Annual Report 2017
156
157
Notes to the Consolidated Financial Statements (continued) December 31, 2017 (In Thousands Saudi Riyal)
11 Consolidated Financial Statements
3. BASIS OF CONSOLIDATION OF FINANCIAL STATEMENTS The Company and its subsidiaries are collectively referred to as the “Group”. Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Generally, there is a presumption that a majority of voting rights results in control. To support this presumption and when the Group has equal or less than a majority of the voting or similar rights of an investee, the Group considers all other relevant facts and circumstances in assessing whether it has power over an investee, including any contractual and other such arrangements which may affect the activities which impact investees’ return. The determination about whether the Group has power thus depends on such relevant activities, the way decisions about the relevant activities are made and the rights the Group has, in relation to the investees. Based on the above considerations, the management and the Group believe: there is a pattern of past and existing practice of the Group’s involvement in the relevant activities of these investees resulting in an impact on their returns and also indicating a more than passive interest of the Group in such investees; and the Group has created an environment in which the set-up and function of these investees and their interrelationship with the Group leads towards a judgement of ‘control’. Subsidiaries are consolidated from the date on which control commences until the date on which control ceases. The Group accounts for the business combination using the acquisition method when control is transferred to the Group. The consideration transferred in the cost of acquisition is generally measured at fair value, as are the identified net assets acquired. The excess of the cost of acquisition and fair value of Non-Controlling Interest (“NCI”) over the fair value of the identifiable net assets acquired is recorded as goodwill in the consolidated statement of financial position. NCI is are measured at is their proportionate share of the acquiree’s identifiable net assets at the date of acquisition. If the Group loses control over a subsidiary, it derecognizes the related assets (including goodwill), liabilities, NCI and other components of equity, while any resultant gain or loss is recognized in the consolidated statement of income. Any investment retained is recognized at fair value. The portion of profit or loss, net assets and other comprehensive income not controlled by the Group are presented separately in the consolidated statement of income and within equity in the consolidated statement of financial position. Intra-group balances and transactions, and any unrealized income and expenses arising from intra- group transactions, are eliminated. Accounting policies of subsidiaries are aligned, where necessary, to ensure consistency with the policies adopted by the Group. The Company and its subsidiaries have the same reporting periods.
Notes to the Consolidated Financial Statements (continued) December 31, 2017 (In Thousands Saudi Riyal)
1.THE COMPANY, ITS SUBSIDIARIES AND ITS BUSINESS DESCRIPTION (continued) Chemicals transportation sector: This sector is fully operated by National Chemical Carriers Limited Company ( a subsidiary), and it owns thirty-one (December 31, 2016: thirty-one vessels, January 1, 2016: twenty-six vessels) specialized tankers distributed as follows: • Three tankers are leased in the form of iron under finance lease signed on January 30, 2009, with Odfjell SE ( a trading partner) (note 10). • Sixteen tankers that are operates in the spot market. • Six tankers are chartered to the International Shipping and Transportation Co. Ltd., a subsidiary of Saudi Basic Industries Corporation (“SABIC”), and five tankers are chartered to Saudi Aramco. • One tanker operates in a pool with Odfjell SE (note 27). Logistics sector: Consists of six RoCon vessels ( December 31, 2016: six vessels, January 1, 2016: six vessels) operating on commercial lines between North America and Europe, and the Middle East and the Indian Subcontinent. Dry bulk transportation sector: This sector is fully operated by Bahri Dry Bulk Company (a subsidiary), and it owns five vessels ( December 31, 2016: five vessels, January 1, 2016: five vessels) specialized in transporting dry bulk cargo, all of which are chartered to the Arabian Agricultural Services Company (“ARASCO”). 2.1. Statement of compliance The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (“IFRS”) that are endorsed in the Kingdom of Saudi Arabia (“KSA”) and other standards and pronouncements that are issued by Saudi Organization for Certified Public Accountants (“SOCPA”) (referred to as “IFRS as endorsed in KSA”). These are also the Group’s first consolidated financial statements prepared in accordance with IFRS as endorsed in KSA, and accordingly, “First-time Adoption of International Financial Reporting Standards” (“IFRS 1”) as endorsed in KSA has been applied in the current year. Refer to note 32 for information on the first time adoption of IFRS as endorsed in KSA by the Group. 2. BASIS OF PREPARATION
4. SIGNIFICANT ACCOUNTING POLICIES
4.1. New standards, amendments to standards and interpretation, and standards issued and not yet effective
2.2. Preparation of financial statements
4.1.1. New standards, amendment to standards and interpretations
i ) Historical cost convention
The Group has adopted, as appropriate, the following new and amended IASB Standards, effective January 1,2017.
The consolidated financial statements have been prepared on a historical cost basis, except for certain financial assets and liabilities below: • Derivative financial instruments are measured at fair value. • The defined benefit plans are recognized at the present value of future obligations using the Projected Unit Credit Method. ii ) Functional and presentation currency These consolidated financial statements are presented in Saudi Riyal (SR), which is the Group’s functional and presentation currency. All amounts have been rounded to the nearest thousand, unless otherwise indicated.
a ) Disclosure initiative (amendments to IAS 7) The amendments require disclosures of information that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flow and non-cash changes. The Group’s financing activities, as disclosed in the consolidated statement of cash flows, represents only cash flow changes. b ) Annual improvements to IFRS (2014 – 2016) cycle amendments to IFRS 12 disclosure of interests in other entities The amendments clarify that disclosure requirements for interests in other entities also apply to interests that are classified as held for sale or distribution. There is no impact of this amendment on the Group’s consolidated statements.
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