous relevant experience
• 30 years of professional experience in
banking and ?nancial markets
• 15 years as a director in listed and non-
listed companies
9 Arif Naqvi
Non-Executive Director
Nationality Pakistani
Age 54
Appointed January 2013
Current term of of?ce expired
15 February 2015
Committee memberships
Audit, Nomination & Governance
Current external appointments
• Founder, CEO and Board Member,
The Abraaj Group
• Director, Orascom Construction Ltd.
• Trustee, Interpol Foundation
• Board Member, United Nations Global
Compact
• Chairman Middle East Centre Advisory
Board, London School of Economics and
Political Science
• Council Member Belfer Center International
at the Kennedy School of Government,
Harvard University
Previous relevant experience
• 30 years of experience of investing
in public and private companies
• Established The Abraaj Group in
2002 and has served as its CEO
since inception
OCI N.V. (the Company) has a one-tier Board of Directors (the Board), which is responsible for the management, general affairs, strategy, and
long-term success of the business as a whole. The Board comprises a majority of Non-Executive Directors and a minority of Executive Directors
whose responsibility is collective, taking into account their respective roles as Executive Directors and Non-Executive Directors.
1 2 3
4 5 6
7 8 9
OCI N.V. Annual Report 2014 57 56 OCI N.V. Annual Report 2013
OCI N.V.
CORPORATE GOVERNANCE
MESSAGE FROM THE CHAIRMAN
Dear Shareholders,
During 2014, the Board of Directors oversaw several landmark
projects that we believe will add substantial value to the Company.
We returned $ 1.4 billion in capital to shareholders through the
separation of the Engineering & Construction Group. This and other
?nancing initiatives have resulted in a leaner and stronger balance
sheet that has well positioned OCI N.V. to pursue exciting growth and
investment opportunities in the medium term.
We are proud of the strides made throughout 2014 to expand and
improve OCI N.V.’s corporate governance. We welcomed two new
non-executive Board members and a new Corporate Secretary, all
of whom bring a wealth of experience to OCI N.V., and established a
Health, Safety and Environment Committee.
Our new Board members, Mr. Robert Jan van de Kraats and Mr.
Jérôme Guiraud, were voted in by our shareholders at the 2014
Annual General Meeting. Mr. Arif Naqvi’s term ended on 15 February
2015. We would like to thank Mr. Naqvi for his valuable contribution.
Our Board now comprises eight members from ?ve countries with a
collective expertise that we believe is curated to serve OCI N.V. well.
Our new Corporate Secretary, Ms. Maud de Vries, brings 17 years of
legal experience to our Board and has been integral to developing our
governance processes.
For the year ended 31 December 2014, the Board reports the
following:
• The Board has reviewed and discussed the audited ?nancial
statements for the year 2014.
• The Board discussed with the external auditor the outcome of
their performed audits in accordance with International Standards
on Auditing.
• The Board has received written con?rmation of the external
auditor’s independence.
• Based on the review and discussions referred to above, the
Board has approved that the audited consolidated and Company
?nancial statements be included in the 2014 Annual Report.
The Board of Directors recommends that the General Meeting of
Shareholders adopts the 2014 ?nancial statements included in this
Annual Report.
The Board is energized to continue to develop and adopt corporate
governance guidelines that adhere to applicable standards, laws and
regulations. We are proud of our role as a global producer of essential
nutrients and environmentally sound industrial chemicals, and aim to
maintain the highest international health, safety, quality
and environmental standards at all of our operations.
With our new, more streamlined focus in place, we look forward
to pursuing growth and investment opportunities that will deliver
outstanding returns to our shareholders.
Michael Bennett
Chairman
CORPORATE GOVERNANCE
OCI N.V. (the Company) is committed to the principles of good
corporate governance. The Board believes that good corporate
governance practices align the interests of all stakeholders by putting
structures in place that ensure the business is managed with integrity
and ef?ciency, thereby maximizing the pro?tability and long-term value
of the Company. The Board is committed to continuously monitor and
strengthen the Company’s corporate governance.
OCI N.V. is a public limited liability Company under Dutch law, with its
of?cial seat in Amsterdam, the Netherlands. The authorized capital of
the Company amounts to EUR 300 million. The authorized capital is
divided into 300 million shares, having a nominal value of EUR 1 each.
All shares are registered shares. No share certi?cates are issued.
OCI N.V.’s shares are listed and quoted in Euros on NYSE Euronext’s
Amsterdam market. The Company reports its ?nancial statements in
US Dollars.
This section contains an overview of the corporate governance
structure and how it was applied in 2014. It includes the information
required by the Dutch Corporate Governance Code. Additional
information on our corporate governance can be found on the
corporate website www.oci.nl/corporate-governance.
Corporate Governance structure
The Board of Directors
OCI N.V.’s Board is a one-tier Board, which in 2014 comprised two
Executive Directors and, in a majority, seven Non-Executive Directors.
The Board has ultimate responsibility for the management, general
affairs, direction, performance and success of the business as a
whole. The responsibility of the Directors is collective, taking into
account the respective roles of the Executive-and Non-Executive
Directors.
The Board is responsible for monitoring and assessing its own
performance.
Non-Executive Directors
The role of the Non-Executive Directors is essentially supervisory
in nature. Their primary responsibilities are:
• The supervision of the Executive Directors;
• Assessing the performance of the business;
• Assessing risks and controls;
• Assessing the Internal Control function;
• Developing strategy with the Chief Executive Of?cer (CEO);
• Remuneration and succession planning;
• Selection and nomination for appointment of Executive and
Non-Executive Directors;
• Governance and Compliance.
Chairman
OCI has a Chairman and a CEO. There is a clear division of
responsibilities between their roles. The Chairman is primarily
responsible for the functioning of the Board and its Committees.
The Chairman sets the Board’s agenda and promotes effective
relationships and open communication between the Executives and
Non-Executive Directors. With the Group Company Secretary, the
Chairman will take the lead in providing an induction programme for
new Directors that is tailored to the respective Director.
Senior Independent Director
The Senior Independent Director acts as a trusted intermediary for
the individual Directors.
Executive Directors
OCI’s Executive Directors are the CEO and the Chief Financial Of?cer
(CFO) who are full time employees of the Company.
Chief Executive Of?cer
The CEO has the authority to determine which duties regarding the
strategic and operational Management will be carried out under his
responsibility. The Board has delegated the operational Management
of the business to the CEO, who can take day-to-day decisions
within the boundary conditions as being de?ned in the Articles of
Association and By-laws, without the need to revert to the Board
for approval. Matters reserved for the Board include structure, Risk
Management & Internal Control Systems, corporate governance,
approval of dividends, approval of overall strategy, approval of
signi?cant transactions, ?nancial reporting and compliance. The CEO
is responsible to the Board and is able to delegate his authorities
and powers.
Corporate Secretary
The Corporate Secretary advises the Board on matters relating to
governance of the Group and compliance with Board procedures.
Appointment of Directors
The General Meeting of Shareholders can appoint, suspend or dismiss
a Director by an absolute majority of the votes cast upon a proposal of
the Board. In addition, the General Meeting of Shareholders is able to
nominate Directors. To do so they must put a resolution to the General
Meeting of Shareholders in line with the requirements as described in
the Articles of Association. A Director is appointed for a four year term
and is eligible for reappointment. However, a Non-Executive Director
may not serve for more than 12 years.
The Non-Executive Directors are selected individually for their broad
and relevant experience and international pro?le as well as for their
independence. The Board pro?le for Non-Executive Directors (which
can be found on OCI N.V.’s website) provides guiding principles for the
composition of the Board.
Organizational structure
Prior to the demerger, OCI N.V.’s organizational structure was split
between its two main segments: the Engineering & Construction
Group and the Fertilizer & Chemicals Group. Each Group was
empowered to manage its day-to-day operations under the
supervision of its respective Chief Operating Of?cer (COO). Going
forward, the day-to-day operational structure will continue to be
supervised by the Fertilizer & Chemicals Group COO. Each subsidiary
is led by a General Manager and Chief Financial Of?cer who report to
the COO.
For 2014 the Board set the strategic mandate for the Company with
operational and ?nancial goals. The Executive Directors supervised the
achievement of these goals through regular reporting from the COO’s
and each subsidiary’s management team and reported progress to
the Executive Directors.
58 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 59
OCI N.V.
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
CONTINUED
The below simpli?ed corporate structure illustrates the governance
and each business segment’s grouping in 2014 with the engineering
and construction activities marked as discontinued operations:
Shareholders’ rights
OCI N.V.’s shareholders exercise their rights through the Annual
General Meeting of Shareholders in the Netherlands each year, no
later than six months after the end of the Company’s ?nancial year.
Additional Extraordinary General Shareholders meetings may be
convened at any time by the Board of Directors or by one or more
shareholders representing more than 10% of the issued share capital.
A notice convening a General Meeting of Shareholders shall be issued
on behalf of the Board by no later than the 42
nd
day prior to the day
of the meeting. Parties who have the right to vote and attend the
meeting and who are registered as such in a designated (sub)register
on the 28
th
day prior to the day of the meeting (“registratiedatum”) will
be entitled to attend the meeting and vote, irrespective of the identity
of the entitled party with respect to those shares at the time of the
meeting.
Votes representing shares can be cast at the General Meeting
of Shareholders either personally or by proxy. No restrictions are
imposed on these proxies, which can be granted electronically or in
writing to the Company, or to independent third parties. OCI N.V.’s
shareholders may cast one vote for each share, be it in the form of
ordinary shares or American Depository Receipts. All resolutions
adopted by the General Meeting of Shareholders are passed by an
absolute majority of the votes cast, unless the law or the Articles of
Association prescribe a larger majority. The Shareholders possess the
rights conferred by the Articles of Association and By-laws.
Information pertaining to the structure of, admission to, and
Shareholders’ voting rights at the General Meeting of Shareholders
can be found on the corporate website.
Important matters that require the approval of the (Annual) General
Meeting of Shareholders are:
• Adoption of the ?nancial statements;
• Declaration of dividends;
• Signi?cant changes to the Company’s corporate governance;
• Remuneration policy;
• Remuneration of the Non-Executive Directors;
• Discharge from liability of the Board of Directors;
• Appointment of the external auditor;
• Appointment, suspension or dismissal of the members of Board
of Directors;
• Issuance of shares or rights to shares, restriction or exclusion of
pre-emptive rights of Shareholders and repurchase or cancellation
of shares;
• Amendments to the Articles of Association.
The Company’s Articles of Association detail the proposals that the
Board may submit to the meeting, and the procedure according to
which Shareholders may submit matters for consideration by the
meeting. Within three months of the meeting, the draft minutes of the
meeting are made available for three months for comments. The ?nal
minutes are published on the corporate website.
External Auditor
The General Meeting of Shareholders appoints the external auditor.
The Audit Committee recommends to the Board the external
auditor to be proposed for (re)appointment by the General Meeting
of Shareholders. In addition the Audit Committee evaluates the
functioning of the external auditor. On 26 June 2014, the General
Meeting appointed KPMG Accountants N.V. as external auditor
for OCI N.V. for the ?nancial year 2014.
Decree Article 10 EU Takeover Directive
OCI N.V. has an authorised capital of EUR 300 million which is divided
into 300 million shares, each with a nominal value of EUR 1. One vote
can be cast for each share.
According to the Dutch Financial Supervision Act, any person or legal
entity who, directly or indirectly, acquires or disposes of an interest in
the Company’s capital or voting rights must immediately give written
notice to the Netherlands Authority for the Financial Markets (AFM) if
the acquisition or disposal of the percentage of the outstanding capital
interest or voting rights exceeds or falls below certain thresholds (3 %,
5%, 10%, 15%, 20%, 25%, 30%, 40%, 50%, 60%, 75% and 95%).
OCI N.V. is aware, on the basis of the information in the registers of
the Netherlands Authority for the Financial Markets (AFM), that the
following shareholders possessed an interest of more than 3% on 31
December 2014:
Shareholder Total Shareholding
(Real) Voting Rights Date of report
Mr. Nassef Sawiris 61,836,983 61,643,399 17-Oct-14
Mr. Onsi Sawiris 36,045,159 36,045,159 31-Jul-13
Mr. Samih Sawiris 15,527,516 15,527,516 19-Feb-13
Southeastern Asset
Management, Inc. 14,037,719 14,037,719 09-Jun-14
IGCF General
Partner Limited 12,532,310 12,532,310 30-Jan-13
Mr. W.H. Gates III 12,725,704 12,725,704 31-Jul-13
Genesis Asset
Managers, LLP 7,621,449 7,621,449 30-Aug-13
Davis Selected
Advisers, LP 8,754,054 8,754,054 31-Jul-13
Total 169,080,894 168,887,310
The above information is extracted from the AFM noti?cations and
registers website as at 31 December 2014:http://www.afm.nl/en/professionals/registers/alle-huidige-registers.
aspx?type={1331D46F-3FB6-4A36-B903-9584972675AF}
As at 31 December 2014, 45.02% of the total shares outstanding
were free-?oat. For details on the number of outstanding shares,
see note 17 of the Consolidated Financial Statements. For details on
capital structure, listings, share performance and dividend policy see
‘Shareholder Information’.
The Company con?rms that it has no anti-takeover constructions, in
the sense of constructions that are primarily intended to block future
hostile public offers for it shares. Although the members of the Sawiris
family have not entered into any formal shareholders agreement, they
have historically coordinated their voting on the OCI N.V. shares and
should therefore be regarded as parties acting in concert (“personen
die in onderling overleg handelen”) as de?ned in section 1:1 of the
Dutch Financial Supervision Act. Their collective voting rights of
54.98% as at 31 December 2014 acts as an implicit anti-takeover
element.
Audit Committee
Remuneration Committee
Nomination and Governance
Committee
Health, Safety and Environment
Committee
General meeting of Shareholders
Board of Directors
Fertilizer
Industrial Chemicals
OCI Nitrogen (100%)
Iowa Fertilizer Co. (100%)
Sorfert (51%)
EFC (100%)
EBIC (60%)
Fertilizer trading subsidiaries
(100%)
Natgasoline LLC (100%)
OCI Partners LP
(OCI Beaumont) (79.88%)
Discontinued Operations
Engineering & Construction
Fertilizer & Chemicals
This does not represent a legal structure and
is for illustrative purposes only.
60 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 61
OCI N.V.
CORPORATE GOVERNANCE
Composition and independence
The composition of the Board strives to arm the Company with
leadership that is diverse in skills, experience, and background,
thereby maximizing the Board’s ability to independently and critically
act without emphasis on particular interests. The Board maintains
independence by ensuring the majority of Non-Executive Directors
including the Chairman are independent Non-Executives. The Board’s
composition, independence, competencies, and quali?cations are
detailed in the Board Pro?le adopted on 13 May 2013 and available on
the corporate website. In 2014 Robert Jan van de Kraats and Jérôme
Guiraud were appointed by the General Meeting of Shareholders on
26 June 2014 as Non-Executive Directors. Arif Naqvi’s term ended
as per 15 February 2015 and his term was not renewed. The Board
thanks Mr. Naqvi for his contribution to the Company.
In 2014 the Board has discussed and assessed its composition
and concluded that amongst others more construction- and energy
related expertise was required. The general conclusion was that the
board is diverse in terms of nationality, experience and age. Finally,
the Board seeks to further diversify its composition, particularly by
nominating female Directors as well as US Directors. Though major
efforts were made in 2014 to ?nd female nominees who ?t the pro?le
this regrettably has not yet been successful. The search for female
Directors is continued in 2015.
Assessment and evaluation of the Board
Every year, the Board evaluates its performance based on a
questionnaire that is completed by the Directors. This evaluation was
carried out in November 2014 and included separate self-evaluations
of the Committees. Given the diverse pro?le, the evaluation shows
that the diversity leads to a constructive and multi-facetted dialogue.
The Board concluded that the composition, the processes and the
scope of its activities and the personal contribution of each Member
are satisfactory. The evaluation is performed every three years with the
aid of an external consultant. This will be done in 2015 for the
?rst time.
Board rotation schedule
The Board adopted its rotation schedule on 13 May 2013. Directors
shall retire periodically in accordance with the Rotation Plan, outlined
in the table below, in order to avoid, as far as possible, a situation in
which many Directors retire at the same time. Each Non-Executive
Director is in principle appointed for a maximum term of four years
and can be reappointed for not more than two other terms. There is
no maximum term for Executive Directors.
Name Date of ?rst Reappointment Final retirement
appointment Max. 3x4 yrs
Nassef Sawiris 16 January 2013 2017 (4 yrs) None
Salman Butt 25 January 2013 2017 (4 yrs) None
Michael Bennett 25 January 2013 2016 (3 yrs) 2024
Jan Ter Wisch 25 January 2013 2016 (3 yrs) 2024
Sipko Schat 9 December 2013 2017 (4 yrs) 2025
Kees van der Graaf 9 December 2013 2017 (4 yrs) 2025
Jérôme Guiraud 26 June 2014 2018 (4 yrs) 2026
Robert Jan
van de Kraats 26 June 2014 2018 (4 yrs) 2026
Induction
An Induction Programme for the Board was set up in 2014. It provides
an excellent governance tool to introduce new Directors with the key
people, the business and the internal governance and risk framework.
Upon nomination, Non-Executive Directors receive a comprehensive
Directors’ Information Pack and are briefed on their responsibilities
and the business with a tailored Induction Programme. The Chairman
ensures that ongoing training is provided for Directors by way of
presentations and updates. Training was provided to the Board on the
Dutch regulatory requirements on Insider Trading. Throughout the year
all members of the Board visit one of more of OCI N.V.’s businesses,
operations and other parts of the Company to gain greater familiarity
with senior Management and to develop deeper knowledge of local
operations, opportunities and challenges. In May 2014 the Board
visited the Iowa Fertilizer Company, currently under construction.
Board meetings
The Board met six times during 2014. In addition several conference
calls were held. The issues on which the Board focused during the
year comprised:
• Spin-off of the Engineering & Construction Group;
• Discuss the performance of the business;
• Private placement of EUR 151 million;
• Further implementation of the Company’s structure and governance
charters;
• Review Risks and Controls;
• Convening of AGM on 26 June 2014 and EGM on 12 November
2014;
• The gas supply situation in EBIC and EFC;
• Assess the Remuneration Policy in light of the upcoming spin-off of
the Engineering & Construction Group;
• Further implementation on topics including internal audit, internal
controls, risk and legal & compliance;
• Discussion of the audit approach and risk assessment for the year
2014 with the external auditor and approval the Charter of the
Internal Audit function;
• Approval by the General Meeting of Shareholders of the
Remuneration Policy;
• Appointment of Corporate Governance and Compliance Of?cer;
• In May 2014 the Board met in New York and Iowa to discuss
strategy and make a site visit; and
• Approval of key ?nancing, operational, investment activities and
other business developments as described below:
REPORT OF THE BOARD OF DIRECTORS
Green?eld Developments and Expansions in the United States
The Company’s expansions and green?eld projects currently include
Iowa Fertilizer Company, debottlenecking at OCI Beaumont, and
Natgasoline LLC. The Board closely monitored the development of the
Company’s United States growth strategy, including the progression of
capital expenditures and construction milestones.
Sidra Medical Centre Project in Qatar - Notice of Termination
In July 2014, a consortium consisting of Obrascón Huarte Lain (OHL)
and OCI N.V. subsidiary Contrack received a Notice of Termination
from the Qatar Foundation for Education, Science & Community
Development for the contract for the design and build of the Sidra
Medical and Research Centre in Doha, Qatar. The contract was
awarded to the JV between OHL (55%) and Contrack (45%) in
February 2008, for a total budget of approximately $ 2.4 billion.
The project is more than 95% complete and represents a negligible
amount in the Engineering & Construction Group’s backlog. The
consortium believes that the reasons given by the client lack any
legitimate grounds and the matter has been referred to the court
of arbitration in the United Kingdom. This will not be part of the
Company’s business going forward.
Approval of $ 550 million OCI N.V. Revolving Credit Facility
On 30 July 2014, the Company signed a $ 550 million Revolving
Credit Facility with a maturity of 36 months from signing. The loan is
earmarked towards general corporate purposes including retirement
of some debt with short-term maturities and partial ?nancing of capital
expenditure for Natgasoline LLC. The lending syndication comprises
of Bank of America Merrill Lynch, Barclays, Rabobank, Credit Agricole,
HSBC, and ING.
Spin-off of Engineering & Construction Group
In August 2014, the intention was announced to spin-off the
engineering and construction activities to form Orascom
Construction Limited.
After careful consideration and advice by Rothschild, the Board
approved the spin-off on 10 December 2014 and its implementation
on 6 February 2015. The spun-off entity, Orascom Construction
Limited, holds all of the Construction Group’s assets and subsidiaries,
including BESIX. The Board and management believe that this spin-
off will effectively position each business to pursue its independent
development strategy, enhance investor understanding and
transparency of each business as each business offers a distinct value
proposition to investors, and best serve our Shareholders as it will
unlock value that is currently being lost in a conglomerate discount.
The separation will allow each business to outperform separately and
is in the best interests of Shareholders, partners, and employees.
Decision of Tax Dispute between OCI S.A.E. and
the Egyptian Tax Authority
In November 2014, the Egyptian Tax Authority’s (ETA) Independent
Appeals Committee, the responsible body overseeing the tax dispute
between the Company’s subsidiary, Orascom Construction Industries
S.A.E. (OCI S.A.E.), and the ETA, ruled in favor of the Company.
The tax dispute was related to the sale of its cement assets to Lafarge
SA in 2007.
As a result of the positive ruling, the balance of the tax liability is
released through the 2014 income statement. The Board also
unanimously approved the transfer of the rights to amounts paid to
the ETA in April 2013 to the Tahya Misr (“Long Live Egypt”) Fund.
No formal agreement with the Tahya Misr social fund has been
drafted yet.
In January 2015 the ETA appealed the ruling of the Independent
Appeals Committee. The appeal did not include new facts or
documents but was rather ?led as a legal formality by the ETA, which
is customary for Egyptian government entities. The proceedings
usually take between two to three years before the court issues its
judgment. The Company believes the likelihood of a judgment issued
in favour of the ETA is weak. Please refer to note 12 of the ?nancial
statements for further information.
62 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 63
OCI N.V.
CORPORATE GOVERNANCE
REPORT OF THE BOARD OF DIRECTORS
CONTINUED
Coal-Fired Power Plant with IPIC
In November 2014, the Engineering & Construction Group and
the International Petroleum Investment Company (IPIC), signed
a Memorandum of Understanding with the Egyptian government
formalizing the parties’ cooperation in the development, construction
and operation of a 2,000 – 3,000 Megawatt (MW) coal-?red power
plant in Egypt. The plant will utilize advanced clean-coal technology
that complies with EU standards for emission control. The MoU gives
the Orascom Construction - IPIC consortium exclusivity on a site
location in the vicinity of El Hamarawein port on the Red Sea coast
for a period of 18 months and allows the consortium to conduct and
?nalize all relevant project studies, an important step in executing the
project. This will not be part of the Company’s business going forward.
Attendance
The following table shows the attendance of Directors at Board
meetings for the year 2014. If Directors are unable to attend they have
the opportunity to discuss any agenda items with the Chairman.
Board Attendance
Date of appointment
during the year
Number of
meetings held
Number of
meetings
attended
Michael Bennett 25 January 2013 6 6
Nassef Sawiris 16 January 2013 6 6
Salman Butt 16 January 2013 6 6
Jan Ter Wisch 25 January 2013 6 6
Kees van der Graaf 9 December 2013 6 6
Sipko Schat 9 December 2013 6 6
Jérôme Guiraud 26 June 2014 3 3
Robert Jan van de
Kraats*
26 June 2014 3 2
* Mr Van de Kraats attended two meetings before his appointment.
Board Committees
At the end of 2013, three committees were installed: the Audit
Committee, the Nomination and Governance Committee and the
Remuneration Committee. The Health, Safety and Environment
Committee was established in 2014. Terms of Reference were drafted,
approved and implemented for all Committees and the Committee
meetings were conducted in line with those Terms of Reference. All
committees are made up of Non-Executive members who meet the
independence and experience requirements to the extent required
under applicable securities laws, stock exchange regulations and By-
Laws, The Committees reported on a regular basis to the Board. The
duties of each committee are described in their respective charters,
which can be found on the corporate website. The full reports of each
committee are set out below.
Annual General Meeting & Extraordinary General Meeting
of Shareholders
On 26 June 2014 the Annual General Meeting was held, which
amongst other comprised the following resolutions:
• Appointment of Robert Jan van de Kraats as an Independent Non-
Executive member of the Board;
• Appointment of Jérôme Guiraud as Non-Executive member of the
Board;
• Approval of the Remuneration Policy; and
• Cancelation of 45,000 ordinary shares.
All resolutions were adopted and the minutes of the Annual General
Meeting are published on the corporate website.
On 12 November 2014, an Extraordinary General Meeting was held
which comprised the following resolutions in regard of the spin-off of
the Engineering & Construction Group:
• Increase of the issued share capital by $ 1.4 billion; and
• Decrease of the issued share capital by $ 1.4 billion.
All resolutions were adopted and the draft minutes of the Extraordinary
General Meeting are published on the corporate website.
Compliance with the Dutch Corporate Governance Code
The Board subscribes the Dutch Code’s principles and best practice
provisions. In accordance with the Corporate Governance Code’s
‘apply or explain’ principle, OCI N.V. has outlined below departures
from the Dutch Code to ensure full transparency.
• Provision IV.3.1: The General Meetings of Shareholders are not
webcasted for cost ef?ciency reasons.
• Provision II.3.2: The CEO is Non-Executive Chairman of the Board
of Directors of Orascom Construction Limited. He is appointed
to the Orascom Construction Limited Board as he has signi?cant
understanding and experience in managing the Engineering &
Construction Group. In order to give Orascom Construction Limited
a strong start as an independent company it was required that
the CEO take the Chairman position. Reference is made to the
paragraph on Con?icts of Interests on page 65. The CEO is a Non-
Executive Director of BESIX, a subsidiary of Orascom Construction
as well as a Non-Executive Board member of Lafarge S.A.
The Board con?rms that throughout the year, the Company has
complied with the Dutch Code, and any departures from the Dutch
Code are explained in accordance with the Dutch Code’s “comply
or explain” principle. Any substantial changes to the Corporate
Governance structure undertaken by the Board will be presented to
the General Meeting of Shareholders
Remuneration
The annual remuneration for Non-Executive Board Members was
determined by the General Meeting of Shareholders on 26 June,
2014. More information can be found on page 76.
The Audit Committee Report
The Audit Committee consists of ?ve (Non-Executive) members who
are mandated with monitoring and supervising activities related to the
Company’s ?nancial, internal audit, compliance and tax performance.
Six Audit Committee meetings and one conference call were
held in 2014. On 22 April 2014 the 2013 full year ?nancial results
and statements were discussed. As these were the ?rst ?nancial
statements issued for the Company, the Audit Committee extensively
discussed and reviewed signi?cant accounting topics for 2013.
In accordance with its Charter, the Audit Committee reviewed the
annual report including the ?nancial statements 2014 and non-
?nancial information, the annual report including non-?nancial
information prior to its publication. The Audit Committee also reviewed
and advised on:
• The functioning of the Company’s internal control processes and
recommended improvements for the internal audit function and the
progress of the 2014 internal audit plan and the 2015 internal audit
plan;
• Financing Strategy;
• Trading updates;
• Litigation and major legal cases such as Sidra and the GPP cases;
• Financial aspects of the spin-off of the Engineering & Construction
Group;
• Risk Management;
• The Corporate governance framework in place;
• The Compliance function and Compliance programme to be
implemented in 2015;
• Discussed Related Party Transactions;
• Tax review and Policy; and
• Accounting systems were discussed and advise was provided on
the new accounting system that was developed and introduced in
2015
Financial Reporting and External Auditor
The Company’s external auditor is KPMG Accountants N.V. The
external auditor attended all Audit Committee meetings in 2014 and
2015, before sign-off on the ?nancial statements in full. The Board
prepared and approved an Independence policy for the external
auditor on 6 March 2015 which will be applied in 2015. The Chairman
met with the internal and external auditor in advance of every Audit
Committee meeting in order to secure all relevant issues to be
addressed with suf?cient time allocation.
The Nomination and Governance Committee Report
The Nomination and Governance Committee consists of four (Non-
Executive) members. Three meetings and one conference call were
held in 2014. The Nomination and Governance Committee:
• Discussed and approved the selection and appointment criteria and
approved a procedure in this regard;
• Assessed the size and composition of the Board;
• Searched for a female board member;
• Assessed the individual functioning of Directors;
• Discussed succession and emergency planning;
• Discussed ancillary positions held by Directors, the acceptance
thereof and approved a policy in this regard;
• Evaluated the status of the corporate governance framework and
compliance with the Dutch Corporate Governance Code.
The Remuneration Committee Report
The Remuneration Committee consists of three Independent (Non-
Executive) members. Four meetings and three conference calls were
held this year. The Remuneration Committee:
• Prepared the remuneration policy for approval by the General
Meeting of Shareholders on 26 June 2014;
• Discussed and decided on the short term and long term incentives;
• Started preparations on an adjusted remuneration policy post spin-
off of the Engineering and Construction group.
More information on the remuneration policy and the 2014
remuneration of the Board can be found in the Remuneration Report
on page 72.
The Health, Safety and Environment Committee Report
The Health, Safety and Environment (HSE) Committee consists of
three (Non-Executive) members. Three meetings were held in 2014.
The HSE Committee:
• Set HSE targets for 2014;
• Discussed a reporting system on incidents to the HSE Committee;
• De?ned HSE Key Performance Indicators (KPI) for both the
Fertilizers & Chemicals Group and the Engineering & Construction
Group;
• Established a KPI reporting format to the HSE Committee;
• Discussed a HSE remuneration/bonus system for employees.
More information on HSE can be found in the HSE section in this
report on pages 52-53.
Con?icts of interest
The Board members are bound by the Company’s Code of Business
Principles and Conduct, and Code of Ethics. Potential or actual
con?icts of interest are governed by the Company’s Articles of
Association and By-Laws. A Director shall immediately report any
con?ict of interest or potential con?ict of interest that is of material
signi?cance and may not take part in any discussion or decision-
making that involves a subject or transaction in relation to which he
has a con?ict of interest with the Company. In 2014 no such situation
occurred. Due to the spin-off of the Engineering & Construction
Group a con?ict of interest may occur in 2015 since the CEO and
the CFO have been elected as Non-Executive directors on the Board
of Orascom Construction Limited following the spin-off due to their
experience, while retaining their Executive and Board positions at
OCI N.V. It has been decided that, in case a con?ict of interest arises
between the Company and Orascom Construction, the CEO will
not participate in the discussions and decision-making that involves
a transaction with Orascom Construction within the Company. In
addition, the CFO will not participate in the decision-making process
in Orascom Construction in respect of such transaction.
Indemni?cations
The Company grants an indemnity to all of its Directors to the extent
permitted by law. These indemnity amounts are uncapped in relation
to losses and liabilities which Directors may incur to third parties in the
course of acting as a Director of the Company, or in any of?ce where
such duties are performed at the request of the Board, or as a result
of their appointment as Directors.
64 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 65
OCI N.V.
CORPORATE GOVERNANCE
RISK MANAGEMENT AND COMPLIANCE
Risk Mitigating Actions
Strategic
Economic and political conditions in the markets in which we operate
OCI N.V. does business in both developed and emerging markets,
which means that we are exposed to some countries where there is a
risk of adverse sovereign action. Accordingly, developments in any of
the countries in which we operate can create an uncertain environment
for investment and business activity and may adversely impact our
business.
We mitigate the impact of any single market by diversifying our presence
with operating facilities in both emerging and developed markets. We
actively monitor economic, political and legal developments and strive to
be a ‘local’ player in each of our markets.
Inability to realize all of the anticipated bene?ts of the demerger
of the Construction Group
There can be no assurance that the Company will realise some or all of
the potential bene?ts that we expect from the demerger in the time we
expect.
In addition, we will require a period of transition to implement our
strategy and streamline our operations without the construction
business.
We anticipated the impact a demerger would have on the operation
and management of both the engineering & construction and fertilizer
& chemicals businesses and took several steps to ensure that each
business operated as an independent group. This has facilitated our
ability to demerge the construction group and we expect a short
transition period that is covered by a Shared Service Agreement.
For more information please refer to note 2.2.4 of the ?nancial
statements and to the Demerger section on page 38.
Tax Verdict Appeal
In November 2014, the Egyptian Tax Authority’s (ETA) Independent
Appeals Committee, the responsible body overseeing the tax dispute
between OCI N.V.’s subsidiary, Orascom Construction Industries S.A.E.
(OCI S.A.E.), and the ETA, ruled in favor of the Company.
The tax dispute related to the sale of OCI S.A.E.’s cement assets to
Lafarge SA in 2007. Although the management and advisors of OCI
S.A.E. believed that the aforementioned transaction was exempted of
tax, management entered into a settlement to resolve the tax dispute
whereby approximately $ 1 billion would be paid over a ?ve-year period.
The agreement was followed by payment of a ?rst installment amounting
to approximately $ 360 million in 2013.
Following the change in government, the Egyptian Public Prosecutor
thoroughly investigated the entire tax ?le over a six months period and
fully exonerated OCI S.A.E. of any tax evasion in a ?nal written opinion
published on 18 February 2014. Subsequently, OCI S.A.E. relaunched
its legal right to appeal the tax settlement and the case was referred
to the Independent Appeals Committee. On 4 November 2014, the
Independent Appeals Committee ruled in favor of the Company. As a
result of the positive ruling, the balance of the tax liability is released
through the 2014 income statement. The Board also unanimously
approved the transfer of the rights to amounts paid to the ETA in April
2013 to the Tahya Misr (“Long Live Egypt”) Fund. No formal agreement
with the Tahya Misr social fund has been drafted yet.
On 11 December 2014, OCI S.A.E. received a noti?cation that the ETA
lodged an appeal before the ?rst instance court. On 6 January 2015, the
court decided to postpone the ?rst hearing to 27 March 2015 and again
to 25 May 2015.
As this dispute does not relate to either business exclusively, any
liabilities and any recoveries are shared under the Tax Claim Agreement
on a 50% basis between OCI N.V. and Orascom Construction Limited
(excluding the EGP 2.5 billion to be paid to Tahya Misr social fund in
Egypt).
The appeal did not include new facts or documents but was rather
?led as a legal formality by the ETA which is customary for Egyptian
government entities. The proceedings usually take between two to
three years before the court issues its judgment. The Company believes
the likelihood of a judgment issued in favour of the ETA is weak.
Although, it is very rare to see judgments issued by Appeals Committees
overturned by courts there can be no assurance that the appeal will not
be accepted by the ?rst instance court, and an adverse decision could
impact the Company’s ?nancial performance. Please also refer to note
12 of the ?nancial statements.
Introduction
Our businesses inherently involve risks. Our management is
cognizant of these risks and takes a measured mitigation approach
to maximize our ability to successfully pursue sustained growth.
Our Board and management foster a transparent company-wide
approach to risk management and internal controls as outlined in
our corporate governance section, which allows our businesses to
operate effectively. We are working diligently to further enhance our
Risk Management within the Company; as part of this process Non-
Financial Letters of Representation have been issued by key operating
units.
