Bahri Annual Report-2016

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Bahri Annual Report

Consolidated Financial Statement

Notes To The Consolidated Financial Statements – Continued

Organization and Operations (Continued)

b. Accounting convention The accompanying consolidated financial statements are prepared in accordance with the accounting standard generally accepted in the Kingdom of Saudi Arabia and under the historical cost convention, except for investments available for sale and the financial derivatives, which are measured at fair value. The Company applies the accruals basis of accounting in recognizing revenues and expenses. c. Period of financial statements According to the by-laws of the Company, the fiscal year of the Company starts on the 1st of January and ends on December 31st of each Gregorian year. d. Basis of consolidation - These consolidated financial statements include assets, liabilities and the Company’s results of operations and its subsidiaries listed in Note (1) above. company is that in which the Company has, direct or indirect long term investment, comprising an interest of more than 50% in the voting capital and over which it exercises practical control. The subsidiary company is consolidated from the date the company obtains control until such control ceases. - All significant inter-group accounts and transactions resulting in revenue and expenses as well as realized - The subsidiary

gains (losses) on these transactions are eliminated on consolidation. interest represents portion of profit or loss and net assets not owned by the Company, and is shown as a separate component in the consolidated balance sheet and consolidated statement of income. e. Use of estimates The preparation of consolidated financial statements in accordance with generally accepted accounting principles requires the use of estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reported period. Although these estimates are based on management’s best knowledge of current events and actions, actual results ultimately may differ from those estimates. f. Cash and cash equivalents For the purpose of the consolidated statement of cash flows. Cash and cash equivalents comprise bank balances and cash, Murabaha and short- term deposits, and investments convertible into known amounts of cash, and maturing within three months or less from the date of acquisition, which is available to the Group without any restrictions. - Non-controlling

The Group Fleet: The Group owns a fleet of eighty three vessels as of December 31, 2016 operating in various sectors as the following: Crude Oil Transportation Sector: Consists of thirty six very large crude carriers (VLCCs), out of which thirty five are operating in the spot market, while one tanker is chartered to ARAMCO Trading Company. The company also owns five product tankers, all of which are chartered to ARAMCO Trading Company. Transportation Sector: Consists of six RoCon vessels operate on commercial lines between North America and Europe, the Middle East and the Indian subcontinent. Chemical Transportation Sector: This sector is fully operated by the National Chemical Carriers Company (subsidiary), and it owns thirty-one specialized tankers distributed as follows: General Cargo a. New accounting framework Effective January 1, 2017, the Company’s financial statements will be prepared under International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and endorsed by the Saudi Organization for Certified Public Accountants (“SOCPA”). Upon IFRS adoption, the Company will

- Three tankers are leased in the form of iron under capital lease signed on January 30, 2009, with “ODFjell SE”. - Fourteen tankers that are operated by the Company in the spot market. - Eight 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 ARAMCO Trading Company. - One tanker operates in a pool with ODFjell SE (trading partner) and managed by the Company. Dry Bulk Transportation Sector: This sector is fully operated by Bahri Dry Bulk Company (subsidiary), and it owns five vessels specialized in transporting dry bulk cargo, all of which are chartered to the Arabian Agricultural Services Company (ARASCO).

2. Significant Accounting Policies

be required to comply with the requirements of IFRS 1 - First- time Adoption of International Financial Reporting Standards for the reporting periods starting January 1, 2017. In preparing the opening IFRS financial statements, the Company will analyze impacts and incorporate certain adjustments due to the first time adoption of IFRS.