Consolidated Financial Statements
24. COMMITMENTS AND CONTINGENCIES
The Company has issued letters of guarantee of SR 6.58 million which include guarantee of SR 4 million in favor of the DZIT related to zakat, withholding taxes and penalties imposed by the Appeals Committee as explained in Note 14. These guarantees were issued against restricted cash, Murabaha, and short-term deposits of SR 0.43 million. The Company has also certain outstanding legal proceedings that have arisen in the normal course of
business. Although, the outcome of these litigations has not yet been determined, management does not expect that these cases will have a material adverse effect on the Company’s result of operations or its financial position. Also see Note 14 for zakat contingencies. In addition, refer to Note 11 in relation to future capital commitments to build chemical carriers and office building.
25. RECLASSIFICATION
Certain amounts previously reported in 2008 consolidated financial statements have been reclassified to conform to current year presentation, which principally relate to capital work in progress
for buildings and improvements reclassified from fixed assets to “ships under construction and others” amounting to SR 27.5 million.
26. SUBSEQUENT EVENTS
The Board of Directors of the Company in its meeting held on January 18, 2010, proposed to the General Assembly for the approval of dividends amounting to SR 315 million for the financial year ended December 31, 2009 at one Saudi riyal per share, to
be distributed to shareholders who are registered in Tadawul at the end of trading on the day of General Assembly. The date of General Assembly session will be announced later.
27. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
The Company’s activities, including subsidiaries, expose it to a variety of financial risks: market risk (including currency risk, fair value and cash flow commission rate exposure and price risk), credit risk and liquidity risk. The Company’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company’s financial performance. Financial instruments carried on the balance sheet principally include cash and cash equivalents, investments, receivables, borrowings, derivative
financial instruments, payables and certain accrued expenses. Financial asset and liability is offset and net amounts reported in the financial statements, when the Company has a legally enforceable right to set off the recognized amounts and intends either to settle on a net basis, or to realize the asset and liability simultaneously. Risk management is carried out by senior management. The most important types of risk are summarized below.
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Annual Report 2009 The National Shipping Company of Saudi Arabia
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