Zamil Industrial Investment SJSC : Company Announces Its Progress on the Transition Plan for Implementation of the International Financial Reporting Standards (Phase Three)

Zamil Industrial Investment Company Announces Its Progress on the Transition Plan for Implementation of the International Financial Reporting Standards (Phase Three)

Pursuant to the company's announcement on 29/1/1438H (corresponding to 30/10/2016) regarding the conversion to International Financial Reporting Standards (IFRS), Zamil Industrial Investment Company (Zamil Industrial) is pleased to announce the following developments in the third phase of the project:

1) The project is progressing in the right direction as planned. To date, the company has not encountered any difficulties in the conversion process to IFRS. Zamil Industrial will issue quarterly financial statements in compliance with IFRS for the first quarter ending 31/3/2017.

2) The Company's board of directors approved the IFRS-based accounting policies for the Company in its meeting dated 11/12/2016.

3) The company has prepared the opening IFRS consolidated balance sheet as at 1 January 2016 as per IFRS 1.
4) The Company will prepare the IFRS interim financial statements for the four quarters of 2016 before 31/3/2017.
5) The transition to IFRS has reduced shareholders' equity as at 1 January 2016 by SAR 211.9 million. The significant differences are as follows:

- The Company recognized impairment of SAR 145 million for property, plant, and equipment of certain subsidiaries as a result of the difference between SOCPA standard and IAS 36

- The Company recognized impairment of SAR 61.6 million for its investment in an associate due to the difference between SOCPA standard and IAS 36

- The Company recognized additional depreciation of SAR 7.6 million as a result of reclassifying spare parts to property, plant and equipment and de-componentization of certain buildings and plants in accordance with IAS 16

- The Company re-measured its employees' terminal benefits obligation in accordance with the requirements of IAS 19 and the IFRS based provision is less by SAR 2.3 million, resulting in an increase in shareholders' equity

- The Company deconsolidated one of its subsidiaries as the conditions for consolidation defined in IFRS 10 were not met. The Company accounted for its investment in this subsidiary as an investment in an associated company. No impact on shareholders' equity resulted from this difference.

6) The Company did not utilize the 'deemed cost' exemption under IFRS 1, the remeasurement model under IAS 16, although the fair value of the Company's lands, according to an independent valuer, was higher than the book value by SAR 186.5 million.

7) Accordingly, the company would like to confirm its readiness to start implementing IFRS in the first quarter of 2017 during the applicable regulatory deadline.