Our risk appetite is ?exible to account for our diversi?ed market
presence and product portfolio, and is tailored to four main
categories:
• Strategic: As a leading player in our markets, we are able to
take certain calculated strategic risks that create opportunities
to maximize our ability to deliver outstanding value to our
shareholders. Our ability to adapt our risk management to meet the
requirements of our global positioning and diversi?ed exposure to
emerging and developed markets is key to maintaining our success.
• Operational: We aim to minimize operational risks while maximizing
our ability to capitalize on our leadership positions in our markets.
We strive to maximize operational ef?ciency while fostering a safe
and entrepreneurial environment for our employees.
• Financial: We implement a prudent ?nancial and reporting strategy
to maintain a strong ?nancial position. Our key ?nancial policies are
described in the notes to the ?nancial statements.
• Compliance: All employees are bound by our Code of Business
Principles & Conduct and Code of Ethics, which we are in the
process of embedding throughout the Company. It is in the values
of the Company and its employees to act with honesty, integrity
and fairness to foster a business climate that maintains such
standards. We strive to comply with applicable laws and regulations
everywhere we do business.
Key Risk Factors
Our key risks as perceived by management are outlined below,
accompanied by an overview of how these risks are mitigated and
the opportunities that can arise from these actions. The sequence
in which these risks are presented in no way re?ects any order of
importance, chance or materiality. If any of the following risks actually
occurs, the Company’s business, prospects, ?nancial condition or
results of operations may be materially affected.
Although management believes that the risks and uncertainties
described below are the most material risks, they are not the only
ones OCI N.V. may face. All of these factors are contingencies which
may or may not occur. Additional risks and uncertainties not presently
known to management or are currently deemed immaterial may also
have a material adverse effect on the Company, results of operations
or ?nancial condition.
66 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 67
OCI N.V.
CORPORATE GOVERNANCE
RISK MANAGEMENT CONTINUED
Risk Mitigating Actions
Operational
Cost of Production
Our cost of production is primarily dependent on the availability and cost
of natural gas, the primary feedstock in manufacturing our products. Our
production facilities can be adversely impacted by supply interruptions,
as seen in Egypt, where our plants have experienced volatility since
2012 due to the government prioritizing the supply of natural gas to the
electricity sector to reduce power blackouts in the country.
Our costs are also subject to ?uctuations in the cost of labour, other raw
materials, and foreign exchange rates.
We must implement, achieve and sustain cost improvement plans,
including our outsourcing projects and those related to general overhead
and workforce rationalization.
Our success is dependent, in part, on our continued ability to manage
cost ?uctuations through pricing actions and cost savings. We have
hedged our global exposure to natural gas price ?uctuations through a
mix of long-term contracts in Egypt, the United States and Algeria, and
spot prices in the United States and The Netherlands.
With regard to supply issues in Egypt, the Egyptian government has
taken several steps to address the country’s gas supply issues. We
expect these efforts to improve supply of natural gas in 2015.
Business continuity and competition risk
We rely on continued demand for and distribution of our products at
favourable prices. Our continued success is dependent on the quality
and pricing of our products, and on our continued positive reputation.
This means we must be able to obtain and manage our resources at
competitive cost. Our success is also dependent on effective marketing
programs in the competitive environments in which we operate.
To address these challenges, we have policies in place to respond
to competitive factors and maintain mutually bene?cial relationships
with our key customers, in order to effectively compete and achieve
our business plans. Since our goals include a growth component tied
to acquisitions, we manage and integrate key acquisitions, including
achieving the cost and growth synergies in accordance with stated
goals.
Commodity pricing and over-supply risk
A change in market dynamics in our fertilizer and industrial chemicals
production portfolio, such as over-supply, may result in lower product
prices, which would adversely impact our margins.
We have a diversi?ed production portfolio comprising fertilizers,
downstream products, and industrial chemicals, which mitigates the
risk of potential downturns in any natural gas linked sector. We are also
geographically diversi?ed in emerging and developed markets to reduce
market-related risks.
Risks associated with our joint ventures
We participate in joint ventures and other partnerships including Sorfert
Algérie and Egypt Basic Industries Corporation. Our investments in joint
ventures involve risks that are different from the risks involved in owning
facilities and operations independently.
The Shareholders Agreements for our joint ventures include clauses that
protect OCI N.V.’s economic and operating interests as applicable.
We maintain close working relationships with our partners and monitor
the operating and ?nancial results of the joint ventures in which we hold
minority stakes or do not have management control. In our larger joint
ventures, such as EBIC and Sorfert, we retain management control and
seats on each joint venture’s Board of Directors.
In addition, we have a policy of constantly reviewing all businesses to
determine whether they continue to be core businesses worth retaining
on a long term basis. This is particularly applicable to businesses in
which we do not have control. If a business becomes non-core or has
reached a certain level of maturity, we actively pursue monetizing the
business through divestment.
Human Capital
Our ability to employ, develop, and retain talented employees is
essential to maintain our high quality operations and management.
We have been able to attract, motivate and retain knowledgeable and
experienced employees due to our reputation and market position, our
in-house training programs, our Employee Incentive Plans (as described
in note 23 of the ?nancial statements), as well as our strategic
partnerships with industry leaders, which offer employees exposure to
high pro?le projects and advanced technologies.
Risk Mitigating Actions
Strategic
Risk of adverse sovereign action
We do business in locations where we are exposed to a greater than
average risk of adverse sovereign action, including overt or effective
expropriation or nationalisation of property, the renegotiation of contract
terms, the implementation of export controls on commodities regarded
by them as strategic, the placement on foreign ownership restrictions, or
changes in tax structures or free zone designations.
We work closely with the governments in the countries in which we do
business to maintain positive working relationships. Although there is
no guarantee that the government of a location in which we operate will
not adopt adverse policies going forward, we have worked to minimize
this risk through water-tight contracts for our assets and government
agreements. Our legal team also works diligently to monitor and review
our practices and any changes in laws or regulations in the countries
in which we operate to provide reasonable assurances that we remain
in line with all relevant laws. Management has also drafted contingency
plans for various unforeseen events and adverse scenarios.
Global economic conditions
Economic changes may result in business interruption, in?ation, de?ation
or decreased demand for our products. Our success will depend in
part on our ability to manage continued global economic uncertainty,
especially in our markets.
We aim to maintain a strong ?nancial position that would cushion any
global economic or cyclical downturns. As a fertilizer producer, our long-
term natural gas supply contracts and natural gas hedge in the United
States provide us with competitive feedstock prices, allowing us to
withstand a decline in global economic conditions.
Ability to execute large green?eld projects on time
OCI N.V. is developing two large-scale green?eld production facilities in
the United States: Iowa Fertilizer Company (IFCo) and Natgasoline LLC.
Our ability to achieve our growth targets is in part dependent on our
ability to complete these projects on time and in line with our expected
cost of construction and development.
Both green?eld projects are being executed by Orascom Construction
Limited under an arm’s length agreement. Orascom Construction has
more than 15 years of fertilizer plant construction experience and more
than 20 years’ experience in the construction of large-scale, complex
industrial projects. In addition, the existing supportive regulatory
and physical infrastructure in the United States is conducive to new
investments, as demonstrated by the early assistance received for both
projects on the state and federal levels.
68 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 69
OCI N.V.
CORPORATE GOVERNANCE
RISK MANAGEMENT CONTINUED
Risk Mitigating Actions
Financial
Ability to raise debt or meet ?nancing requirements
Our ability to complete strategic acquisitions and green?elds or
re?nancing existing debt is contingent on our access to new funding.
Although we strive to ensure that adequate levels of working capital
and liquidity are maintained, unfavorable ?nancial market conditions
may adversely affect our ?nancing costs, hinder our ability to achieve
additional ?nancing, hinder our ability to re?nancing existing debt, and/or
postpone new projects. This could therefore have an adverse effect on
business prospects, earnings and/or our ?nancial position.
We maintain a strong ?nancial position and strive to maintain our
creditworthiness with our creditors. Our treasury department closely
monitors our cash position and credit lines to ensure our ?nancial
?exibility. We have also diversi?ed our funding sources to avoid
dependence on a single market, and have staggered our debt maturity
pro?le to reduce repayment burdens.
Currency ?uctuations
A substantial portion of the company’s consolidated revenue, operating
expenses and long-term debt is denominated in foreign currencies
Signi?cant changes in the exchanges rates of operational currencies,
which include the US Dollar, the Euro, the Egyptian Pound, and the
Algerian Dinar, can have a material effect on the reported and actual
?nancial performance of the company.
We hedge our foreign exchange cash ?ow risk on a consolidated basis
by matching our foreign currency-denominated liabilities with continuing
sources of foreign currencies through a centralized treasury.
Compliance
Regulatory conditions in the markets in which we operate
Changes in laws, regulations and the related interpretations may alter
the environment in which we do business. This includes changes
in environmental, competition and product-related laws, as well
as changes in accounting standards and taxation requirements. In
addition, this includes regions where corrupt behaviour exists that could
impair our ability to do business in the future or result in signi?cant ?nes
or penalties. Our ability to manage regulatory, tax and legal matters and
to resolve pending matters within current estimates may impact our
results.
We closely monitor the legal developments in each of our markets.
Our Code of Business Principles and Conduct, and Code of Ethics set
out our commitment to comply with the laws and regulations of the
countries in which we operate.
It is in the values of the Company and its employees to act with
honesty, integrity and fairness to foster a business climate that
maintains such standards. We strive to comply with applicable laws and
regulations everywhere we do business.
Health, Safety and Environment
Ability to maintain our health, safety and environment (HSE) standards
HSE is a vital aspect at OCI N.V. We have a deep commitment to
maintaining our strong HSE track record. Despite the nature of our
businesses, we aim to prevent every accident through stringent HSE
rules, standards and training programs.
We implement strict HSE training and operating discipline at every plant
in order to minimize HSE risks, and closely monitor our plants through
regular audits. Our safety and emissions records meet or exceed
international standards, underscoring our commitment to providing
our employees with a safe, secure and environmentally conscious
workplace.
In addition, the Board of Directors established an HSE Committee
during the year and has worked diligently on OCI N.V.’s HSE monitoring
and reporting processes.
Risk management approach
Our risk management framework is being developed to align with the
Dutch Corporate Governance Code. Our risk management framework
is devised to provide reasonable assurances that the risks we face are
properly evaluated and mitigated, and that management is provided
with information necessary to make informed decisions in a timely
manner.
The key elements of our internal risk management, compliance and
control systems in 2014 were:
Code of Conduct
OCI N.V. is committed to conducting all business activities responsibly,
ef?ciently, transparently, and with integrity and respect towards all
stakeholders. Our values underpin everything we do and form the
essence of the Company’s Code of Business Principles & Conduct,
which should be read in conjunction with our Code of Ethics (together
forming the Code of Conduct). The Code of Conduct contains the
policies and principles that govern how each director, executive of?cer
and employee of OCI N.V. is expected to conduct his or her self while
carrying out his or her duties and responsibilities on behalf of the
Company.
Whistleblower Policy
The Whistleblower Policy applies to all employees, of?cers and
directors of OCI N.V. internal reporting of suspected criminal or
unethical conduct by or within the Company is vital for maintaining
our success. If received, all reports are treated with the utmost
con?dentiality and are promptly investigated without the risk of
recourse for the reporting employee so long as their report is made
in good faith.
Insider Trading Policy
The Insider Trading Policy applies to all employees, of?cers and
directors of OCI N.V. and prohibits every employee from using insider
information to a transaction in OCI N.V. securities, or executing a
transaction in OCI N.V. securities if that transaction may reasonably
appear to have been executed while the employee was in possession
or had access to inside information.
Internal Financial Reporting & Audits
Subsidiaries are required to provide management with weekly activity
reports, with a detailed monthly review of performance, ?nancials
and operating issues held for each subsidiary and led by the Chief
Executive Of?cer, Chief Financial Of?cer, and the Chief Operating
Of?cer.
A detailed budget for each subsidiary is prepared and presented
to management in the fourth quarter of each preceding year, and
includes a one year forecast. The subsidiary budgets are updated
monthly to account for actuals, and the forecasts are updated at a
mid-year review. These budgets and forecasts are consolidated into
an OCI N.V. budget and forecast, which is used by management as
a tool to evaluate the Company’s investment strategy, performance
indicators, and operations.
Periodic Internal Audits are conducted to review any speci?c issues
at the subsidiary level, and management is consulted on performance
developments and variations.
The Board of Directors is given a full ?nancial, operational, and
strategic update by the Executive directors at each Board meeting.
The Group Controller provides guidance on internal and ?nancial
controls that must exist for each process and monitors the
implementation of these controls in collaboration with the internal audit
and controls department.
Strategic and Operational Risk Management
Each subsidiary reports on the top risks it faces at its monthly review
either in writing or verbally, including the nature of the risk, the
likelihood of it materialising, and the ?nancial and operational impact
it may have on the subsidiary. Management monitors these risks and
provides guidance where necessary.
Operationally, health, safety, environmental, and quality systems are
in place at each subsidiary. All our subsidiaries have been awarded
relevant certi?cations, including ISO and REACH, among others. In
addition, insurance policies have been taken out for operating entities
to provide full coverage.
70 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 71
OCI N.V.
CORPORATE GOVERNANCE
This report gives an overview of the remuneration of the Board and
explains how the remuneration policy was applied in 2014.
Introduction
The Remuneration Committee (“the Committee”) oversees the
remuneration policy, plans and practices of OCI N.V. and recommends
changes when appropriate. The Committee is comprised solely of
Non-Executive Directors from the Company’s Board of Directors.
In 2014, the Committee, with assistance from Mercer, prepared
a new Remuneration Policy for the Executive and Non-Executive
Directors which was presented to Shareholders for approval in the
Annual Meeting of Shareholders on 26 June 2014. The approved
Remuneration Policy was introduced with effect from ?nancial year
2014. Shareholders’ approval was also received for the long-term
incentive plan of the Executive Directors and for the extension of the
long-term incentive plan of the employees.
The 2014 Remuneration Report is comprised of two sections:
1. Detail on the current Executive and Non-Executive Board
remuneration policy
2. Details of actual remuneration paid to the Executive and Non-
Executive Directors in 2014
A new Policy will be presented to the 2015 Annual General Meeting
of shareholders. The changes to the Policy are in response to the
demerger of our Engineering & Construction group in early 2015. The
new Policy does not involve substantive changes to compensation
levels or incentive plan opportunities.
Part 1: Current Remuneration Policy
Remuneration policy: objective and scope
The objective of OCI N.V.’s remuneration policy is to attract, motivate
and retain the quali?ed individuals that it needs in order to achieve
its strategic and operational objectives. The policy is designed in
the context of international competitive market trends, the relevant
provisions of statutory requirements, corporate governance best
practices, the societal context around remuneration and the interests
of OCI N.V.’s shareholders and other stakeholders. The policy is
simple and transparent, promotes the interests of the Company in
the medium and long term, and encourages a “pay for performance”
culture.
Term of Employment and severance arrangements
The Executive Directors referred to in this Remuneration Report are
the Chief Executive Of?cer (CEO) and Chief Financial Of?cer (CFO).
The details of their appointment terms are provided below:
Name Title Date of appointment Notice period
Nassef Sawiris
Chief Executive
Of?cer (CEO)
16 January 2013 3 months
Salman Butt
Chief Financial
Of?cer (CFO)
25 January 2013 3 months
If the Company terminates a service agreement with an Executive
Director other than due to an urgent cause or serious culpability, the
Executive Director is entitled to a severance payment of an amount
equal to 100% of base salary.
Peer groups
The Remuneration Committee consults multiple points of data
when setting the remuneration policy, as well as the structure and
quantum of remuneration. To ensure the competitiveness of OCI N.V.’s
remuneration levels, benchmark remuneration data from a peer group
of international companies similar in size and scope to OCI N.V. is
used for decision making. In addition, the Committee also refers to
remuneration levels at Dutch listed companies of a similar size to
OCI N.V.
International labour market peer group
• Agrium
• Akzo Nobel
• CF Industries
• Chicago Bridge & Iron (CB&I)
• DSM
• Fluor
• Leighton Holdings
• Petrofac
The peer group used for the assessment of Total Shareholder Return
(described in the LTI section below) is different to the one detailed
above as it is used for a different purpose. The Total Shareholder
Return peer group is intended to re?ect the market in which OCI N.V.
competes for investment rather than for executive talent.
The Committee has reviewed the appropriateness of both peer groups
following the spin-off of the Engineering & Construction Group and will
propose revisions for approval as part of a new Policy at the Annual
General Meeting of Shareholders in 2015.
REMUNERATION REPORT
Elements of remuneration
The remuneration policy consists of ?ve main elements:
• Base salaries: ?xed cash compensation set in line with individual
performance and contribution to Company goals with reference to
external market data;
• Short-term incentives (annual bonus): performance-based annual
bonus to encourage and reward the achievement of annual ?nancial
performance measures and other speci?ed corporate objectives;
• Matching rights over OCI N.V. shares where Executive Directors
elect to defer part of their bonus into OCI N.V. shares for at least
three years;
• Long-term incentives: share-based compensation focusing on
enterprise value creation and retention; and
• Other bene?ts: simple bene?t plans focusing on key needs.
Base salaries
The current base salaries re?ect the size and international scope
of the Executive Director roles and the calibre and experience of
the individuals. The base salaries include a ?xed cash allowance
(amounting to 25% of the total base salary) which is designed to
compensate the Executive Directors for their personal provision of
key bene?ts such as pension, car, and life and disability insurance.
Short term incentives
The annual bonus is a key element of a “pay for performance”
culture and is linked to pre-determined, measurable targets set and
assessed by the Committee. Short-term incentives provide context for
Management decisions, ensure focus on primary corporate ?nancial,
operational or strategic goals, and reward decisions that drive short-
term results and support long-term strategy. For the CEO, the STI is
capped at maximum of 150% of base salary. On-target performance
will result in a pay-out of 75% of base salary and threshold
performance 30% of salary. For the CFO, the STI is capped at 120%
of base salary, on-target performance will result in a pay-out of 60%
of base salary and threshold performance 24% of salary.
At the beginning of each year, the Remuneration Committee
establishes the performance measures and targets based on OCI
N.V.’s business priorities for the year. Speci?c targets will not be
disclosed as they are commercially sensitive. At the end of the
year the Committee will review performance against the targets
and approve STI awards based on the performance achieved.
The strategic measures will be determined and assessed by the
Committee based on key priorities for the year.
Payment of the STI to the CEO and CFO will be at least 50% in cash
(net of taxes) with the option to invest 50% (net of taxes) in the shares
of the Company for a period of three years. Any deferral of STI into
shares will result in the award of matching share rights on a 1:1 basis
to incentivise Executive Directors to increase their long-term interest
in the Company. Matching rights will be based on the pre-tax value
of the amount elected for deferral such that the matching shares
are, after tax, equivalent to the number of deferred shares. Aligned
to international best practice, the matching rights will be adjusted
to re?ect any dividends paid during the vesting period. Vesting of
the matching rights at the end of the holding period will normally be
conditional upon the incumbent still being employed by OCI N.V.
After vesting, shares arising from the matching rights (net of tax)
will be held for a further two years in line with the Dutch Corporate
Governance Code.
Other executives and senior managers will also be invited to
participate in a similar deferred bonus and matching plan.
Payments under the STI may be reduced by up to one quarter in
the event that health, safety and environment (“HSE”) performance
is judged unsatisfactory by the Remuneration Committee, taking
account of feedback from the HSE Committee.
Long term incentives
The Performance Share Plan aims to:
• Incentivise the creation of shareholder value in excess of that
achieved by comparator organisations.
• Align the interests of executives with those of shareholders.
• Comply with the Dutch Corporate Governance Code Best Practice.
• Increase retention of key executive.
Executive Directors will be granted performance share awards which
will vest after three years only if pre-speci?ed performance targets are
met. Vested shares for Executive Directors (net of tax) will then be held
for a further 2 years after vesting in line with the requirements of the
Dutch Corporate Governance Code.
The number of performance shares will be calculated based on the
face value method which calculates the number of shares granted
based on the share price at date of grant and a ?xed percentage of
base salary. The maximum award size for all Executive Directors is
100% of total salary.
Performance targets will be based on relative Total Shareholder Return
(TSR) and the following peer group of international construction and
fertilizer/chemicals/gases was approved as part of the Remuneration
Policy.
Share awards under the plan will be made annually.
TSR peer group
• Agrium
• Air Products
• Akzo Nobel
• Balfour Beatty
• Boskalis Westminster
• Celenese
• CF Industries
• Chicago Bridge & Iron
• Colas
• Koninklijke DSM
• Fluor
• Lanxess
• Leighton Holdings
• Methanex
• Petrofac
• Solvay
• Westlake Chemicals
• Yara International
72 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 73
OCI N.V.
CORPORATE GOVERNANCE
The design of the plan ensures that no pay-out will be made for
below-threshold performance. Threshold vesting will begin with
performance at the 40
th
percentile of the peer group. At threshold
performance (40
th
percentile) 25% of the award will vest, for target
performance (67
th
percentile) performance 100% of the award will
vest and at maximum performance (90th percentile) vesting will be
equivalent to 150% of the original award. Straight line vesting will
occur between these points.
TSR calculations will be externally veri?ed. Appropriate adjustments
will be made to deal with mergers and acquisitions, demergers, rights
issues and other material changes.
As a result of the demerger of the Engineering & Construction group,
the above peer group was reviewed by the Committee with the
assistance of Mercer. As a result, a new TSR peer group has been
agreed which is focused on fertilizer and chemicals companies.
Given that the demerger was agreed by the Board less than one year
into the three year TSR performance period, the new TSR peer group
will be applied for the full three year period.
The new peer group is as follows.
Other bene?ts
As mentioned, the base salaries provided to the Executive Directors
include a ?xed cash allowance, which is 25% of the total, in lieu of
pension, car and other key bene?ts. No material pension bene?ts
in excess of statutory requirements are offered and the Executive
Directors are not eligible for a car bene?t. The Committee believes that
this is a transparent approach.
The Executive Directors receive medical insurance, use of a mobile
phone, and reimbursement of business expenses. They also bene?t
from directors’ and of?cers’ liability insurance coverage. In addition,
the CEO is able to expense the use of a private aircraft for business
travel.
Loans and guarantees
No personal loans or guarantees, including mortgage loans, are
offered to members of the Board.
Claw back
A “claw-back” clause is included in the service agreements of the
Executive Directors, applicable in the situation that the ?nancial or
other information on which the pay-out of variable remuneration was
based is determined to be incorrect. This will be applied if needed with
the discretion of the Remuneration Committee.
Non-Executive Directors
The remuneration of the Non-Executive Directors consists of ?xed fee
payments for Board membership and for service on the committees.
The fees are not linked to the ?nancial results of the Company.
Non-Executive Directors do not receive any performance or equity-
related compensation and do not accrue any pension rights with
the Company. Non-Executive Directors bene?t from directors’ and
of?cers’ liability insurance coverage, and are not entitled to any
bene?ts upon the termination of their appointment.
REMUNERATION REPORT CONTINUED
Part 2: Actual Remuneration
Executive Directors
The details of the individual remuneration of the Executive and Non-
Executive Directors and its costs to the Company are presented in the
table below:
Remu-
nera-
tion Name Currency
Base
salary
Short term
incentive
pay
1
Share-
based
compen
sation Bene?ts Pension
2014 Nassef
Sawiris
$ 2,000,000 1,000,000 1,320,482 0 0
Salman
Butt
$ 1,680,000 840,000 83,545 0 0
2013 Nassef
Sawiris
$ 2,000,000 1,000,000 1,498,872 0 0
Salman
Butt
$ 1,689,180 800,000 0 0 0
1 For 2014 remuneration the short term incentive pay relates to performance in 2014
which was paid in early 2015. For 2013 remuneration the short term variable pay
relates to performance in 2013 and was paid in 2014. Both CEO and CFO have
chosen to invest 50% of the 2014 bonus in OCI N.V. shares (investment shares).
Base salary
The base salary of the Chief Executive Of?cer was $ 2,000,000
which remained unchanged from 2013. The base salary of the Chief
Financial Of?cer was $ 1,680,000 and remained unchanged from
2013. For the avoidance of doubt, the Executive Directors do not
receive housing allowances or other expatriate-style bene?ts. The
base salaries of the Executive Directors include their fees for their
positions on the OCI N.V. Board of Directors. As mentioned previously,
the Executive Director base salaries disclosed above include a ?xed
cash allowance of 25% of the total base salary in lieu of pension, car
and other key bene?ts.
No changes to salaries for the Executive Directors are proposed for
2015.
Short term incentives 2013 and 2014
The company granted bonuses to the CEO and CFO during 2014
relating to the performance of 2013. The expenses relating to this
bonus awards were recorded in the ?nancial year 2014. We have
included the bonus relating to the performance of 2013 in the
overview of actual remuneration paid for the year 2013.
With effect from the 2014 ?nancial year, bonus payments will be made
shortly after the end of the ?nancial year and disclosed in the year in
which they were earned.
For 2013 performance, bonuses were discretionary in line with the
previous Policy. Therefore the Remuneration Committee reviewed
the overall performance of the business in that year and the speci?c
contributions of the CEO and CFO in the context of a year during
which substantial change occurred. It concluded that it would be
appropriate to pay a below-target bonus of 50% of salary to both
CEO and CFO. This results in a short term incentive for the CEO of
$ 1,000,000 and for the CFO of $ 800,000 which were both paid in
2014.
In making this determination, the Committee took the following factors
and achievements into account (further details can be found in the
2013 Annual Report).
• 2013 EBITDA targets were partially achieved.
• OCI N.V. was successfully re-domiciled and re-listed in the
Netherlands.
• Sorfert Algérie was successfully commissioned.
• OCI Partners LP was listed onto the NYSE in New York.
• OCI N.V.’s 18.1% stake in the Gavilon Group was divested.
• A $ 1.2 billion bond issuance for Iowa Fertilizer Company was
closed.
For 2014, performance targets included a mix of corporate ?nancial
(80%) and strategic (20%) objectives. The ?nancial measures are pro?t
(measured as Group EBITDA) and cash ?ow, each weighted at 40%.
Revised TSR peer group
• Agrium
• Air Products
(2014 cycle only)
• Akzo Nobel
• Celenese
• CF Industries
• Intrepid Potash
• Koninklijke DSM
• Lanxess
• Methanex
• Mosaic
• Potash Corp
• Solvay
• Westlake Chemicals
• Yara International
74 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 75
OCI N.V.
CORPORATE GOVERNANCE
Introduction
This 2014 Annual Report dated 29 April 2015 (the Annual Report)
comprises regulated information within the meaning of sections
1:1 and 5:25c of the Dutch Act on Financial Supervision (“wet op
het ?nancieel toezicht”).
For the consolidated and the parent Company’s 2014 ?nancial
statements “jaarrekening” within the meaning of section 2:361 of
the Dutch Civil Code, please refer to the ?nancial statements. The
Members of the Board of Directors have signed the 2014 ?nancial
statements pursuant to their obligation under section 2:101,
paragraph 2 of the Dutch Civil Code.
The following sections of the Annual Report together constitute the
Management Report (“jaarverslag”) within the meaning of section
2:391 Civil Code: the Operational Review, the Corporate Governance
Section, the Financial Statements and the Additional Information.
For other information “overige gegevens” within the meaning of
section 2:392 of the Dutch Civil Code, please refer to the ?nancial
statements and to the section Shareholders information.
Corporate governance statement
As referred to in article 2a of the Decree laying down additional
requirements for annual reports ‘Vaststellingsbesluit nadere
voorschriften inhoud jaarverslag’ effective 1 January 2010 (the
‘Decree’), OCI N.V. is required to make a statement on corporate
governance.
The information required to be included in this corporate governance
statement as described in articles 3, 3a and 3b of the Decree can be
found in the following sections of this Annual Report and Accounts:
• The information concerning compliance with the Dutch Code, as
required by article 3 of the Decree, can be found in the section
Compliance with the Dutch Corporate Governance Code;
• The information concerning OCI N.V.’s Risk Management and
control frameworks relating to the ?nancial reporting process, as
required by article 3a(a) of the Decree, can be found in the section
‘Risk Management’;
• The information regarding the functioning of OCI N.V.’s General
Meeting of Shareholders, and the authority and rights of OCI N.V.’s
shareholders and holders of depositary receipts, as required by
article 3a(b) of the Decree, can be found within the relevant sections
under ‘Corporate Governance’;
• The information regarding the composition and functioning of OCI
N.V.’s Board and its Committees, as required by article 3a(c) of the
Decree, can be found within the relevant sections under ‘Corporate
Governance’; and
• The information concerning the inclusion of the information required
by the decree Article 10 European Takeover Directive, as required
by article 3b of the Decree, can be found in the section Decree
Article 10 EU Takeover Directive.
The Dutch Corporate Governance Code was last
amended on 10 December 2008 and is available at www.
commissiecorporategovernance.nl.
In control statement
The Board believes that, to the best of its knowledge and in
accordance with best practice provisions of section II.1.4 and II.1.5
of the Dutch Corporate Governance Code, OCI N.V. is in control of
its business processes through its internal Risk Management and
control structures, which were assessed and found to have functioned
properly during the year. In its assessment, the Board identi?ed certain
improvement areas in the accounting and reporting cycle, which will
be addressed in 2015. This provides reasonable assurance that OCI
N.V.’s ?nancial reporting for the ?nancial year 2014 does not contain
any material misstatements.
Directors’ statement pursuant to article 5:25c of the Dutch
Financial Supervision Act (Wft)
In accordance with Article 5:25C of the Dutch Financial Supervision
Act (Wft), OCI N.V.’s Board declares that to the best of its knowledge,
(i) the 2014 ?nancial statements provide a true and fair view of the
assets, liabilities, ?nancial position and results of the Company and its
subsidiaries included in the consolidated statements in accordance
with International Financial Reporting Standards as adopted by the
European Union (IFRS-EU); and (ii) the annual report provides a true
and fair view of the situation as at 31 December, 2014, and of the
Company’s state of affairs for the ?nancial year 2014, as well as the
principal risks faced by OCI N.V. (iii) the Management report includes
a description of the principal risks and uncertainties that the Company
faces.
Amsterdam, the Netherlands, April 2015
The OCI N.V. Board of Directors
Michael Bennett, Chairman
Nassef Sawiris
Salman Butt
Jan Ter Wisch
Sipko Schat
Jérôme Guiraud
Robert Jan van de Kraats
Kees van der Graaf
Arif Naqvi
DECLARATIONS REMUNERATION REPORT CONTINUED
In making a decision about the appropriate short term incentive award
for 2014, the Committee took the following factors and achievements
into account:
• underlying EBITDA for continuing operations growing 23.2%
year-on-year to $ 833.4 million;
• net income for continuing operations improving 41.7% to $ 444.1
million;
• successfully raising EUR 151 Million through a private placement of
4.2 million new shares at EUR 36 per share; and
• obtaining regulatory approval and meeting other key milestones
towards the demerger of the Engineering & Construction group.
Payment was calculated at 50% of salary for both the CEO and CFO.
This equates to 33% of the maximum for the CEO and 42% of the
maximum for the CFO. In both cases the payment is below target.
The HSE Committee judged the HSE performance as satisfactory, so
no reduction on that basis was applied.
Long term incentives 2014
As at 31 December 2014, the Executive Directors held 400,000
stock options (2013: 590,000) at a weighted average exercise price
of EUR 25.94.
Name
Outstanding
as at
31/12/2014
Exercise Price
in EUR
Value
at grant
date in $
1
Vesting
date
Value
at vesting
date in $
2
Nassef
Sawiris
190,000
200,000
200,000
26.71
26.43
25.45
2,988,652
2,685,993
1,937,400
04-01-2014
31-03-2015
02-01-2016
846,751
Salman
Butt
- - - - -
1
Fair value calculated at grant date.
2
Value of the shares at exercise date minus the exercise price to
be paid.
As at 31 December 2014, the Executive Directors were granted
92,378 conditional performance shares.
Name
Outstanding
year-end
2013
Granted
conditional
Outstanding
year-end
2014
Value
at grant
date in $
1
vesting
date
End of
lock-up
period
Nassef
Sawiris
- 51,321 51,321 553,809 01-07-2017 01-07-2019
Salman
Butt
- 41,057 41,057 443,050 01-07-2017 01-07-2019
1
Fair value calculated at grant date.
As at 31 December 2014, the Executive Directors were granted
16,409 matching rights to bonus shares.
Name
Outstanding
year-end
2013 Granted
Outstanding
year-end
2014
Value
at grant
date in $
1
vesting
date
End of
lock-up
period
Nassef
Sawiris
- 9,116 9,116 319,821 17-11-2017 17-11-2019
Salman
Butt
- 7,293 7,293 255,864 17-11-2017 17-11-2019
1
Fair value calculated at grant date.
Remuneration scenarios
The Remuneration Committee conducts pay scenario analysis
modelling on an annual basis which investigates pay-out quantum
for Executive Directors under different performance scenarios. This
modelling is undertaken in order to ensure that the remuneration
policy links directly with the performance of OCI N.V. and therefore,
is in the interests of shareholders. If speci?c short term and long term
threshold performance targets are not hit, then pay in that year for
Executive Directors will not include any variable element.
Future outlook
As noted above the Committee is reviewing, with the assistance of
Mercer, the remuneration policy in the context of the demerger of
the Engineering & Construction group and expects to propose an
adjusted remuneration policy for approval of the Annual General
Meeting of Shareholders in 2015.
Non-Executive Directors
The Non-Executive Director fee rates for 2014 were as follows. There
is no intention to change the fee rates in 2015. Jérôme Guiraud, who
was appointed by the General Meeting of Shareholders on 26 June
received a pro rata remuneration over 2014.
Main Board
Audit
Remuneration Remuneration Nomination HSE
Chairman 260,000 25,000 10,000 10,000 10,000
Member 130,000 20,000 7,500 7,500 7,500
Non-Executive Directors are reimbursed for all reasonable costs of
travel, accommodation and representation in the performance of their
duties. The Chairman received an additional ?xed fee of $ 150,000 for
service on the board of a publicly-traded subsidiary of the Company in
the United States.
On behalf of the Remuneration Committee
Sipko Schat, Chairman
76 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 77
OCI N.V.
