Consolidated Financial Statements
The accompanying consolidated financial statements include the activities of the Company and its subsidiaries, in which the Company owns more than 50% of owners’ equity and/or has control over those subsidiaries. The Company established and/or invested in the following subsidiaries and affiliates:
Ownership % 2009
Ownership % 2008
Date of incorporation
Name Consolidated Subsidiaries:
Activity
Location
National Shipping Company of Saudi Arabia (America) Inc. Mideast Ship Management Ltd. National Chemical Carriers Ltd. Co. (NCC) Non-consolidated affiliates:
Company’s ships agent Ship management
USA
1991
100%
100%
Dubai
1996
100%
100%
Riyadh Petrochemicals trans- portation
1990
80%
80%
Bermuda Liquefied petroleum gas transportation Riyadh Glass Manufacturing & Trading
Petredec Ltd.
1980
30,3%
30,3%
Arabian United Float Glass Co.
2006
10%
10%
2. SIGNIFICANT ACCOUNTING POLICIES
a) Accounting convention The accompanying consolidated financial statements are prepared in accordance with the standards issued by the Saudi Organization for Certified Public Accountants (SOCPA) and under the historical cost convention, except for the investment in financial instruments and derivative financial instruments at fair value. The Company applies the accrual basis of accounting in recognizing revenues and expenses. b) Period of financial statements According to the by-laws of the Company, the fiscal year of the Company starts on the 1st of January and ends on December 31st of each Gregorian year. c) Basis of Consolidation For the purpose of consolidating accounts, inter- company transactions and balances are eliminated in the consolidation process. Minority interest relating to third parties (other partners in the subsidiaries) is also accounted for in the subsidiaries’ net assets and income. d) Use of estimates The preparation of consolidated financial statements
in accordance with generally accepted accounting principles requires the use of estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reported period. Although these estimates are based on management’s best knowledge of current event and actions, actual results ultimately may differ from those estimates. e) Accounting for finance lease The present value of lease payments for assets sold under finance lease together with unguaranteed residual value at end of the lease is recognized as a receivable net of unearned finance income. Lease income is recognized over the term of the lease using the net investment method, which reflects a constant periodic rate of return. The Company accounts for the assets acquired under a lease arrangement as a finance lease when the lease transfers to the lessee (“the Company”) substantially all the benefits and risks incident to the ownership of leased assets.
Annual Report 2009 The National Shipping Company of Saudi Arabia
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