SUMMARY OF RISK FACTORS
D- Risks Related to the Offer Shares
6. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
6.1 Introduction
The following Management’s Discussion and Analysis (“MD&A”) of the financial results of Retal Urban Development Company (the “Company”) and its subsidiaries (together referred to as “the Group” for the years ended 31 December 2018G , 2019G and 2020G , in addition to the interim nine-month period ended 30 September 2020G and 2021G based on the consolidated audited financial statements for the years ended 31 December 2018G (“2018G”), 2019G (“2019G”) and 2020G (“2020G”) and the reviewed condensed consolidated interim financial statements for the nine- month period ended 30 September 2021G , together being the “Financial Statements”; and should be read in conjunction with the financial statements referred to above.
The financial information presented in this discussion has been derived from the Financial Statements prepared by the Group and audited in accordance with the International Standards on Auditing that are endorsed in the Kingdom of Saudi Arabia for the years ended 31 December 2018G, 2019G and 2020G and reviewed in accordance with the International Standard on Review Engagements 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity that are endorsed in the Kingdom of Saudi Arabia for the nine-month period ended 30 September 2021G by the Group’s independent auditors Baker Tilly MK & Co (“Bakertilly”).
The Group has applied the International Financial Reporting Standards (“IFRS”) that are endorsed in the Kingdom of Saudi Arabia and other standards and pronouncements that are issued by the Saudi Organization for Certified Public Accountants (“SOCPA”) for the preparation of the financial statements for the years ended 31 December 2018G, 2019G and 2020G.
The Group has applied IAS 34 Interim Financial Reporting that is endorsed in the Kingdom of Saudi Arabia for the preparation of the condensed consolidated interim financial statements for the nine-month period ended 30 September 2021G.
Neither the Auditor (as part of the team working for the Company and its subsidiaries) nor any of their subsidiaries or any of their employees’ relatives own any shares or stock of any kind in the Company and its subsidiaries that would impair their independence.
The above-mentioned financial statements are an integral part of this Section and it should be read in conjunction with these financial statements and their supplementary notes, and these financial statements are contained in Section 20 (“CONSOLIDATED FINANCIAL STATEMENTS AND AUDITORS’ REPORTS”) of this Prospectus.
The figures in this MD&A have been rounded to the nearest SAR in thousands. Therefore, if summed, the numbers may differ to those which are stated in the tables. Annual percentages, margins and CAGRs are based on the rounded figures.
This Section might include forward-looking statements related to the Group’s future capabilities, based on management’s plans and prospects as to its growth, results of operations and financial condition that could involve prospective risks and uncertainties.
The Group’s actual results could differ materially from those anticipated as a result of numerous factors, risks, and future events, including those discussed in this Section of the Prospectus or elsewhere thereof, particularly Section 2 (“RISK FACTORS”).
6.2 Directors’ Declaration for Financial Information
The Board of Directors declares that the financial information presented in this Section is extracted without material adjustment from the consolidated audited financial statements for the years ended 31 December 2018G , 2019G and 2020G and the accompanying notes, which were prepared by the Group in accordance with International Financial Reporting Standards (IFRS) as endorsed in KSA and the reviewed condensed consolidated interim financial statements for the nine-month period ended 30 September 2021G and the accompanying notes, which were prepared by the Group in accordance with IAS 34 Interim Financial Reporting that is endorsed in the Kingdom of Saudi Arabia.
The Board of Directors declares that the Group has working capital sufficient for a period of at least 12 months from
The Board of Directors declares that there have been no material adverse changes to the Group’s financial or business position in the three financial years directly preceding the date of the application for the registration and offer of securities subject to this Prospectus, in addition to the end of period covered in the Auditors report until the date of issuing this Prospectus.
The Board of Directors declares that there is no intention to introduce any material changes to the nature of the Group’s activity.
The Board of Directors confirms that operations have not discontinued in a way that could affect or has affected the Group’s financial position materially during the past 12 months.
The Board of Directors declare that all material facts related to the Group and its financial performance have been disclosed in this prospectus, and that there are no other information, documents, or facts, the omission of which would make any statement herein misleading.
The Board of Directors declares that the Group has provided comprehensive details in this Section of all fixed assets and investments, including contractual financial securities or other assets, which may be subject to fluctuations in value or may be difficult to estimate.
The Board of Directors confirm that the Group has provided comprehensive details in this Section of any commissions, discounts, brokerage fees or other non-cash compensation granted by the Issuer or any of its Subsidiaries during the three years directly preceding the date the application for admission and offering of the securities subject to this Prospectus was submitted.
The Board of Directors confirm that the Group’s capital is not under option, except for the option to purchase shares related to Tadbeir Limited Company, granted to Mr. Amer Saleh Al Khashel, Executive Director of Tadbeir Limited Company.
