Our responsibilities according to these standards are further described in the Auditor's responsibilities for auditing the annual accounts section of our report. Key audit matters are those matters which, in our professional judgment, were of greatest importance to our audit of the accounts for the current period. While a significant part of the company's turnover is based on the final prices as set out in the associated withdrawal agreements (based on international market prices).
See Note 3(c) to the financial statements for the Company's accounting policy relating to revenue recognition. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (All amounts are in thousands of Saudi Riyals unless otherwise stated). Accordingly, the company's financial statements continue to be prepared on the basis of going concern.
New standards, interpretations and amendments Standards, interpretations and amendments adopted
Rabigh Refining and Petrochemical Company (“the Company” or “PetroRabigh”) is a company registered in the Kingdom of Saudi Arabia under commercial registration number. The company's board of directors has approved the business plan for the year ending December 31, 2023 and believes that the company has the resources to continue operations for the foreseeable future. Available for optional application / effective date postponed indefinitely The standards, interpretations and amendments with an effective date of January 1, 2023 that will not have a material impact on the Company's financial statements.
The Company intends to use the practical aids in future periods if they become applicable.
Critical accounting estimates and judgments
If there are any indications or if annual asset impairment testing is required, the company assesses the asset's recoverable amount. The company shows assets and liabilities in the statement of financial position based on the classification short-term/non-short-term. When or when the performance obligation is fulfilled, the company recognizes as revenue the amount of the transaction price allocated to that performance obligation.
The Company’s financial statements are presented in Saudi Riyals which is also the functional currency of the Company. The Company recognizes a right-of-use asset and a lease liability at the commencement date of the lease (i.e., the date the underlying asset is available for use). The lease liability is initially measured at the present value of the lease payments to be made over the lease term, discounted using the Company’s incremental borrowing rate (if the interest rate implicit in the lease is not available).
A financial asset or financial liability is recognized when the Company becomes a party to the contractual terms of the instrument, which is usually on trade date. A financial liability is derecognised from the statement of financial position when the Company has fulfilled its obligation or the contract has been canceled or expired. 17 3 Summary of significant accounting policies (continued). The Company has classified its financial assets into the following measurement categories: i) Those which must subsequently be measured at amortized cost; or (ii) Fair value through profit or loss.
The classification depends on the Company’s business model for managing financial assets and the contractual terms of the financial assets cash flows. The Company 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 for an asset is required, the Company estimates the asset’s recoverable amount.
The Company also compares the change in the fair value of each asset and liability with relevant external sources to determine whether the change is reasonable.
Crude oil feedstock supply agreement
Provisions are recognized when the entity has a current obligation (legal or actual) as a result of a past event, it is probable that an outflow of resources that entails economic benefits will be required to settle the obligation, and there may a reliable estimate of the liability is made. the size of the obligation. Where the Company expects part or all of a provision to be repaid, the repayment is recognized as a separate asset when repayment is practically certain. The expense relating to a provision is presented in the income statement with deduction of any compensation.
Investment properties are derecognised when they are sold or occupied by the Company or if they are not held to increase their value. The Company's founding shareholders are the Saudi Arabian Oil Company ("Saudi Aramco") and Sumitomo Chemical Company Limited ("Sumitomo Chemical"), each holding a 37.5% equity interest in the Company's share capital. The Company has entered into various agreements with the founding shareholders and their subsidiaries, including, but not limited to, some of the key agreements that are relevant to financial reporting are summarized below:
Ethane feedstock supply agreements
Butane feedstock supply agreement
Petroleum product sales agreement
On March 16, 2015, the company entered into a fuel oil supply agreement with Saudi Aramco for the supply of fuel oil up to a maximum of 20 MBD per month, which the company would in turn supply to RAWEC for use as fuel for the supply. of certain utilities for the Company. The price at which Saudi Aramco sells the fuel oil to the Company is the government-established price in effect on the date of delivery of the product to the Company.
Allocated Sales gas supply agreement
Phase I Refined products offtake agreement
Sulphur and Refined Products lifting and marketing agreement
Liquefied Petroleum Gas and Light Naphtha lifting and marketing agreements
Phase 2 Light Naphtha Offtake Agreement
Phase I Petrochemical products marketing agreements
Phase II Petrochemical products marketing agreements
Domestic distribution agreement
Technology license agreements
Credit facility agreement
Revolving corporate facilities agreements
Corporate facility agreement
Land lease agreement
Rabigh Plustech Park Land Lease Agreement
On March 2, 2006, the company entered into a terminal lease agreement with Saudi Aramco regarding the existing Rabigh Marine Terminal. Pursuant to the terms of this agreement, Saudi Aramco grants to the Company an exclusive right to use and operate the Rabigh Terminal Facilities and the Rabigh Terminal Site for a period of 30 years.