CORPORATE GOVERNANCE
FINANCIAL
STATEMENTS
$ millions Note
31 December
2014
31 December
2013
2
Proforma / unaudited
31 December
2013
1
restated
1 January
2013
1
restated
Assets
Non-current assets
Property, plant and equipment (7) 5,272.4 4,509.3 4,773.4 4,302.0
Goodwill and other intangible assets (8) 932.9 964.1 984.3 996.2
Trade and other receivables (9) 49.7 43.1 76.8 107.7
Equity accounted investees (10) 37.9 36.1 517.1 458.4
Other investments (11) 22.9 50.0 51.0 54.0
Deferred tax assets (12) 50.1 60.6 67.6 4.4
Total non-current assets 6,365.9 5,663.2 6,470.2 5,922.7
Current assets
Inventories (13) 178.5 186.0 367.5 302.3
Trade and other receivables (9) 344.0 444.4 1,282.1 1,215.1
Contracts receivables (14) - - 375.4 406.6
Other investments (11) 31.2 - - 1,213.4
Current income tax receivables (12) 272.6 - - -
Cash and cash equivalents (15) 846.6 1,570.2 1,990.2 762.5
Assets held for sale (16) - - 2.4 371.8
Assets held for demerger (29) 2,538.5 2,624.0 - -
Total current assets 4,211.4 4,824.6 4,017.6 4,271.7
Total assets 10,577.3 10,487.8 10,487.8 10,194.4
Equity
Share capital (17) 273.3 272.1 272.1 191.6
Share premium 1,447.6 1,441.8 1,441.8 725.7
Reserves (18) 196.5 109.6 109.6 (14.4)
Retained earnings 201.5 (102.2) (102.2) 378.8
Equity attributable to owners of the Company 2,118.9 1,721.3 1,721.3 1,281.7
Non-controlling interest (19) 418.9 366.3 366.3 418.9
Total equity 2,537.8 2,087.6 2,087.6 1,700.6
Liabilities
Non-current liabilities
Loans and borrowings (20) 4,638.5 4,441.1 4,497.2 2,610.5
Trade and other payables (21) 30.9 16.7 75.8 69.0
Provisions (22) 19.4 19.2 19.2 1.2
Deferred tax liabilities (12) 343.4 371.4 375.7 309.1
Income tax payables (12) - 207.4 414.7 514.6
Total non-current liabilities 5,032.2 5,055.8 5,382.6 3,504.4
Current liabilities
Loans and borrowings (20) 402.2 677.2 1,428.0 2,864.6
Trade and other payables (21) 432.7 283.0 1,002.3 1,243.4
Billing in excess of construction contracts (14) - - 140.9 113.9
Provisions (22) 301.1 35.1 108.2 89.3
Income tax payables (12) 58.7 202.7 338.2 678.2
Liabilities held for demerger (29) 1,812.6 2,146.4 - -
Total current liabilities 3,007.3 3,344.4 3,017.6 4,989.4
Total liabilities 8,039.5 8,400.2 8,400.2 8,493.8
Total equity and liabilities 10,577.3 10,487.8 10,487.8 10,194.4
1
For the restatement reference is made to note 2.3.
2
In the 2013 proforma column, Engineering & Construction segment has been presented as if it quali?ed as assets held for demerger as of
year-end 2013 (reference is made to note 2.2).
The notes on pages 84 to 139 are an integral part of these consolidated ?nancial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT
79 Consolidated Statement of Financial Position
80 Consolidated Statement of Pro?t or Loss and other
Comprehensive Income
81 Consolidated Statement of Changes in Equity
82 Consolidated Statement of Cash Flows
84 Notes to the consolidated ?nancial statements
140 Parent Company Statement of Financial Position and Parent
Company Statement of Pro?t or Loss
141 Notes to the parent company ?nancial statements
143 Other information
144 Independent Auditor’s report
149 Miscellaneous
150 Shareholder Information
152 Key Subsidiaries
78 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 79
OCI N.V.
$ millions Note 2014
2013
1
restated
Revenue (28) 2,685.8 2,477.5
Cost of sales (23) (1,949.4) (1,864.6)
Gross pro?t 736.4 612.9
Other income (24) 15.2 294.5
Selling, general and administrative expenses (23) (265.1) (202.9)
Other expenses (25) (4.7) (85.3)
Transaction cost (23) - (89.3)
Donation cost (12) (266.2) -
Operating pro?t / (loss) 215.6 529.9
Finance income (26) 21.8 76.8
Finance cost (26) (272.2) (280.0)
Net ?nance cost (26) (250.4) (203.2)
Income from equity accounted investees (net of tax) (10) 15.8 7.4
Pro?t / (loss) before income tax (19.0) 334.1
Income tax (12) 565.0 (71.1)
Net pro?t / (loss) from continuing operations 546.0 263.0
Net pro?t / (loss) from discontinued operations (net of tax) (29) (96.1) (3.8)
Total net pro?t / (loss) 449.9 259.2
Other comprehensive income:
Items that are or may be reclassi?ed to pro?t or loss
Net change in fair value of available-for-sale ?nancial assets (1.2) (1.9)
Changes in fair value of cash ?ow hedges (6.1) 10.6
Foreign currency translation differences 70.2 (104.0)
Other comprehensive income, net of tax 62.9 (95.3)
Total comprehensive income 512.8 163.9
Pro?t / (loss) attributable to:
Owners of the Company 328.7 295.2
Non-controlling interest 121.2 (36.0)
Net pro?t / (loss) 449.9 259.2
Total comprehensive income attributable to:
Owners of the Company 415.6 199.9
Non-controlling interest 97.2 (36.0)
Total comprehensive income 512.8 163.9
Earnings / (loss) per share from total operations (in USD)
Basic earnings / (loss) per share (27) 1.604 1.449
Diluted earnings / (loss) per share (27) 1.603 1.408
Earnings / (loss) per share from continuing operations (in USD)
Basic earnings / (loss) per share (27) 2.168 1,538
Diluted earnings / (loss) per share (27) 2.161 1,493
1
For the restatement reference is made to note 2.3.
The notes on pages 84 to 139 are an integral part of these consolidated ?nancial statements.
$ millions Note
Share
capital
(17)
Share
premium
(17)
Reserves
(18)
Retained
earnings
Equity
attributable to
owners of the
Company
Non-
controlling
interest
(19)
Total
equity
Balance at 1 January 2013
before and after restatement 191.6 725.7 (14.4) 378.8 1,281.7 418.9 1,700.6
Net pro?t / (loss) - - - 295.2 295.2 (36.0) 259.2
Other comprehensive income - - (95.3) - (95.3) - (95.3)
Total comprehensive income - - (95.3) 295.2 199.9 (36.0) 163.9
Corporate restructuring (17) 78.1 653.8 105.6 (1,044.2) (206.7) - (206.7)
OCI Partnership IPO - - - 268.0 268.0 23.0 291.0
Treasury shares sold (18) - - 91.2 - 91.2 - 91.2
Treasury shares acquired (18) - - (20.5) - (20.5) - (20.5)
Dividends - - - - - (39.6) (39.6)
Share issuance (17) 2.4 62.3 - - 64.7 - 64.7
Share-based payments (23) - - 11.6 - 11.6 - 11.6
Convertible bond issuance
(net of taxes)
(20) - - 31.4 - 31.4 - 31.4
Balance at 31 December 2013
restated
272.1 1,441.8 109.6 (102.2) 1,721.3 366.3 2,087.6
Net pro?t / (loss) - - - 328.7 328.7 121.2 449.9
Other comprehensive income - - 86.9 - 86.9 (24.0) 62.9
Total comprehensive income - - 86.9 328.7 415.6 97.2 512.8
Dividends - - - - - (57.1) (57.1)
Change in ownership of OCI
Partners LP - - - (12.5) (12.5) 12.5 -
Treasury shares sold (18) - - 50.2 (12.5) 37.7 - 37.7
Treasury shares acquired (18) - - (62.1) - (62.1) - (62.1)
Change in capital (17) 1.2 5.8 - - 7.0 - 7.0
Share-based payments (23) - - 11.9 - 11.9 - 11.9
Balance at 31 December 2014 273.3 1,447.6 196.5 201.5 2,118.9 418.9 2,537.8
The notes on pages 84 to 139 are an integral part of these consolidated ?nancial statements.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
FOR THE YEARS ENDED 31 DECEMBER
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
80 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 81
OCI N.V.
$ millions Note 2014
2013
1
restated
Net pro?t / (loss) 449.9 259.2
Adjustments for:
Net pro?t / (loss) from discontinued operations (29) 96.1 3.8
Depreciation and amortization (7),(8) 308.4 218.3
Interest income (26) (9.0) (6.0)
Interest expense (26) 199.2 278.5
Foreign exchange gain / (loss) and others 60.2 (69.3)
Share in income of equity accounted investees (10) (15.8) (7.4)
Gain from assets held for sale (9.0) (262.1)
Share-based payment transactions (23) 11.9 11.6
Income tax expense (12) (565.0) 71.1
Transaction cost - 89.3
Changes in:
Inventories (13) 7.5 (25.8)
Trade and other receivables (9) 88.6 11.5
Trade and other payables (21) 140.8 (69.1)
Provisions (22) 262.3 15.3
Cash ?ows:
Interest paid (26) (284.5) (308.1)
Interest received from equity accounted investees (10) 9.0 6.0
Income taxes paid (12) (30.6) (48.8)
Income tax litigation payment (12) - (180.2)
Transaction cost paid - (242.0)
Cash ?ow from / (used in) operating activities (continuing operations) 720.0 (254.2)
Investments in property, plant and equipment (1,211.0) (687.0)
Proceeds from sale of investments 9.0 1,829.9
Dividends from equity accounted investees 33.0 33.0
Cash ?ow from / (used in) investing activities (continuing operations) (1,169.0) 1,175.9
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED 31 DECEMBER
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED 31 DECEMBER (CONTINUED)
$ millions Note 2014
2013
1
restated
Proceeds from share issuance (17) - 355.6
Proceeds from sale of treasury shares (18) 37.7 91.2
Purchase of treasury shares (18) (62.1) (20.5)
Proceeds from borrowings (20) 550.0 2,573.3
Repayment of borrowings (20) (433.2) (2,098.9)
Orascom Construction Industries S.A.E. shares acquired - (90.0)
Dividends paid to non-controlling interest (57.1) (39.7)
Financing related to discontinued operations (390.0) (459.0)
Cash ?ows from / (used in) ?nancing activities (continuing operations) (354.7) 312.0
Net cash ?ows from / (used in) continuing operations (803.7) 1,233.7
Cash ?ows from / (used in) operating activities (27.4) (423.4)
Cash ?ows from / (used in) investing activities (69.6) 5.0
Cash ?ows from / (used in) ?nancing activities 45.9 410.6
Net cash ?ows from / (used in) discontinued operations (29) (51.1) (7.8)
Net increase (decrease) in cash and cash equivalents (854.8) 1,225.9
Cash and cash equivalents at 1 January 1,990.2 762.5
Currency translation adjustments (20.2) 1.8
Cash and cash equivalents at 31 December 1,115.2 1,990.2
Presentation in the statement of ?nancial position
Cash and cash equivalents (15) 846.6 1,990.2
Bank overdrafts (20) (100.3) -
Cash and cash equivalents (as held for demerger) (29) 368.9 -
Cash and cash equivalents at 31 December 1,115.2 1,990.2
1
For the restatement reference is made to note 2.3.
The notes on pages 84 to 139 are an integral part of these consolidated ?nancial statements.
82 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 83
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER
1. General
OCI N.V. (‘OCI’, ‘the Group’ or ‘the Company’) was established on 2 January 2013 as a public limited liability company incorporated under
Dutch law, with its head of?ce located at Honthorststraat 19, Amsterdam, the Netherlands. OCI is registered in the Dutch commercial register
under No. 56821166 dated 2 January 2013. The consolidated ?nancial statements comprise the ?nancial statements of the Company, its
subsidiaries and joint operations (together referred to as the ‘Group’) and the Group’s interests in associates and joint ventures.
The Group is primarily involved in the production of nitrogen based fertilizers and industrial chemicals; engineering and construction activities
have been discontinued.
2. Basis of preparation
2.1 General
These consolidated ?nancial statements have been prepared in accordance with International Financial Reporting Standards as endorsed by
the European Union (IFRS-EU).
The consolidated ?nancial statements have been prepared on the historical cost basis, except when otherwise indicated.
The ?nancial year of the Group commences on 1 January and ends on 31 December.
The parent company statement of pro?t or loss is presented in abbreviated format in accordance with article 2:402 of Part 9 of the Dutch
Civil Code.
These consolidated ?nancial statements are presented in US dollars (‘USD’), which is the Group’s presentation currency. The euro (‘EUR’) is
the functional currency of OCI N.V. All values are rounded to the nearest tenth million (in millions of USD), except when stated otherwise.
The ?nancial statements have been authorised for issue by the Company’s Board of Directors on 28 April 2015. The ?nancial statements are
subject to adoption of the Annual General Meeting of Shareholders on 10 June 2015.
2.2 Demerger of Construction and Engineering business
2.2.1 General
On 6 November 2014, the Board of Directors of OCI N.V. announced its intention to seek a dual listing for the Engineering & Construction
business of OCI N.V., through the separation of OCI’s Engineering & Construction business from OCI’s Fertilizer & Chemicals business (“the
Demerger”). The Board of Directors of OCI N.V. con?rmed its intention to implement the Demerger at its meeting on 10 December 2014.
The Demerger was completed successfully in March 2015, with the listing of shares on Nasdaq Dubai as of 9 March 2015 and a secondary
listing on the Egyptian Exchange as of 11 March 2015. The Demerger has resulted in the Engineering & Construction and Fertilizer & Chemicals
businesses being owned by two, separately-listed companies. OCI N.V. remains listed on Euronext Amsterdam and owns the Fertilizer &
Chemicals business and Orascom Construction Limited, is dual-listed on the Nasdaq Dubai and the Egyptian Exchange and owns the
Engineering & Construction business.
The Demerger was achieved by OCI N.V. carrying out a reduction of its share capital. At an Extraordinary General Meeting of Shareholders of
OCI N.V. held on 12 November 2014, shareholders approved the proposal to reduce the share capital of OCI N.V. to facilitate the Demerger.
On 16 January 2015, the mandatory creditor objection period related to the resolutions passed on 12 November 2014, expired without any
objections being made. Accordingly, the Board of Directors of OCI N.V. have passed a resolution to execute the Demerger.
2.2.2 Accounting for the Demerger
In order to ensure that suf?cient share capital will be available to account for such reduction, OCI N.V. will apply IFRS 1 ‘First time adoption of
IFRS‘ in 2015 to its Company ?nancial statements and will apply a deemed cost approach for the initial valuation of its subsidiaries using fair
value (market capitalization as a substitute for cost). The resulting revaluation reserve was partially converted to capital. Subsequently, OCI
N.V.’s capital was reduced by the same amount, representing the fair value of the shares of Orascom Construction Limited (the ultimate parent
company of the Engineering & Construction business) which were distributed to OCI N.V.’s shareholders on 7 March 2015.
Following the guidance under IFRS 5, the Engineering & Construction business is accounted for as “Assets held for demerger / discontinued
operations” (further reference is made to note 29 of the notes to the consolidated ?nancial statements). OCI has chosen to add an additional
column to its consolidated statement of ?nancial position to show the effect of the Demerger on the 31 December 2013 consolidated statement
of ?nancial position as if the Engineering & Construction business was already discontinued at 31 December 2013. This ?nancial information is
“Proforma”, and is unaudited.
2.2.2 Accounting for the Demerger (continued)
The consolidated net results of the discontinued operations (Engineering & Construction business) are presented under discontinued operations
in the consolidated statement of pro?t or loss and other comprehensive income and the consolidated statement of cash ?ows. The comparative
information in the consolidated statements of pro?t or loss and other comprehensive income and the consolidated statement of cash ?ows are
reclassi?ed as if the operation had been discontinued from the start of the comparative period in accordance with the requirements IFRS 5. In
the statement of ?nancial position, the comparative numbers are not reclassi?ed. The demerger is considered a non-adjusting event after the
balance sheet date, an estimate of the ?nancial effect of the demerger cannot yet be made reliably.
2.2.3 Ongoing relationship between OCI N.V. and Orascom Construction Limited
After the Demerger, OCI N.V. and Orascom Construction Limited each operate as separately listed companies. There are no cross-directorships,
other than Nassef Sawiris who is Chief Executive Of?cer of OCI N.V. and chairman of Orascom Construction Limited, and Salman Butt, who is
Chief Financial Of?cer of OCI N.V. and non-executive director of Orascom Construction Limited. The senior management teams of OCI N.V. and
Orascom Construction Limited are different and all agreements between the two companies are entered into on an arms’ length basis.
Orascom Construction Limited’s objective is to increase self-generated opportunities in the future to replace the work awarded by OCI N.V.
However, Orascom Construction Limited and OCI N.V. will remain party to continuing commercial arrangements, in particular, in relation to the
construction of certain fertilizer plants. The existing commercial arrangements were entered into on an arms’ length basis and are not materially
different from the terms on which Orascom Construction Limited has contracted with other customers and future commercial arrangements.
2.2.4 Shared services agreement
On 5 February 2015, OCI N.V. and Orascom Construction Limited entered into a shared services agreement whereby each of the parties
has agreed to supply certain transitional services to the other. These services include: the provision by OCI N.V. to Orascom Construction
Limited of accounting and consolidation, and any general corporate support services as required and the provision by Orascom Construction
Limited to OCI N.V. of accounting, treasury, information technology, administration, corporate human resources, and of?ce space services. It is
expected that the services will be provided for a transitional period of up to 12 months, following which each of the parties will make their own
arrangements for the provision of these services. The consideration payable for the services will be on a cost-plus basis.
2.2.5 Conditional sale agreement
On 5 February 2015, OC IHC 4 B.V. (a subsidiary of Orascom Construction Limited) and OCI MENA B.V. (a subsidiary of OCI N.V.) entered
into an Agreement for the Conditional Sale and Purchase of the Share Capital of Construction Egypt. Under the Conditional Sale Agreement,
OCI MENA B.V. has agreed to sell to OC IHC 4 B.V. all of the shares it will receive as a result of the Egypt Demerger. These shares (the
Construction Egypt Shares) will be shares in an Egyptian joint stock company (Construction Egypt) which, as a result of the Egypt Demerger,
will hold the construction projects and construction business of Orascom Construction Industries S.A.E in the Middle East and North Africa
which, in order to comply with local law and regulation, cannot be transferred to the Group prior to completion of the Demerger. The transfer
of the Construction Egypt Shares will be conditional on the completion of the Egypt Demerger, the approval of EFSA regarding the issue of
the Construction Egypt shares to OCI MENA B.V. and incorporation of Construction Egypt. In addition, OCI MENA B.V. commits to appoint
management personnel in the construction operations, such personnel to be nominated by OC IHC 4 B.V.; to appoint accounting personnel
responsible for the preparation of the carve out ?nancials of the construction operations, such personnel to be nominated by OC IHC 4 B.V.,
and to vote on the board of directors of Orascom Construction Industries S.A.E. in matters related to the construction operations based on the
recommendation of OC IHC 4 B.V. The Conditional Sale Agreement also provides for the economic bene?ts/liabilities of the Construction Egypt
Shares including the underlying Relevant Construction Projects (together with the right to any dividends) to pass from OCI MENA B.V. to OC
IHC 4 B.V. with effect from the date of the Conditional Sale Agreement as if such shares had been in existence since 30 September 2014. This
transfer of economic bene?t will remain in force until the earlier of completion of the Egypt Demerger and transfer of the Construction Egypt
Shares to the Company and completion of all of the Relevant Construction Projects, while any new awards will be sought through wholly-owned
subsidiaries of Orascom Construction Limited.
2.2.6 Tax indemnity agreement
On 6 February 2015, Orascom Construction Limited and Orascom Construction Industries S.A.E. entered into a tax indemnity agreement
which sets out the obligations of the parties in respect of the tax claim lodged by the tax authorities in Egypt relating to the sale of the Orascom
Construction Industries S.A.E.’s cement business to Lafarge SA in 2007 (further reference is made to note 12). The parties have agreed that, to
the extent that any liability is incurred by Orascom Construction Industries S.A.E. in relation to the Tax Claim (including the costs of dealing with
the Tax Claim), this will be shared between the parties on a 50%/50% basis. In addition, to the extent that any recoveries are made in relation
to the Tax Claim, these will be shared between the parties on a 50%/50% basis (excluding the amount of EGP 2.5 billion for which it was
announced that the rights will be transferred to Tahya Misr social fund in Egypt). This agreement is in accordance with informal agreements as
reached before year-end.
84 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 85
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
2.2.7 Construction contracts
A commercial relationship between OCI N.V. and Orascom Construction Limited will remain on-going in respect of the construction of two
projects for the fertilizer business on an arms’ length basis. Orascom E&C USA (subsidiary of Orascom Construction Limited) is:
• party to an Engineering, Procurement and Construction (EPC) contract in respect of the Iowa Fertilizer Company (IFCo), a 2 million metric
ton per annum (mmtpa) fertilizer and industrial chemicals green?eld plant under construction for OCI N.V. in Iowa, USA. Under the terms of
the EPC contract, the new plant will utilize proven state-of-the-art production process technologies to produce between 1.5-2 million metric
tons per year of ammonia, urea, urea ammonium nitrate (UAN) as well as diesel exhaust ?uid (DEF), an environmentally friendly fuel additive;
and
• in the process of ?nalizing the terms of an EPC contract for the construction of a methanol plant at Beaumont, Texas, USA for Natgasoline
LLC. The plant is expected to have a capacity of up to 5,000 metric tons per day (tpd), equivalent to approximately 1.75 million metric tons
per annum (mtpa).
2.2.8 Reimbursement agreement
As part of the Demerger of the Orascom Construction Group, OCI N.V. and Orascom Holding Cooperatief U.A., a company that is part of
Orascom Construction Limited, entered into a letter agreement in relation to the construction contracts entered into between companies within
the fertiliser business of OCI N.V. (Fertilizer Business) and companies within the construction business of OCI N.V. (Construction Business). The
agreement provides that if the Construction Business incurs costs, expenses or liabilities under the Contracts or for other works and services
performed or to be performed for the Fertilizer Business, which are not otherwise reimbursable to the Construction Business under the terms
of the Contracts and which exceed the amounts that will, in aggregate, have been and will be payable to the Construction Business under all
of the Contracts (the excess being referred to as the Aggregate Group Shortfall), OCI N.V. will pay an amount equal to the Aggregate Group
Shortfall. The amount payable by OCI N.V. to the Construction Business under the agreement is capped at USD 150 million.
2.3 Changes in accounting policies
Except for the changes below, the Group has consistently applied the accounting policies set out in note 3 to all periods presented in these
consolidated ?nancial statements.
With reference to paragraph 4 “New accounting standards and policies”, the Group has adopted new accounting standards, amendments and
revisions to existing standards and interpretations for which IFRS 10 “Consolidated Financial Statements” and IFRS 11 “Joint Arrangements”
have a signi?cant impact on the Group’s consolidated ?nancial statements:
• IFRS 10 ‘Consolidated Financial Statements’ IFRS 10 is effective for annual periods beginning on or after 1 January 2014. IFRS 10
establishes principles for the presentation and preparation of consolidated ?nancial statements when an entity controls one or more other
entities. IFRS 10 replaces the consolidation requirements in SIC-12 ‘Consolidation-Special Purpose Entities’ and IAS 27 ‘Consolidated and
Separate Financial Statements’. IFRS 10 builds on existing principles by identifying the concept of control as the determining factor in
whether an entity should be included within the consolidated ?nancial statements of the parent company. The standard provides additional
guidance to assist in the determination of control where this is dif?cult to assess.
• IFRS 11 ‘Joint Arrangements’ IFRS 11 is applicable for annual periods beginning on or after 1 January 2014. IFRS 11 provides for a more
realistic re?ection of joint arrangements by focusing on the rights and obligations of the arrangement, rather than its legal form (as was the
case). The standard addresses inconsistencies in the reporting of joint arrangements by requiring a single method to account for interests
in jointly controlled entities. IFRS 11 supersedes IAS 31 ‘Interests in Joint Ventures’ and SIC-13 ‘Jointly Controlled Entities / Non-monetary
Contributions by Ventures’. The application of this new standard impacts the ?nancial position of the Group by eliminating proportionate
consolidation of the joint ventures such as BESIX, Orasqualia for Development, Orasqualia for Construction, Alico, Fitco and some other
entities. With the application of the new standard, the investment in these entities are accounted for using the equity method of accounting.
The tables in paragraph 4.3 summarise the impact of the above changes on the Group’s consolidated ?nancial statements. Both new
accounting standards have been applied as from 1 January 2014 retrospectively. Consequently, the 2013 comparative ?nancial statements have
been adjusted for this change in accounting principles.
3. Summary of signi?cant accounting policies
3.1 Consolidation
The consolidated ?nancial statements include the ?nancial statements of OCI N.V., its subsidiaries and the proportion of OCI’s ownership of joint
operations.
Subsidiaries
Subsidiaries are all companies to which OCI N.V. is exposed or has rights to variable returns from its involvement with the investee and has
the ability to affect those returns through its control over the investee, generally accompanying a shareholding of more than half of the shares
issued and related voting power. In assessing control, potential voting rights that are presently exercisable or convertible are taken into
account. Subsidiaries are fully consolidated from the date that control commences until the date that control ceases. When the Group ceases
to have control over a subsidiary, it derecognizes the assets and liabilities of the subsidiary, and any related non-controlling interest and other
components of equity. Any resulting gain or loss is recognized in pro?t or loss including related cumulative translation adjustments accumulated
in other comprehensive income. If it becomes an associate, the interest retained is subsequently valued in accordance with the equity method.
The principal subsidiaries are listed in the section ‘Miscellaneous’.
Transactions eliminated in the consolidated ?nancial statements
Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated in
preparing the consolidated ?nancial statements. Unrealized gains arising from transactions with equity accounted investees are eliminated
against the investment to the extent of the Group’s interest in the investees. Unrealized losses are eliminated in the same way as unrealized
gains, but only to the extent that there is no evidence of impairment.
3.2 Discontinued operations / assets held for demerger or sale
A discontinued operation is a component of the Group’s business which:
• has operations and cash ?ows that can be clearly distinguished from the rest of the Group;
• represents a separate major line of business or geographical area of operations;
• is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations.
Classi?cation as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classi?ed as held for sale or
demerger. When an operation is classi?ed as a discontinued operation, the comparative information in the statement of comprehensive income
and the consolidated statement of cash ?ows are reclassi?ed as if the operation had been discontinued from the start of the comparative
period. In the statement of ?nancial position, the comparative numbers are not reclassi?ed.
3.3 Business combinations
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the
consideration transferred measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. For each
business combination, the Group elects whether to measure the non-controlling interest in the acquiree at fair value or at the proportionate
share of the acquiree’s identi?able net assets. Acquisition-related costs are expensed as incurred and included in administrative expenses.
When the Group acquires a business, it assesses the ?nancial assets and liabilities assumed for appropriate classi?cation and designation
in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the
separation of embedded derivatives in host contracts by the acquiree.
If the business combination is achieved in stages, the previously held equity interest is remeasured at its acquisition date fair value and any
resulting gain or loss is recognized in pro?t or loss. Any contingent consideration to be transferred by the acquirer will be recognized at fair value
at the acquisition date. Contingent consideration classi?ed as an asset or liability that is a ?nancial instrument and within the scope of IAS 39
‘Financial Instruments: Recognition and Measurement’, is measured at fair value with changes in fair value recognized either in pro?t or loss or
as a change to other comprehensive income. If the contingent consideration is not within the scope of IAS 39, it is measured in accordance with
the appropriate IFRS. Contingent consideration classi?ed as equity is not remeasured and subsequent settlement is accounted for within equity.
Non-controlling interests
Non-controlling interests are presented as a separate component in equity. Changes in the Group’s interest in a subsidiary or joint operation that
do not result in a loss of control are accounted for as an equity transaction.
86 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 87
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
3.4 Associates
Associates are those companies in which the Group exercises signi?cant in?uence, but does not have control over the ?nancial and operating
policies, which is presumed to exist when the Group holds 20 percent to 50 percent of the shareholding and related voting rights of the other
entity. Associates are accounted for by applying the ‘equity method’. The Group’s share of pro?t or loss of an investee is recognized in pro?t
or loss from the date when signi?cant in?uence begins up to the date when that in?uence ceases. Investments in associates with negative
shareholder’s equity are impaired and a provision for its losses is recognized only if the Group has a legal or constructive obligation to cover
the losses. Equity changes in investees accounted for using the equity method that do not result from pro?t or loss are recognized directly
in other comprehensive income. Unrealized gains on transactions between the Group and its associates are eliminated to the extent of the
Group’s interest in the associates. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset
transferred. Unrealized gains on transactions between two associates are not eliminated.
3.5 Joint arrangements
Under IFRS 11 investments in joint arrangements are classi?ed as either joint ventures or joint operations depending on the contractual rights
and obligations of each investor. Those joint arrangements that are assessed as joint ventures are accounted for using the equity method. Joint
operations are accounted for using the line-by-line accounting.
Under the equity method of accounting, interests in joint ventures are initially recognized at cost and adjusted subsequently for the group’s share
in the post-acquisition pro?t or losses and movements in comprehensive income. When the Group‘s share of losses in a joint venture equals or
exceeds its interest in the joint venture (which includes any long-term interest that, in substance, forms part of the Group’s net investment in joint
ventures), the Group does not recognize further losses, unless it has incurred obligations or made payments on behalf of the joint venture.
A joint operation is proportionately consolidated until the date on which the Group ceases to have joint control over the joint operation. Upon
loss of joint control, the Group reassesses the joint operation.
3.6 Foreign currency translation
Foreign currency transactions
The ?nancial statements of subsidiaries and joint operations are prepared in the currencies which are determined based on the primary
economic environment in which they operate (‘the functional currency’). Transactions in currencies other than the functional currency are
recorded at the rates of exchange prevailing on the transaction dates. At each balance sheet date, monetary items denominated in foreign
currencies are translated into the entity’s functional currency at the then prevailing closing-rates. Exchange differences arising on the settlement
and translation of monetary items are included in pro?t or loss for the period except when deferred to other comprehensive income for available-
for-sale assets and the effective part of qualifying cash ?ow hedges.
Foreign currency operations
Upon consolidation, the assets and liabilities of subsidiaries with a functional currency other than the US dollar are translated into US dollars
using the exchange rates prevailing at the balance sheet date. Income and expense items are translated using exchange rates prevailing at the
date of the transactions. Investments in joint ventures and associates with a functional currency other than the US dollar are translated into US
dollar using exchange rates prevailing on the balance sheet date. Exchange rate differences arising during consolidation and on the translation
of investments in subsidiaries, joint arrangements and associates are included in other comprehensive income, as ‘currency translation
adjustments’. When a foreign operation is (partly) disposed of or sold, (the proportionate share of) the related currency translation differences
that were recorded in other comprehensive income are recycled to pro?t or loss as part of the gain and loss on disposal or sale. Goodwill and
fair value adjustments arising on the acquisition of a foreign subsidiary are considered as assets and liabilities denominated in the functional
currency of the foreign subsidiary.
3.7 Financial instruments
The Group classi?es ?nancial instruments into the following categories: (i) ?nancial instruments at fair value through pro?t or loss, (ii) derivatives
designated in a hedge relationship, (iii) loans and receivables and (iv) available-for-sale ?nancial assets. Financial instruments are classi?ed as
current liabilities unless the remaining term of the ?nancial instruments or the remaining term of the facility, under which the ?nancial instruments
are drawn, is 12 months or more. The Group derecognizes a ?nancial asset when the contractual rights to the cash ?ows from the asset expire,
or it transfers the rights to receive the contractual cash ?ows in a transaction in which substantially all of the risks and rewards of ownership of
the ?nancial asset are transferred, or it neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain
control over the transferred asset. Any interest in such derecognized ?nancial assets that is created or retained by the Group is recognized as
a separate asset or liability. The Group derecognizes a ?nancial liability when its contractual obligations are discharged, cancelled or expire.
Financial assets and ?nancial liabilities are offset and the net amount presented in the statement of ?nancial position when, and only when,
the Group has a legal right to offset the amounts and intends either to settle them on a net basis or to realize the asset and settle the liability
simultaneously. Compound ?nancial instruments are bifurcated and the components are presented separately as ?nancial liabilities, ?nancial
assets or equity instruments.
3.7 Financial instruments (continued)
Financial instruments at fair value through pro?t or loss
A ?nancial instrument is classi?ed at fair value through pro?t or loss if it is classi?ed as held-for-trading or designated into this category. Directly
attributable transaction costs are recognized in pro?t or loss when incurred. Financial instruments at fair value through pro?t or loss are
measured at fair value and changes therein, including any interest or dividend income, are recognized in pro?t or loss. Financial instruments
classi?ed as ‘at fair value through pro?t or loss’ are initially recognized on the trade date and changes in fair value are accounted for under
?nance income and cost.
Embedded derivatives
Embedded derivatives are separated from the host contract and accounted for separately if the economic characteristics and risks of the
host contract and the embedded derivative are not clearly and closely related, a separate instrument with the same terms as the embedded
derivative would meet the de?nition of a derivative, and the combined instrument is not measured at fair value through pro?t or loss. Changes in
the fair value of separated embedded derivatives are recognized immediately in pro?t or loss.
Other non-trading derivatives
When a derivative ?nancial instrument is not designated in a hedge relationship that quali?es for hedge accounting, all changes in its fair value
are recognized immediately in pro?t or loss.
Derivatives designated in a hedge relationship
In order to mitigate risk, the Group applies hedging in case by case situations. The Group holds derivative ?nancial instruments to hedge
its foreign currency risk, interest rate risk, and ?uctuating natural gas price exposures. On initial designation of the derivative as a hedging
instrument, the Group formally documents the relationship between the hedging instrument and hedged item, including the risk management
objectives and strategy in undertaking the hedge transaction and the hedged risk, together with the methods that will be used to assess the
effectiveness of the hedging relationship. The Group makes an assessment, both at the inception of the hedge relationship as well as on an
ongoing basis, of whether the hedging instruments are expected to be highly effective in offsetting the changes in the fair value or cash ?ows of
the respective hedged items attributable to the hedged risk on a prospective and retrospective basis.
For a cash ?ow hedge of a forecast transaction, the transaction should be highly probable to occur and should present an exposure to
variations in cash ?ows that ultimately could affect reported pro?t or loss. Derivatives are recognized initially at fair value. Attributable transaction
costs are recognized in pro?t or loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value and changes therein
are accounted for as described below:
Cash ?ow hedges
When a derivative is designated as the hedging instrument in a hedge of the variability in cash ?ows attributable to a particular risk associated
with a recognized asset or liability, or a highly probable forecast transaction that could ultimately affect pro?t or loss, the effective portion of
changes in the fair value of the derivative is recognized in other comprehensive income as ‘hedging reserve’, net of related tax. Any ineffective
portion of changes in the fair value of the derivative is recognized immediately in pro?t or loss. When the hedged item is a non-?nancial asset,
the amount otherwise accumulated in equity is included in the carrying amount of the asset. In other cases, the amounts recognized as other
comprehensive income are reclassi?ed to pro?t or loss when the hedged transaction affects pro?t or loss. If the hedging instrument no longer
meets the criteria for hedge accounting, expires or is sold, terminated or exercised, or the designation is revoked, then hedge accounting
is discontinued prospectively. In these cases, the cumulative gain or loss on the hedging instrument that has been recognized in other
comprehensive income from the period when the hedge was effective shall remain separately in equity until the forecast transaction occurs. If
the forecast transaction is no longer expected to occur, the balance in equity is reclassi?ed to pro?t or loss.
Loans and receivables
Loans and receivables are initially recognized at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they
are measured at amortized cost, using the effective interest method less any impairment losses.
