IFRS 16- Leases
6.7 Results of operations
6.7.7 General and administrative expenses
Table No. (6.11): General and administrative expenses for the financial years ended 31 December 2019G, 2020G, 2021G.
SAR in 000s 2019G
(Audited) 2020G
(Audited) 2021G
(Audited) Var.
2019G-2020G Var.
2020G-2021G CAGR
2019G-2021G
Salaries and benefits 36,414 41,441 16,371 13.8% (60.5%) (32.9%)
Telephone and communication expenses 597 497 574 (16.8%) 15.5% (2.0%)
Legal and professional fees 517 698 835 35.1% 19.6% 27.1%
Computer, office supplies and printing 536 623 614 16.3% (1.6%) 7.0%
Rent 400 641 1,393 60.2% 117.5% 86.6%
Water and electricity 351 124 158 (64.6%) 27.0% (32.9%)
Travel and accommodation 392 293 417 (25.4%) 42.3% 3.0%
Labor wages - 127 692 N/A 444.9% 0.0%
Depreciation of property and equipment - 239 370 N/A 54.8% 0.0%
Other 664 2,178 2,591 227.9% 19.0% 97.5%
Total 39,871 46,860 24,015 17.5% (48.8%) (22.4%)
SAR in 000s 2019G
(Audited) 2020G
(Audited) 2021G
(Audited) Var.
2019G-2020G Var.
2020G-2021G CAGR
2019G-2021G Key performance indicators
Number of employees 118 127 140 9 13 22
As a percentage of revenue
Salaries and benefits 5.6% 5.2% 2.0% (0.4) (3.2) (3.6)
Telephone and communication expenses 0.1% 0.1% 0.1% 0.0 0.0 0.0
Legal and professional fees 0.1% 0.1% 0.1% 0.0 0.0 0.0
Computer, office supplies and printing 0.1% 0.1% 0.1% 0.0 0.0 0.0
Rent 0.1% 0.1% 0.2% 0.0 0.1 0.1
Water and electricity 0.0% 0.0% 0.0% 0.0 0.0 (0.1)
Travel and accommodation 0.0% 0.0% 0.1% 0.0 0.1 0.0
Labor wages 0.0% 0.0% 0.1% 0.0 0.1 0.1
Depreciation of property and equipment 0.0% 0.0% 0.1% 0.0 0.0 0.1
Other 0.1% 0.3% 0.3% 0.2 0.0 0.2
Total 6.1% 5.9% 2.9% (0.2) (3.0) (3.2)
Source: Audited financial statements for the financial years ended 31 December 2019G, 2020G and 2021G, and management information.
Salaries and benefits
Salaries and benefits comprised mainly of salaries, bonuses and other expenses associated with employees who operate employees in the finance department and other administrative divisions. Salaries and benefits increased by 13.8% from SAR36.4 million in 2019G to SAR41.4 million in 2020G, mainly driven by the increase in employee headcount coupled with the increase in the bonuses entitled to the employees during this period. While Salaries and benefits decreased by 60.5% to reach SAR16.4 million in 2021G mainly stemming from senior executives not obtaining the bonus which ranged historically between SAR22 million and SAR25 million.
Telephone and communication expenses
Telephone and communications expenses relate to the Company’s head office. Telephone and communications expenses decreased by 16.8% from SAR597 thousand in 2019G to SAR497 thousand in 2020G, driven by the impact of COVID-19 on the working hours whereby the office working hours were reduced which led to a decrease in these expenses during this period.
Telephone and communications expenses increased by 15.5% to reach SAR574 thousand in 2021G driven by the gradual lifting of government lockdown, which led to an increase in the working hours of employees in offices, and thus these expenses increased during the same period.
Legal and professional fees
Legal and professional fees comprised mainly of professional and consulting fees in addition auditor fees, amongst others.
Legal and professional fees increased by 35.1% from SAR517 thousand in 2019G to SAR698 thousand in 2020G, mainly driven by the increase in audit fees during this period.
Legal and professional fees increased by 19.6% to reach SAR835 thousand in 2021G. This is due to (1) payment of additional consultancy fees in relation to the governance structure, in addition to (2) the increased in the auditor’s fees during this period.
Computer, office supplies and printing
Computer, office supplies and printing expenses pertained to the Company’s head office. Computer, office supplies and printing increased by 16.3% from SAR536 thousand in 2019G to SAR623 thousand in 2020G, driven by the impact of COVID-19, whereby employees were provided with additional IT equipment in order to operate remotely. While computer, office supplies and printing expenses decreased to reach SAR614 thousand in 2021G, resulting from the lack of additional need of computer, office supplies and printing during this period.
Rent
Rent expenses comprised mainly of office rent (administrative departments). Rental expenses increased by 60.2% from SAR400 thousand in 2019G to SAR641 thousand in 2020G driven by increase in the rent premium during this period.
Rental expenses increased by 117.5% to reach SAR1.4 million in 2021G, driven by additional offices dedicated to the finance department and e-commerce.
Water and electricity
Water and electricity comprise of water and electricity expenses in relation to the head office. Water and electricity expenses decreased by 64.6% from SAR351 thousand in 2019G to SAR124 thousand in 2020G, due to employees working remotely during COVID-19 lockdown whereby the offices were not fully operational.
Water and electricity expenses increased by 27.0% to reach SAR158 thousand in 2021G as a result of the return of employees to work in the Company’s office, due to the gradual lifting of government lockdown restrictions, which contributed to the increase in water and electricity expenses.
Travel and accommodation expenses
Travel and accommodation expenses related to travel and accommodation expenses, pertaining to the Company’s employees, incurred upon visiting the branches. Travel and accommodation expenses decreased by 25.4% from SAR392 thousand in the 2019G to SAR293 thousand in 2020G, due to the decrease in the employee travel stemming from closure of airports during COVID-19.
Travel and accommodation expenses increased by 42.3% to reach SAR417 thousand in 2021G, driven by the gradual opening of the airport post COVID-19.
Labor wages
Related to temporary external labor. Labor wages increased by 444.9% to reach SAR692 thousand in 2021G, in-line with the increase in the number of stores during this period.
Depreciation of property and equipment
Depreciation of property and equipment increased by 54.8% to reach SAR370 thousand in 2021G, resulting from the increase in the depreciation expense of fixed assets in the head office by an amount of SAR130.9 thousand.
Others
Other expenses comprise of (1) warehouse related expenses, (2) governmental charges, (3) car and fuel expenses, (4) penalties and other expenses. Other expenses increased by 227.9% from SAR664 thousand in 2019G to SAR2.2 million in 2020G, due to the absence of warehouse expenses in 2019G.
Other expenses increased by 19.0% to reach SAR2.6 million in 2021G as a result of the increase in warehouse expenses related to the following: (1) car fuel expenses amounting to SAR 222.6 thousand, after lifting the closing restrictions during 2021G, and (2) penalties and fines amounting to SAR189.3 thousand.