Rabigh community agreement
Secondment agreements
Services agreements
The Middle East market mainly includes the Kingdom of Saudi Arabia, while Asia Pacific mainly includes Singapore and China.
Adjustments
Reconciliation of net (loss) profit
Pursuant to these agreements, the Company provided loans to RAWEC in the amount of 3.9 billion Saudi Riyals (Phase I) at an interest rate of 5.76%. The Company and RAWEC have entered into a Memorandum of Understanding (MOU), which was formally signed on January 11, 2022, pursuant to which RAWEC intends to incur debt under a refinancing facility made available to RAWEC by a commercial bank for early repayment of the entire loan and with related interest. costs incurred on the amount of the loan to the company. Further, as per the terms and conditions of the Memorandum of Understanding, RAWEC would also pay the Company; refinancing fee ("Refinancing Fee") of 236.25 million Saudi Riyals to share the future benefits of its refinancing in a fair and equitable manner, subject to the release of all securities on RAWEC's assets ("Securities") by the Company .
On December 30, 2021, RAWEC repaid the entire outstanding loan to the Company in accordance with the MOU and during the year ended December 31, 2022, it paid the refinancing fee upon release by the Company of securities on RAWEC's assets. The basic (loss) profit per share is calculated by dividing the net (loss) profit for the year by the weighted average number of ordinary shares outstanding during the year. The diluted (loss) earnings per share is calculated by dividing the net (loss) earnings for the year by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued upon conversion of all dilutive shares . potential common shares of common stock.
Weighted average number of shares (thousands The weighted average number of shares for the previous year is calculated using an adjustment factor of 1.31, which is a ratio of the theoretical ex-rights price of Saudi Riyal 15.29 and the closing price per share of Saudi Riyal 20.10 per share on 13 June 2022, the last day on which the shares were traded before the rights issue The basic and diluted earnings per share are calculated as follows: Loss) profit for the year for basic and diluted earnings per share Weighted average number of shares outstanding during the year. Adjustment for the effect of dilution in weighted average number of shares outstanding during the year due to ESOP (number of shares in . thousands) 337,213.
Right-of-use assets
Financial assets measured at amortized cost
- Financial assets measured at fair value through profit and loss
- Loans from banks and financial institutions
- Loan from SIDF
- Loans and facilities from founding shareholders and their affiliates
- Other facilities
- Other long-term liability
- Financial instruments risk management objectives and policies
- End of service benefits
- Employees’ share ownership plan
- Employees’ savings program
- Charge for the year
- Status of assessments
- Transactions with related parties
- Balances with related parties
- Transactions with key management personnel
During the year ended December 31, 2015, the Company also entered into syndicated loan agreements with commercial banks and financial institutions for the Phase II expansion project. The facilities available under these loan agreements amount to Saudi Riyal 30,630 million, which have been fully utilized by the Company. The loans are secured by property, plant and equipment and liquid assets from the Company with a book value of DKK 2,045 million respectively. Saudi Riyal and 42,638 million Saudi Riyal.
During the year ending 31 December 2019, the Company entered into a loan agreement with SIDF to replace part of the loans for the Phase II Expansion Project (see note 16.3.1). The loan facility is secured by a pledge on the company's tangible fixed assets of DKK 7,200 million. Saudi Riyal. Internal audit examines the adequacy of the relevant policies and procedures and the company's compliance with internal policies and regulatory guidelines.
The Company considers share capital, retained earnings (accumulated losses) and statutory reserve as Company capital. The company's authorized and issued share capital consists of 1.671 million shares of Saudi Riyals 10 each (December million shares of Saudi Riyals 10 each). The founding shareholders of the company are Saudi Aramco and Sumitomo Chemical and each of them holds 37.5% of the shares.
As a result of the rights issue, the Company increased its share capital from Saudi Riyal 8,760 million to Saudi Riyal 16,710 million. The company has agreed with a commercial bank to subscribe for 1.5 million shares during the IPO at the offer price of 21 Saudi riyals per share. The company had appealed to the Tax Violations and Disputes Appellate Committee (TVDAC) for the years 2009 and 2010 and submitted a bank guarantee worth Saudi Riyal 43.5 million.
If additional zakat and tax arise upon finalizing the above additional requirements, it may be recovered up to an amount of 18.8 million Saudi Riyals and 0.7 million Saudi Riyals for zakat and tax, respectively, from the founding shareholders of the Company .