The Group recognizes a ?nancial asset arising from a service concession arrangement when it has an unconditional contractual right to receive
cash or another ?nancial asset from, or at the direction of the grantor for the construction, or upgrade services provided. Such ?nancial assets
are measured at fair value on initial recognition and classi?ed as loans and receivables. Subsequent to initial recognition, the ?nancial assets are
measured at amortized cost. If the Group has paid for the construction services partly by a ?nancial asset and partly by an intangible asset, then
each component of the consideration is accounted for separately and is initially recognized at the fair value of the consideration.
88 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 89
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
3.7 Financial instruments (continued)
Available-for-sale ?nancial assets
Available-for-sale ?nancial assets are non-derivative instruments that are either designated in this category or not classi?ed in any of the other
categories of ?nancial instruments under IAS 39. Available-for-sale ?nancial assets include debt and equity securities. For available-for-sale debt
securities interest income is recognized using the effective interest method. Available-for-sale ?nancial assets are accounted for using trade date
accounting and are carried at fair value. The change in fair value is recognized in other comprehensive income net of taxes. When securities
classi?ed as available-for-sale are sold or impaired, the accumulated gains and losses are reclassi?ed to pro?t or loss. Available-for-sale ?nancial
assets are included in non-current assets unless the Group intends to dispose of the available-for-sale ?nancial assets within 12 months after
the balance sheet date. The dividend income from equity instruments is recognized in pro?t or loss as ‘Other income’ when the Group’s right to
receive payment is established.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with maturities of three months or less from the acquisition date (original
maturity) that are subject to an insigni?cant risk of changes in their fair value and are used by the Group in the management of its short-term
commitments. Restricted cash comprises cash balances where speci?c restrictions exist on the Company’s ability to use this cash. Restricted
cash includes cash deposited as collateral for letters of credit issued by the Company.
3.8 Share capital
Ordinary shares are classi?ed as equity. Share premium is the excess amount received over the par value of the shares. Incremental costs
directly attributable to the issue of new shares are recognized in equity as a deduction, net of tax, from the proceeds. When ordinary shares are
repurchased, the amount of the consideration paid, which includes directly attributable costs, net of tax effects, is recognized as a deduction
from ‘Reserves’. Repurchased shares are classi?ed as treasury shares and are presented in ‘Reserves’. When treasury shares are sold or
reissued subsequently, the amount received is recognized as an increase in ‘Reserves’, and the resulting surplus or de?cit on the transaction is
presented in share premium.
3.9 Property, plant and equipment
Items of property, plant and equipment are measured at cost less accumulated depreciation and any impairment. Cost includes expenditure that
is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes cost of material, direct labour, other directly
attributable cost incurred to bring the asset ready to its intended use, cost of asset retirement obligations and any capitalized borrowing cost.
Purchased software that is integral to the functionality of the related equipment is capitalized as part of that equipment. When parts of property,
plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment (calculated as the difference between the net proceeds from disposal
and the carrying amount of the item) is recognized in pro?t or loss. Subsequent expenditures are capitalized only when it is probable that the
future economic bene?ts associated with the expenditure will ?ow to the Group. Ongoing repairs and maintenance costs are expensed as
incurred. Spare parts of property, plant and equipment are recognized under property, plant and equipment if the average turn-over exceeds 12
months or more, otherwise they are recognized within inventories.
Finance leases
Leased assets in which the Group bears substantially all the risks and rewards incidental to ownership are classi?ed as ?nance leases and
recognized under property, plant and equipment. Upon initial recognition, the leased asset is measured at the lower of its fair value and
the present value of minimum lease payments. Minimum lease payments made under ?nance leases are apportioned between the interest
expenses and the reduction of the outstanding liability. The interest expenses are recognized as other ?nancing cost over the lease term. The
?nance cost is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of
the liability.
Property, plant and equipment under construction
Expenditures incurred for purchasing and constructing property, plant and equipment are initially recorded as ‘under construction’ until the asset
is completed and becomes ready for use. Upon the completion of the assets, the recognized costs are reclassi?ed from ‘under construction’
to its ?nal category of property, plant and equipment. Assets under construction are not depreciated and measured at cost less any impairment
losses.
3.9 Property, plant and equipment (continued)
Depreciation
Items of property, plant and equipment are depreciated on a straight line basis through pro?t or loss over the estimated useful lives of each
component, taking into account any residual values. Finance lease assets are depreciated over the shorter of the lease term and their useful
lives. If it is reasonably certain that the Group will obtain ownership by the end of the lease term, the ?nance lease assets are depreciated over
their useful lives. Land is not depreciated. Items of property, plant and equipment are depreciated from the date that they are installed and are
ready for use, or in respect of internally constructed assets, from the date that the asset is completed and ready for use.
The estimated useful lives for items of property, plant and equipment are as follows: Years
Buildings 10 - 50
Plant and equipment 5 - 25
Fixtures and ?ttings 3 - 10
Depreciation methods, useful lives and residual values are reviewed at each reporting date by the Group.
Borrowing costs
Borrowing costs attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to get
ready for their intended use or sale, are recognized as part of the cost of those assets. All other borrowing costs are recognized as ‘Finance
cost’ in the period in which they are incurred.
3.10 Goodwill and other intangible assets
Goodwill
Goodwill represents the excess of the cost, being the excess of the aggregate of the consideration transferred including the amount recognized
for non-controlling interest, of an acquisition over the fair value of the Group’s share in the net identi?able assets and liabilities assumed of the
acquired subsidiary at the date of acquisition.
If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the gain is recognized in pro?t or loss.
Goodwill on acquisition of entities that qualify as subsidiaries is presented under ‘Intangible assets’. Goodwill on acquisitions of entities that
qualify as associates or joint ventures is included in ‘Associates’. Goodwill on acquisition of subsidiaries is allocated to cash-generating units for
the purpose of impairment testing. The allocation is made to those cash-generating units or group of units that are expected to bene?t from the
business combination through which the goodwill arose, based on past experience.
Goodwill is initially measured at cost. After initial recognition, goodwill is measured at cost less any impairment losses. Goodwill is tested
annually for impairment; an impairment loss is recognized for the amount by which the cash-generating unit’s carrying amount exceeds its
recoverable amount. The recoverable amount of the cash-generating unit is determined by the higher of its fair value less cost to sell and its
value in use. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of
goodwill related to the entity sold. All other expenditures on internally generated goodwill and other intangible assets is recognized in pro?t or
loss as incurred.
Other intangible assets
Other intangible assets with a ?nite useful life (licenses, customer relations, brand names and other rights that are acquired separately or
through business combinations) are amortized on a straight-line basis in pro?t or loss over their estimated useful lives taking into account any
residual value, from the date that they are available for use.
The estimated useful lives of intangible assets are as follows: Years
Licenses and trade names 3 - 10
Purchased rights and other 4 - 10
Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted if necessary.
90 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 91
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
3.11 Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of inventories of raw materials, spare parts and supplies cost
are based on weighted average principle or the ?rst-in-?rst-out method, and includes expenditure incurred in acquiring the inventories and
bringing them to their existing location and condition. In case of manufactured inventories and work in progress, cost includes an appropriate
share of production overheads based on normal operating capacity. Net realisable value is the estimated selling price in the ordinary course of
business, less the estimated costs of completion and selling expenses.
3.12 Impairment of assets
Non-derivative ?nancial assets
The Group assesses at each balance sheet date whether there is objective evidence that a non-derivative ?nancial asset or a group of non-
derivative ?nancial assets is impaired. An impairment loss is recognized for the amount by which the carrying amount of a non-derivative
?nancial asset exceeds its estimated discounted future cash ?ows using the original interest rate. Impaired non-derivative ?nancial assets are
tested periodically to determine whether the estimated future cash ?ows have increased and the impairment has to be reversed. Reversal
of impairments is only permitted if in a subsequent period after an impairment loss has been recognized, the amount of the impairment loss
decreases and the decrease can be related objectively to an event after the impairment loss was recognized. In the case of a ?nancial asset
classi?ed as available-for-sale, a signi?cant or prolonged decline in the fair value of the available-for-sale ?nancial asset below its acquisition cost
is considered as an indicator that the available-for-sale ?nancial asset is impaired. If any such evidence exists for an available-for-sale ?nancial
asset, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that
?nancial asset previously recognized in pro?t or loss – is removed from other comprehensive income and recognized in pro?t or loss. Impairment
losses recognized in pro?t or loss on equity instruments classi?ed as available-for-sale are not reversed through pro?t or loss.
Derivative ?nancial assets
Derivative ?nancial assets are measured at fair value and the Group investigates whether the counterparty creditworthiness gives rise to an
impairment.
Non-?nancial assets
Non-?nancial assets that have an inde?nite useful life, for example goodwill, are not subject to amortization but are tested annually for
impairment or more frequently when indicators arise. Assets with a ?nite useful life are subject to depreciation or amortization and are reviewed
(at least at the balance sheet date) for impairment whenever events or changes in circumstances indicate that the carrying amount may not be
fully recoverable. An impairment loss is recognized for the amount by which the assets’ carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset’s fair value less costs of disposal and its value in use. For the purposes of assessing impairment,
assets are grouped based on the lowest level for which there are separately identi?able cash ?ows (cash-generating units). Impairment
is recognized as an expense in pro?t or loss. Non-?nancial assets, which are impaired, are tested periodically to determine whether the
recoverable amount has increased and the impairment has to be (partially) reversed. Impairment losses on goodwill are not reversed. Reversal
of impairments is only permitted if in a subsequent period after an impairment loss has been recognized, the amount of the impairment loss
decreases and the decrease can be related objectively to an event after the impairment loss was recognized.
3.13 Provisions
Provisions are recognized when a present legal or constructive obligation as a result of a past event exists, and it is probable that an out?ow of
economic bene?ts is required to settle the obligation. The non-current part of provisions are determined by discounting the expected future cash
?ows at a pre-tax rate that re?ects current market assessments of the time value of money and the risks speci?c to the liability. The unwinding of
the discount is recognized as ?nance cost.
Warranties
A provision for warranties is recognized with respect to services performed and goods sold.
Restructuring
A provision for restructuring is recognized when the Group has approved a detailed and formal restructuring plan, and the restructuring either
has commenced, the Group has committed itself by public announcement or is expected to commit itself to a restructuring plan.
Asset retirement obligations
The Group recognizes a provision if the Group has an obligation to restore a leased asset in its original condition at the end of its lease term and
in case of legal requirements with respect to clean-up of contamination of land.
3.13 Provisions (continued)
Onerous contracts
A provision for onerous contracts is recognized if the Group expects that the unavoidable costs of meeting the obligations under a contract
exceed the economic bene?ts expected to be received under it. A provision for onerous contracts is measured at the present value of the lower
of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the
Group recognizes any impairment loss on the assets associated with that contract.
Legal
The Group is subject to legal and regulatory proceedings in various jurisdictions. Such proceedings may result in criminal or civil sanctions,
penalties or disgorgements against the Company. If it is probable that an obligation to the Group exists, which will result in an out?ow of
resources and the amount of the out?ow can be reliably estimated, a provision is recognized.
3.14 Revenue recognition
Revenues comprise the fair value of the considerations received or receivable from the sale of goods and services to third parties in the ordinary
course of the Group’s activities, excluding the taxes levied and taking into account any discounts granted. OCI recognizes revenue when the
amount of revenue can be reliably measured, it is probable that future economic bene?ts will ?ow to OCI and speci?c criteria have been met as
described below.
Construction contracts
Construction contracts are stated at cost incurred and allocated result in line with the progress of the construction, less total expected losses
and invoiced instalments. The cost price consists of all costs which are directly related to the project and directly attributable indirect cost based
on the normal production capacity. If the outcome of a contract can be estimated reliably, project revenue and cost are recognized in pro?t or
loss based on the progress of work performed. If the outcome of a contract cannot be estimated reliably, revenue is recognized only to the
extent of the contract costs incurred that are likely to be recoverable. Onerous sales contracts are identi?ed by monitoring the progress of the
project and updating the estimate of total contract costs, which also requires signi?cant judgment relating to achieving certain performance
standards as well as estimates involving warranty costs and estimates regarding project delays, including the assessment of responsibility
splits between the contract partners for these delays. If it is probable that the total contract cost exceeds the total contract revenue, the total
expected loss is recognized as an expense. The Group uses the ‘percentage of completion method’ to determine the appropriate amount
of revenue (and cost) to be recognized in a given period. The stage of completion is measured by reference to the contract cost incurred
as a percentage of total actual, compared to the estimated project cost. In case of ?xed price contracts, revenue is recognized when the
total contract revenue can be measured reliably, it is probable that future economic bene?ts will ?ow to the entity, both the contract cost and
the stage of completion can be measured reliably at the end of the period and the contract cost attributable to the contract can be clearly
identi?ed so that actual cost incurred can be compared with prior periods. For cost plus contract revenue is recognized when it is probable
that future economic bene?ts associated with the contract will ?ow to the entity and the contract cost attributable to the contract, whether or
not speci?cally reimbursable, can be clearly identi?ed and measured reliably. Projects are presented in the statement of ?nancial position as
‘Contract receivables‘ or ‘Billing in excess of construction contracts‘. If the costs incurred (including the result recognized) exceed the invoiced
instalments, the net contract position is presented as a receivable. If the invoiced instalments exceed the costs incurred (including the result
recognized) the net contract position is presented as a liability.
Contracts comprising the construction of a project and the possibility of subsequent long-term maintenance of that project as separate
components, or for which these components could be negotiated individually in the market, are accounted for as two separate contracts.
Revenue and results are recognized accordingly in the consolidated statement of comprehensive income as construction contract revenue or
the rendering of services, respectively.
Service concession arrangements
Revenue related to construction or upgrade services under a service concession arrangement is recognized based on the stage of completion
of the work performed, consistent with the Group’s accounting policy on recognizing revenue on construction contracts. Operation or service
revenue is recognized in the period in which the services are provided by the Group. If the Group provides more than one service in a service
concession arrangement, then the consideration received is allocated with reference to the relative fair values of the services delivered if the
amounts are separately identi?able.
Goods sold
Revenue on goods sold is recognized, in addition to abovementioned criteria, when persuasive evidence exists, usually in the form of an
executed sales agreement, that the signi?cant risks and rewards of ownership of the goods have transferred to the customer, the associated
costs and possible return of goods can be estimated reliably and there is no continuing management involvement with the goods. If it is
probable that discounts will be granted and the amount can be measured reliably, then the discount is recognized as a reduction of revenue
as the sales are recognized. The timing of the transfer of risks and rewards varies depending on the individual terms of the sales agreement,
whereby usually the transfer occurs when the product is received at the customer’s warehouse or the products leave the Company’s
warehouse; however, for some international shipments transfer occurs on loading the goods onto the relevant carrier at the port. Generally for
such products the customer has no right of return.
92 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 93
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
3.15 Government grants
An unconditional government grant related to an asset is recognized in pro?t or loss as ‘Other income’ when the grant becomes receivable.
When the grant relates to an asset, it is recognized as income in equal amounts over the expected useful life of the related asset. Grants that
compensate the Group for expenses incurred are recognized in pro?t or loss as ‘Other income’ on a systematic basis in the periods in which the
expenses are recognized. Other government grants are recognized initially as deferred income at fair value when there is reasonable assurance
that they will be received and the Group will comply with the conditions associated with the grant, and are then recognized in pro?t or loss as
‘Other income’ on a systematic basis over the useful life of the asset.
3.16 Operating leases
Leases in which a signi?cant portion of the risks and rewards incidental to ownership are retained by the lessor are classi?ed as operating
leases. Payments made by OCI under operating leases (net of any incentives received from the lessor) are charged to the consolidated
statement of pro?t or loss and other comprehensive income on a ‘straight-line’ basis over the period of the lease.
3.17 Finance income and cost
Finance income comprises:
• interest income on funds invested (including available-for-sale ?nancial assets);
• gains on the disposal of available-for-sale ?nancial assets;
• fair value gains on ?nancial assets at fair value through pro?t or loss;
• gains on the re-measurement to fair value of any pre-existing interest in an acquired business combination;
• gains on hedging instruments that are recognized in pro?t or loss and reclassi?cations of amounts previously recognized in other
comprehensive income; and
• interest income is recognized as it accrues in pro?t or loss, using the effective interest method.
Dividend income is recognized in pro?t or loss on the date that the Group’s right to receive payment is established, which in the case of quoted
securities is normally the ex-dividend date.
Finance cost comprise:
• interest expense on borrowings;
• unwinding of the discount on provisions and contingent consideration;
• losses on disposal of available-for-sale ?nancial assets;
• fair value losses on ?nancial assets at fair value through pro?t or loss; and
• impairment losses recognized on ?nancial assets (other than trade receivables).
Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognized in pro?t or
loss are expensed as incurred.
Foreign currency gains and losses are recognized on a net basis as either ?nance income or ?nance cost depending on whether foreign
currency movements are in a net gain or net loss position.
3.18 Employee bene?ts
De?ned contribution plan
Certain Group subsidiaries provide ‘pension plans’, ‘end of service remuneration plans’ and ‘long-term service bene?ts’. These pension plans
qualify as de?ned contribution plans. Obligations for contributions to de?ned contribution plans are expensed as the related service is provided.
Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in future payments is available.
Short-term employee bene?ts
Short-term employee bene?ts are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the
Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation
can be estimated reliably.
3.18 Employee bene?ts (continued)
Long-term employee bene?ts
The Group long-term employee bene?ts are recognized if the Group has a present legal or constructive obligation to pay this amount as a
result of past service provided by the employee and the obligation can be estimated reliably to determine its present value. The discount rate
is the yield at the balance sheet date on triple-A (‘AAA’) credit rated bonds that have maturity dates approximating to the terms of the Group’s
obligations. Re-measurements are recognized in pro?t or loss in the period in which they arise.
Termination bene?ts
Employee termination bene?ts are payable when employment is terminated before the normal retirement date, or whenever an employee
accepts voluntary redundancy in exchange for these bene?ts. OCI recognizes termination bene?ts when OCI is demonstrably committed to
either terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal, or when OCI is
providing termination bene?ts as a result of an offer made to encourage voluntary redundancy. Bene?ts falling due more than 12 months after
balance sheet date are discounted to present value.
Share-based payments
Employees (including senior executives) of the Group receive remuneration in the form of share-based payments, whereby employees render
services as consideration for equity instruments (equity-settled share-based payments arrangements). The grant date fair value of share-based
payment awards granted to employees is recognized as an employee expense, with a corresponding increase in equity, over the period (the
vesting period) that the employees render service and becomes unconditionally entitled to the awards. The amount recognized as an expense
is adjusted to re?ect the number of awards for which the related service and non-market performance conditions are expected to be met,
such that the amount ultimately recognized as an expense is based on the number of awards that meet the related service and non-market
performance conditions at the vesting date.
3.19 Income tax
Current tax
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively
enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Current tax payable also includes any tax liability
arising from the declaration of dividends. Current income tax assets and liabilities are offset when there is a legally enforceable right to offset and
when the current income tax relates to the same ?scal authority.
Deferred tax
Deferred income tax liabilities are recognized for all taxable temporary differences arising between the tax bases of assets and liabilities and
their carrying amounts in the consolidated ?nancial statements (‘liability’ method). Deferred income tax assets are recognized for all deductible
temporary differences, unused carry forward losses and unused carry forward tax credits, to the extent that it is probable that future taxable
pro?t will be available against which the deferred income tax assets can be utilized.
Deferred income tax is not recognized if it arises from initial recognition of an asset or liability in a transaction that is not a business combination
and at the time of the transaction affects neither accounting nor taxable pro?t or loss. Also, no deferred income tax is recognized regarding the
initial recognition of goodwill.
Deferred income tax is measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled,
based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. Deferred income tax assets
and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred
income tax relates to the same ?scal authority.
3.20 Segment reporting
An operating segment is a component of an entity that engages in business activities for which it may earn revenues and incur expenses
(including revenues and expenses relating to transactions with other components of the same entity), whose operating results are regularly
reviewed by the entity’s Chief Operating Decision Maker (CODM) to make decisions about resource allocation to the segment and to assess its
performance and for which discrete ?nancial information is available. The Group determines and presents operating segments on the basis of
information that internally is provided to the CODM during the period.
94 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 95
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
3.21 Consolidated statement of cash ?ows
The consolidated statement of cash ?ows has been prepared using the ‘indirect’ method. Cash ?ows in foreign currencies have been
translated applying average exchange rates. Currency translation differences are shown separately in the consolidated statement of cash ?ows.
Cash ?ows from investing activities consist mostly of investments and divestments in property, plant and equipment, intangible assets, and
acquisitions insofar as these are paid for in cash. Acquisitions or disposals of subsidiaries are presented as aquisition of subsidiary, net of cash,
aquired. Cash ?ows relating to capitalized borrowing cost are presented as cash ?ows from investment activities similar as other cash ?ows to
acquire the qualifying asset.
3.22 Earnings per share
Earnings per ordinary share are calculated by dividing the pro?t or loss (net) attributable to holders of ordinary shares by the weighted average
number of ordinary shares outstanding during the year. In making this calculation the (ordinary) treasury shares are deducted from the number
of ordinary shares outstanding. The calculation of the diluted earnings per share is based on the weighted average number of ordinary shares
outstanding plus the potential increase as a result of the conversion of convertible bonds and the settlement of share-based compensation
plans (share option plans). Anti-dilutive effects are not included in the calculation. With regard to the convertible notes it is assumed that these
are converted in full. An adjustment is made to pro?t or loss (net) to eliminate interest charges, whilst allowing for effect of taxation. Regarding
equity-settled share option plans it is assumed that all outstanding plans will vest. The potential increase arising from share option plans is
based on a calculation of the value of the options outstanding. This is the number of options multiplied by the exercise price, divided by the
average share price during the ?nancial year. This potential increase is only applied if the option has intrinsic value.
4. New accounting standards and policies
On a regular basis, the IASB issues new accounting standards, amendments and revisions to existing standards and interpretations. These new
accounting standards, amendments and revisions to existing standards and interpretations are subject to endorsement by the European Union.
In 2014, the following new accounting standards, amendments and revisions to existing standards and interpretations were issued by the IASB,
which will become or became effective to OCI.
4.1 Standards, amendments, revisions and interpretations effective to OCI in 2014
IAS 27 (as revised in 2011) ‘Separate Financial Statements‘ IAS 27 is applicable for annual periods beginning on or after 1 January 2013. As a
consequence of the new IFRS 10 and IFRS 12, what remains of IAS 27 is limited to accounting for subsidiaries, jointly controlled entities, and
associates in separate ?nancial statements. The revision had no impact on the consolidated ?nancial statements.
IAS 28 Amendment ‘Investments in Associates and Joint Ventures‘ IAS 28 is applicable for annual periods beginning on or after 1 January
2013. As a consequence of the new IFRS 11 and IFRS 12, IAS 28 has been renamed ‘Investments in associates and Joint Ventures‘, and
describes the application of the equity method to investments in joint ventures in addition to associates. The revision had no impact on the
consolidated ?nancial statements.
IAS 36 Impairment of Assets: Recoverable Amounts Disclosures for Non-Financial Assets The amendments are to be applied retrospectively for
annual periods beginning on or after 1 January 2014. Earlier application is permitted for periods when the entity has already applied IFRS 13.
The amendments clarify the IASB’s original intention: that the scope of those disclosures is limited to the recoverable amount of impaired assets
that is based on fair value less costs of disposal. The amendments did not have an impact on the consolidated ?nancial statements.
IFRS 10 ‘Consolidated Financial Statements’ IFRS 10 is effective for annual periods beginning on or after 1 January 2014. IFRS 10 establishes
principles for the presentation and preparation of consolidated ?nancial statements when an entity controls one or more other entities. IFRS 10
replaces the consolidation requirements in SIC-12 ‘Consolidation-Special Purpose Entities’ and IAS 27 ‘Consolidated and Separate Financial
Statements’. IFRS 10 builds on existing principles by identifying the concept of control as the determining factor in whether an entity should
be included within the consolidated ?nancial statements of the parent company. The standard provides additional guidance to assist in the
determination of control where this is dif?cult to assess. For the impact of this standard and IFRS 11 on the consolidated ?nancial statements,
reference is made to note 4.3.
4.1 Standards, amendments, revisions and interpretations effective to OCI in 2014 (continued)
IFRS 11 ‘Joint Arrangements’ IFRS 11 is applicable for annual periods beginning on or after 1 January 2014. IFRS 11 provides for a more
realistic re?ection of joint arrangements by focusing on the rights and obligations of the arrangement, rather than its legal form (as was the case).
The standard addresses inconsistencies in the reporting of joint arrangements by requiring a single method to account for interests in jointly
controlled entities. IFRS 11 supersedes IAS 31 ‘Interests in Joint Ventures’ and SIC-13 ‘Jointly Controlled Entities / Non-monetary Contributions
by Ventures’. The application of this new standard impacts the ?nancial position of the Group by eliminating proportionate consolidation of the
joint ventures in, BESIX, Orasqualia for Development, Orasqualia for Construction, Alico and some other small entities. With the application
of this new standard, the investment in these entities are accounted for using the equity method. For the impact of this standard on the
consolidated ?nancial statements, reference is made to note 4.3.
IFRS 12 ‘Disclosure of interest in other Entities‘ IFRS 12 is applicable for annual periods beginning on or after 1 January 2013, however the
European Union provided an 1-year relief. IFRS 12 is a new and comprehensive standard on disclosure requirements for all forms of interests
in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. As a result of IFRS 12,
the Group provides additional disclosures regarding interest in other entities.
Amendment to IAS 19 ‘De?ned Bene?t Plans: Employee Contributions’ The amendment issued on 21 November 2013 are effective for annual
periods beginning on or after 1 January 2014. The amendments apply to contributions from employees or third parties to de?ned bene?t plans.
The objective of the amendments is to simplify the accounting for contributions that are independent of the number of years of employee
service, for example, employee contributions that are calculated according to a ?xed percentage of salary. The amendments did not have a
signi?cant impact on the consolidated ?nancial statements, because OCI does not have any signi?cant de?ned bene?t plans.
Amendments to IAS 32 ‘Offsetting Financial Assets and Financial Liabilities’ The amendments are effective for annual periods beginning on or
after 1 January 2014. The amendments to IAS 32 clarify existing application issues relating to the offset of ?nancial assets and ?nancial liabilities
requirements. Speci?cally, the amendments clarify the meaning of ‘currently has a legally enforceable right of set-off’ and that some gross
settlement systems may be considered equivalent to net settlement. The amendment did not have a signi?cant impact on the consolidated
?nancial statements upon adoption.
Amendment to IAS 39 ‘Novation of Derivatives and Continuation of Hedge Accounting’ The amendment issued on 27 June 2013 is effective
for annual periods beginning on or after 1 January 2014. The amendment allows hedge accounting to continue in a situation where a derivative,
which has been designated as a hedging instrument, is novated to effect clearing with a central counterparty as a result of laws or regulation,
if speci?c conditions are met. The amendment did not have a signi?cant impact on the consolidated ?nancial statements.
IFRIC Interpretation 21 ‘Levies’ The interpretation issued on 20 May 2013 is effective for annual periods beginning on or after 1 January 2014.
IFRIC 21 is an interpretation of IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets‘. IAS 37 sets out criteria for recognition of a
liability, one of which is the requirement for an entity to have a present obligation as a result of a past event (known as an obligating event). The
interpretation clari?es that the obligating event that gives rise to a liability to pay levy is the activity described in the relevant legislation that trigger
the payment of the levy. The amendments did not have an impact on the consolidated ?nancial statements.
Amendment to IFRS 10, IFRS 12, and IAS 27 ‘Investment Entities’ The amendments issued in October, 2012 are effective for annual periods
beginning on or after 1 January 2013 and apply to particular classes of business that qualify as investment entities. The IASB uses the term
investment entity to refer to an entity whose ?nancial statements business purpose is to invest funds solely for returns from capital appreciation,
investment income or both. The amendments are subject to endorsement by the European Union. The amendments did not have an impact on
the consolidated ?nancial statements, because OCI does not qualify as an investment entity.
96 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 97
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
4.2 Standards, amendments, revisions and interpretations not yet effective to OCI:
IFRS 9 ‘Financial Instruments’ IFRS 9 is effective for annual periods beginning on or after 1 January 2018 (tentative). IFRS 9 addresses the
classi?cation and measurement of ?nancial assets. The publication of IFRS 9 represents the completion of the ?rst part of a three-part project
to replace IAS 39 ‘Financial Instruments: Recognition and Measurement’. IFRS 9 enhances the ability of investors and other users of ?nancial
information to understand the accounting of ?nancial assets and reduces complexity. OCI is currently investigating the impact of IFRS 9 on the
consolidated ?nancial statements.
IFRS 14 ‘Regulatory Deferral Accounts’
The Standard was issued in January 2014 and is effective from 1 January 2016, with earlier application permitted. IFRS 14 permits an entity
which is a ?rst-time adopter of International Financial Reporting Standards to continue to account, with some limited changes, for ‘regulatory
deferral account balances’ in accordance with its previous GAAP, both on initial adoption of IFRS and in subsequent ?nancial statements.
Regulatory deferral account balances, and movements in them, are presented separately in the statement of ?nancial position and statement
of pro?t or loss and other comprehensive income, and speci?c disclosures are required. IFRS 14 will not have an impact on the consolidated
?nancial statements, because OCI is not a ?rst-time adopter.
IFRS 15 ‘Revenue from Contracts with Customers’
The Standard was issued in January 2014 and is effective from 1 January 2017. IFRS 15 speci?es how and when an IFRS reporter will
recognise revenue as well as requiring such entities to provide users of ?nancial statements with more informative, relevant disclosures. The
standard provides a single, principles based ?ve-step model to be applied to all contracts with customers. The group does not expect a
signi?cant impact from the application of this standard on its continuing operations.
Amendments to IAS 1 ‘Disclosure Initiative’
The amendments issued on 18 December 2014 are effective for annual periods beginning on or after 1 January 2016, with earlier application
being permitted. The amendments aim at clarifying IAS 1 to address perceived impediments to preparers exercising their judgement in
presenting their ?nancial reports. OCI is currently investigating the impact of the amendments.
Amendments to IFRS 10 and IAS 28 ‘Sale or Contribution of Assets between an Investor and its Associate or Joint Venture’
The amendments issued on 11 September 2014 are effective for annual periods beginning on or after 1 January 2016. When a parent losses
control of a subsidiary in a transaction with an associate or joint venture, there is a con?ict between the existing guidance on consolidation
and equity accounting. In response to this con?ict and the resulting diversity in practice, the amendments requires the recognition of the full
gain when the assets transferred meet the de?nition of a business combination under IFRS 3. OCI is currently investigating the impact of the
amendments.
Amendments to IAS 27 ‘Equity Method in Separate Financial Statements’
The amendment to IAS 27 issued on 12 August 2014 will be effective for reporting period starting on or after 1 January 2016, but is subject to
EU endorsement. In some countries, local regulations require entities to apply the equity method for accounting for investments in subsidiaries
in their separate ?nancial statements. The amendment allows for the use of the equity method. OCI N.V. does not currently apply IFRS for its
separate ?nancial statements. In 2015 OCI N.V. will convert to IFRS, but will apply the cost method in accounting for subsidiaries.
Amendments to IAS 16 and IAS 38 ‘Clari?cation of Acceptable Methods of Depreciation and Amortization’
The amendments issued on 12 May 2014 are effective for annual periods beginning on or after 1 January 2016, with earlier application being
permitted. These amendments clarify the principle in IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets that revenue re?ects
a pattern of economic bene?ts that are generated from operating a business (of which the asset is part) rather than the economic bene?ts that
are consumed through use of the asset. As a result, the ratio of revenue generated to total revenue expected to be generated cannot be used
to depreciate property, plant and equipment and may only be used in very limited circumstances to amortise intangible assets. OCI is currently
investigating the impact of the amendments.
Amendments to IFRS 11 ‘Accounting for Acquisitions of Interests in Joint Operations’
The amendment was issued on 6 May 2014 and will be effective for reporting periods starting on or after 1 January 2016. The amendment
states that, where a joint operator acquires an interest in a joint operation in which the activity of the joint operation constitutes a business, it
must apply all of the principles on business combinations accounting as set out in IFRS 3 Business Combinations, and other standards. In
addition, the joint operator must disclose the information required by IFRS 3 and other IFRSs for business combinations. The amendment will
only affect OCI’s consolidated ?nancial statements if the entity would enter into a signi?cant joint operation.
