Bahri Annual Report-2016



Consolidated Financial Statement

Bahri Annual Report

Consolidated Financial Statement

Bahri Annual Report

27. Approval of the Consolidated Financial Statements

25. Financial Instruments and Risk Management - Continued

on its meeting held on Jumad Thani 1, 1438H (corresponding to February 28, 2017).

The board of directors has approved the consolidated financial statements for the year ended December 31, 2016

Currency risk Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates. The Group is subject to fluctuations in foreign exchange rates in the normal course of its business. The Group transactions are mainly dominated in Saudi Riyals, UAE Dirhams and US Dollars. The balance in UAE Dirhams and US Dollars are not considered to represent significant currency risk, as these currencies are pegged to the Saudi Riyal. Fair value Fair value is the amount used to exchange assets or to settle liabilities between knowledgeable willing parties on an arms-length basis. As the consolidated financial statements of the Group are compiled based on the historical cost convention, except for the investments in financial instruments and derivative financial instruments at fair value, differences might occur between carrying value and fair value estimates. The management believes that the fair values of financial assets and liabilities are not materially differing from their carrying values. the revaluation of such agreements for the year amounted to SR 10.93 million (2015: SR 6.34 million), and these losses are included in the Financial charges. These agreements are revaluated in a regular basis to recorded any unrealized gains or losses, if any.

manages its exposure to commission rate risk by continuously monitoring movements in commission rates. Credit risk Credit risk is the risk that one party will fail to discharge an obligation and will cause the other party to incur a financial loss. The Group seeks to manage its credit risk with respect to banks by only dealing with reputable banks and with respect to customers by setting credit limits for individual customers, monitoring outstanding receivables and ensuring close follow-ups. At 31 December 2016, trade accounts receivable include balances totaling 323.15 million (2015: SR 306.20 million) due from Government and quasi-Government institutions. Liquidity risk Liquidity risk is the risk that the Group will encounter difficulty in raising funds to meet commitments associated with financial instruments. Liquidity risk may result from an inability to sell a financial asset quickly at an amount close to its fair value. The Group manages its liquidity risk by ensuring that bank facilities are available. The Group has derivative financial instruments including commission rate swaps agreements. The nominal amount of these financial instruments is SR 96.27 million as of December 31, 2016 (2015: SR 31.78 million) for total loan of SR 4.09 billion (2015: SR 1.53 billion). The unrealized losses from

28. Reclassification

to conform to the current year presentation.

Certain comparative figures of the previous year have been reclassified

26. Derivitives Financial Insturments

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