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BANQUE SAUDI FRANSI CONSOLIDATED BALANCE SHEET As at December 31, 2008 and 2007 - page 32 / 51

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BANQUE SAUDI FRANSI

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2008 and 2007 _______________________________________________________________________________________________

17

Statutory and general reserves

In accordance with Saudi Arabian Banking Control Law and the Articles of Association of the Bank, a minimum of 25% of the annual net income is required to be transferred to a statutory reserve until this reserve equals the paid up capital of the Bank.

An amount of SAR 701 million (2007: SAR 678 million) has been transferred from the retained earnings for the year to statutory reserve. This reserve is currently not available for distribution.

The appropriation of SAR 1,390 million (2007: SAR 950 million) has been made to general reserve from retained earnings for the year. Other reserves represent the net unrealized revaluation gains (losses) of cash flow hedges and available for sale investments. These reserves are not available for distribution.

Cash flow hedges

Available for sale investments

Total

74,778

(94,397)

(19,619)

18 Other reserves

SAR(000)

2008

Balance at beginning of the year

535,104

(317,521)

217,583

(109,175)

206,652

97,477

Net change in fair value Transfer to consolidated statement of income

425,929

(110,869)

315,060

500,707

(205,266)

295,441

Net movement during the year

Balance at the end of the year

2007

Net change in fair value

20,286

Transfer to consolidated statement of income

22,065

Net movement during the year

42,351

Balance at the end of the year

74,778

Balance at beginning of the year

32,427

(117,586)

(85,159)

23,189

43,475

-

22,065

23,189

65,540

(94,397)

(19,619)

Transfer to consolidated statement of income from AFS reserve represents, loss on disposal of AFS investments – international amounting to SAR 171 million (2007: SAR Nil) and impairment charges amounting to SAR 35 million (2007: SAR Nil) against AFS equity investments. Accordingly, the cumulative gain or loss recognised previously in equity and gain or loss on disposal of investments sold during the year and impairment charges have been transferred to consolidated statement of income.

32

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