4.3. Restatement of comparative information as a result of the application of IFRS 10 and IFRS 11
4.3.1. Restatement of consolidated statement of ?nancial position as at 31 December
$ millions Note
2013
before restatement
Effect of
IFRS 10 / 11
2013
restated
Assets
Non-current assets
Property, plant and equipment (7) 4,918.4 (145.0) 4,773.4
Goodwill and other intangible assets (8) 986.0 (1.7) 984.3
Trade and other receivables 198.7 (121.9) 76.8
Equity accounted investees (10) 188.2 328.9 517.1
Other investments 51.9 (0.9) 51.0
Deferred tax assets 76.1 (8.5) 67.6
Total non-current assets 6,419.3 50.9 6,470.2
Current assets
Inventories (13) 479.7 (112.2) 367.5
Trade and other receivables 1,865.1 (583.0) 1,282.1
Contracts receivables 414.0 (38.6) 375.4
Cash and cash equivalents (15) 2,266.1 (275.9) 1,990.2
Assets held for sale 2.4 - 2.4
Total current assets 5,027.3 (1,009.7) 4,017.6
Total assets 11,446.6 (958.8) 10,487.8
Equity
Share capital 272.1 - 272.1
Share premium 1,441.8 - 1,441.8
Reserves 109.6 - 109.6
Retained earnings (102.2) - (102.2)
Equity attributable to owners of the Company 1,721.3 - 1,721.3
Non-controlling interest 366.3 - 366.3
Total equity 2,087.6 - 2,087.6
Liabilities
Non-current liabilities
Loans and borrowings (20) 4,591.9 (94.7) 4,497.2
Trade and other payables 118.9 (43.1) 75.8
Provisions 48.2 (29.0) 19.2
Deferred tax liabilities 393.3 (17.6) 375.7
Income tax payables 414.7 - 414.7
Total non-current liabilities 5,567.0 (184.4) 5,382.6
Current liabilities
Loans and borrowings (20) 1,474.2 (46.2) 1,428.0
Trade and other payables 1,616.3 (614.0) 1,002.3
Billing in excess of construction contracts 218.9 (78.0) 140.9
Provisions 130.5 (22.3) 108.2
Income tax payables 352.1 (13.9) 338.2
Total current liabilities 3,792.0 (774.4) 3,017.6
Total liabilities 9,359.0 (958.8) 8,400.2
Total equity and liabilities 11,446.6 (958.8) 10,487.8
98 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 99
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
4.3.2. Restatement of consolidated statement of pro?t or loss (before effect of IFRS 5 ‘discontinued operations‘)
for the year ended
$ millions Note
2013
before restatement
Effect of
IFRS 10 / 11
2013
restated
Revenue 6,131.8 (1,730.9) 4,400.9
Cost of sales (5,270.4) 1,557.0 (3,713.4)
Gross pro?t 861.4 (173.9) 687.5
Other income (24) 316.9 (6.1) 310.8
Selling, general and administrative expenses (23) (434.4) 93.8 (340.6)
Other expenses (25) (97.5) 12.2 (85.3)
Transaction cost (89.3) - (89.3)
Operating pro?t / (loss) 557.1 (74.0) 483.1
Finance income (26) 178.5 (22.7) 155.8
Finance cost (26) (412.1) 23.1 (389.0)
Net ?nance cost (26) (233.6) 0.4 (233.2)
Income from equity accounted investees (net of tax) (10) 21.7 62.0 83.7
Pro?t / (loss) before income tax 345.2 (11.6) 333.6
Income tax (12) (86.0) 11.6 (74.4)
Net pro?t / (loss) 259.2 - 259.2
Attributable to owners of the Company 295.2 - 295.2
Non-controlling interest (36.0) - (36.0)
Net pro?t / (loss) 259.2 - 259.2
Earnings / (loss) per share (in USD)
Basic earnings (loss) per share (27) 1.449 1.449
Diluted earnings (loss) per share (27) 1.408 1.408
4.3.4 Restatement of consolidated statement of cash ?ows for the year ended
$ millions Note
2013
before restatement
Effect of
IFRS 10 / 11
2013
restated
Net pro?t / (loss) 259.2 - 259.2
Adjustments for non-cash pro?t or loss items / changes in items of
?nancial position: (971.9) (20.7) (992.6)
Cash ?ow from / (used in) operating activities (712.7) (20.7) (733.4)
Cash ?ow from / (used in) investing activities 1,084.6 87.7 1,172.3
Cash ?ow from / (used in) ?nancing activities 849.5 (62.5) 787.0
Net increase (decrease) in cash and cash equivalents 1,221.4 4.5 1,225.9
Cash and cash equivalents at 1 January (15) 1,033.4 (270.9) 762.5
Currency translation differences 11.3 (9.5) 1.8
Cash and cash equivalents at 31 December (15) 2,266.1 (275.9) 1,990.2
5. Critical accounting judgement, estimates and assumptions
The preparation of the ?nancial statements in compliance with IFRS requires management to make judgements, estimates and assumptions
that affect amounts reported in the consolidated ?nancial statements. The estimates and assumptions are based on experience and various
other factors that are believed to be reasonable under the circumstances and are used to judge the carrying values of assets and liabilities
that are not readily apparent from other sources. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognized in the period in which the estimate is revised or in the revision period and future periods, if the changed
estimates affect both current and future periods. The most critical accounting policies involving a higher degree of judgment and complexity in
applying principles of valuation and for which changes in the assumptions and estimates could result in signi?cantly different results than those
recorded in the ?nancial statements are the following:
Intangible assets
Intangible assets with ?nite useful lives are carried at cost less cumulative amortization and any impairment. Amortization is calculated using
the ‘straight-line’ method based on the estimated useful lives. Management makes estimates regarding the useful lives and residual values
and assumes that amortization takes place on a ‘straight-line’ basis. The assets’ useful lives are reviewed, and adjusted if appropriate, at each
balance sheet date. For intangible assets with ?nite useful lives, OCI assesses annually or more frequently whether indicators exist that suggest
the intangible asset might be impaired by comparing the recoverable amounts with their carrying amounts. In determining the recoverable
amounts of intangible assets, OCI makes estimates and assumptions about future cash ?ows based on the value in use. In doing so, OCI also
makes assumptions and estimates regarding the discount rates in order to calculate the net present value of the future cash ?ows.
OCI tests at least annually whether goodwill is impaired by comparing the recoverable amounts of cash-generating units with their carrying
amounts. The recoverable amount is the higher of the fair value less cost to sell and the value in use. In determining the recoverable amount,
OCI makes estimates and assumptions concerning future revenues, future costs, future working capital, future investments, Weighted Average
Cost of Capital (WACC) and future in?ation rates.
Property, plant and equipment
Depreciation is calculated using the ‘straight-line’ method based on the estimated useful lives, taking into account any residual values.
Management makes estimates regarding the useful lives and residual values and assumes that depreciation takes place on a ‘straight-line’
basis. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. OCI assesses annually,
or more frequently, whether indicators exist that suggest that an item of property, plant and equipment might be impaired by comparing the
recoverable amounts with their carrying amounts. In determining the recoverable amounts of property, plant and equipment, OCI makes
estimates and assumptions about future cash ?ows based on the value in use. In doing so OCI also makes assumptions and estimates
regarding the discount rates to be used in order to calculate the net present value of the future cash ?ows.
Financial instruments
The fair value of ?nancial instruments traded in active markets (?nancial instruments in the fair value hierarchy category 1) is based on quoted
market prices at the balance sheet date. The fair value of ?nancial instruments that are not traded in an active market (?nancial instruments in
the fair value hierarchy category 2) is determined using generally accepted valuation techniques. These valuation techniques include estimates
and assumptions about forward rates, discount rates based on a single interest rate, or on a yield-curve based on market conditions existing
at the balance sheet date. The fair value of borrowings and interest rate swaps is calculated based on the present value of the estimated future
cash ?ows based on the yield-curve applicable at the balance sheet date. If the ?nancial instrument contains a ?oating interest rate, the future
expected interest rates are determined based on the ‘boot-strap’ method. The fair value of forward foreign exchange contracts is determined
using quoted forward exchange rates at the balance sheet date. The net carrying amount of trade receivables and trade payables is assumed
to approximate the fair value due to the short term nature. The fair value of non-current ?nancial liabilities is estimated by discounting the future
cash ?ows using yield-curves. For unlisted equity securities in the available-for-sale category (?nancial instruments in the fair value hierarchy
category 3) the equity-method is used as a proxy for fair value. In using the equity method, input is derived from the ?nancial statements of
the unlisted equity investments. Counterparty risk in connection with triggers for impairment is based on judgment of the ?nancial position of
the counterparty. A signi?cant and prolonged decline in fair value of available-for-sale ?nancial assets is depends on the average volatility of
the instrument, if an instrument exceeds certain ranges in both time frame and negative volatility, a trigger for impairment is considered. This is
considered on an item by item basis.
Impairment ?nancial instruments (including trade receivables)
Objective evidence may exist in circumstances in which a counterparty has been placed in bankruptcy, or has failed on the repayments of
principal and interest. In other circumstances OCI uses judgment in order to determine whether a ?nancial assets may be impaired. OCI
uses judgement in order to determine whether an impairment can be reversed, an assumption in doing so might be an improvement in the
debtor’s credit rating or receipt of payments due. For listed equity securities in the available-for-sale ?nancial assets category, the Group uses
the assumption that if the market value declined by more than 25 percent and more than 6 months, the asset is assumed to be impaired. For
debt-securities, an impairment trigger exist when the counterpart fails to meet its contractual payment obligations or there is evidence that the
counterpart has encountered ?nancial dif?culties. The impairment is determined based on the carrying amount and the recoverable amount. The
recoverable amount is determined as the present value of estimated future cash ?ows using the original effective interest rate.
100 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 101
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
5. Critical accounting judgement, estimates and assumptions (continued)
Inventories
In determining the net realisable value of inventories, OCI estimates the selling prices in the ordinary course of business, cost of completion and
cost to sell. In doing so, OCI makes estimates and assumptions based on current market prices, historical usage of various product categories
versus current inventory levels and speci?c identi?ed obsolescence risks (e.g. end of life of speci?c goods and spare parts and the impact of
new environmental legislation).
Provisions
Recognition of provisions include signi?cant estimates, assumptions and judgements. IFRS requires only those provisions to be recognized if
there is an expected out?ow of resources in the near future and if the cost of these out?ows can be estimated reliably. Accordingly, management
exercises considerable judgment in determining whether there is a present obligation as a result of a past event at the end of the reporting
period, whether it is probable that such a proceeding will result in an out?ow of resources and whether the amount of the obligation can be
reliably estimated. These judgements are subject to change as new information becomes available. The required amount of a provision may
change in the future due to new developments in the particular matter. Revisions to estimates may signi?cantly impact future pro?t or loss. Upon
resolution, the Group may incur charges in excess of the recorded provisions for such matters.
The group uses past experiences to estimate the likelihood and cost of future warranties with respect to services provided and goods sold.
OCI recognizes a provision for restructuring regarding cost-saving restructuring measures. Provisions for restructuring include, amongst other,
estimates and assumptions about severance payments and termination fees.
Provisions for asset retirement obligations, represent estimated costs of decommissioning. Due to the long time frame over which future cash
out?ows are expected to occur including the respective interest accretion require assumptions. Amongst others, the estimated cash out?ows
could alter signi?cantly if, and when, political developments affect future laws and regulation with respect to asset retirements.
In case of onerous contracts the Group estimates the present value of the lower of the expected cost of terminating the contract and the
expected net cost of continuing with the contract. In doing so, the Group has to estimate the future cash ?ows and the discount rates used. In
addition to this the Group has to estimate any possible impairments.
With respect to legal cases, the Group has to estimate the outcome of the legal cases. Regulatory and legal proceedings as well as government
investigations often involve complex legal issues and are subject to substantial uncertainties. The Company periodically reviews the status of
these proceedings with both the internal and external legal counsels.
Revenue recognition on construction contracts
The Company conducts a signi?cant portion of its business under construction contracts with customers. The Company generally accounts for
construction projects using the percentage-of-completion method, recognizing revenue as performance on contract progresses. This method
places considerable importance on accurate estimates of the extent of progress towards completion and may involve estimates on the scope
of deliveries and services required for ful?lling the contractually de?ned obligations. Depending on the methodology to determine contract
progress, the signi?cant estimates include total contract costs, remaining costs to completion, total contract revenues, contract risks, including
technical, political and regulatory risks, and other judgments. Management of the operating divisions continually review all estimates involved
in such construction contracts, including commercial feasibility, and adjusts them as necessary. Under the percentage-of-completion method,
such changes in estimates may lead to an increase or decrease of revenues in the respective reporting period.
Income taxes
OCI is subject to income taxes in numerous jurisdictions. Estimates are required in determining the worldwide provision for income taxes.
There are some transactions and calculations for which the ultimate tax position is uncertain during the ordinary course of business. The Group
recognizes provisions for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the ?nal tax outcome
of these matters is different from amounts that were initially recorded, such differences will impact the current income tax and deferred tax
provisions in the period in which such determination is made. OCI recognizes deferred tax assets to the extent that it is probable that future
taxable pro?ts will be available for the deferred tax asset to be recovered. This is based on estimates of taxable future income by jurisdiction
in which OCI operates and the period over which deferred tax assets are expected to be recoverable. In the event that actual results or new
estimates differ from previous estimates and depending on the possible tax strategies that may be implemented, changes to the recognition of
deferred tax assets could be required, which could impact the ?nancial position and pro?t or loss.
Asset held sale for sale / demerger, discontinued operations
OCI used judgment in determining what a disposal group or a discontinued operation is and when it quali?es for reclassi?cation according to
IFRS 5 (management commitment, ready for sale / demerger, highly probable, completion within one year). In determining what is a disposal
group or a discontinued operation, OCI judges whether the cash ?ows of the disposal group or a discontinued operation can be distinguished
from the rest of the group, what determines a major line of operation and whether a single coordinated plan to dispose exists and at what date
it was formally approved.
6. Financial risk and capital management
Overview
The Group has exposure to the following risks arising from ?nancial instruments:
• Credit risk
• Liquidity risk
• Market risk
These risks arise from exposures that occur in the normal course of business and are managed on a consolidated company basis. This note
presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and
managing risk, and the Group’s management of capital.
Risk management framework
Senior management has an overall responsibility for the establishment and oversight of the Group’s risk management framework. The Board is
responsible for developing and monitoring the Group’s risk management policies.
The Group’s risk management policies are established to identify and analyze the risks faced by the Group, to set appropriate risk limits and
controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to re?ect changes in
market conditions and the Group’s activities. The Group, through its training and management standards and procedures, aims to develop a
disciplined and constructive control environment in which all employees understand their roles and obligations.
The Audit Committee oversees how management monitors compliance with the Group’s risk management policies and procedures, and reviews
the adequacy of the risk management framework in relation to the risks faced by the Group. The Audit Committee is assisted in its oversight role
by the Internal Audit Department. The Internal Audit Department undertakes both regular and ad hoc reviews of risk management controls and
procedures, the results of which are reported to the Audit Committee.
6.1 Exposure to credit risk
The Company mitigates the exposure to credit risk on outstanding cash balances by placing funds at multiple ?nancial institutions with a
suf?cient credit rating. As of 31 December 2014, IFCo has a maximum concentration risk of USD 410.2 million in relation to its outstanding
cash at UMB Bank (treasury bills). The Group’s exposure to customer credit risk is monitored and mitigated by performing credit checks before
selling any goods. The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and
other receivables. The main components of this allowance are a speci?c loss component that relates to individually signi?cant exposures, and
a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identi?ed. The
collective loss allowance is determined based on historical data of payment statistics for similar ?nancial assets. The carrying amount of ?nancial
assets represents the maximum credit exposure. With respect to transactions with ?nancial institutions, the group sets limits to the credit
worthiness rating of the counterparty. The maximum credit risk is the carrying amount of ?nancial instruments, for an overview reference is made
to the tables ?nancial instruments by category.
The major exposure to credit risk at the reporting date was as follows:
$ millions Note 2014
2013
restated
Trade and other receivables (9) 393.7 1,358.9
Available-for-sale ?nancial assets (11) 54.1 51.0
Contract receivables (14) - 375.4
Cash and cash equivalents (15) 846.6 1,990.2
Total 1,294.4 3,775.5
The major exposure to credit risk for trade and other receivables by geographic region was as follows:
$ millions 2014
2013
restated
Middle East and Africa 202.8 650.7
Asia and Oceania 7.4 225.2
Europe and United States 183.5 483.0
Total 393.7 1,358.9
102 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 103
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
6.2 Liquidity risk
Liquidity risk is the risk that the Group will encounter dif?culty in meeting the obligations associated with its ?nancial liabilities that are settled by
delivering cash or another ?nancial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have
suf?cient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking
damage to the Group’s reputation. This is also safeguarded by using multiple ?nancial institutions in order the mitigate any concentration of
liquidity risk.
The following risk is monitored internally at Group level, on an ongoing basis the Group prepares liquidity forecasts to verify whether the Group
is able to meet its future debt obligations.
The following are the contractual maturities of ?nancial liabilities, including estimated interest payments and exclude the impact of netting
agreements:
At 31 December 2014
$ millions Note
Carrying
amount
Contractual
cash ?ow
6 months
or less
6–12
months
1–5
years
More than
5 years
Financial liabilities
Cash out?ows:
Loans and borrowings (20) 5,040.7 6,466.2 336.8 249.3 4,013.7 1,866.4
Trade and other payables (21) 463.6 515.0 454.1 - 60.9 -
Derivatives (21) - 26.4 26.4 - - -
Cash in?ows:
Derivatives (21) - 26.4 26.4 - - -
Total 5,504.3 6,981.2 790.9 249.3 4,074.6 1,866.4
The Group entered into construction agreements regarding the building of new plants, reference is made to note 31 ‘Capital commitments‘. The
building of these new plants is ?nanced by cash held by the operating company, new loans or shares issued or dividends received.
At 31 December 2013 restated
$ millions Note
Carrying
amount
Contractual
cash ?ow
6 months
or less
6–12
months
1–5
years
More than
5 years
Financial liabilities
Loans and borrowings (20) 5,925.2 7,730.4 284.1 410.4 4,522.0 2,513.9
Trade and other payables (21) 1,078.1 1,078.1 1,002.3 - 75.8 -
Total 7,003.3 8,808.5 1,286.4 410.4 4,597.8 2,513.9
The interest on ?oating rate loans and borrowings is based on forward interest rates at period-end. This interest rate may change as the market
interest rate changes.
6.3 Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates, commodity prices and equity prices will
affect the Group’s income or the value of its holdings of ?nancial instruments. The objective of market risk management is to manage and
control market risk exposures within acceptable parameters, while optimizing the return.
The Group is exposed to foreign currency risk arising in separate ways:
Foreign exchange translation exposure
Due to the Group’s international presence, OCI’s Financial Statements are exposed to foreign exchange ?uctuations as these affect the
translation of the subsidiaries’ assets and liabilities presented in foreign currencies to the US dollar (the Group’s presentation currency). The
currencies concerned are mainly the Egyptian pound, the Algerian Dinar and the Euro. Foreign exchange translation exposure is considered a
part of doing business on an international level; this risk is not actively managed, nor is it hedged.
Foreign exchange transaction exposure
The Group entities predominantly execute their activities in their respective functional currencies. Some Group subsidiaries are, however,
exposed to foreign currency risks in connection with the scheduled payments in currencies that are not their functional currencies. In general
this relates to foreign currency denominated supplier payables due to capital expenditures and receivables. The Group monitors the exposure
to foreign currency risk arising from operating activities. The Group does not use foreign exchange contracts for hedge accounting purposes,
therefore all changes in fair value adjustments are recognized in pro?t or loss.
The Group is exposed to foreign exchange transaction exposure to the extent that there is a mismatch between the currencies in which sales,
purchases and borrowings are denominated and the respective functional currencies of Group companies. The functional currencies of Group
companies are primarily the Euro, US Dollar, Egyptian Pound and Algerian Dinar.
As of 31 December 2014, if the functional currencies had strengthened/weakened by 7 percent against the Euro, 1 percent against the
Egyptian Pound with all other variables held constant, the translation of foreign currency receivables, payables and loans and borrowings that
would have resulted in an increase/decrease of USD 40.1 million of the pro?t of the year.
The Group uses foreign exchange contracts to manage its foreign exchange transaction exposure.
The summary of quantitative data about the Group’s exposure to foreign exchange transaction exposure provided to management of the Group
based on its risk management policy for the main currencies was as follows:
At 31 December 2014
$ millions USD EUR EGP
Trade and other receivables 42.7 7.0 21.3
Trade and other payables (8.5) (24.5) (92.8)
Loans and borrowings - - (1,015.0)
At 31 December 2013 restated
$ millions USD EUR EGP
Trade and other receivables 223.3 55.6 1,636.3
Trade and other payables (49.8) (92.2) (2,428.8)
Loans and borrowings (128.4) (63.5) (1,039.4)
104 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 105
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
6.3 Market risk (continued)
Signi?cant rates
The following signi?cant exchange rates applied during the year:
Average
2014
Average
2013
Closing
2014
Closing
2013
Euro 1.3282 1.3284 1.2155 1.3761
Egyptian pound 0.1412 0.1454 0.1398 0.1439
Algerian Dinar 0.0124 0.0124 0.0114 0.0127
The following tables demonstrate the sensitivity to a reasonably possible change in EUR and EGP exchange rates, with all other variables
held constant. The impact on the Group’s pro?t before tax is due to changes in the fair value of monetary assets and liabilities, including inter
company positions. The Group’s exposure to foreign currency changes for all other currencies is not material.
2014
$ millions
Change in
FX rate*
Effect on pro?t
before tax**
Effect on
equity**
EUR - USD 7 percent 40.1 -
EGP - USD 1 percent 0.1 -
* Determined based on the volatility of last year for the respective currencies
** Effects are displayed in absolute amounts
Interest rate risk
The Group‘s cash ?ow interest rate risks arise from the exposure to variability in future cash ?ows of ?oating rate ?nancial instruments. The
Group reviews its exposure in light of global interest rate environment after consulting with a consortium of global banks.
The Group analyses its interest rate exposure on a dynamic basis. The Group calculates the impact on pro?t or loss of a de?ned interest rate
shift. The same interest rate shift is used for all currencies. The following table demonstrates the sensitivity to a reasonably possible change in
interest rates on that portion of borrowings affected, after the impact of hedge accounting. With all other variables held constant, the Group’s
pro?t before tax is affected through the impact on ?oating rate borrowings, as follows:
$ millions in basis points 2014
2013
restated
Effect on pro?t before tax for the coming year +10 bps (1.5) (5.1)
- 10 bps 1.4 4.8
The assumed movement in basis points for the interest rate sensitivity analysis is based on the currently observable market environment,
showing a signi?cantly lower volatility than in prior years. As of 31 December 2014, the Group applied no cash ?ow hedge accounting; the
hedge reserve recognized in other comprehensive income relates to the joint venture Besix.
Commodity price risk
The group is exposed to natural gas price commodity risk, as natural gas is one of the primary raw materials used in the fertilizer and chemicals
production process. The Group enters into gas swaptions in order to hedge acceptable future gas price levels over a certain period of time. This
commodity hedge policy is only applied in those regions (mainly the USA) in which natural gas commodity hedging is possible. In other areas,
the Group enters into long-term gas supply contracts in order to manage its natural gas commodity risk.
6.3 Market risk (continued)
Categories of ?nancial instruments
2014
$ millions Note
Loans and
receivables
at amortized cost
Derivatives
at fair value
Available-for-sale
?nancial asset
at fair value
Assets
Trade and other receivables (9) 388.9 4.8 -
Other investments (11) - - 54.1
Cash and cash equivalents (15) 846.6 - -
Total 1,235.5 4.8 54.1
Liabilities
Loans and borrowings (20) 5,040.7 - -
Trade and other payables (21) 463.6 - -
Total 5,504.3 - -
2013 restated
$ millions Note
Loans and
receivables
at amortized cost
Derivatives
at fair value
Available-for-sale
?nancial asset
at fair value
Assets
Trade and other receivables (9) 1,330.8 28.1 -
Other investments (11) - - 51.0
Cash and cash equivalents (15) 1,990.2 - -
Total 3,321.0 28.1 51.0
Liabilities
Loans and Borrowings (20) 5,925.2 - -
Trade and other payables (21) 1,078.1 - -
Total 7,003.3 - -
Most ?nancial instruments are in the fair value hierarchy category level 2, with the exception of ?nancial assets in the available-for-sale category.
An amount of USD 54.1 million (2013: 51.0 million) was recognized as level 3 and was measured using the equity-method, reference is made
to note 11. In 2014, there were no transfers between the fair value hierarchy categories.
6.4 Capital management
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market con?dence and to sustain future
development of the business. Capital consists of ordinary shares, retained earnings and non-controlling interest of the Group. The Board of
Directors monitors the return on capital as well as the level of dividends to ordinary shareholders.
The Group’s net debt to equity ratio at the reporting date was as follows:
$ millions Notes 2014
2013
restated
Loans and borrowings (20) 5,040.7 5,925.2
Less: cash and cash equivalents (15) 846.6 1,990.2
Net debt 4,194.1 3,935.0
Total equity 2,537.8 2,087.6
Net debt to equity ratio at 31 December 1.65 1.88
The group is required by external ?nancial institutions to maintain certain capital requirements compared to its debt. Reference is made to note
20 ‘Loans and borrowings’ for a speci?cation of ?nancial covenants.
106 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 107
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
7. Property plant and equipment
$ millions
Land and
buildings
Plant and
equipment
Fixtures and
?ttings
Under
construction Total
Cost 263.8 2,706.5 24.9 2,190.5 5,185.7
Accumulated depreciation (52.1) (815.6) (16.0) - (883.7)
At 1 January 2013 restated 211.7 1,890.9 8.9 2,190.5 4,302.0
Movements in the carrying amount:
Additions 169.2 47.7 5.2 512.5 734.6
Disposals (2.6) (27.2) (1.1) - (30.9)
Depreciation (12.4) (255.6) (4.7) - (272.7)
Transfers (4.0) 2,056.1 0.8 (2,052.9) -
Effect of movement in exchange rate (4.5) 52.8 (0.7) (7.2) 40.4
At 31 December 2013 restated 357.4 3,764.7 8.4 642.9 4,773.4
Cost 408.2 4,724.5 30.2 642.9 5,805.8
Accumulated depreciation (50.8) (959.8) (21.8) - (1,032.4)
At 31 December 2013 restated 357.4 3,764.7 8.4 642.9 4,773.4
Movements in the carrying amount:
Additions 19.3 155.4 7.1 1,227.4 1,409.2
Disposals (17.0) (8.4) (1.3) (0.7) (27.4)
Depreciation (15.3) (323.3) (8.9) - (347.5)
Transfers (0.2) 64.9 16.5 (81.2) -
Effect of movement in exchange rates (16.0) (229.2) (10.2) (7.7) (263.1)
Assets reclassi?ed as held for demerger (122.8) (137.2) (5.3) (6.9) (272.2)
At 31 December 2014 205.4 3,286.9 6.3 1,773.8 5,272.4
Cost 234.5 4,140.3 17.2 1,773.8 6,165.8
Accumulated depreciation (29.1) (853.4) (10.9) - (893.4)
At 31 December 2014 205.4 3,286.9 6.3 1,773.8 5,272.4
As at 31 December 2014, the group had land with a carrying amount of USD 62.4 million (2013: USD 78.1 million).
In 2013, primarily due to Sorfert’s completion of the commissioning and testing period, USD 2,052.9 million of asset under construction were
transferred to ‘plant and equipment’. Additions to assets under construction in 2013 and 2014 are mainly related to the construction of Iowa
Fertilizer Company (IFCo) and Natgasoline in Iowa and Texas respectively.
The capitalized borrowing costs during the year ended 31 December 2014 amounted to USD 67.3 million (2013: USD 40.7 million) and relate
mainly to IFCo.
The amount of USD 263.1 million under effect of movement in exchange rates mainly relates to the Sorfert plant (Algeria), which has a different
functional currency (Algerian Dinar), than the Group’s presentation currency. The Algerian Dinar decreased by approximately 10% during 2014.
For capital commitments reference is made to note 31.
8. Goodwill and other intangible assets
$ millions Goodwill
Licenses and
trademarks
Purchase rights
and other Total
Cost 1,826.0 86.2 36.5 1,948.7
Accumulated amortization and impairment (900.0) (46.0) (6.5) (952.5)
At 1 January 2013 restated 926.0 40.2 30.0 996.2
Movements in the carrying amount:
Additions - - 4.1 4.1
Purchase price adjustment on previously acquired subsidiary 4.6 - - 4.6
Amortization - (15.1) (7.2) (22.3)
Effect of movement in exchange rates 0.4 1.3 - 1.7
At 31 December 2013 restated 931.0 26.4 26.9 984.3
Cost 1,831.0 87.5 40.6 1,959.1
Accumulated amortization and impairment (900.0) (61.1) (13.7) (974.8)
At 31 December 2013 restated 931.0 26.4 26.9 984.3
Movements in the carrying amount:
Disposals - - (0.6) (0.6)
Amortization - (14.5) (7.2) (21.7)
Impairment loss (7.0) - - (7.0)
Other - - (4.8) (4.8)
Effect of movement in exchange rates (3.0) (1.9) - (4.9)
Assets reclassi?ed as held for demerger (12.4) - - (12.4)
At 31 December 2014 908.6 10.0 14.3 932.9
Cost 1,808.6 85.6 35.2 1,929.4
Accumulated amortization and impairment (900.0) (75.6) (20.9) (996.5)
At 31 December 2014 908.6 10.0 14.3 932.9
Goodwill
Goodwill amounting to USD 0.9 billion is almost entirely related to the 2007 acquisition of EFC in Egypt which is part of the continuing
operations. This goodwill did not change during 2014.
Certain measurement period adjustments relating to real estate for sale, an investment in a joint operation and a judgement on other contract
receivables totalling USD 4.6 million have been adjusted through goodwill during the year ended 31 December 2013 as purchase price
adjustments.
In 2014, OCI Egypt (discontinued operation) impaired goodwill for an amount of USD 7.0 million relating to the National Steel Fabrication
company (NSF).
Licenses and trademarks
As at 31 December the 2014, the total licenses and trademarks have a carrying amount of USD 10.0 million as compared to an amount of USD
26.4 million as at 31 December 2013. The licenses and trademarks mainly relate to the customer relationships, trademarks and technology
assets of OCI Nitrogen B.V. These intangible assets were identi?ed during the acquisition of OCI Nitrogen B.V. in 2010. The useful life of
the customer relationships, trademarks and technology assets are respectively 5 to 10 years, 3 years and 5 years except the brand name
‘Nutramon’ which has an inde?nite useful life.
Purchase rights and other
As at 31 December 2014, the ‘Purchase rights and other’ have a carrying amount of USD 14.3 million (2013: USD 26.9 million). The purchase
rights and other mostly relates to the Ammonium Sulphate supply agreement between Fertiva GmbH and Orascom Construction Industries
S.A.E., where Orascom Construction Industries S.A.E. is entitled to all rights, bene?ts and obligations relating the supply of Ammonium Sulphate
by LANXESS. The term of the contract is from 1 November 2012 through 31 December 2016.
108 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 109
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
8. Goodwill and other intangible assets (continued)
Goodwill impairment testing Fertilizer & Chemicals Group
Goodwill amounting to USD 0.9 billion is almost entirely related to EFC. Historically, OCI allocated all goodwill from the EFC acquisition to the
CGU EFC and was also monitored and tested for impairment on this level. In 2014 OCI reorganized its entire internal reporting structure by
setting up a separate reporting structure for Fertilizer and Chemicals and Engineering and Construction. In addition to the change in internal
reporting structure the legal structure was changed to align the legal structure with the revised managerial and internal reporting structure.
The changes in the legal and internal reporting structure re?ected changes in the goods ?ow within the Fertilizer and Chemicals operations
and changes in management responsibilities within the Fertilizer and Chemicals operations. The goods ?ow within the Fertilizer and Chemicals
Group changed in 2014 as several fertilizer plants started to sell their products to 2 centralized trading of?ces within the group. These trading
of?ces subsequently sell ?nished products to the ultimate customers.
The Company appointed a COO for the entire Fertilizer and Chemicals business in 2014, as the changes in the setup of the Fertilizer and
Chemicals operations warranted managing the business at a more aggregated level. Following the appointment of the COO and the
aforementioned changes, the Fertilizer and Chemicals group is monitored as a group rather than on an individual production facility basis. Due
to the aforementioned changes, goodwill is tested for impairment on the level of a group of CGU’s, being the entire Fertilizer and Chemicals
group.
Goodwill has been allocated to the cash generating units as follows:
Cash generating units
$ millions 2014
Fertilizer & Chemicals Group 908.6
Weitz 12.4
Goodwill reclassi?ed as held for demerger (12.4)
Total 908.6
Cash generating units
$ millions
2013
restated
EFC Co SAE (EFC) - Fertilizer & Chemicals segment 877.6
Other - Fertilizer & Chemicals segment 34.4
Other - Engineering & Construction segment 19.0
Total 931.0
For the Fertilizer and Chemicals Group, details of the goodwill impairment test are as follows:
Key assumptions and method of quanti?cation
The Group recognizes its intangible assets in accordance with IAS 38 and IFRS 3. In accordance with IAS 36, the Group has performed an
impairment test on the capitalized goodwill of the Fertilizer and Chemicals group. The test was carried out by discounting future cash ?ows to
be generated from the continuing use of the cash-generating units to which the goodwill applies and on the assumption of an inde?nite life.
Key assumptions used in the calculation of recoverable amounts are the discount rate, the terminal value growth rate, selling price outlook per
product, natural gas availability and the number of expected operating days per plant. Selling prices assumptions are based on a published
independent price outlook prepared by global fertilizer experts. The other assumptions used are based on past experience and external
sources, but that are unpredictable and inherently uncertain.
The impairment test is based on speci?c estimates for the cash ?ow projections for the years 2015 to 2019 which are approved by the COO
and the Board of Directors. For the subsequent years the residual value was calculated on the basis of the results in the last year of relevant
forecasts and whereby a perpetual growth rate of 2.0% was taken into account. The estimated pre-tax cash ?ows are discounted to their
present value using a pre-tax weighted average cost of capital of 11.2%.
The determination of the recoverable amount for the cash generating unit requires signi?cant judgments and estimates, including projections of
future cash ?ows from the businesses.
Discount rate
In determining the pre-tax discount rate, ?rst the post-tax average cost of capital was calculated for the Fertilizer and Chemicals group. The
post-tax rate is based on a debt leveraging compared to the market value of equity of 10%.
8. Goodwill and other intangible assets (continued)
Percentage 2014 2013
1
Discount rate (pre tax weighted average cost of capital) 11.2% 13.9%
Perpetual growth rate 2.0% 2.5%
1
The 2013 percentage of the discount rate and perpetual rate relates to the CGU EFC. In 2013 this was monitored and tested for impairment
on this level.
Result of the impairment test
For 2014, the result of the impairment test was that the recoverable amount exceeded the carrying value by USD 5.3 billion and no further
impairment was identi?ed.
Sensitivity analysis
When performing the annual impairment test, we performed sensitivity analyses. The effect on the recoverable amount of 100 bps modi?cations
in the assumed WACC and the terminal growth rate can be summarized as follows:
$ billions In basis points 2014
Change in discount rate (pre-tax WACC) + 100 bps (1.6)
- 100 bps 2.1
Change in assumed perpetual growth rate + 100 bps 1.7
- 100 bps (1.3)
9. Trade and other receivables
$ millions 2014
2013
restated
Trade receivables (gross) 256.4 1,080.2
Allowance for trade receivables - (37.4)
Trade receivables (net) 256.4 1,042.8
Trade receivables due from related parties (note 33) 24.1 6.9
Prepayments 14.9 28.9
Derivative ?nancial instruments 4.8 28.1
Loans granted to personnel in relation to share-based payment arrangement 19.5 36.2
Other tax receivable 45.1 140.6
Other receivables due from related parties 22.4 -
Other receivables 6.5 75.4
Total 393.7 1,358.9
Non-current 49.7 76.8
Current 344.0 1,282.1
Total 393.7 1,358.9
The carrying amount of ‘Trade and other receivables’ as at 31 December 2014 approximates its fair value.
110 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 111
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
9. Trade and other receivables (continued)
The aging of current gross trade receivables at the reporting date that were as follows:
$ millions 2014
2013
restated
Neither past due nor impaired 237.4 383.1
Past due 1 - 30 days 17.1 132.6
Past due 31 - 90 days 0.3 222.1
Past due 91 - 360 days 0.5 256.3
More than 360 days 1.1 86.1
Total 256.4 1,080.2
Management believes that the unimpaired amounts that are past due by more than 30 days are collectible in full, based on historic payment
behavior and extensive analysis of customer credit risk, including underlying customers’ credit ratings if they are available. For trade and other
receivables pledged as securities, reference is made to note 20.
The movement in the allowance for impairment in respect of trade receivables during the year was as follows:
$ millions 2014
2013
restated
At 1 January (37.4) (49.2)
Additions (24.4) (18.6)
Unused amounts reversed - 26.6
Used amounts 10.2 -
Impairment losses recognized - 2.2
Exchange rates differences 0.8 1.6
Reclassi?ed as assets held for demerger 50.8 -
At 31 December - (37.4)
Derivative ?nancial instruments include the following:
Gas price derivative
Although the IFCo plant is still under construction, the company has entered into a swaption (option to swap) to mitigate the potential impact
of the increase in natural gas prices for a portion of the expected usage. The group does not apply hedge accounting therefore all fair value
changes related to this ?nancial instrument are recognized in pro?t or loss. The derivative has a quantity of 95,887,500 MMBTU against a strike
price of USD 6.0/ MMBTU for years 2015-2018 and USD 6.5/ MMBTU for years 2019-2022. On 31 December 2014, the fair value of the
derivative amounted to USD 4.8 million (2013 USD 9.5 million).
