NIG Prospectus - London Stock Exchange

11.07.2015 Views
Level: 8 – From: 8 – Thursday, August 9, 2007 – 2:20 pm – mac5 – 3776 Section 10b : 3776 Section 10bNotes to the consolidated financial statements31 December 20061 Incorporation and ActivitiesNational Industries Group Holding – SAK (‘the parent company’) was incorporated in 1961 as aKuwaiti shareholding company in accordance with the Commercial Companies Law in the State ofKuwait and in April 2003, its status was transformed to a ‘Holding Company’. The parentcompany’s shares are traded on the Kuwait Stock Exchange and Dubai Financial Market.The main objectives of the parent company are as follows:– Owning stocks and shares in Kuwaiti or non-Kuwaiti shareholding companies and shares inKuwaiti or non-Kuwaiti limited liability companies and participating in the establishment of,lending to and managing of these companies and acting as a guarantor for these companies.– Lending money to companies in which it owns 20% or more of the capital of the borrowingcompany, along with acting as guarantor on behalf of these companies.– Owning industrial equities such as patents, industrial trade marks, royalties, or any otherrelated rights, and franchising them to other companies or using them within or outside theState of Kuwait.– Owning real estate and moveable property to conduct its operations within the limits asstipulated by law.– Employing excess funds available with the company by investing them in investment andreal estate portfolios managed by specialised companies.The address of the parent company’s registered office is PO Box 417, Safat 13005, State of Kuwait.The board of directors of the parent company approved these consolidated financial statementsfor issue on 10 February 2007.2 Significant Accounting PoliciesBasis of preparationThe consolidated financial statements of the group are prepared in accordance with InternationalFinancial Reporting Standards issued by the International Accounting Standards Board (IASB).The consolidated financial statements are prepared under the historical cost convention modifiedto include the revaluation of freehold and leasehold properties, and the measurement at fair ofinvestment securities and investment properties.The accounting policies used are consistent with those used in the previous year.IASB Standard issued but not yet effectiveThe following IASB Standard has been issued but not yet effective, and has not yet been adoptedby the group.IFRS 7 Financial Instruments: DisclosuresThe application of IFRS 7, which will be effective for the year ending 31 December 2007 will resultin amended and additional disclosures relating to financial instruments.F-21

Level: 8 – From: 8 – Thursday, August 9, 2007 – 2:20 pm – mac5 – 3776 Section 10b : 3776 Section 10bBasis of consolidationThe consolidated financial statements incorporate the financial statements of the parent company,National Industries Group Holding – SAK and of its subsidiary companies, for the years ended 31December 2006 and 2005. During the year the group decided to change the annual accountingperiod of the foreign subsidiaries for the purpose of consolidation to 30 November 2006 whereasin the previous year it was 31 December 2005. Consequently, during the year the group hasconsolidated the foreign subsidiaries for the eleven months ended 30 November 2006 whereas inthe comparative information these subsidiaries have been consolidated for the year ended 31December 2005.Necessary adjustments are made for the effects of significant transactions or other events thatoccur between the reporting date of the subsidiaries and 31 December 2006, the reporting dateof the parent company. The details of the significant subsidiary companies are set out in Note 3 tothe consolidated financial statements.Subsidiaries are those enterprises controlled by the parent company. Control exists when theparent company has the power, directly or indirectly, to govern the financial and operating policiesof an enterprise so as to obtain benefits from its activities. The financial statements ofsubsidiaries, other than those that are considered not material to the financial statements of theparent company, are included in the consolidated financial statements from the date that controleffectively commences until the date that control effectively ceases.All significant inter-company balances and transactions are eliminated on consolidation.Minority interest represents the portion of profit or loss and net assets not held by the Group andis presented separately in the consolidated statement of income and within equity in theconsolidated balance sheet, separately from the equity attributable to the shareholders of theparent company.RevenueRevenue is recognised to the extent that it is probable that the economic benefits will flow to thegroup and the revenue can be reliably measured. The following specific recognition criteria mustalso be met before revenue is recognised.SalesSales represent the value of goods and services supplied during the year excluding value addedtax or other sales taxes. Sales and profits between subsidiary undertakings are eliminated.Dividend incomeDividend income is recognised when the shareholders’ right to receive payment is established.Interest incomeInterest income is recognised on a time proportionate basis, taking into consideration the principaloutstanding and the interest rate applicable.Finance costsFinance costs are calculated and recognised on a time proportionate basis taking into account theprincipal loan balance outstanding and the interest rate applicable.Finance costs that are directly attributable to the acquisition and construction of an asset thatnecessarily takes a substantial period of time to get ready for its intended use or sale arecapitalised as part of the cost of that asset. Capitalisation of borrowing costs ceases whenF-22

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