The Board of Directors declare that the Group has no loans or indebtedness, including bank overdrafts, commitments under acceptance, acceptance credits, or rental purchase commitments, as of 30 September 2021G, except as provided in Section 12.9 (“Credit Facilities and Contracts”) from this prospectus.
The Board of Directors declare that the properties of the Group are not subject to any mortgages, rights, or encumbrances as of 30 September 2021G, except as provided in Section 12.9 (“Credit Facilities and Contracts”) from this prospectus.
The Board of Directors declares that as of the date of this Prospectus and as of 30 September 2021G there are no significant fixed assets outside the normal course of business to be purchased or leased by the Group or its Subsidiaries, except as described in this Section 6 in the part related to the commitments and contingencies within the Group’s statement of financial position.
One of Retal’s subsidiaries, Tadbeir Co. Ltd., has the option to purchase shares, whereby Tadbeir Co. Ltd. granted this option to Mr. Amer Saleh Al Khashel, Chief Executive Officer of Tadbeir Co. Ltd., as per his employment contract in which one of the clauses states that in the event of achieving a cumulative net profit of not less than ninety (90) million Saudi riyals for Tadbeir Limited Company during the five years from the date of his appointment 06/13/1443 AH (corresponding to 01/26/2021G ) based on the book value as per the last reviewed budget. If he is not able to achieve the aforementioned goal during the first five years from the date of his appointment, Mr. Amer is not entitled to any shares in Tadbeir Limited Company.
Duration Option cost
The consid- eration for which the right has been or will
be granted Position
Address Name of the
beneficiary Date of the con-
tract Name of
the sub- sidiary
Within the five years from the date of the appointment as CEO of the company 5% of the
shares in the company’s
capital, according to the book
value as per the last
reviewed budget If a cumulative
net profit of not less than ninety (90) million Saudi riyals is
achieved Chief
Executive Officer Dahran,
Al Qusor District Mr. Amer
Saleh Al Khashel 06/13/1443 AH
(corresponding to 01/26/2021G) Tadbeer
Co. Ltd
6.3 Group Overview
Retal Urban Development Company (“the Company”) or (“the Parent Company”) is a closed joint stock company (previously a limited liability company) registered in the Kingdom of Saudi Arabia under commercial registration No.
2051047761 issued in Khobar on 12 Rabi’I 1433H (4 February 2012G). The registered address of the Company is P.O. Box 1448 Al Rawaby, King Faisal Str., Al Khobar, 31952, Kingdom of Saudi Arabia.
During the year 2020G, the shareholders decided to convert the Company from a limited liability company to a closed joint stock company. The Company obtained ministerial approval for the official announcement of the conversion on 9 Muharram 1442 H, corresponding to 28 August 2020G.
The Company’s by-laws stipulate that the Company’s first fiscal year starts from the date of ministerial approval of the official announcement to convert the Company from a limited liability company to a closed joint stock Company i.e., 28 August 2020G until 31 December of the following year. The Company’s management believes that since the change in the legal form of the Company did not lead to any new accounting unit, these consolidated financial statements have been prepared for a full year from 1 January 2020G to 31 December 2020G, to better reflect the Company’s operations on a consistent and comparable basis.
The Company is principally engaged in:
■ Purchase and sale of land and real estate, divide them, and sale on map activities;
■ General construction of residential buildings;
■ General construction of non-residential building, including (schools, hospitals, hotels ... etc.).
The Company’s By-laws includes the activity of acquisition of shares or shares in existing companies or merger with them.
The financial statements include the assets, liabilities, and the results of the Company and the following branch:
Registration Registration certificate
Location Date
Branch
Dahran, Al Qusor District
1010642508 Riyadh
21 Dhu al-Qi’dah 1441 Retal Urban
Development Company branch
Khobar 2051236513
Khobar 18 Dhu’l Hijjah 1442
Retal Urban Development Company
branch
The Ultimate Parent Company is Abdullatif and Mohammed Al-Fozan Company.
These consolidated financial statements include the financial statements of the Company and the following subsidiaries (collectively referred to as “the Group”) that are 100% directly and indirectly owned and prepared by the management for the purposes of submitting them to GAZT in accordance with Ministerial Resolution No. 1005 that dated 28 Rabi’ al-Thani 1428H.
Table (6-1): The Group includes the following subsidiaries, and the table below shows the actual ownership of the subsidiaries for the financial years ended 31 December 2018G, 2019G and 2020G and the nine-month period ended 30 September 2021G
Effective ownership (in %)
31 December 2018G 31 December
2019G 31 December 2020G
30 September 2021G
100 100
100 95