Annual Report 2017
178
179
Notes to the Consolidated Financial Statements (continued) December 31, 2017 (In Thousands Saudi Riyal)
11 Consolidated Financial Statements
6.PROPERTY AND EQUIPMENT (continued) During 2017, the Group revised the estimated residual value of the fleet from 10% of the cost to more appropriate estimate of residual value, measured based on the average steel price for light weight tonnage. This method is applied by leading transport companies. The Company also revised the estimated useful lives of five vessels, from 25 years to 22-23 years as a result of impact assessment for the expected change in certain environmental regulations which are expected to be applied during 2020. These changes have been accounted for prospectively, resulted in a decrease in depreciation expenses for the year ending December 31, 2017 by SAR 65.7 million. This change will have a similar impact on the subsequent financial results of the Group until the end of the estimated residual lives of the assets.
Notes to the Consolidated Financial Statements (continued) December 31, 2017 (In Thousands Saudi Riyal)
6.PROPERTY AND EQUIPMENT (continued)
2016
Tools and office equip- ment
Contain- ers yard equip- ment
7. SHIPS UNDER CONSTRUCTION
Building and improve- ments
Contain- ers and trailers
Furni- ture and fixtures
Computer equip- ment
Fleet and equipment*
Motor vehicles
Land
Total
The movement in ships under construction is as follows:
2017
2016
January 1, 2016
Cost At January 1, 2016 Additions/ transfers
1,854 58,813 17,494,356 34,350 11,343 4,157 2,241 61,370 11,987 17,680,471
Beginning Balance
1,235,565 1,099,901
12,039
Additions
784,955 327,834
1,098,412
-
715 1,981,664
-
625 297 2,213 2,374 2,448 1,990,336
(192,170)
Transferred to property and equipment
(1,061,130)
(10,550)
Disposals (1,854)
(5,016)
(71,250)
(4,879)
-
(278)
-
(45)
-
(83,322)
Ending balance
959,390 1,235,565
1,099,901
At December 31, 2016
- 54,512 19,404,770 29,471 11,968 4,176 4,454 63,699 14,435 19,587,485
• The Group signed contracts on May 21, 2015 and June 30, 2015 with the Korean company Hyundai Samho Heavy Industries for building ten VLCCs for a total amount of SAR 3.56 billion (US$ 948.90 million), which expected to be received during 2017 and 2018. The Group paid an advance payment of SR 882 million (USD 235 million). The Group received five vessels during the current year 2017. • Bahri Dry Bulk Company (a subsidiary) signed contracts on August 25,2017 with the Korean company Hyundai Samho Heavy Industries to build four bulk cargo carriers vessels for a total amount of SAR 450 million (US$ 120 million). These are expected to be received during the year 2020. 8. INTANGIBLE ASSETS Intangible assets represent the long term substantial evaluation of transportation contracts, which resulted from purchasing the operations and assets of Vela Company (a subsidiary of ARAMCO) in 2014. The value of those intangible assets are amortized over the estimated total average remaining useful life of the purchased vessels
Accumulated depreciation At January 1, 2016 -
14,846 4,912,708 34,096 6,376 3,727 1,481 54,054 10,514 5,037,802
Charge for the year
-
4,693 905,521
- 1,367 133 241 2,626 341 914,922
-
(4,058)
(17,989)
(4,877)
-
(169)
-
(42)
-
(27,135)
Disposals
At December 31, 2016
- 15,481 5,800,240 29,219 7,743 3,691 1,722 56,638 10,855 5,925,589
Net book value: As at December 31,2016
- 39,031 13,604,530 252 4,225 485 2,732 7,061 3,580 13,661,896
2017
2016
January 1, 2016
As at January 1, 2016
1,854 43,967 12,581,648 254 4,967 430 760 7,316 1,473 12,642,669
Cost Opening balance
918,750
894,082
918,750
(24,668)
Disposals
-
-
*Certain vessels and tanker of the Group under fleet and equipment with a carrying value of SR 6.5 billion as at 31 December 2016, and SR 4.5 billion as at 1 January 2016 are pledged against the long term loans (note 18).
894,082
Ending balance
894,082
918,750
Accumulated amortization Opening balance
(69,286)
(122,018)
(15,249)
(54,690)
Charge for the year
(52,471)
(54,037)
1,958
Disposals
-
-
(122,018)
Ending balance
(174,489)
(69,286)
Net book value
719,593
772,064
849,464
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