Foreign exchange contracts
On 23 March 2012, the Group entered into forward exchange contracts to hedge its currency risk exposure to the Japanese Yen that matures
in October 2015. The contract has a notional amount of USD 320.7 million at the inception of the contract. The Group does not apply hedge
accounting, therefore all fair value changes related to this ?nancial instrument are recognized in pro?t or loss. As at December 2013, the foreign
exchange hedge had a fair value of USD 18.1 million. These derivatives relate to construction operations of Besix, which are presented under
‘Assets held for demerger’ in 2014.
OCI Nitrogen B.V. interest rate swap
As of 27 April 2012, OCI Nitrogen B.V. entered into an interest rate swap for a notional amount of EUR 150 million (equivalent to USD 206.4
million) with Commerzbank by means of an amortizing plain vanilla interest rate swap. The swap matured during 2014.
10. Equity accounted investees
(i) The following table shows the movement in the carrying amount of the Groups’ associates and joint ventures:
$ millions 2014
2013
restated
At 1 January 517.1 458.4
Share in income (152.9) 81.1
Investment/divestment 96.9 1.4
Dividend (42.0) (35.8)
Movement in hedge reserve (6.1) -
Provisions on associates recognized under ‘Trade and other payables’ 21.4 -
Effect of movement in exchange rates (25.3) 12.0
Associates reclassi?ed as held for demerger (371.2) -
At 31 December 37.9 517.1
Joint ventures 11.0 378.5
Associates 26.9 138.6
Total 37.9 517.1
The share of income of associates of USD 152.9 million loss (2013: USD 81.1 million pro?t) is composed of a gain of USD 15.8 million relating
to the continuing operations and a loss of USD 168.7 million (2013: USD 73.7 million pro?t) relating to discontinued operations (2013: USD 7.4
million pro?t). The 2014 loss in discontinued operations relates mainly to the associate Sidra Medical Center in the amount of USD 188.0 million
(2013: USD 0.7 million loss) partly off-set by a pro?t of Besix of USD 31.2 million (2013: USD 77.9 million).
(ii) The Group has interests in a number of associates and joint ventures relating to continuing operations:
Name Type Participation via Country Participation %
Sitech Manufacturing Services C.V. Associate OCI Nitrogen B.V. The Netherlands 35.0
Sitech Utility Holding Beheer B.V. Associate OCI Nitrogen B.V. The Netherlands 40.0
Sitech Utility Holding C.V. Associate OCI Nitrogen B.V. The Netherlands 39.9
Sitech Services B.V. Associate OCI Nitrogen B.V. The Netherlands 23.0
Nitrogen Iberian Company SL. Joint venture OCI Nitrogen B.V. Spain 50.0
Shanxi Fenghe Melamine Company Ltd. Joint venture OCI Nitrogen B.V. China 50.0
Fitco OCI Agro S.A. Joint venture OCI Fertilizers B.V. Uruguay 50.0
Fitco OCI Agronegocios do Brazil Joint venture OCI Fertilizers B.V. Brazil 50.0
112 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 113
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
10. Equity accounted investees (continued)
(iii) The following table summarizes the ?nancial information of OCI N.V.’s associates and joint ventures (on a 100% basis) of continuing
operations:
$ millions
2014
Associates
2014
Joint venture
2014
Total
2013
Associates
2013
Joint ventures
2013
Total
Non-current assets 127.3 24.4 151.7 121.1 27.5 148.6
Current assets 75.4 72.0 147.4 180.7 72.2 252.9
Non-current liabilities - - - (9.9) (3.1) (13.0)
Current liabilities (85.9) (74.4) (160.3) (151.5) (72.1) (223.6)
Net assets 116.8 22.0 138.8 140.4 24.5 164.9
Income 382.4 417.7 800.1 390.8 413.3 804.1
Expenses (363.4) (412.4) (775.8) (372.7) (407.4) (780.1)
Net pro?t / (loss) 19.0 5.3 24.3 18.1 5.9 24.0
The associates include the Sitech entities, which are used to operate the Chemelot site in Geleen, the Netherlands for OCI Nitrogen B.V. The
Chemelot site is used by several other companies. The Sitech entities generated USD 382.4 million revenues and USD 19.0 million net income
in 2014. The net assets amounted to USD 116.8 million in 2014. Dividends were distributed to OCI NItrogen B.V. in 2014 for the amount of
USD 6.1 million (2013: USD 3.1 million).
The joint ventures consist mainly of OCI’s investment in Fitco OCI Agro S.A. (Uruguay), for which 2014 revenues amounted to USD 266.9 million
with a net pro?t of USD 5.3 million.
(iv) The following chart summarizes the ?nancial information of Fitco OCI Agro S.A.
$ millions 2014 2013
Non-current assets - -
Current assets (excluding cash and cash equivalents) 29.6 21.3
Cash and cash equivalents 3.2 0.4
Non-current liabilities - (3.1)
Current liabilities (23.2) (9.8)
Net assets 9.6 8.8
Group’s share of net assets (50%) 4.8 4.4
Revenues 266.9 234.9
Depreciation - -
Interest income - -
Interest expense (0.1) (0.1)
Pro?t (loss) before taxes 5.3 4.3
Tax expense - -
Pro?t (loss) after taxes 5.3 4.3
Other comprehensive income - -
Total comprehensive income 5.3 4.3
11. Other investments
$ millions 2014
2013
restated
Available-for-sale / debt securities - 0.9
Available-for-sale / equity securities 54.1 50.1
Total 54.1 51.0
Non-current 22.9 51.0
Current 31.2 -
Total 54.1 51.0
Available-for-sale debt securities
Available-for-sale debt securities in 2013 are primarily comprised of investments in hedge funds and corporate bonds held by the Weitz Group.
Available-for-sale equity securities
The amount of the equity securities in 2014 includes USD 24.3 million (2013: USD 26.0 million) representing the Group’s 16.7 percent share
in Notore Chemicals Industries (Mauritius), which is expected to be sold in 2015. The remaining USD 6.9 million represent the market value of
308,976 shares of a 0.4 percent shareholding in ABU KIR Fertilizer and Chemical Industries Co (bloomberg ticker: ABUK:EY), which are held by
one of the subsidiaries and which are expected to be sold in 2015. USD 22.9 million (2013: USD 24.1 million) represents the Group’s interest in
the Infrastructure and Growth Capital Fund LP. The fund is managed by the Abraaj Group, which is a related party.
12. Income taxes
12.1 Income tax in the statement of pro?t or loss
The income tax on pro?t before income tax of continuing operations amounts to USD 565.0 million (2013: USD 71.1 million) and can be
summarized as follows:
$ millions 2014
2013
restated
Current tax 518.5 (66.1)
Deferred tax 46.5 (5.0)
Total Income tax in pro?t or loss 565.0 (71.1)
The amount excludes the tax income from the discontinued operation of USD (263.0) million (2013: USD 3.6 million), which is included in ‘pro?t
(loss) from discontinued operation, net of tax’ (see note 29).
114 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 115
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
12.2 Reconciliation of effective tax rate
OCI’s operations are subject to income taxes in various foreign jurisdictions. The statutory income tax rates vary from 0.0% to 36.5%, which
results in a difference between the weighted average statutory income tax rate and the Netherlands’ statutory income tax rate of 25.0%
(2013: 25.0%).
Reconciliation of the statutory income tax rate in the Netherlands with the effective tax rate can be summarized as follows:
$ millions 2014 %
2013
restated %
Pro?t / (loss) before income tax (19.0) 334.1
Enacted income tax rate in the Netherlands 25% 25%
Tax calculated at statutory tax rate 4.8 (25.0) (83.5) (25.0)
Effect tax rates in foreign jurisdictions 4.4 (23.2) 34.0 10.2
Unrecognized tax losses (72.2) 380.0 - -
Recognition of previously unrecognized tax losses 26.3 (138.4) (16.9) (5.1)
Non-taxable income on sale of Gavilon 0.9 (4.7) 26.2 7.8
Expenses non-deductible (38.0) 200.0 (43.3) (13.0)
Income not subject to tax 69.3 (364.7) 10.0 3.0
Reversal of tax liability relating to the tax evasion claim 557.4 (2,933.7) - -
Other 12.1 (63.7) 2.4 0.7
Total Income tax in pro?t or loss 565.0 (2,973.4) (71.1) (21.4)
The effective income tax rate is higher than the weighted average statutory income tax rate in 2014, mainly due to the reversal of tax liability
relating to the tax evasion claim. Furthermore, unrecognized tax losses include the tax impact of the donation cost.
Orascom Construction Industries S.A.E. Financial Tax liability
In April 2013, Orascom Construction Industries S.A.E. and the Egyptian Tax Authority (“ETA”) reached agreement on the accusation of
tax evasion following the sale of Orascom Building Materials Holding S.A.E. to Lafarge in 2007. Although the management of Orascom
Construction Industries S.A.E. and their advisors believed that the aforementioned transaction was exempted of tax, management entered into
an agreement to resolve the tax dispute. A modi?ed tax ?ling was made and cheques were issued to the ETA for approximately USD 1.0 billion.
The agreement was followed by payment of a ?rst installment amounting to approximately USD 360 million in 2013.
On 18 February 2014, the Egyptian general prosecutor exonerated Orascom Construction Industries S.A.E. from tax evasion. Following this
court ruling, Orascom Construction Industries S.A.E. started proceedings to have the tax settlement and cheques reversed. As the outcome of
this litigation was uncertain at year-end 2013, management concluded that the full liability, amounting to USD 674 million including interest, had
to be accrued. On 4 November 2014, the Egyptian Tax Authorities’ Independent Appeals Committee ruled in favor of the Company. Despite
the fact that the Egyptian Prosecutor started an appeal on 30 November 2014, the Company’s management, supported by its legal experts
concluded that the tax liability of USD 674 million should be released. The release has been accounted for in the 2014 Consolidated Statement
of Pro?t and Loss and Comprehensive Income, under the lines Income taxes (USD 557.4 million) and Finance income and expenses (USD 46.1
million) and includes foreign currency translation gains amounting to USD 9.5 million.
In March 2015, the Company received a cheque for approximately USD 266.2 million from the ETA, which refunded part of the ?rst installment
paid in 2013. This amount has been recognized as a receivable in the 2014 Consolidated Statement of Financial Position and as a gain on the
Income tax line in the Statement of Pro?t and Loss and Comprehensive Income.
Transfer of rights to the Tahya Misr Fund
On 13 November 2014, the Company announced that it had decided to transfer the rights to the amounts receivable from the ?rst instalment
already paid to the tax authorities in 2013 (USD 360 million) to the Tahya Misr (“Long Live Egypt”) social fund. No formal agreement has been
drafted with the Tahya Misr social fund yet and no payments have been made to the fund. The transfer of rights has been approved by OCI
N.V.’s Board of Directors on 12 November 2014.
In the 2014 ?nancial statements, and following the guidance under IAS 37 (constructive obligations) the Company has recognized operating
expenses (donation costs) and a provision for the transfer of rights to the fund amounting to USD 266.2 million.
Tax indemnity agreement
With reference to note 2.2.6 “Tax indemnity agreement” it should be noted that OCI N.V. and Orascom Construction Limited have entered into
a tax indemnity agreement in which it has been agreed that the outcome of the tax evasion case (both positive and negative) will be allocated to
the “Fertilizer & Chemicals” segment and the “Engineering & Construction” segment on a 50%/50% basis.
12.3 Deferred income tax assets and liabilities
Changes in deferred tax asset and liabilities
$ millions 2014
2013
restated
At 1 January (308.1) (304.7)
Pro?t or loss from continuing opertions 46.5 (5.0)
Pro?t or loss from discontinued operations (29.3) -
Effect of movement in exchange rates (23.8) 1.6
Assets reclassi?ed as held for demerger 21.4 -
At 31 December (293.3) (308.1)
Recognized deferred tax assets and liabilities
Assets Liabilities Net
$ millions 2014
2013
restated 2014
2013
restated 2014
2013
restated
Property, plant and equipment - 0.6 (215.8) (179.0) (215.8) (178.4)
Inventories - - - (6.6) - (6.6)
Intangible assets - 0.7 (50.5) (47.9) (50.5) (47.2)
Subsidiaries - - (58.8) - (58.8)
Provisions - 1.0 - (11.1) - (10.1)
Trade and other receivables 0.7 - (9.4) - (8.7)
Loans and borrowings 14.8 - - - 14.8 -
Trade and other payables - 7.9 (8.9) (131.1) (8.9) (123.2)
Carry forward losses 34.6 57.4 - - 34.6 57.4
Total 50.1 67.6 (343.4) (375.7) (293.3) (308.1)
Deferred tax liabilities recognized in relation to property, plant and equipment will be realized over the amortization period of the related asset.
Carry forward losses recognized in the balance sheet are expected to be realized in the period 2015-2018.
12.4 Current income tax
EBIC tax exemption arbitration
In 1997, Egypt Basic Industries Corp. (EBIC), a subsidiary of the OCI group, was established as a free zone company under the then prevailing
investments laws. In 2008, the tax exemption for activities related to fertilizers, iron and steel, oil production and liquidation and transmission of
natural gas in free zones has been canceled, and those activities became subject to taxes for the year 2008 onwards.
On 20 April 2013, the Administrative Court ruled in favor of EBIC and ordered for the revocation of the disputed Decision, and reinstating
EBIC to its previous status as a free zone entity in Egypt. On 1 June 2013, the General Authority for Investment and Free Zones (GAFI) ?led an
appeal to stop the execution of the ruling. The appeal has been lodged, however, it has not been reviewed by the court nor has a hearing been
scheduled (‘?rst appeal’).
GAFI ?led a motion to remain the execution of the verdict before the Administrative Court as an interim measure while the appeal is ongoing
(‘second appeal’).
On the hearing on 21 March 2015 the Administrative Court rejected the motion of GAFI (‘second appeal’) and ruled in favor of EBIC. The
hearing on the 21 March 2015 did not suspend the ?rst appeal of GAFI. This was a separate claim ?led by GAFI to the Administrative Court to
freeze the court decision of the ?rst degree court till the appeal is decided on. No tax ?lings have been done by the company since the ?ling for
the year 2011.
The Group, despite its strong position, awaits the ?nal judgement and assessed that winning the case is not yet probable. Consequently, OCI
concluded based on guidance in IAS 37 and IAS 12 not to release the (deferred) tax liabilities totaling USD 140 million at year-end 2014, of
which USD 52.8 million is recognized in ‘current tax liabilities‘.
116 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 117
OCI N.V.
13. Inventories
$ millions 2014
2013
restated
Finished goods 91.0 96.5
Raw materials and consumables 19.4 180.2
Spare parts, fuels and others 68.1 79.7
Real estate - 11.1
Total 178.5 367.5
In 2014, the total write-downs amount to USD 1.5 million which all related to raw materials. In 2014 there were no reversals of write downs
(2013: nil). For inventory pledged as securities, reference is made to note 20.
The real estate in 2013 relates to the land bank owned by Suez industrial Development Company in Egypt (discontinued operation), which owns
and develops an industrial park.
14. Contract receivables / billing in excess of construction contracts
$ millions 2014
2013
restated
Costs incurred on incomplete contracts - 10.307.4
Estimated earnings - 1.072.8
- 11.380.2
Less: billings to date - (11.145.7)
Total - 234.5
Presented in the consolidated statements of ?nancial position as follows:
Construction contracts in progress - current assets - 375.4
Billing in excess on construction contracts - current liabilities - (140.9)
Total - 234.5
As a result of the Demerger of the Construction activities, the ‘Contract receivables / billing in excess of construction contracts’ are presented
as assets and liabilities held for demerger as at 31 December 2014. Reference is made to note 29.
15. Cash and cash equivalents
$ millions 2014
2013
restated
Cash on hand 2.5 2.7
Bank balances 413.4 792.6
Restricted funds 427.7 1,194.2
Restricted cash 3.0 0.7
Total 846.6 1,990.2
Restricted funds
On May 2013, Iowa Fertilizer Company (IFCo) entered into a Bond Financing Agreement with Iowa Finance Authority for the construction of
the plant. IFCo entered into a Collateral Agency and Account Agreement with Citibank, N.A. The cash was invested under an Investment
Agreement with Natixis Funding Corporation and are restricted to the requisition procedures in the agreement. As at 31 December 2014, the
invested funds had a carrying amount of USD 410.2 million (2013: USD 1,142.8 million).
Restricted cash
The restricted cash is an amount held as collateral. The reason for this collateral is letters of credit and letters of guarantees issued to foreign
creditors by the subsidiary Sorfert.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
16. Assets held for sale
As at 31 December 2014, the total current assets held for sale amounted to nil as compared to an amount of USD 2.4 million in 2013.
17. Share capital
The movements in the number of shares can be summarized as follows:
2014 2013
Interest of less than 100% (and therefore another company has a non-controlling interest in group equity). 204,840,744 -
Establishment of Company - 45,000
Number of issued shares in restructuring 1,070,826 203,067,159
Number of issued shares - 1,773,585
Shares cancelled in AGM December 2013 - (45,000)
On issue at 31 December - fully paid 205,911,570 204,840,744
At 31 December (in millions of USD) 273.3 272.1
On 2 January 2013, the Company was incorporated with an authorised share capital amounting to EUR 225 thousand. The issued capital,
paid up in full amounted to EUR 45 thousand, owned by OCI Overseas Holding Limited (indirectly owned by Orascom Construction Industries
S.A.E., Egypt, the former ultimate parent company of the Group). Soon after the establishment of OCI N.V. in January 2013, the Company
launched exchange offers to acquire both all outstanding Regulation S global depositary receipts (GDRs) of Orascom Construction Industries
S.A.E. in exchange for ordinary shares in OCI N.V. and to acquire all the outstanding ordinary shares of Orascom Construction Industries
S.A.E. listed on the Egyptian Stock Exchange. The latter was structured by means of a Mandatory Tender Offer by which the shareholders of
Orascom Construction Industries S.A.E. could exchange an ordinary share of Orascom Construction Industries S.A.E by an ordinary share
of OCI N.V. at a ratio of 1:1 or to make use of the cash alternative. By the end of 2013, the exchanges were successfully completed and OCI
N.V.’s share in Orascom Construction Industries S.A.E. was further increased to 99.44% at year-end 2013. Following the exchanges, the
Company’s authorized share capital was EUR 300 million and the issued capital, paid up in full, has increased to EUR 204,840,744, divided into
204,840,744 shares at the par value per share of EUR 1 per share at year-end 2013.
In March 2014, another 1,070,826 shares in Orascom Construction Industries S.A.E. were swapped for ordinary shares. This transaction
resulted to an increase of share premium by approximately USD 5.8 million. Consequently, at year-end 2014, the issued and fully paid up share
capital amounted to 205,911,570 shares of EUR 1 per share.
Transaction costs
For the Exchange Offer and the Tender Offer in 2013, the Company incurred total transaction costs of USD 242 million. Transaction costs
totaling USD 89.0 million, including underwriter fees of USD 84 million to the Sawiris Family and Abraaj and professional advisory fees
amounting to USD 5 million have been expensed through pro?t or loss. The remaining transaction costs (net of taxes) are considered an
integral part of the equity transaction and were debited to both the share premium reserve and retained earnings in shareholders’ equity in the
statement of ?nancial position as at 31 December 2013.
118 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 119
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
18. Reserves
$ millions
Hedge
reserve
Available-
for-sale
Currency
translation
Other
reserve
Convertible
note
1
Treasury
shares
Employees
stock option Total
At 31 December 2012 (17.3) - (104.0) 119.1 - (87.6) 75.4 (14.4)
Changes in cash ?ow hedge
reserve 10.6 - - - - - - 10.6
Currency translation differences - - (104.0) - - - - (104.0)
Available-for-sale ?nancial
assets
- (1.9) - - - - - (1.9)
Other comprehensive
income 10.6 (1.9) (104.0) - - - - (95.3)
Corporate restructuring - - - 105.6 - - - 105.6
Treasury shares acquired - - - - - (20.5) - (20.5)
Share-based payments
transactions - - - - - - 11.6 11.6
Convertible note issue - - - - 31.4 - - 31.4
Treasury shares sold - - - - - 91.2 - 91.2
At 31 December 2013 (6.7) (1.9) (208.0) 224.7 31.4 (16.9) 87.0 109.6
Changes in cash ?ow hedge
reserve (6.1) - - - - - - (6.1)
Currency translation differences - - 94.2 - - - - 94.2
Available-for-sale ?nancial
assets
- (1.2) - - - - - (1.2)
Other comprehensive
income (6.1) (1.2) 94.2 - - - - 86.9
Treasury shares acquired - - - - - (62.1) - (62.1)
Share-based payments
transactions - - - - - - 11.9 11.9
Treasury shares sold - - - - - 50.2 - 50.2
At 31 December 2014 (12.8) (3.1) (113.8) 224.7 31.4 (28.8) 98.9 196.5
1
Relates to equity component convertible Euro-notes, net of taxes (note 20).
OCI N.V. is a company incorporated under Dutch law. In accordance with the Dutch Civil Code, legal reserves have to be established in certain
circumstances. The hedging reserve, the available-for-sale reserve, the currency translation reserve and other legal reserves are legal reserves
that limit distributions to shareholders to the extent that these reserves individually have a credit balance. ‘Other reserves’ include amongst other
the reserve for non-distributed income of minority share holdings.
18. Reserves (continued)
Treasury shares
During the ?nancial year ended 31 December 2014 the company sold 1,108,946 of its own shares and acquired 1,475,200 shares.
2014 2013
Number of shares 757,574 391,320
Cost of acquiring the shares (In millions of USD) 28.8 16.9
Average cost per share (USD) 38.07 43.2
19. Non-controlling interest
2014
$ millions
OCI
Partners LP
Egyptian Basic
Industries
Corporation
Sorfert
Algeria Spa
Discontinued
and other Total
Non-controlling interest percentage 20.96% 40.00% 49.01% - -
Non-current assets 114.6 176.5 863.8 74.8 1,229.7
Current assets 24.6 30.2 49.7 142.2 246.7
Non-current liabilities (79.4) (59.6) (557.9) (32.0) (728.9)
Current liabilities (20.4) (57.5) (143.8) (106.9) (328.6)
Net assets 39.4 89.6 211.8 78.1 418.9
Revenues 84.4 33.6 268.2 170.1 556.3
Pro?t 25.0 (1.0) 80.0 17.2 121.2
Other comprensive income - (0.8) (22.3) (0.9) (24.0)
Total comprehensive income 25.0 (1.8) 57.7 16.3 97.2
Dividend cash ?ows (30.9) (17.0) - (9.2) (57.1)
2013
$ millions
OCI
Partners LP
Egyptian Basic
Industries
Corporation
Sorfert
Algeria Spa
Discontinued
and other Total
Non-controlling interest percentage 21.70% 40.00% 49.01% - -
Non-current assets 79.9 189.2 1,024.5 66.5 1,360.1
Current assets 51.3 37.9 37.6 104.5 231.3
Non-current liabilities (85.0) (65.5) (645.3) (39.9) (835.7)
Current liabilities (13.3) (55.5) (262.3) (58.3) (389.4)
Net assets 32.9 106.1 154.5 72.8 366.3
Revenues 92.9 60.0 20.8 117.0 290.7
Pro?t 33.5 19.1 (80.2) (8.4) (36.0)
Other comprensive income - - 2.1 (2.1) -
Total comprehensive income 33.5 19.1 (78.1) (10.5) (36.0)
Dividend cash ?ows - (32.2) - (7.5) (39.7)
120 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 121
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
20. Loans and borrowings
Borrowing Company
Type
of loan Interest rate Date of maturity Carrying amount Long term portion
Short term
portion
Bank facility
and overdraft Collateral / Guarantee given (if applicable)
Sorfert Algeria SPA Secured
Interest rate is ?xed during the plant construction period to 5.95% per annum. After completion
of the construction period it will be referred to Algerian bank interest rate plus rate of 1.95% per
annum
April 2024 1,732.0 1,316.7 415.3 -
Debt service reserve account, ban for any disposal or
decrease of the company share and assets.
Iowa Fertilizer Company (IFCo.) Secured
Current Yields and pricing:
2019: 4.9% on 100,48
2022: 5.59% on 99,375
2025: 5.68% on 96,346
December 2025 1,168.7 1,168.7 - - All assets pledged.
EFC Secured LIBOR +3% margin and CEB Mid Corridor +2.25% margin for EGP denominated borrowings October 2016 733.6 572.4 161.2 -
Pledge EFC shares 99.9% owned by 'Orascom Fertilizer plant
maintenance'. Power of Attorney for perfection of commercial
and real estate mortgages. OCI N.V. will pay for shortfalls.
OCI Nitrogen B.V.
Secured Variable December 2014 81.7 - 81.7 -
Pledge of OCI Fertilizer International shares in OCI Nitrogen,
Pledge of moveable assets, trade
receivables and company accounts, property mortgage. Secured LIBOR /EURIBOR + a variable margin based on leverage ratio ranging 2.25%-3.5% December 2016 498.4 498.4 - -
OCI N.V. Unsecured Fixed at 3.875% September 2018 420.4 420.4 - -
OCI Partners LP Secured USD LIBOR + 4% margin, with USD LIBOR Floor of 1% August 2019 397.7 391.1 6.6 - All assets pledged.
Orascom Construction Unsecured
Variable LIBOR + margin ranging:
USD: 2.28 - 4% (including LIBOR)
EUR: 2.21 - 5% (including LIBOR)
EGP: 9.8-12.95%
Renewed
annually
385.4 - - 385.4
Corporate guarantee from Orascom Construction Industries
S.A.E. and promissory notes from Orascom Construction.
Orascom Construction Industries Unsecured
Variable LIBOR + margin ranging:
USD: 2.28 - 4% (including LIBOR)
EUR: 2.21 - 5% (including LIBOR)
EGP: 9.8-12.95%
Renewed
annually
221.2 - - 221.2 Promissory notes.
Egypt Basic Industries Corporation
(EBIC)
Unsecured LIBOR +3.25% December 2017 85.9 73.4 12.5 -
Orascom Saudi
Secured LIBOR +2.0% 2014 34.1 - - 34.1
Guarantee letter with 710M signed by the client and
guarantor, obligation letter for the client invoices to be paid in
ANB Bank. Secured LIBOR +2.75% 2014 42.6 21.3 21.3 -
Orascom Construction Industries -
Algeria
Secured Variable 6.5% 2014 61.4 - 53.1 8.3 USD 62.4 mln cash cover at Citi Bank Dubai.
Contrack international
Unsecured LIBOR +3.7% 2014 10.0 - - 10.0
Corporate guarantee from Orascom Construction Industries
S.A.E.
Unsecured LIBOR +2.5% 2014 13.5 - - 13.5
The Weitz Group, LLC Unsecured Multiple rates March 2018 38.6 34.8 3.8 -
Total as per 31 December 2013 5,925.2 4.497.2 755.5 672.5
Borrowing Company
Type
of loan Interest rate Date of maturity Carrying amount Long term portion
Short term
portion
Bank facility
and overdraft Collateral / Guarantee given (if applicable)
Sorfert Algeria SPA Secured Algerian bank interest rate plus rate of 1.95% per annum April 2024 1,306.7 1,138.4 168.3 -
Debt service reserve account, ban for any disposal or
decrease of the company share and assets.
Iowa Fertilizer Company (IFCo.) Secured
Current Yields and pricing:
2019: 2.80% on 109.63
2022: 3.79% on 105.91
2025: 3.83% on 110.43
December 2025 1,171.0 1,171.0 - - All assets pledged.
EFC Secured LIBOR + 5.00% margin and CEB Mid Corridor + 2.90% margin for EGP denominated borrowings October 2019 663.9 607.1 56.8 -
Pledge EFC shares 99.9% owned by ‘Orascom Fertilizer plant
maintenance’. Power of Attorney for perfection of commercial
and real estate mortgages. OCI N.V. will pay for shortfalls.
OCI Nitrogen B.V. Secured LIBOR /EURIBOR + a variable margin based on leverage ratio ranging 2.25%-3.5% December 2016 450.2 392.5 57.7 -
Pledge of OCI Fertilizer International shares in OCI Nitrogen,
Pledge of moveable assets, trade
receivables and company accounts, property mortgage.
OCI N.V. Unsecured Fixed at 3.875% September 2018 379.6 379.6 - -
OCI N.V. Secured EURIBOR + 2.75% July 2017 511.2 511.2 OCI Fertilizers B.V.
OCI N.V. Unsecured - - 94.8 - - 94.8
OCI Fertilizer Trading Ltd Secured LIBOR + 2.50% - 5.5 - - 5.5
OCI Fertilizers B.V. as guarantor and pledge over
commodities and bank accounts.
OCI Partners LP Secured USD LIBOR + 4.00% margin, with USD LIBOR Floor of 1% August 2019 384.0 377.4 6.6 - All assets pledged.
Egypt Basic Industries Corporation
(EBIC)
Unsecured LIBOR + 3.25% December 2017 73.8 61.3 12.5 -
Total 31 December 2014 5,040.7 4,638.5 301.9 100.3
122 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 123
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
20. Loans and borrowings (continued)
$ millions 2014
2013
restated
Non-current liabilities:
Secured bank loans 3,026.6 2,799.9
Unsecured bank loans 61.3 108.2
IFCo ?nancing arrangement 1,171.0 1,168.7
Convertible notes 379.6 420.4
Sub-total 4,638.5 4,497.2
Current liabilities:
Secured bank loans 289.4 739.2
Unsecured bank loans 12.5 16.3
Bank facilities and overdrafts 100.3 672.5
Sub-total 402.2 1,428.0
Total 5,040.7 5,925.2
Information about the Group’s exposure to interest rate, foreign currency and liquidity risk is disclosed in the ?nancial risk and capital management
paragraph in note 6.
The fair value of loans and borrowings is USD 31.4 million lower than the carrying amount (2013: USD 31.3 million higher). The fair value of the
convertible notes is USD 409.8 million as of 31 December 2014 (2013: USD 459.0 million).
New and amended Financing Arrangements in 2014:
EFC Finance Restructuring
In March 2014, EFC signed restructuring agreements to extend the maturity to October 2019. Instalments of 1.85 percent of original Facility
amounts are payable quarterly, and with interest rate of USD: LIBOR plus margin of 5.0 percent and for EGP loan: CBE Mid Corridor plus margin
of 2.9 percent. OCI N.V. will fund any payment shortfall that EFC has in relation to this loan.
OCI N.V.
In July 2014, OCI N.V. signed a credit facility agreement for a total amount of USD 550 million and with an interest rate of USD:LIBOR or
EUR:EURIBOR plus margin of 2.75 percent. The maturity date of the agreement is July 2017.
In December 2014 the agreement has been amended and restated due to the Demerger of the Construction business.
OCI Fertilizer Trading
On 15 January 2014, OCI Fertilizer Trading signed an uncommitted trade ?nance facility for USD 75.0 million. The facility carries an interest rate
of USD: LIBOR plus margin of 2.50 percent. In December 2014 the agreement was amended, the facility amount was increased to USD 115.0
million.
Covenants
Certain covenants apply to the aforementioned borrowings. Covenants include compliance with the following ?nancial ratios: Debt to equity ratio,
debt-service coverage ratio, leverage ratio, interest coverage ratio, cash ?ow coverage threshold, and tangible net worth threshold.
20. Loans and borrowings (continued)
Convertible note terms
In September, 2013, OCI N.V. issued convertible Euro notes with proceeds of USD 466.5 million. The notes have a 5 year maturity date and
a coupon rate of 3.875 percent per annum, payable semi-annually in arrears. The issued convertible notes qualify as compound ?nancial
instruments, since each note contains both an equity and liability component. These notes contain an equity component which entitles the
holder to convert into shares at a conversion ?xed price of EUR 34.45 per share and so contain a liability component for the issuer’s obligation
to pay interest and potentially, to redeem the note in cash. In March 2015, post the Demerger of the Construction and Engineering segment, the
conversion price was adjusted to EUR 28.4690. The conversion price was calculated based on the 5-day weighted average price (WAP) of OCI
N.V. prior to the Demerger and the 5-day WAP of Orascom Limited post the Demerger.
Transaction costs that are directly attributable for the issuance of the shares and convertible notes totalled USD 11.7 million This includes fees
and commissions paid to advisers, brokers, dealers and lawyers. These costs are allocated to the liability and equity component on a pro rate
basis. The transaction costs related to the liability component will be recognized in accordance with the effective interest rate method over the
term of the convertible bond and will be recognized under ?nance expenses in the pro?t or loss statement.
Management has measured the liability component by establishing the fair value of a similar note, with similar terms, credit status and
containing similar non-equity derivative features, yet without the conversion option. This results in a fair value of the liability component of EUR
308.2 million (USD equivalent 420.2 million). The group did not recognize separately an embedded derivative as it is closely related to the
host contract and therefore it is included as part of the liability component. Transaction costs allocated to the liability component represent 90
percent of the total transaction cost, totalling USD 10.5 million.
The equity component is calculated by deducting the fair value attributable to the bonds (USD 466.5 million) from the liability component (USD
424.1 million). The amount recognized, net of taxes, for the equity component is USD 31.4 million. Transaction costs allocated to the equity
component represent 10 percent of the total transaction cost, totalling USD 1.2 million. As per 31 December 2014, the carrying amount of the
debt element is USD 379.6 million (31 December 2013: 420.4 million).
21. Trade and other payables
$ millions 2014
2013
restated
Trade payables 215.7 684.6
Trade payable due to related party (note 33) 31.1 -
Other payables 97.1 133.8
Accrued expenses 103.8 198.3
Deferred revenues - 10.0
Other tax payable 15.9 15.3
Retentions payable - 35.1
Derivative ?nancial instrument - 1.0
Total 463.6 1,078.1
Non-current 30.9 75.8
Current 432.7 1,002.3
Total 463.6 1,078.1
Information about the Group’s exposure to currency and liquidity risk is included in note 6. The carrying amount of ‘Trade and other payables’
approximated the fair value.
Retentions payable relate to amounts withheld from sub-contractors.
124 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 125
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
22. Provisions
$ millions Warranties
Asset
retirement
obligation
Onerous
contracts
Claims
and other
contingencies
Donation
provision Other Total
At 1 January 2014 72.4 10.5 14.1 11.7 - 18.7 127.4
Provision made during the year - - 15.5 29.8 266.2 5.5 317.0
Provision used during the year - - - (4.2) - (5.7) (9.9)
Provision reversed during the year (5.5) - (7.6) - - (1.2) (14.3)
Unwinding of discount - 0.6 - - - - 0.6
Reclassi?cations (51.7) (0.3) 19.5 35.6 - (3.1) -
Effect of movement in exchange rates (0.5) (0.8) (2.1) (5.0) - (0.4) (8.8)
Provisions reclassi?ed as held for demerger (14.7) - (39.4) (34.5) - (2.9) (91.5)
At 31 December 2014 - 10.0 - 33.4 266.2 10.9 320.5
Non-current - 10.0 - - - 9.4 19.4
Current - - - 33.4 266.2 1.5 301.1
Total - 10.0 - 33.4 266.2 10.9 320.5
Warranties
The warranties are based on historical warranty data and a weighting of possible outcomes against their associated probabilities.
Asset retirement obligation
The provision includes an asset retirement obligation of USD 10.0 million relating to the Group’s Algerian plant (Sorfert). According to the
agreement, the land must be restored to its original state at the end of the lease term.
