REPORTING ENTITY
REPORTING ENTITY (Continued)
Profit or loss and any component of other comprehensive income (OCI) are attributed to the equity owners of the Group's parent company and non-controlling interests, even if this results in a deficit for the non-controlling interests. If necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the group's accounting policies. All assets and liabilities within the group, capital, revenues, expenses and cash flows related to transactions between group members are completely eliminated upon consolidation.
A change in the ownership interest of a subsidiary without loss of control is accounted for as a capital transaction. Reclassify the parent's interest in the components previously recognized in additional income to the consolidated statement of profit or loss or retained earnings, as appropriate, as would be required if the group directly disposed of the related assets or liabilities.
Significant accounting policies a) Business combinations and goodwill
Significant accounting policies (continued) a) Business combinations and goodwill (continued)
Significant accounting policies (continued) c) Current versus non-current classification
Significant accounting policies (continued) d) Fair value measurement (continued)
Significant accounting policies (continued) f) Taxation
Significant accounting policies (continued) h) Dividends on ordinary shares
Significant accounting policies (continued) l) Intangible assets (continued)
Significant accounting policies (continued)
Restructuring an amount owed to the Group on terms that the Group would not otherwise consider; Noticeable data indicating that there has been a measurable reduction in expected cash flows from a group of financial assets. For assets measured at fair value, impairment is the difference between cost and fair value less any impairment loss previously recognized in the income statement.
For assets recognized at cost, impairment is the difference between the book value and the present value of .. future cash flows discounted with the current market rate of return for a similar financial asset. For assets recognized at amortized cost, impairment is the difference between the carrying amount and the present value of estimated future cash flows discounted at the financial assets' original effective interest rate. Reversals of impairment losses are recognized in the income statement to the extent that the asset's accounting value does not exceed its amortized cost price at the time of the reversal. n) Inventories.
Net realizable value is based on estimated selling price in the ordinary course of business, less any further costs expected to be incurred on completion and disposal. o) Impairment of non-financial assets. The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing is required for an asset, the Group estimates the asset's recoverable amount.
If the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. When assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. The group bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the group's cash-flow generating units to which the individual assets are allocated.
Impairment losses from continuing operations are recognized in the consolidated statement of profit or loss, except for a property that has previously been revalued where the revaluation has been taken to other comprehensive income. In this case, the impairment is also recognized in other comprehensive income up to the amount of any previous revaluation. Impairment losses are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.
Significant accounting policies (continued) o) Impairment of non-financial assets (continued)
Significant accounting policies (continued) r) Employees end of service benefits (continued)
An estimate of the recoverable amount of trade accounts receivable and retentions is made when collection of part or the full amount is no longer probable. The calculation of the fair value less costs of disposal is based on available data from binding sales transactions, carried out at arm's length, for similar assets or observable market prices less incremental costs of selling the asset. The cash flow is derived from the budget for the next five years and does not include restructuring activities to which the Group has not yet committed or significant future investments that will improve the performance of the assets of the KGE being tested.
These include determining the discount rate, future wage increases, mortality rates and future pension increases. Due to the complexity of the valuation, the underlying assumptions and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. In determining the appropriate discount rate, management considers interest rates on corporate bonds in the relevant currency rated at least AA, with extrapolated maturities corresponding to the expected duration of the defined benefit obligation.
The key assumptions used in estimating the recoverable amount are set out below. The final growth rate was determined based on management's estimate of the long-term compound annual growth rate of EBITDA, which is consistent with assumptions that a market participant would make. The estimated recoverable amount of the monetary unit exceeded the book value by SAR 12.73 million.
In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to and including the reporting date. Consequently, management believes that no further credit allowance is required beyond the provision for impairment of receivables. In Thousands of Saudi Riyals, unless otherwise stated) 7 EQUITY WRONG INVESTORS The details of the Group's associates are as follows:. incorporation Effective interest on 31 December.
The table also reconciles the summarized financial information to the carrying amount of the Group's interest in the participation. The key assumptions used in estimating the recoverable amount are set out below. The Group's management has estimated in detail the book value of LG Shaker as of December 31, 2017 based on the above assumptions.
The new Saudi rules for companies issued on 25 Rajab 1437H (equivalent to 2 May 2016) require companies to set aside 10% of their net income each year to a statutory reserve until such reserve reaches 30% of the share capital. The facility agreements are secured by promissory notes and corporate and personal guarantees from the shareholders in the group.
The company's board of directors has overall responsibility for establishing and supervising the group's risk management framework. The board has set up the audit committee, which is responsible for developing and monitoring the group's risk management policies. Risk management policies and systems are continuously revised to reflect changes in market conditions and the Group's activities.
The group's exposure to credit risk is primarily affected by the individual characteristics of each customer. However, the group has investments in foreign subsidiaries whose net assets are exposed to currency translation risk. The Group's management monitors such fluctuations and manages its effect on the consolidated interim financial statements accordingly.
The interest rate profile of the Group's interest-bearing financial instruments, as reported to the Group's management, is as follows. The Group does not account for any fixed rate financial assets or financial liabilities in FVTPL. The Group's current plan is that it will choose to apply the new requirements of IFRS 9.
However, the Group may decide to apply the expected change in accounting for forward points retrospectively. Currently, the new standard is not expected to have a significant impact on the Group's revenue recognition policy. The Group is in the process of finalizing the impact assessment of IFRS 15 on its revenue recognition policy.
The following new or amended standards are not currently expected to have a significant impact on the Group's interim financial statements. As stated in note 2, these are the Group's first interim consolidated financial statements prepared in accordance with IFRS. As a result, the acquisition of one of the Group's subsidiaries (EMS) has been amended to confirm IFRS requirements.
The implemented adjustments are reflected in the reconciliation of the group's statement of financial position as of January 1, 2016 and December 31, 2016. b) The group did not apply IAS 21 retrospectively for adjustments to fair value and goodwill from business combinations that occurred before the date of transition to IFRS . Similarly, the Group did not recalculate borrowing costs capitalized under SOCPA for qualifying assets prior to the IFRS transition date.
