Annual Report 2017
172
173
Notes to the Consolidated Financial Statements (continued) December 31, 2017 (In Thousands Saudi Riyal) 4. SIGNIFICANT ACCOUNTING POLICIES (continued) 4.21. Employees’ benefits (continued) Past service costs are recognized in profit or loss on the earlier of: • The date of the plan amendment or curtailment, and • The date on which the Group recognizes related restructuring costs
11 Consolidated Financial Statements
Notes to the Consolidated Financial Statements (continued) December 31, 2017 (In Thousands Saudi Riyal)
4. SIGNIFICANT ACCOUNTING POLICIES (continued)
4.18. Impairment of non-financial assets (continued)
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Group recognizes the following changes in the net defined benefit obligation under “general and administrative expenses” in the consolidated statement of income: • Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non- routine settlements, and • Net interest expense or income. 4.22. Provisions Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the consolidated statement of income net of any reimbursement. An assessment is made at each reporting date to recognize contingent liabilities which are probable obligations arising from past events whose existence is confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly under the control of the Group. 4.24. Earnings per share The Group determines basic earnings per share by dividing profit or loss attributable to ordinary equity holders (the numerator) by ordinary equity of the parent by the weighted average number of ordinary shares outstanding (the denominator) during the year. For the purpose of calculating basic earnings per share, the number of ordinary shares is the weighted average number of ordinary shares outstanding during the period. The weighted average number of ordinary shares outstanding during the period is the number of ordinary shares outstanding at the beginning of the period, adjusted by the number of ordinary shares bought back or issued during the period multiplied by a time-weighting factor. The time-weighting factor is the number of days that the shares are outstanding as a proportion of the total number of days in the period; a reasonable approximation of the weighted average is adequate in many circumstances. Diluted EPS amounts are calculated by dividing the profit attributable to equity shareholders of the parent by the weighted average number of equity shares outstanding during the year plus the weighted average number of equity shares that would be issued on conversion of all the dilutive potential equity shares into equity shares. 4.25. Statutory reserve In accordance with the Saudi Arabian Regulations for Companies, the Company must transfer 10% of the net income in each year to the statutory reserve until it has built a reserve equal to 30% of the capital. This reserve is not available for distribution. 4.23. Contingent assets and liabilities Contingent assets are not recognized in the consolidated financial statements, but are disclosed when an inflow of economic benefits is probable.
Such reversal is recognized in the consolidated statement of income unless the asset is carried at a revalued amount, in which case the reversal is treated as a revaluation increase.
The following criteria are also applied in assessing impairment of specific assets:
• Goodwill is tested for impairment annually as at December 31 and when circumstances indicate that the carrying value may be impaired. • Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than their carrying amount, an impairment loss is recognized. Impairment losses relating to goodwill cannot be reversed in future periods. • Intangible assets with indefinite useful lives are tested for impairment annually at the CGU level, as appropriate and when circumstances indicate that the carrying value may be impaired. 4.19. Non-current assets held for sale The Group classifies non-current assets as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. Non-current assets groups classified as held for sale are measured at the lower end of their carrying amount and fair value less costs to sell. Costs to sell are the incremental costs directly attributable to the disposal of an asset, excluding finance costs and zakat expense. The criteria for held for sale classification is regarded as met only when the sale is highly probable and the asset or is available for immediate sale in its present condition. Actions required to complete the sale should indicate that it is unlikely that significant changes to the sale will be made or that the decision to sale will be withdrawn. Management is committed to the plan to sell the asset and the sale expected to be completed within one year from the date of the classification. 4.20. Cash dividends to the shareholders The Group recognizes a liability to make cash distribution to equity holders of the Parent when the distribution is authorized and the distribution is no longer at the discretion of the Group. In accordance with the Companies Law in KSA, a distribution is authorized when it is approved by the shareholders. 4.21. Employees’ benefits The Group has defined benefit plans with General Organization for Social Insurance “GOSI” where the Group and the employees contribute fixed percentage of their salary toward the retirement of its employees. The Group operates defined benefit plans, under the Saudi Arabian Labor Law based on employees’ accumulated periods of service at the consolidated statements of financial position. Property, plant and equipment and intangible assets are not depreciated or amortized once classified as held for sale.
The cost of providing benefits under the defined benefit plans is determined separately for each plan using the projected unit credit method.
Re-measurements, comprising of actuarial gains and losses, the effect of the asset ceiling (excluding amounts included in net interest on the net defined benefit liability) and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognized immediately in the statement of financial position with a corresponding debit or credit to retained earnings through OCI in the year end in which they occur. Re- measurements are not reclassified to profit or loss in subsequent periods.
Powered by FlippingBook