Litigations and claims
The Group is involved in various litigations and arbitrations. In cases where it is probable that the outcome of the proceedings will be unfavorable,
and the ?nancial outcome can be measured reliably, a provision has been recognized. Reference is made to note 30 for detailed information with
respect to major ongoing litigations and claims.
Donation provision
Includes the donation provision of Orascom Construction Industries S.A.E. for an amount of USD 266.2 million, reference is made to note 12
‘Income taxes‘.
23. Development of cost of sales and selling, general and administrative expenses
a. Expenses by nature
$ millions 2014
2013
restated
Changes in raw materials and consumables, ?nished goods and work in progress 1,456.7 1,572.3
Employee bene?t expenses (c) 232.2 173.0
Depreciation, amortization 308.4 218.3
Transaction cost (b) - 89.3
Consultancy expenses 16.6 62.6
Other 200.6 41.3
Total 2,214.5 2,156.8
The expenses by nature comprise ‘cost of sales’ and ‘selling and general and administrative expenses’.
23. Development of cost of sales and selling, general and administrative expenses (continued)
b. Transaction cost
The transaction costs of USD 89.3 million in 2013 relate to the Group restructuring in 2013. For the Exchange Offer and the Tender Offer made
in 2013, the Company incurred total transaction costs of USD 242 million. Transaction costs totalling USD 89.3 million, including underwriter
fees of USD 84 million to the Sawiris Family and Abraaj and professional advisory fees amounting to USD 5 million have been expensed through
pro?t or loss. The remaining transaction costs (net of taxes) are considered an integral part of the equity transaction and were debited to both
the share premium reserve and retained earnings in shareholders’ equity in the statement of ?nancial position as at 31 December 2013.
Selling, general and administrative expenses include provisions for USD 2.7 million (2013: USD 12.0 million).
c. Employee bene?t expenses
$ millions 2014
2013
restated
Wages and salaries 165.2 128.3
Social securities 5.7 1.2
Employee pro?t sharing 30.1 27.5
Pension cost 0.9 0.2
Share-based payment expense (d) 11.9 11.6
Other employee expenses 18.4 4.2
Total 232.2 173.0
During the ?nancial year ended 31 December 2014, the number of key executives was 2 (2013: 2 key executives), which represents the
Executive Board members; Nassef Sawiris (CEO), and Salman Butt (CFO). During the ?nancial year ended 31 December 2014, the average
number of staff employed in the Group converted into full-time equivalents amounted to 33,282 employees (2013: 72,418 employees*). Of
these employees 2,911 (2013: 2,768 employees) were employed in the Fertilizer & Chemicals segment, 30,371 (2013: 69,460*) were employed
in the Engineering & Construction segment.
* the numbers of employees in 2013 included employees employed by associates and joint ventures.
d. Share-based payment arrangements
OCI N.V. currently has four incentive plans which are intended to (i) attract and retain the best available personnel for positions of substantial
responsibility, (ii) provide additional incentive to management and employees, (iii) promote the success of the Company’s business, and (iv)
align the economic interests of key personnel directly with those of shareholders. Under the ?rst two plans, stock options have been granted to
management and employees. The other plans comprise of share incentive plans. All plans are ‘equity-settled share-based compensation plans’.
Share option plans
As a result of the reverse takeover and group restructuring that took place during 2013, OCI N.V. acquired the assets and liabilities of the
Orascom Construction Industries S.A.E. Stock Incentive Plan (the ?rst plan). Under the terms of the Orascom Construction Industries S.A.E.
incentive plan, in the event of a change of control of Orascom Construction Industries S.A.E., each outstanding option or right shall be
assumed or an equivalent option, or right substituted by the successor company or a subsidiary of the successor company. In the event that
the successor company refuses to assume or substitute for the option or right, all outstanding options or rights shall fully vest and become
immediately exercisable. OCI N.V. elected that holders of options or rights under the Orascom Construction Industries S.A.E. incentive plan
exchange each of their existing options or rights for an option or right in respect of shares of OCI N.V. on the same terms and conditions as the
existing options or rights. The options under the Orascom Construction Industries S.A.E. plan were generally granted at the fair market value
on the date of grant, vested after four years (cliff vesting) and expired after ?ve years. On 28 August 2013, following the commencement of OCI
N.V. ‘s share trading in Euros, the options under the Orascom Construction Industries S.A.E. plan were replaced by the Company’s options and
accounted for as a modi?cation of the original grant of options. Furthermore, under existing authority, 1,529,598 shares were repurchased from
employees to facilitate the administration of the Orascom Construction Industries S.A.E. plan during the year.
Under the terms of the Orascom Construction Industries S.A.E. plan, certain employees were allowed to vest their options immediately and
purchase the respective shares with a promissory note (as a payment method in order to be able to ?nance the exercise price) bearing interest
at the “applicable federal rate prescribed under the United States Internal Revenue Code” at the time of purchase, secured by a pledge of the
shares purchased by the note pursuant to a security agreement. The notes generally have a term of nine years, and may not be prepaid until
four years after issuance which necessitates that the employee remain a shareholder for at least four years. As of 31 December 2013, 926,700
shares were pledged by employees as security against their notes valued at USD 36,096,988.75. As at 31 December 2014, 500,000 shares
were pledged by employees as security against their notes valued at USD 19,383,350.14. Employees held 687,000 vested options which were
exercisable as at 31 December 2014 for which payment of the purchase price could be made with a promissory note.
126 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 127
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
23. Development of cost of sales and selling, general and administrative expenses (continued)
On 20 December 2013, the non-executive board members of OCI N.V. adopted an additional Employees Incentive Plan (the second plan). The
second plan authorized the issuance of up to 1 million shares to employees and excludes the executive directors. The exercise price of the
options granted to employees is equal to the fair market value of the shares on the date of grant. The options granted under this plan generally
vest after three years (cliff vesting) and expire after seven years.
The company did not modify the plans as at 31 December 2014 due to the planned Demerger.
The following table summarizes information about the stock options outstanding at 31 December 2014
Grant date
(1)
Number of options
outstanding at
31 December 2014
Fertilizer
Number of options
outstanding at
31 December 2014
Construction
Number of options
outstanding at
31 December 2014
Total
Exercise price per
share (EUR)
Remaining life as at
31 December 2014
(in years)
Number of options
exercisable at
31 December 2014
1 June 2010 154,000 - 154,000 29.99 0.42 154,000
31 March 2011 642,500 615,000 1,257,500 26.43 1.25 -
31 March 2011 202,400 - 202,400 31.48 1.25 -
28 November 2012 804,800 667,500 1,472,300 25.45 2.91 -
28 November 2012 120,000 413,000 533,000 26.46 2.91 533,000
31 December 2013 472,140 456,349 928,489 32.74 6.00 -
Total 2,395,840 2,151,849 4,547,689 - - 687,000
(1)
In the table above, options granted between 2010 and 2012 are a part of the ?rst plan described above replaced in August 2013. Options
granted in December 2013 are a part of the second plan described above.
Measurement of fair values
The inputs used in the measurement of the fair values at grant date of plans were as follows:
Options granted in: 2013 2012 2011 2011
Fair value at grant date EUR 9.75 USD 9.69 USD 17.69 EGP 79.74
Share price at grant date EUR 32.74 EUR 25.45 EUR 31.48 EUR 26.43
Exercise price EUR 32.74 EUR 25.45 EUR 31.48 EUR 26.43
Expected volatility (weighted average) 31.86% 39.80% 59.00% 48.00%
Expected life (weighted average in years) 5.0 3.5 4.1 4.3
Expected dividends none 1.5% 3.0% 3.0%
Risk-free interest rate (based on government bonds) 1.07% 0.35% 1.90% 10.0%
Performance conditions No No No Yes
Expected volatility has been based on an evaluation of the historical volatility of the Company’s share price, particularly over the historical period
commensurate with the expected term. The expected term of the instruments has been based on historical experience and general option
holder behavior. The fair value for the 2010 options were completely expensed as at 31 December 2014. The fair value for the 2010 and 2011
options were calculated using Monte-Carlo simulations. The fair value calculation took into account the performance condition as a market
condition. The fair value of the options granted at 28 November 2012 and 31 December 2013 were calculated using the Black-Scholes model.
23. Development of cost of sales and selling, general and administrative expenses (continued)
Reconciliation of outstanding share options
The number and weighted-average exercise prices of share options under the share option plans and replacement awards were as follows:
Options
Number of options
2014
Weighted-average
exercise price
2014 (EUR)
Number of options
2013
(1)
Weighted-average
exercise price
2013 (EUR)
Outstanding at 1 January 5,805,440 27.52 7,091,011 26.77
Forfeited during the year (209,251) 26.53 (502,100) 25.24
Granted during the year - - 940,740 32.74
Exercised during the year (1,048,500) 26.71 (1,095,892) 18.15
Expired during the year - - (628,319) 57.87
Outstanding at 31 December 4,547,689 27.75 5,805,440 27.52
Exercisable at 31 December 687,000 27.25 548,000 26.46
(1)
In August 2013 options under the Orascom Construction Industries S.A.E. plan were replaced by the Company’s options
The options outstanding at 31 December 2014 had an exercise price in the range of EUR 25.45 to EUR 32.74 (2013: EUR 25.45 to EUR 32.74)
and a weighted-average contractual life of 2.54 years (2013: 3.36 years).
Performance share plans
In 2014 a new performance share plan was introduced for the Executive Board. The share plan comprises the conditional granting of shares
in OCI N.V. Each year a plan with a 3-year vesting period starts in which the company’s performance is measured on total shareholder return
(TSR) against a peer group of companies. The fair value of these awards have been calculated using Monte-Carlo simulations. The number
of conditional shares corresponds to a percentage (at most 150%) of the ?xed reference salary divided by the price of the share on the stock
market on the ?rst day of the vesting period. The relative ranking that OCI achieves in the peer group determines the de?nitive number of shares
that are granted at the end of the vesting period. The remaining shares vested must be retained by the members of the Executive Board for a
period of 2 years. In 2014, in total 127,652 conditional shares have been granted with a fair value of EUR 1 million (fair value at grant date
EUR 7.90 per share, using a volatility of 49%, a risk-free rate of 0.10 percent).
Bonus matching plan
In 2014 a new bonus matching plan was introduced for the members of the Executive Board and Senior Management. In this plan members
of the Executive Board and Senior Management are entitled to buy shares from their annual bonus. The shares will be withheld for a period of
three years. After the 3-year period, the participants will receive a bonus share for each share of the plan. For the members of the Executive
Board, the shares vested must be retained for a period of 2 years. In 2014 60.028 shares were granted in the bonus matching plan with a fair
value of EUR 1.7 million (with a fair value of EUR 28.02 at grant date equal to the share price at grant date).
The total expense for share-based payments recognized in the statement of pro?t or loss for 2014 amounts to USD 11.9 million.
24. Other income
$ millions 2014
2013
restated
Net gain on sale of investment - 1.0
Result on sale of non-controlling interest (Gavilon) 9.0 262.1
Other income 6.2 31.4
Total 15.2 294.5
Other income
The USD 9.0 million of ‘Result of sale of non-controlling interest’ in 2014 relates to the partial release of the escrow account created during the
sales transaction of Gavilon in 2013. During 2013, OCI Fertilizer Holding Limited (‘OCI FH’) sold its full ownership in Gavilon Group for a total
consideration of USD 666.7 million, resulting into a gain of USD 262.1 million.
The group’s management believes there is great uncertainty surrounding the collection of these escrow amounts. Given that these amounts
are held back by the sellers’ representative to deal with any post-closing expenses and claims, management has not recorded these escrow
amounts as an asset and therefore resulted in a reduction of consideration value.
Other income in 2013 includes USD 7.2 million insurance claims received.
128 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 129
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
25. Other expenses
Other expenses in 2014 of USD 4.7 million are mainly related to IFCo’s loss on the gas price derivative for USD 4.2 million. Other expenses in
2013 of USD 85.3 million relates for USD 31.0 million to IFCo’s loss on the gas price hedge and for USD 54.3 million to the start-up cost and
idle capacity of the plant in Algeria (Sorfert).
26. Net ?nance cost
$ millions 2014
2013
restated
Interest income on loans and receivables 9.0 6.0
Fair value gain on derivatives 0.5 -
Foreign exchange gain 12.3 70.8
Finance income 21.8 76.8
Interest expense on ?nancial liabilities measured at amortized cost (199.2) (278.7)
Foreign exchange loss (73.0) -
Changes in fair values of cash ?ow hedges - (1.3)
Finance cost (272.2) (280.0)
Net ?nance cost recognized in pro?t or loss (250.4) (203.2)
Interest expense includes USD - 36.6 million (2013: USD 36.6 million) representing the reversal of interest on the tax dispute liability that was
recognized in 2013. Foreign exchange gain in 2014, includes the foreign currency result from the tax dispute liability USD 9.5 million (2013:
USD 44.2 million).
The above ?nance income and ?nance costs include the following interest income and expense in respect of assets (liabilities) not measured at
fair value through pro?t or loss:
$ millions 2014
2013
restated
Total interest income on ?nancial assets 9.0 6.0
Total interest expenses on ?nancial liability (199.2) (278.7)
27. Earnings per share
27.1 Earnings per share from total operations
2014 2013
i. Basic
Net Pro?t / (Loss) attributable to shareholders 328.7 295.2
Weighted average number of ordinary share (Basic) 204,871,270 203,751,864
Basic earnings per ordinary share 1.604 1.449
ii. Diluted
Net Pro?t / (Loss) attributable to holders of ordinary shareholders 328.7 295.2
Interest expense on convertible notes anti-dilutive 6.1
Net Pro?t / (Loss) attributable to holders of ordinary shareholders based on full conversion 328.7 301.3
Weighted average number of ordinary shares (Basic) 204,871,270 203,751,864
Adjustment for assumed conversion of convertible notes anti-dilutive 9,840,348
Adjustment for assumed equity - settled share-based compensation 236,648 365,315
Weighted average number of ordinary shares outstanding on the basis of full conversion 205,107,918 213,957,527
Diluted earnings per ordinary share 1.603 1.408
At 31 December 2014, the effect of conversion of convertible notes was excluded from the calculation of the diluted earnings per share for total
operations because the effect would be anti-dilutive. Further reference on the details of the effect of conversion of convertible notes is made in
note 27.2.
(i) Weighted average number of ordinary shares calculation
shares 2014 2013
Issued ordinary shares at 1 January 204,840,744 203,127,669
Effect of treasury shares held (779,195) 127,677
Effect of shares issued during the year 809,721 496,518
Weighted average number of ordinary shares outstanding 204,871,270 203,751,864
The average market value of the Company’s shares for the purpose of calculating the dilutive effect of share options was based on quoted
market prices for the year during which the options were outstanding.
In January 2015, new shares have been issued, reference is made to note 35 ‘Subsequent events’.
130 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 131
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
27.2 Earnings per share from continued operations
2014 2013
i. Basic
Net Pro?t / (Loss) attributable to shareholders 444.1 313.3
Weighted average number of ordinary share (Basic) 204,871,270 203,751,864
Basic earnings per ordinary share 2.168 1.538
ii. Diluted
Net Pro?t / (Loss) attributable to holders of ordinary shareholders 444.1 313.3
Interest expense on convertible notes 20.4 6.1
Net Pro?t / (Loss) attributable to holders of ordinary shareholders based on full conversion 464.5 319.4
Weighted average number of ordinary shares (Basic) 204,871,270 203,751,864
Adjustment for assumed conversion of convertible notes 9,840,348 9,840,348
Adjustment for assumed equity - settled share-based compensation 236,648 365,315
Weighted average number of ordinary shares outstanding on the basis of full conversion 214,948,266 213,957,527
Diluted earnings per ordinary share 2.161 1.493
(i) Weighted average number of ordinary shares calculation
shares 2014 2013
Issued ordinary shares at 1 January 204,840,744 203,127,669
Effect of treasury shares held (779,195) 127,677
Effect of shares issued during the year 809,721 496,518
Weighted average number of ordinary shares outstanding 204,871,270 203,751,864
The average market value of the Company’s shares for the purpose of calculating the dilutive effect of share options was based on quoted
market prices for the year during which the options were outstanding.
28. Segment reporting
The Group has identi?ed 2 reportable segments, ‘Fertilizer & Chemicals’ and ‘Engineering & Construction’. Both segments are managed
separately because they require different operating strategies and use their own assets and employees. Prices for transactions between
segments are determined on an arm’s length basis. Segment results, assets and liabilities include items directly attributable to a segment as
well as those that can reasonably and consistently be allocated. Selected information on a country and regional basis is provided in addition
to the information about operating segments. The ‘Engineering & Construction’ segment has been presented as asset held for demerger /
discontinued operations as of 2014.
Geographical information of continuing operations
The geographic information below analyses the Group’s revenue (by destination of the goods) and non-current assets (by the Company where
the activities are being operated). OCI N.V. has no single customer that represents 10 percent or more of revenues and therefore information
about major customers is not provided.
Revenue Non-current assets
1
$ millions 2014
2013
restated 2014
2013
restated
Europe & America 2,446.8 2,266.7 2,415.2 2,149.9
Africa & Middle East 181.2 145.9 3,886.6 4,234.5
Asia & Oceania 57.8 64.9 9.3 -
Total 2,685.8 2,477.5 6,311.1 6,384.4
1
The non-current assets exclude deferred taxes and derivative ?nancial instruments based on the disclosure requirements of IFRS 8.
29. Assets classi?ed for demerger / discontinued operations
On 6 November 2014, the Board of Directors of OCI N.V. announced its intention to seek a dual listing for the Engineering & Construction
business of OCI N.V., through the separation of OCI’s Engineering & Construction and OCI’s Fertilizer & Chemicals business (“the Demerger”).
The Board of Directors of OCI N.V. decided to continue the implementation of the Demerger at its meeting on 10 December 2014.
The Demerger was completed successfully in March 2015, with the listing of shares on Nasdaq Dubai as of 9 March 2015 and a secondary
listing on the Egyptian Exchange on 11 March 2015. The Demerger has resulted in the Engineering & Construction and Fertilizer & Chemical
businesses being owned by two, separately-listed companies as of March 2015. OCI N.V. remains listed on Euronext Amsterdam and holds the
Fertilizer & Chemicals business and Orascom Construction Limited, is dual-listed on the Nasdaq Dubai in Dubai and the Egyptian Exchange and
holds the Engineering & Construction business.
Following the Demerger and following the guidance under IFRS 5, the Engineering & Construction business are accounted for as “Assets held
for demerger / discontinued operations”. Consequently, the net assets and net liabilities of the Engineering & Construction are presented as
“Assets held for demerger” and “Liabilities held for demerger” in the consolidated statement of ?nancial position as at 31 December 2014,
while the 2014 consolidated net results of the discontinued operations (Engineering & Construction business) are presented under discontinued
operations in the consolidated statement of pro?t or loss and other comprehensive income and the consolidated statement of cash ?ows. The
2013 comparative information in the consolidated statements of pro?t or loss and other comprehensive income and the consolidated statement
of cash ?ows are reclassi?ed as if the operation had been discontinued from the start of the comparative period. In the statement of ?nancial
position, the comparative numbers are not reclassi?ed.
Statement of pro?t or loss for ‘discontinued operations’ for the year ended 31 December:
$ millions 2014 2013
Total revenue 3,067.9 2,350.4
Inter-segment revenue from Fertilizer & Chemicals group (1,020.7) (427.0)
Revenue 2,047.2 1,923.4
Expense (2,237.7) (1,999.7)
Income of associates (net of tax) (168.6) 76.3
Pro?t / (loss) before income tax (359.1) (0.2)
Income tax 263.0 (3.6)
Net pro?t / (loss) (96.1) (3.8)
132 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 133
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
29. Assets classi?ed for demerger / discontinued operations (continued)
Statement of ?nancial position for ‘assets held for demerger’ as at 31 December:
$ millions 2014
Non-current assets 777.4
Current assets (excluding cash and cash equivalents) 1,392.2
Cash and cash equivalents 368.9
Non-current liabilities (67.6)
Current liabilities (1,745.0)
Net assets / equity 725.9
Inter-segment revenues
Orascom E&C and Iowa Fertilizer Corporation and OCI Beaumont
Orascom E&C is engaged in the construction of the Iowa Fertilizer Company plant and the debottlenecking of the OCI Beaumont plant (owned
by OCI Partners LP) during 2013 and 2014. Both the Iowa Fertilizer Company and OCI Partners LP are part of OCI N.V. Fertilizer Group. The
total amount of revenues of Orascom E&C in 2014 amount to USD 1,020.7 million (2013: USD 427.0 million) including revenues from Weitz for
an amount of USD 275.5 million as a sub-contractor. The construction / debottlenecking of these plants will continue in 2015. These inter-
segment revenues have been fully eliminated and are therefore not included in of above disclosed revenues.
Equity accounted investees included in assets held for demerger
‘Equity accounted investees’ that are signi?cant to the Group are Sidra Medical Center (associate) and BESIX (joint venture). Established in
1909 in Belgium, BESIX is a global multi-service group offering engineering, procurement and construction (EPC) services. BESIX operates
in the construction, real estate and concession sectors in 15 countries covering Europe, Africa, the Middle East and Australia. Their core
construction competencies include buildings, infrastructure and environmental projects, industrial civil engineering, maritime and port works and
real estate development. In addition to EPC services, BESIX is active in real estate development and holds concessions in several Public Private
Partnerships (PPP) and design, build, ?nance, and maintain/operate (DBFM) contracts, through which it develops, operates and maintains
projects. In 2004, OCI acquired 50% of BESIX in a joint leverage buyout in partnership with BESIX management.
30. Contingencies
Contingent liabilities
Letters of guarantee / letters of credit (Continuing operations)
Letters of guarantee issued by banks for continuing operations in favor of others as at 31 December 2014 amounted to USD 0.2 million (2013:
USD 1.0 million). Outstanding letters of credit as at 31 December 2014 (uncovered portion) amounted to nil (2013: USD 14.6 million).
Letters of guarantee / letters of credit (Discontinued operations)
Letters of guarantee issued by banks for discontinued operations in favor of others as at 31 December 2014 amounted to USD 1.0 billion
(2013: USD 0.7 billion). Outstanding letters of credit as at 31 December 2014 (uncovered portion) amounted to USD 72.5 million (2013: USD
37.6 million).
Litigations and claims
In the normal course of business, the Group entities and joint ventures are involved in some arbitration or court cases as defendants or
claimants. These litigations are carefully monitored by the entities’ management and legal counsels, and are regularly assessed with due
consideration for possible insurance coverage and recourse rights on third parties. OCI does not expect these proceedings to result in liabilities
that have a material effect on the company’s ?nancial position. In cases where it is probable that the outcome of the proceedings will be
unfavorable, and the ?nancial outcome can be measured reliably, a provision has been recognized in the ?nancial statements which is disclosed
in note 22 ‘Provisions’. It should be understood that, in light of possible future developments, such as (a) potential additional lawsuits, (b)
possible future settlements, and (c) rulings or judgments in pending lawsuits, certain cases may result in additional liabilities and related costs.
At this point in time, OCI cannot estimate any additional amount of loss or range of loss in excess of the recorded amounts with suf?cient
certainty to allow such amount or range of amounts to be meaningful. Moreover, if and to the extent that the contingent liabilities materialize,
they are typically paid over a number of years and the timing of such payments cannot be predicted with con?dence. While the outcome of
said cases, claims and disputes cannot be predicted with certainty, we believe, based upon legal advice and information received, that the ?nal
outcome will not materially affect our consolidated ?nancial position but could be material to our results of operations or cash ?ows in any one
accounting period.
30. Contingencies (continued)
Administrative court against Suez Industrial Development Company (Discontinued operations)
A decision was issued against Suez Industrial Development Company, which operates in the ?eld of land development in the North West of
the Gulf of Suez in Egypt, for the cessation of dealings on any of its allocated plots of land as of mid-November 2011 until the investigations,
conducted by the Public Fund Prosecution and Military Prosecution and relating to the allocation and sale of lands located in the North West of
the Gulf of Suez, are concluded. On 28 May 2012, the company has submitted a request to the Dispute Settlement Committee at the General
Authority of Investment and Free Zones to cancel the said decision. On 25 July 2012, the decision issued by the Prime Minister to withdraw the
plot of land allocated to the company was challenged before the Administrative Court and the hearing was postponed to 2 November 2013.
On the hearing of November 2, 2013, the hearing was referred to a different court on the grounds of jurisdiction and accordingly the case was
referred to the 8th District Contracts and during the hearing of 4 March 2014 the case was referred to the commissioners to prepare their
report. OCI is waiting for the commissioners report.
For the Suez case a reliably outcome of the ?nancial impact cannot be estimated.
Administrative court against Egyptian Gypsum Company S.A.E (Discontinued operations)
A lawsuit was ?led before the Administrative Court against Egyptian Gypsum Company S.A.E. which operates in the ?eld of gypsum
manufacturing, to nullify the sale contract of the company on the grounds that it is one of the companies sold under the privatization scheme.
Currently, the report of the commissioners is being prepared. The hearing initially scheduled for 20 April 2015 was postponed until the
commissioners submit their report to the court. If the ?nal award is against the company, the ownership of the plant will be transferred to its
original owner and the company will get the sales price back. The company’s management, supported by its legal expert, believes it is likely that
the award will be issued in favor of Egyptian Gypsum Company.
Court against former owner of Weitz (Discontinued operations)
The previous owner of The Weitz Company (‘Weitz’) ?led a variety of claims against Weitz arising out of alleged breaches of the Separation
Agreement and Buy-Sell Agreements executed upon his departure from Weitz. He also ?led a claim for tortious interference with contract
against Orascom Construction Industries S.A.E., arising out of the same alleged breaches of the Separation Agreement and Buy-Sell
Agreements. Weitz ?led a motion for summary judgment on the ground that the proper purchase price had been paid for his stock pursuant to
the Separation Agreement and Buy-Sell Agreements.
On 6 February 2015, the court dismissed all claims ?led by the previous owner against both Weitz and Orascom Construction Industries S.A.E.
On 11 February 2015, the previous owner ?led a notice of appeal to the Supreme Court of Iowa from the ?nal order entered following the trial
and from all adverse rulings and orders against the previous owner and in favor of OCI and the Weitz defendants. The alleged legal and factual
basis for the appeal have not yet been set out by the claimant. Currently, the Company’s management cannot make a reliable estimate of the
outcome of the appeal and in accordance with IAS 37 has disclosed the litigation as a contingent liability.
Sidra Medical Center (Discontinued operations)
The contract for the design and build of the Sidra Medical and Research Centre in Doha, Qatar was awarded by the Qatar Foundation for
Education, Science & Community Development in February 2008 to the associate owned by Obrascón Huarte Lain (55%) and Contrack (45%),
for a total contract value of approximately USD 2.4 billion. The project is more than 95% complete and is not part of the Construction Group’s
backlog as the project is accounted for under the equity method.
In July 2014, the consortium received a Notice of Termination from the Qatar Foundation for Education, Science & Community Development
(“the Foundation). In relation to this termination, the Foundation claims damages for material amounts from the associates. The claim and
asserted damages have not yet been substantiated by the Foundation. At this stage, the Company believes there is no merit to the claim and
intends to vigorously oppose the claim. The Company issued a counter claim for asserted damages and claimable costs. The matter has
been referred to the UK court of arbitration. Although the Company and their lawyers expect a favorable outcome, there is, given the fact that
the arbitration is in its initial phase, uncertainty associated with these matters, and an unfavorable outcome of the proceedings could have a
materially adverse effect on the demerged entity’s consolidated ?nancial position, results of operations and cash ?ows.
At year-end 2014, OCI has valued its interest in the associate at nil and, additionally, recorded a USD 20 million liability for expected costs
including legal fees. This resulted in a cost charge of USD 188 million for the year, mainly stemming from the guarantee / performance bond
executed by the Foundation (USD 94 million) and the write off of the equity investment in the joint venture (USD 66 million), re?ecting the
uncertainties related to the arbitration. When concluding on the accounting for the interest in the associate, OCI management considered the
views of their external lawyer who stated that even if the associate would be successful in arbitration, enforcing rights against the Foundation
will be a time consuming and complex process.
EBIC tax free zone (Continuing operations)
Reference is made to note 12 to the consolidated ?nancial statements.
Tax evasion claim
We refer to note 12 to the consolidated ?nancial statements.
Reimbursement agreement
The amount payable by OCI N.V. to the Construction Business under the agreement is capped at USD 150 million.
134 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 135
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
30. Contingencies (continued)
Contingent assets
Arbitration against the Golden Pyramids Plaza (Discontinued operations)
Orascom Construction Industries S.A.E. and Consolidated Contractors International Co. SAL ?led an arbitration claim against Golden Pyramids
Plaza regarding the performance of its obligations relating to the City Stars Project. The claim related to the value of additional work performed,
extension of time for all delays, return of the improperly liquidated bonds and payment for outstanding re-measurement items.
On 17 December 2014, the Court dismissed all objections to jurisdiction and admissibility of claims against Golden Pyramids Plaza. Orascom
Construction Industries S.A.E. and Consolidated Contractors International Co. SAL were awarded compensation for damages resulting from
the delayed and disrupted completion of the work and the cost of the arbitration. The total award, of which Orascom Constructions Industries
S.A.E.’s share is 50%, amounts to approximately USD 80.0 million at the prevailing exchange rate on the date of the award.
Following the guidance under IAS 37, OCI management assessed the award as not being “virtually certain” at year-end 2014. Consequently,
the award is disclosed as a contingent asset in the Group’s consolidated ?nancial statements.
31. Capital commitments
As at 31 December 2014, the Group entered into contracts to buy property, plant and equipment for USD 443.1 million (2013: USD 1.39
billion), of which USD 251.6 million represents capital commitments pertaining to OCI Partners and USD 180.5 million relating to the Iowa
Fertilizer Company (IFCo) (2013: USD 1.09 billion).
32. Operating lease commitments
The Group leases a number of of?ce space, computers, machinery and cars under operating leases. The leases typically run for a period of
10 years, with an option to renew the lease after that date. Lease payments are renegotiated every ?ve years to re?ect market rentals. Some
leases provide for additional rent payments that are based on changes in local price indices.
(i) Future minimum lease payments
$ millions 2014 2013
Less than one year 9.3 28.8
Between one and ?ve years 22.2 14.0
More than ?ve years 35.3 0.9
Total 66.8 43.7
(ii) Amount recognized in pro?t or loss
$ millions 2014 2013
Lease expense 2.7 9.3
Contingent rent expense - 2.2
Total 2.7 11.5
33. Related party transactions
Transactions with related parties – Normal course of business
Transactions with related parties occur when a relationship exists between the company, its participating interest and their directors and key
management personnel. In the normal course of business, the company buys and sells goods and services from and to various related parties
(including associates) within the Group. The CEO is able to expense the use of a private aircraft for business travel. These transactions are
conducted on a commercial basis under comparable conditions that apply to transactions with third parties.
The following is a list of signi?cant related party transactions and outstanding amounts as at 31 December 2014:
Related party Relation
Revenue
transactions
during the year
AR outstanding
at year end
Purchases
transactions
during the year
AP outstanding
at year end
Loans
outstanding to
associates
Continuing operations:
Fitco Agro S.A. Associate 157.7 21.4 - - -
Sitech Manufactoring Services C.V. Associate - - - 29.1 -
Sitech Utility Holding Beheer B.V. Associate 33.2 2.4 - 1.5 16.9
Sitech Services B.V. Associate - - 185.9 0.1 -
OCI Nitrogen Iberian Company Joint venture 65.7 - - 0.4 -
Shanxi Fenghe Melamine Co Ltd. Joint venture 0.4 0.3 - - 5.5
Total 257.0 24.1 185.9 31.1 22.4
Discontuning operations:
Orascom Trading Associate - 2.1 3.2 0.3 -
Alico Associate 0.4 29.6 - - -
Medrail Associate - 11.2 - - -
Orasqualia Associate - 3.3 - - -
Obrascon Huarte Lain SA /
Contrack Cyprus Limited JV Associate 15.7 - - - -
OPTD
Related by member of key
management personnel - 0.6 - 1.3 -
United Yamama Orascom Associate - 1.2 - - -
Watts Webcor Obayashi Joint venture 16.0 1.0 22.7 5.0 -
URS Contrack Pacer Forge IV Joint venture 6.1 - 5.2 0.2 -
Lafarge S.A.
Related by member of key
management personnel - - 19.2 12.9 -
Other 1.5 1.8 0.8 0.7 -
Total 39.7 50.8 51.1 20.4 -
In addition to the related party transactions in the table above, the company incurs certain operating expenses for immaterial amounts in relation
to services provided by related parties.
OCI Foundation and Sawiris Foundation (Discontinued operations)
The OCI Foundation invests company resources in educational programs that improve the communities in which the company operates.
OCI has cultivated strong ties with several leading universities, including the University of Chicago (Onsi Sawiris Scholars Exchange Program),
Stanford (The American Middle Eastern Network Dialogue) and Yale (Master of Advanced Management program and Global Network for
Advanced Management program).
In 2013, through the Onsi Sawiris Scholarship Program, the Group provided scholarships to ?ve students who are attending Yale, Stanford,
Wharton, and Northwestern for graduate studies.
Furthermore, the Sawiris Foundation for Social Development also provides grants to fund projects implemented by charitable organizations,
educational institutions, local government and private business. These related charitable organizations have a total transaction amount during
2014 of USD 1.0 million (2013: USD 1.3 million).
136 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 137
OCI N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
34. Remuneration of the Board of Directors (Key management personnel)
During 2014, we considered the members of the Board of Directors (Executive and Non-executive) and the Chief Operating Of?cer for the
Fertilizer and Chemicals Group to be the key management personnel as de?ned in IAS 24 ‘Related parties’. The key management personnel
have not entered into any related party transactions. No other bene?ts or remuneration were provided to or have been entered into with above
mentioned key management personnel except as disclosed below. The total remuneration of the key-management personnel amounts in 2014
to USD 8.9 million.
Remuneration of the Directors
In 2014, the total remuneration relating to the Executive Directors amounted to USD 6.9 million (2013: USD 7.0 million) consisting of the
elements in the table below:
2014 Age Base salary Annual bonus
Share-based
compensation Total remuneration
N. Sawiris 53 2,000,000 1,000,000 1,320,482 4,320,482
S. Butt 55 1,680,000 840,000 83,545 2,603,545
Total 3,680,000 1,840,000 1,404,027 6,924,027
2013 Base salary Annual bonus
1
Share-based
compensation Total remuneration
N. Sawiris 2,000,000 1,000,000 1,498,872 4,498,872
S. Butt 1,689,180 800,000 - 2,489,180
Total 3,689,180 1,800,000 1,498,872 6,988,052
1
In 2014, OCI granted a bonus to Mr. Sawiris of USD 1.0 million and to Mr. Butt of USD 0.8 million relating to the performance of 2013, which
was expensed to the statement of pro?t or loss in 2014.
As at 31 December 2014, the Executive Directors held 400,000 stock options (2013: 590,000) at a weighted average exercise price of EUR
25.94.
