The National Shipping Company of Saudi Arabia
Annual Report 2008
47
Notes To The Consolidated Financial Statements For the year ended December 31, 2008 (InThousands Saudi Riyals)
statement of income. Provisions are made against any amounts that might not be collectable. n) Expenses Direct and indirect operating costs are classified as operating expenses and all other expenses are classified as general and administrative expenses. o) Borrowing costs Borrowing costs incurred to finance the construction of vessels are capitalized until these vessels are ready for use and operation. transactions are translated into Saudi riyal at prevailing exchange rates on transaction date. Monetary assets and liabilities in foreign currencies at balance sheet date are translated into Saudi riyal at the prevailing exchange rates on that date. Gains and losses resulting from fluctuation of exchange rates are recognized in the consolidated income statement. denominated in foreign currencies are converted into Saudi riyal at exchange rates prevailing at the consolidated balance sheet date. Revenues and expenses of the consolidated subsidiaries denominated in foreign currencies have been converted into Saudi riyal at average exchange rates during the period. Also the elements of shareholders’ equity, excluding retained earnings (deficit), that are converted applying the exchange rate prevailing at the time of incurring the elements transaction. Exchange differences arising from such conversion, if material, are included in a separate line item under shareholders’ equity. p) Foreign currency transactions Foreign currency Assets and liabilities of the consolidated subsidiaries
q) Zakat and income tax Provision for Zakat is computed in accordance with Saudi zakat standard and charged to consolidated statement of income based on the zakat base for each individual company. provision is made for withholding tax on payments made to non-resident parties and is charged to the consolidated statement of income, when the company bears the tax on behalf of non-resident. For subsidiaries outside the Kingdom of Saudi Arabia, provisions for tax is computed in accordance with the regulations applicable in the respective countries. The Company uses commission rate swaps and commission rate caps to hedge its long-term loans against fluctuations in market commission rates. Changes in the fair market value of the commission rate swaps are recorded in the hedging reserve which is included in shareholders’ equity; also, the hedging reserve is adjusted based on the periodical valuation of commission rate swaps. Earning per share from operating income, other operations and net profit is calculated based on the weighted average number of shares outstanding during the year. Dividends proposed after year end are treated as a part of retained earnings and not as liabilities unless the General Assembly’s approval was before the end of the year. t) Trade accounts receivables Trade accounts receivables are stated at net value after deducting provision for doubtful debts. r) Hedging reserve for loans commission s) Earning per share and proposed dividends
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