Outstanding
Year end ‘13 Granted Exercised Expired
Outstanding Year
End ‘14 Exercise Price Expiration
N. Sawiris 190,000 - 190,000 - - EUR 26.71
200,000 - - - 200,000 EUR 26.43 31-03-2016
200,000 - - - 200,000 EUR 25.45 02-01-2017
S. Butt - - - - - - -
Total 590,000 - 190,000 - 400,000 - -
At 31 December 2014, the Executive Directors were granted 92,378 conditional performance shares.
Outstanding
Year end ‘13
Granted
conditional
Outstanding Year
End ‘14 Vesting date
N. Sawiris - 51,321 51,321 01-07-2017
S. Butt - 41,057 41,057 01-07-2017
Total - 92,378 92,378 -
As at 31 December 2014, the Executive Directors held 16,409 bonus matching shares
Outstanding
Year end ‘13 Granted
Outstanding Year
End ‘14 Vesting date
N. Sawiris - 9,116 9,116 17-11-2017
S. Butt - 7,293 7,293 17-11-2017
Total - 16,409 16,409 -
34. Remuneration of the Board of Directors (Key management personnel) (continued)
In 2014, the total remuneration costs relating to the Non-Executive Directors amounted to USD 1,343,149 (2013: USD 710,000) consisting of the
elements in the table below:
2014 Annual ?xed fee
Audit
Committee
membership
Additional
fee
Nomination
governance
committee
Remuneration
committee
Health safety
environment
committee Total
M. Bennett 260,000 - 150,000 3,750 7,500 7,500 428,750
J.A. Ter Wisch 130,000 20,000 - 10,000 - 1,875 161,875
A. Naqvi 130,000 20,000 - 7,500 - 7,500 165,000
S. N. Schat 130,000 20,000 9,041 - 10,000 - 169,041
K. van der Graaf 130,000 - - 7,500 - 10,000 147,500
R.J. van de Kraats 130,000 25,000 10,045 - 7,500 - 172,545
J. Guiraud 81,250 12,500 - 4,688 - - 98,438
Total 991,250 97,500 169,086 33,438 25,000 26,875 1,343,149
The additional fee for Mr. Bennett is for service on the Board of the publicly traded company OCI Partners in the US. The additional fee for Mr.
Schat and Mr. van de Kraats relates to 2013 fees which were paid in 2014.
2013 Annual ?xed fee
Audit
Committee
membership
Additional
fee
Nomination
governance
committee
Remuneration
committee
Health safety
environment
committee Total
M. Bennett 260,000 - 150,000 - - - 410,000
J.A. Ter Wisch 130,000 20,000 - - - - 150,000
A. Naqvi 130,000 20,000 - - - - 150,000
S. N. Schat - - - - - - -
K. van der Graaf - - - - - - -
Total 520,000 40,000 150,000 - - - 710,000
The additional fee for Mr. Bennett is for service on the Board of the publicly traded company OCI Partners in the US.
36. External auditors’ fee
The service fees recognized in the ?nancial statements 2014 for the service of KPMG amounted to USD 9.1 million (2013: USD 7.7 million).
The amounts per service category are shown in the following table:
Total service fee
of which KPMG Accountants N.V.
(the Netherlands)
$ millions 2014 2013 2014 2013
Audit of Group Financial Statements 6.2 4.6 1.5 1.6
Other assurance services 1.8 1.9 0.9 0.3
Total assurance services 8.0 6.5 2.4 1.9
Tax services 0.8 0.8 - -
Sundry services 0.3 0.4 - -
Total 9.1 7.7 2.4 1.9
138 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 139
OCI N.V.
PARENT COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER (BEFORE NET INCOME APPROPRIATION)
$ millions Note 2014 2013
Assets
Non-current assets
Tangible ?xed assets 0.9 -
Financial ?xed assets (38) 2,813.9 2,002.2
Deferred tax assets 1.7 47.6
Total non-current assets 2,816.5 2,049.8
Current assets
Receivables
(39) 233.7 679.2
Cash and cash equivalents 111.3 5.4
Total current assets 345.0 684.6
Total assets 3,161.5 2,734.4
Equity
Share capital (40) 273.3 272.1
Share premium 1,447.6 1,441.8
Other reserves 69.3 (287.8)
Net pro?t/ (loss) for the year 328.7 295.2
Total equity 2,118.9 1,721.3
Liabilities
Non-current liabilities
Loans and borrowings (41) 896.6 969.8
Deferred tax liabilities - -
Total non-current liabilities 896.6 969.8
Current liabilities
Trade payables and other liabilities (42) 46.4 43.3
Loans and borrowings 94.8 -
Income tax payable 4.8 -
Total current liabilities 146.0 43.3
Total liabilities 1,042.6 1,013.1
Total equity and liabilities 3,161.5 2,734.4
PARENT COMPANY STATEMENT OF PROFIT OR LOSS
FOR THE YEARS ENDED 31 DECEMBER
$ millions Note 2014 2013
Net pro?t / (loss) from subsidiaries, joint arrangements and associates 414.8 393.9
Other net income / (loss) (86.1) (98.7)
Net pro?t / (loss) for the year 328.7 295.2
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
37. General
The Parent Company ?nancial statements of OCI N.V. have been prepared in accordance with provisions of Part 9, Book 2 of the Dutch Civil
Code. OCI N.V. has applied the option in article 2:362 paragraph 8 of Part 9, of the Dutch Civil Code to use the same accounting principles for
the recognition and measurement of assets and liabilities and determination of results for the corporate ?nancial statements as the consolidated
?nancial statements. Investments in subsidiaries are carried at net asset value. The net asset value is established by valuing assets, provisions
and liabilities and calculating the result in accordance with the accounting policies applied in the consolidated ?nancial statements. For a list
of principal subsidiaries reference is made to the section ‘Miscellaneous’ in this report. Investments in Group companies are included at the
pro rata value of OCI’s share in their net assets value. For principles of recognition and measurement of assets, liabilities and results, reference
is made to the notes to the consolidated ?nancial statements. OCI N.V. has the Euro as its functional currency, to align with the consolidated
?nancial statements, the parent company ?nancial statements are also presented in US dollars.
38. Financial assets
Subsidiaries
$ millions Share in capital Loans Other loans Total
Balance at 1 January 2013 - - - -
Acquisitions/ capital contributions 1,674.7 - - 1,674.7
Share in pro?t 393.9 - - 393.9
Exchange rate differences (104.0) - - (104.0)
Loans - 1.5 36.1 37.6
Balance at 31 December 2013 1,964.6 1.5 36.1 2,002.2
Share in pro?t 414.8 - - 414.8
Change in ownership OCI Partners (12.5) - - (12.5)
Settlement loans - - (16.6) (16.6)
Change in cash ?ow hedge (6.1) - - (6.1)
Change in available-for-sale ?nancial assets (1.2) - - (1.2)
Dividend from associates (30.4) - - (30.4)
Capital contributions in subsidiaries 777.8 - - 777.8
Dividends form subsidiaries (408.3) - - (408.3)
Exchange rate differences 94.2 - - 94.2
Balance at 31 December 2014 2,792.9 1.5 19.5 2,813.9
The loans included under ‘Other loans’ fully consist of loans granted to employees as part of a share incentive plan. For details see note 23(d) in
the consolidated ?nancial statements.
39. Receivables
$ millions 2014 2013
Receivables from subsidiaries 227.1 649.9
Other receivables 6.6 29.3
Total 233.7 679.2
No receivables have a maturity longer than one year.
40. Shareholders’ equity
For details on the statement of changes in equity of the Parent Company see the consolidated statement of changes in equity.
140 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 141
OCI N.V.
41. Loans and borrowings
$ millions 2014 2013
Convertible bond 379.6 420.4
Revolving credit facility 511.2 -
Loans from subsidiaries 5.8 549.4
Total 896.6 969.8
Reference is made to note 20 ‘Loans and borrowings’ of the consolidated ?nancial statements for detailed information on the convertible bond
and the revolving credit facility.
The maturity dates of loans and borrowings is as follows:
$ millions 2014 2013
2015 - 48.3
2017 511.2 -
2018 379.6 420.4
2019 5.8 501.1
Total 896.6 969.8
42. Trade payables and other current liabilities
$ millions 2014 2013
Owing to subsidiaries 30.8 36.9
Other current liabilities 15.6 6.4
Total 46.4 43.3
43. Contingent liabilities
OCI N.V. has provided ?nancial guarantees to certain subsidiaries including EFC related to its International Finance Corporation (‘IFC’) bank
loan, and OCI Construction B.V. regarding its bank loan with Credit Agricole. For OCI Fertilizers B.V. and OCI Nitrogen B.V. comfort letters were
provided by OCI N.V.
44. Employees
The total number of employees in 2014 was 26 (2013: 7 employees).
45. Fiscal unity
OCI N.V. forms a ?scal unity with several Dutch entities for corporation tax purposes. The full list of Dutch entities which are part of the ?scal
unity is included in the list containing the information referred to in article 2:379 and article 2:1 of the Dutch Civil Code, which is ?led at the of?ce
of the Chamber of Commerce. In accordance with the standard conditions, a company and its subsidiaries that form the ?scal unity are jointly
and severally liable for taxation payable by the ?scal unity.
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
CONTINUED
OTHER INFORMATION
PROPOSED APPROPRIATION OF NET PROFIT / (LOSS)
$ millions 2014 2013
Cash dividend interim - -
Cash dividend ?nal - -
Added to retained earnings 328.7 295.2
Total net pro?t / (loss) attributable to shareholders 328.7 295.2
Upon adoption of this proposed Net Pro?t / (Loss) appropriation, the dividend for the 2014 ?nancial year will be nil. This proposed Net Pro?t /
(Loss) appropriation is in conformity with article 26 of the Company’s Articles of Association.
Extract from the Articles of Association relating to Net Pro?t / (Loss) appropriation
Article 26. ‘Pro?ts and Distributions’.
26.1 The Board may decide that the pro?ts realized during a ?nancial year will fully or partially be appropriated to increase and/or from reserves.
26.2 The pro?ts remaining after application of Article 26.1 shall be put at the disposal of the General Meeting. The Board shall make a proposal
for that purpose. A proposal to pay a dividend shall be dealt with as a separate agenda item at the General Meeting of Shareholders.
26.3 Distributions from the Company’s distributable reserves are made pursuant to a resolution of the General Meeting at the proposal of the
Board.
26.4 Provided it appears from an interim statement of assets signed by the Board that the requirement mentioned in Article 26.8 concerning the
position of the Company’s assets has been ful?lled, the Board may make one or more interim distributions to the holders of Shares.
26.5 The Board may decide that a distribution on Shares shall not take place as a cash payment but as a payment in Shares, or decide that
holders of Shares shall have the option to receive a distribution as a cash payment and/or as a payment in Shares, out of the pro?t and/or at
the expense of reserves, provided that the Board is designated by the General Meeting pursuant to Articles 6.2. The Board shall determine the
conditions applicable to the aforementioned choices.
26.6 The Company’s policy on reserves and dividends shall be determined and can be amended by the Board. The adoption and thereafter
each amendment of the policy on reserves and dividends shall be discussed and accounted for at the General Meeting of Shareholders under a
separate agenda item.
26.7 The Company may further have a policy with respect to pro?t participation for employees which policy will be established by the Board.
26.8 Distributions may be made only insofar as the Company’s equity exceeds the amount of the paid in and called up part of the issued
capital, increased by the reserves which must be kept by virtue of the law or these Articles of Association.
Amsterdam, the Netherlands, 28 April 2015
The OCI N.V. Board of Directors
Michael Bennett, Chairman
Nassef Sawiris
Salman Butt
Jan Ter Wisch
Arif Naqvi
Kees van der Graaf
Sipko Schat
Jérôme Guiraud
Robert Jan van de Kraats
142 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 143
OCI N.V.
INDEPENDENT AUDITOR’S REPORT
To: the Annual General Meeting of Shareholders of OCI N.V.
Report on the audit of the Financial Statements 2014
Opinion
We have audited the ?nancial statements 2014 of OCI N.V. (OCI N.V. or the Company), based in Amsterdam. The ?nancial statements
include the consolidated ?nancial statements and the Company ?nancial statements.
In our opinion:
• the consolidated ?nancial statements give a true and fair view of the ?nancial position of OCI N.V. as at 31 December 2014, and
of its result and cash ?ows for the year then ended in accordance with International Financial Reporting Standards as adopted by
the European Union (EU-IFRS) and with Part 9 of Book 2 of the Netherlands Civil Code, and
• the Company ?nancial statements give a true and fair view of the ?nancial position of OCI N.V. as at 31 December 2014, and of its
result for the year then ended in accordance with Part 9 of Book 2 of the Netherlands Civil Code.
The consolidated ?nancial statements comprise:
• the consolidated statement of ?nancial position as at 31 December 2014;
• the following consolidated statements for 2014: the statement of pro?t or loss and comprehensive income, changes in equity
and cash ?ows; and
• the notes, comprising a summary of the accounting policies and other explanatory information.
The Company ?nancial statements comprise:
• the Company statement of ?nancial position as at 31 December 2014;
• the Company statement of pro?t or loss for 2014; and
• the notes, comprising a summary of the accounting policies and other explanatory information.
Basis for our opinion
We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our responsibilities under those standards
are further described in the “Our responsibilities for the audit of the ?nancial statements” section of our report.
We are independent of OCI N.V. in accordance with the “Verordening inzake de onafhankelijkheid van accountants bij assurance-opdrachten”
(ViO) and other relevant independence requirements in the Netherlands. Furthermore we have complied with the “Verordening gedrags- en
beroepsregels accountants” (VGBA).
We believe that the audit evidence we have obtained is suf?cient and appropriate to provide a basis for our opinion.
Materiality
Misstatements can arise from fraud or errors and will be considered material if, individually or in aggregate, they could reasonably be expected
to in?uence the economic decisions of users taken on the basis of these ?nancial statements. The materiality affects the nature, timing and
extent of our audit procedures and the evaluation of the effect of identi?ed misstatements on our opinion.
Based on our professional judgment we determined the materiality for the ?nancial statements as a whole at USD 30 million, with reference to
a benchmark of normalized pro?t before tax from continuing operations (approximately 10%) and total revenues from discontinued operations
(approximately 1.7%). Normalized pro?t before tax has been determined as the Result before income tax from continuing operations adjusted
for the one-off items at the operating pro?t level as included on page 44 of the report of the Board of Directors. Considering the differences in
nature and characteristics of the continuing and discontinued operations, we deem these benchmarks most relevant. The continuing operations
represent high volume production and sales of fertilizer and chemicals, for which oftentimes global market prices are available. The discontinued
operations are characterized by signi?cant construction contracts, with contract speci?c terms and conditions and often relatively low margins.
We have also taken into account misstatements and possible misstatements that are in our opinion material for qualitative reasons to the users
of the ?nancial statements.
Audits of group entities (components) were performed using materiality levels determined by the judgment of the group audit team, having
regard to the materiality for the consolidated ?nancial statements as a whole. Component materiality for components within the Fertilizer &
Chemicals Group did not exceed USD 11.5 million, whereas for components within the Engineering & Construction Group materiality did not
exceed USD 7.5 million.
The difference in component materiality for components within the Fertilizer & Chemical Group and components within the Engineering &
Construction Group has been based on both quantitative and qualitative factors.
We agreed with the Board of Directors that misstatements in excess of USD 1.25 million, which are identi?ed during the audit, would be
reported to them, as well as smaller misstatements that in our view must be reported on qualitative grounds.
Scope of the group audit
OCI N.V. is head of a group of entities. The ?nancial information of this group is included in the ?nancial statements of OCI N.V.
Because we are ultimately responsible for the opinion, we are also responsible for directing, supervising and performing the group audit. In this
respect we have determined the nature and extent of the audit procedures to be carried out for components. Decisive were the size and / or the
risk pro?le of the components or operations. On this basis, we selected components for which an audit had to be performed on the complete
set of ?nancial information or on speci?c items.
Based on these scoping criteria, we selected 18 components from 7 countries for a full scope audit. This resulted in a coverage of
approximately 99% and 84% of revenues for continued and discontinued operations respectively, and approximately 93% and 94% of total
assets for continued and discontinued operations respectively. The remaining revenues and assets result from a number of components, none
of which individually represented more than 2.6% of total revenues or 1.4% of total assets. For these remaining components we performed
analytical procedures to corroborate our assessment that there are no signi?cant risks of material misstatement and performed additional
veri?cation procedures whenever deemed necessary.
The group audit team provided detailed instructions to all component auditors, covering the signi?cant audit areas, including the relevant risks
of material misstatement identi?ed by us, and set out the information required to be reported back to the group audit team. The group audit
team visited component auditors and performed ?le reviews for components in the Netherlands, Belgium, Egypt and Algeria. Conference calls
were held with all the component auditors. During these visits and calls, the planning, risk assessment, procedures performed, ?ndings and
observations reported were discussed and reviewed in more detail by us, where considered necessary. Any further work deemed necessary
was subsequently performed by the component auditors and reviewed by us.
By performing the procedures mentioned above at components, together with additional procedures at group level, we have been able to
obtain suf?cient and appropriate audit evidence to provide an opinion on the ?nancial statements.
Our key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most signi?cance in our audit of the ?nancial statements. We
have communicated the key audit matters to the Board of Directors. The key audit matters are not a comprehensive re?ection of all matters
discussed.
These matters were addressed in the context of our audit of the ?nancial statements as a whole and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Assets and liabilities classi?ed as held for demerger and discontinued operations
In November 2014, the Company announced its intention to pursue a dual listing of its Engineering & Construction Group in both United Arab
Emirates and Egypt. Meanwhile, listings have been obtained in the United Arab Emirates on 7 March 2015 and in Egypt on 9 March 2015. In
preparing the Company’s consolidated ?nancial statements, the Company applied IFRS 5. The Company presented the assets and liabilities
of the Engineering & Construction Group as “Assets held for demerger” and “Liabilities held for demerger” and the operations have been
presented net as “Net pro?t/(loss) from discontinued operations”. The assessment process whether this presentation is in accordance with
IFRS 5, is complex and judgmental, especially in determining if and when the demerger is highly probable.
As part of our audit we challenged the appropriateness of management’s judgments with documentation available within the Company and
external documentation, amongst others from legal advisors and other third parties. We also assessed the adequacy of the Company’s
disclosure notes 2.2 and 29 in the ?nancial statements in respect of assets and liabilities classi?ed as held for demerger and discontinued
operations.
Accounting for income tax positions – in particular the tax evasion claim in Egypt
The Company has extensive international operations and makes judgments and estimates in relation to tax issues and exposures resulting in
the recognition of tax liabilities. Income tax was signi?cant to our audit because the assessment process is complex and the amounts involved
are material to the ?nancial statements as a whole, especially with respect to tax positions in Egypt following changes in interpretations of tax
laws and regulations.
In 2012, a tax claim was initiated in Egypt, accusing Orascom Construction Industries S.A.E., the former Egyptian parent company of the
group, of tax evasion in relation to a divestment of part of the group in 2007. In 2013, Orascom Construction Industries S.A.E. entered into an
agreement with the Egyptian Tax Authority (“ETA”) to pay approximately USD 1 billion of tax in several installments to resolve the tax dispute.
The ?rst installment was paid in 2013 and for the remaining installments a liability was recorded in the 2013 ?nancial statements. During 2014,
the ETA independent appeal committee overseeing the tax dispute ruled in favor of Orascom Construction Industries S.A.E. and OCI N.V.
released the liability. The Board of Directors of the Company decided to transfer the rights to the installment paid in 2013 to the “Long Live
Egypt Fund”.
We have tested the completeness and accuracy of the amounts reported in the ?nancial statements for current and deferred tax, including the
assessment of disputes with tax authorities. In this area our audit procedures included, amongst others, assessment of correspondence with
the relevant tax authorities, obtaining and reviewing letters from (tax) lawyers and testing the recording and re-assessment of tax positions. We
144 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 145
OCI N.V.
INDEPENDENT AUDITOR’S REPORT
CONTINUED
engaged and visited component audit teams, which included local tax specialists, to assist us in analyzing and challenging the assumptions
used to determine tax positions and we corroborated the assumptions with (external) evidence.
We also assessed the adequacy of the Company’s disclosure note 12 in the ?nancial statements in respect of income tax and the accounting
for the tax evasion claim as well as the accounting for and the disclosure of the intended donation to the “Long Live Egypt Fund”.
Valuation of work in progress and related revenue
OCI N.V. is involved in construction projects for which the Company applies the percentage of completion method. The amount of revenue and
pro?t recognized in a year is dependent, inter alia, on the assessment of the percentage of completion of long-term contracts, the forecasted
cost of each project, the accounting for variation orders and claims as well as the recoverability of retention receivables. The nature of these
estimates implies that continual re-assessments can have a signi?cant effect on pro?ts for the year. This re-assessment process is complex and
judgmental due to the size of the construction projects and uncertainties related to future performance and disputes.
For our audit we evaluated the processes of the accounting for construction contracts. Speci?c procedures have been performed by
component auditors to determine that variation orders and claims have been properly taken into account. Furthermore, component auditors
evaluated that the valuation of work in progress, other project related receivables and liabilities were timely recognized and properly measured,
and the resulting estimated cumulative result on contracts is appropriately accounted for. They challenged the appropriateness of these
estimates for signi?cant projects and assessed whether or not the estimates showed any evidence of management bias, amongst others by
vouching changes in estimates to underlying documentation.
We speci?cally focused on the valuation of the Company’s share in the partnership with OHL to construct the Sidra Medical Center in Doha,
which investment is accounted for as an associate by OCI N.V. Management of the partnership was unable to conclude on the ?nancial
information for the year 2014 as a result of substantial differences in views on the value of the working capital. OCI N.V. has completely written
off its share in the equity accounted associate, and has also written off the performance bond that was called by the customer in the year
2014. We discussed the matter with the component auditor, obtained external legal con?rmation letters on the matter and received further
con?rmation on relevant facts and circumstances from the component auditor and in-house counsel. We tested amounts paid under the
executed performance bond with supporting documentation such as contracts and bank statements. We also evaluated the adequacy of the
related disclosure in disclosure note 30.
Long term debt and covenants requirements
In order to ?nance the construction of its Fertilizer & Chemicals property, plant & equipment, OCI N.V. has entered into various loan agreements,
which often contain speci?c covenant requirements. Most of the loan agreements have been concluded at the component level. The
covenants, if applicable, relate to the ?nancial information of these components. If covenants are not met, and no waivers are received, long
term debt may need to be classi?ed as a short term liability.
As part of our audit procedures we assessed compliance with ?nancial ratios included in the covenants, if applicable, as at the balance sheet
date. These procedures included obtaining and reading the loan agreements, challenging the Company’s understanding of the ?nancial ratios
by reviewing underlying contracts and correspondence and by verifying the mathematical accuracy of the ?nancial ratios. For covenants with
limited headroom, we evaluated the assumptions applied by management when making estimates for potential management bias. For loans
with covenants for which waiver letters were received from ?nancial institutions, we obtained and inspected these waiver letters. We further
evaluated the adequacy of the Company’s disclosures about the loans, borrowings and covenants in disclosure note 20.
Changes in accounting policies (IFRS 11)
Especially within the Engineering & Construction Group, the Company has entered into joint arrangements with third party companies for
construction projects. As of 1 January 2014, the Company has applied the new accounting standard IFRS 11 to all joint arrangements.
Under IFRS 11 investments in joint arrangements are classi?ed as either joint ventures or joint operations, depending on the contractual rights
and obligations of each investor. The new guidance requires the company to assess and interpret the substance of a substantial number
of contractual agreements. Some of these assessments required signi?cant management judgment. The most notable consequence is the
accounting for the company’s 50% share in Besix Group S.A., which was proportionally consolidated in the ?nancial statements 2013 and is
accounted for as an associate in the ?nancial statements 2014, including the comparative 2013 ?nancial information.
We obtained and assessed management’s analysis of the contracts for signi?cant joint arrangements, read the relevant parts of the contracts
obtained, con?rmed management’s assessment of facts and circumstances were in line with the contracts and challenged management’s
interpretations and conclusions. We evaluated whether the effects of the new accounting standards were adequately disclosed in note 4.3.
Responsibilities of the Board of Directors for the ?nancial statements
The Board of Directors is responsible for:
• the preparation and fair presentation of the ?nancial statements in accordance with EU-IFRS and Part 9 of Book 2 of the
Netherlands Civil Code, and for the preparation of the report of the Board of Directors in accordance with Part 9 of Book 2 of the
Netherlands Civil Code;
• such internal control as the Board of Directors determines is necessary to enable the preparation of ?nancial statements that are free
from material misstatement, whether due to fraud or error;
• assessing the Company’s ability to continue as a going concern. Based on the ?nancial reporting frameworks mentioned, the
Board of Directors should prepare the ?nancial statements using the going concern basis of accounting unless the Board of
Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. The Board of
Directors should disclose events and circumstances that may cast signi?cant doubt on the Company’s ability to continue as a going
concern.
• overseeing the Company’s ?nancial reporting process.
Our responsibilities for the audit of the ?nancial statements
Our objective is to plan and perform the audit assignment in a manner that allows suf?cient and appropriate audit evidence to be obtained for
our ?nal opinion.
Our audit has been performed with a high, but not absolute, level of assurance, which means we may have not uncovered all errors and fraud.
We have exercised professional judgment and have maintained professional skepticism throughout the audit, in accordance with Dutch
Standards on Auditing, ethical requirements and independence requirements.
Our audit included e.g.:
• Identifying and assessing the risks of material misstatement of the ?nancial statements, whether due to fraud or error, designing and
performing audit procedures responsive to those risks, and obtaining audit evidence that is suf?cient 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.
• Obtaining an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
• Evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by management.
• Concluding on the appropriateness of management’s use of the going concern basis of accounting, and based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast signi?cant doubt on the Company’s ability
to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the ?nancial 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 our auditor’s report. However, future events or conditions may
cause the Company to cease to continue as a going concern.
• Evaluating the overall presentation, structure and content of the ?nancial statements, including the disclosures; and
• Evaluating whether the ?nancial statements represent the underlying transactions and events in a manner that achieves fair
presentation.
We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and signi?cant audit
?ndings, including any signi?cant ?ndings in internal control that we identify during our audit.
We provide the Board of Directors 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 the Board of Directors, we determine those matters that were of most signi?cance in the audit of the
?nancial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law
or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, not communicating the matter is in the
public interest.
146 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 147
OCI N.V.
INDEPENDENT AUDITOR’S REPORT
CONTINUED
Report on other legal and regulatory requirements
Report on the report of the Board of Directors and the other information
Pursuant to legal requirements of Part 9 of Book 2 of the Netherlands Civil Code (concerning our obligation to report about the report of the
Board of Directors and other information):
• we have no de?ciencies to report as a result of our examination whether the report of the Board of Directors, as set out on pages 1 to 77,
to the extent we can assess has been prepared in accordance with Part 9 of Book 2 of this Code, and whether the information as required
by Part 9 of Book 2 of the Netherlands Civil Code has been annexed;
• we report that the report of the Board of Directors, to the extent we can assess, is consistent with the ?nancial statements.
Appointment
Our ?rst appointment as auditor of OCI N.V. was in 2013. On 26 June 2014, we have been re-appointed by the Annual General Meeting of
Shareholders as auditor of OCI N.V. for 2014.
Amstelveen, 28 April 2015
KPMG Accountants N.V.
P.J.G. ter Steeg RA
MISCELLANEOUS
List of principal subsidiaries, associates and joint ventures
Companies Country
Percentage of
interest
Consolidation
Method
Fertilizer entities (continuing operations):
OCI N.V. The Netherlands 100.00 Full
Sorfert Algérie Spa Algeria 50.99 Full
Orascom Construction Industries Egypt 99.84 Full
OCI Fertilizer Trading Limited Cyprus 100.00 Full
Egypt Basic Industries Corporation Egypt 60.00 Full
Egyptian Fertilizers Company Egypt 99.90 Full
OCI Nitrogen B.V. The Netherlands 100.00 Full
Iowa Fertilizer Company LLC USA 100.00 Full
OCI Partners LP USA 79.04 Full
Natgasoline LLC USA 100.00 Full
Construction entities (discontinued operations):
Cementech BVI 100.00 Full
Orascom Construction Industries Algeria Spa Algeria 99.90 Full
BESIX Group SA Belgium 50.00 Equity
OCI Construction Limited Cyprus 100.00 Full
Orascom Construction Egypt 100.00 Full
Orascom Road Construction Egypt 99.98 Full
Orasqualia for the Development of the Wastewater Treatment Plant Egypt 50.00 Equity
National Steel Fabrication Egypt 99.90 Full
Alico Egypt Egypt 50.00 Equity
Suez Industrial Development Company Egypt 60.50 Full
Orascom Saudi Company Kingdom of Saudi Arabia 60.00 Full
Contrack International Inc USA 100.00 Full
Orascom E&C USA Inc USA 100.00 Full
The Weitz Group LLC USA 100.00 Full
A full list of af?liated companies will be available for public inspection at the Commercial Registry in conformity with the provisions of Article 2:379
of the Dutch Civil Code.
148 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 149
OCI N.V.
Share Listing
OCI N.V.’s shares have been listed on the NYSE Euronext in
Amsterdam as of 25 January 2013. In March 2014, OCI N.V. became
a constituent of the AEX-Index, the NYSE Euronext Amsterdam’s
largest index.
The OCI N.V. Share in 2014
1
Number of outstanding ordinary shares
as at 31 December 2014 205,911,570
Average share price € 24.22
Lowest share price € 19.11
Highest share price € 30.54
Share price at year end € 23.70
Market capitalization at year end
2
€ 5.95 billion
1 Adjusted for Orascom Construction demerger
2 Including demerged Orascom Construction
Demerger of the Engineering & Construction Business
At an OCI N.V. extraordinary general meeting held on 12 November
2014, shareholders approved the proposal to facilitate the demerger
of the company’s engineering and construction business from its
fertilizer and chemicals business (the “Spin-Off”). The demerged
engineering and construction business formed Orascom Construction
Limited (“OC”). The Spin-Off was effected after the close of trading on
6 March 2015 (the “Record Date”) through a $ 1.4 billion repayment
of capital in kind to OCI N.V. shareholders as registered on the Record
Date in the form of OC shares. An OCI N.V. shareholder received one
OC share for every two OCI N.V. shares held. OC shares commenced
trading on 9 March 2015 on NASDAQ Dubai and on 11 March 2015
on the Egyptian Exchange.
After close of trading on the Record Date, Euronext announced a
reference price of $ 13.33 per OC share and a EUR:USD exchange
rate of 1.087 (https://www.euronext.com/en/products/equities/
NL0010558797-XAMS), to calculate an adjustment of EUR 6.13 per
OCI N.V. share. The $ 13.33 reference price is based on the $ 1.4
billion capital repayment divided by the number of OC shares available
for transfer to the OCI N.V. shareholders. Based on a closing price of
EUR 34.095, Euronext adjusted the OCI N.V. shares to EUR 27.965
as at 18:00 CET on 6 March 2015.
Share capital
All of the Company’s issued shares are ordinary shares with
authorized par value of 1 Euro. The number of paid-up ordinary shares
outstanding is disclosed in note 17 of the ?nancial statements.
Dividend Policy
OCI N.V. has a ?exible dividend policy designed to balance the
availability of funds for dividend distribution with pursuing growth
opportunities that generate attractive returns. We currently have two
large green?eld projects under construction in the US. Accordingly,
the Board has decided to focus cash ?ows on completing these
signi?cant growth initiatives in a timely manner and therefore has not
announced a dividend for FY2014.
Financial Calendar
20 May 2015 Publication of trading update Q1
10 June 2015 General Meeting of Shareholders
26 August 2015 Publication of Interim Financial Statements
12 November 2015 Publication of trading update Q3
17 March 2016 Q4 & FY 2015 Results
SHAREHOLDER INFORMATION
Investor Relations
OCI N.V. places great importance on maintaining active dialogue with
existing and potential shareholders, banks, and analysts. OCI N.V. is
committed to providing relevant, high-quality and timely information
to all stakeholders, and to giving current and potential shareholders,
analysts and ?nancial press broader insight into the Company and the
industries in which we operate. To this end, OCI N.V. strives to ensure
that relevant information is provided equally and simultaneously to all
interested parties.
As per the Company’s by-laws, OCI N.V. observes a ‘black-out’
period during which analysts’ meetings and presentations to and/or
direct discussions with current or potential shareholders do not take
place shortly before the publication of the regular ?nancial information.
Investor Relations contacts
Corporate website: www.oci.nl
Hans Zayed
Investor Relations Director
E-mail: [email protected]
Tel: (+31) 06 18 25 13 67
Erika Wakid
E-mail: [email protected]
[email protected]
150 OCI N.V. Annual Report 2014 OCI N.V. Annual Report 2014 151
OCI N.V.
KEY SUBSIDIARIES
OCI NITROGEN (100%)
Nitrates and melamine manufacturer, the Netherlands
IOWA FERTILIZER COMPANY (100%)
Nitrates and diesel exhaust ?uid manufacturer, USA
OCI PARTNERS LP (79.88%)
Owner and operator of OCI Beaumont, ammonia and methanol
manufacturer, USA
NATGASOLINE LLC (100%)
Methanol manufacturer, USA
SORFERT ALGÉRIE (51%)
Ammonia and granular urea manufacturer, Algeria
EGYPTIAN FERTILIZERS COMPANY (100%)
Granular urea manufacturer, Egypt
EGYPT BASIC INDUSTRIES CORPORATION (60%)
Ammonia manufacturer, Egypt
OCI FERTILIZER TRADING (100%)
Fertilizer trading and distribution arm
OCI TERMINAL EUROPOORT B.V. (100%)
Ammonia tank owner and operator, Netherlands
152 OCI N.V. Annual Report 2014
OCI N.V.
Designed and produced by dmicreative www.dmicreative.com
Contents
This annual report is available online at www.oci.nl
OCI N.V.
Honthorststraat 19
1071 DC Amsterdam
The Netherlands
T: (+31) 20 723 45 00
[email protected]
OCI N.V. stock symbols: OCI / OCI.NA / OCI.AS / OCINY
CONTACT US
OVERVIEW
01 About OCI N.V.
02 Highlights 2014
06 Letter to Shareholders from Nassef Sawiris
10 Company Overview
OPERATIONAL REVIEW
12 Global Fertilizer & Industrial Chemicals Player
30 Market Performance
34 Year in Review
38 The Demerger
42 Financial Performance
SUSTAINABILITY
48 CSR Report
CORPORATE GOVERNANCE
56 Board of Directors Pro?le
58 Message from the Chairman
59 Corporate Governance
62 Report of the Board of Directors
66 Risk Management and Compliance
72 Remuneration Report
77 Declarations
FINANCIAL STATEMENTS
79 Consolidated Statement of Financial Position
80 Consolidated Statement of Pro?t or Loss and other
Comprehensive Income
81 Consolidated Statement of Changes in Equity
82 Consolidated Statement of Cash Flows
84 Notes to the consolidated ?nancial statements
140 Parent Company Statement of Financial Position and
Parent Company Statement of Pro?t or Loss
141 Notes to the parent company ?nancial statements
143 Other information
144 Independent Auditor’s report
149 Miscellaneous
150 Shareholder Information
152 Key Subsidiaries
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OCI N.V.
2014 ANNUAL REPORT
GLOBAL ENTREPRENEURIAL GROWTH
WERELDWIJD ONDERNEMENDE GROEI
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