IFRS 16- Leases
6.7 Results of operations
6.7.12 Non-current assets
Table No. (6.17): Non-current assets as at 31 December 2019G, 2020G and 2021G
SAR in 000s As at 31 December 2019G
(Audited) As at 31 December 2020G
(Audited) As at 31 December 2021G (Audited)
Property and equipment, net 114,806 123,662 142,209
Right-of-use assets, net 90,467 99,269 121,442
Total non-current assets 205,273 222,931 263,651
Source: Audited financial statements for the financial years ended as at 31 December 2019G, 2020G and 2021G
Property and Equipment
Table No. (6.18): Net book value of property and equipment as at 31 December 2019G, 2020G and 2021G
SAR in 000s As at 31 December 2019G
(Audited) As at 31 December 2020G
(Audited) As at 31 December 2021G (Audited)
Decorations 41,945 47,706 54,975
Lands 23,554 23,554 36,521
Buildings 21,263 22,233 20,890
Leasehold improvements 16,226 15,966 17,946
Computer equipment 3,673 4,113 4,749
Furniture, fixtures & office equipment 1,751 1,920 2,114
Motor vehicles 1,395 2,335 1,606
Work in progress 4,998 5,834 3,408
Total 114,806 123,662 142,209
Source: Audited financial statements for the financial years ended as at 31 December 2019G, 2020G and 2021G
Table No. (6.19): Transfers from work in progress as at 31 December 2019G, 2020G and 2021G
SAR in 000s As at 31 December 2019G
(Audited) As at 31 December 2020G
(Audited) As at 31 December 2021G (Audited)
Decorations 10,766 6,179 9,164
Lands - - -
Buildings 2,279 2,269 -
Leasehold improvements 2,548 1,361 3,401
Computer equipment 604 309 508
Furniture, fixtures & office equipment 249 148 149
Motor vehicles 178 - -
Total 16,624 10,266 13,222
Source: Audited financial statements for the financial years ended as at 31 December 2019G, 2020G and 2021G
Table No. (6.20): Additions to property and equipment as at 31 December 2019G, 2020G and 2021G
SAR in 000s As at 31 December 2019G
(Audited) As at 31 December 2020G
(Audited) As at 31 December 2021G (Audited)
Decorations 4,832 5,862 5,218
Lands - - 12,966
Buildings 148 130 122
Leasehold improvements 762 756 904
Computer equipment 604 810 895
Furniture, fixtures & office equipment 181 308 377
Motor vehicles 1,062 1,676 109
Work in progress 17,239 11,102 10,796
Total 24,828 20,644 31,388
Source: Audited financial statements for the financial years ended as at 31 December 2019G, 2020G and 2021G
Table No. (6.21): Depreciation charges of property and equipment as at 31 December 2019G, 2020G and 2021G
SAR in 000s As at 31 December 2019G
(Audited) As at 31 December 2020G
(Audited) As at 31 December 2021G (Audited)
Decorations 4,546 5,923 7,114
Buildings 1,285 1,429 1,465
Leasehold improvements 1,824 2,011 2,326
Computer equipment 572 672 766
Furniture, fixtures & office equipment 238 283 331
Motor vehicles 481 735 779
Total 8,946 11,053 12,782
Source: Audited financial statements for the financial years ended as at 31 December 2019G, 2020G and 2021G
Decorations
The net book value of decorations increased from SAR41.9 million as at 31 December 2019G to SAR47.7 million as at 31 December 2020G, mainly driven by additions with a total amount of SAR5.9 million, coupled with transfers from work in progress with a total amount of SAR6.2 million, as a result of opening new branches over the same period, which was partially offset by depreciation charges of SAR5.9 million.
The net book value of decorations increased further to SAR55.0 million as at 31 December 2021G stemming from additions of SAR5.2 million and transfers from work in progress of SAR9.2 million, following the increase in the number of branches over the same period, which was partially offset by depreciation charges of SAR7.1 million over the same period.
Lands
Lands represents the net book value of lands owned by the Company in relation to its warehouses, lands remained stable at SAR23.6m as at 31 December 2019G and 31 December 2020G. Land net book value increased to SAR36.5m as at 31 December 2021G following management’s decision to purchase new land areas instead of renting.
Buildings
The net book value of buildings comprised of 9 branches and one warehouse. The net book value increased from SAR21.3 million as at 31 December 2019G to SAR22.2 million as at 31 December 2020G, mainly driven by the transfer of one branch from work in progress.
Buildings’ net book value then subsequently decreased to SAR20.9m as at 31 December 2021G, driven by depreciation charges over the period.
Leasehold improvements
The net book value of leasehold improvements decreased from SAR16.2 million as at 31 December 2019G to SAR16.0 million as at 31 December 2020G driven by annual depreciation charges.
The net book value of leasehold improvements increased to SAR17.9 million as at 31 December 2021G mainly due to the opening of 8 new stores over the same period.
Computer equipment
Computer equipment comprised of computers, networks & servers. The net book value of computer equipment increased from SAR3.7 million as at 31 December 2019G to SAR4.1 million as at 31 December 2020G and increased further to SAR4.7 million as at 31 December 2021G, mainly driven by the opening of new stores and increase in the number of employee headcount.
Furniture, fixtures & office equipment
Furniture, fixtures & office equipment comprised mainly of desks, tables and chairs. The net book value increased slightly from SAR1.8 million as at 31 December 2019G to SAR1.9 million as at 31 December 2020G, followed by an increase to SAR2.1 million as at 31 December 2021G, driven by the opening of new branches over the same period.
Motor vehicles
Motor vehicles net book value increased from SAR1.4 million as at 31 December 2019G to SAR2.3 million as at 31 December 2020G driven by additions of SAR1.7 million over the same period.
The net book value then subsequently decreased to SAR1.6 million as at 31 December 2021G, mainly driven by annual depreciation charges of SAR779 thousand.
Work in progress
Work in progress increased from SAR5.0 million as at 31 December 2019G to SAR5.8 million as at 31 December 2020G, driven by additions of SAR11.1 million, partly offset by transfers from work in progress with a total amount of SAR10.3 million.
The balance then decreased from SAR5.8 million at 31 December 2020G to SAR3.4 million as at 31 December 2021G driven by transfers with a total amount of SAR13.2 million, partly offset by additions of SAR10.8 million over the same period.
Right-of-use Assets
Table No. (6.22): Right-of-use assets as at 31 December 2019G, 2020G and 2021G
SAR in 000s As at 31 December 2019G
(Audited) As at 31 December 2020G
(Audited) As at 31 December 2021G (Audited) Cost
Balance as at 1 January 101,196 101,196 125,159
Additions - 23,964 42,038
Disposals and write-offs - - (2,880)
Balance as at 31 December 101,196 125,159 164,317
Accumulated Depreciation
Balance as at 1 January - 10,728 25,891
Charge for the year 10,728 15,162 18,877
Disposals - - (1,892)
Balance as at 31 December 10,728 25,891 42,875
Net book value as at 31 December 90,467 99,269 121,442
Source: Audited financial statements for the financial years ended as at 31 December 2019G, 2020G and 2021G
The Company adopted IFRS16 “Leases” in accordance with the requirements of International Financial Reporting Standards effective 1 January 2019G, whereby lease contracts are recognized as right-of-use assets alongside its corresponding liabilities on the date when the leased assets become ready for use by the Company. Lease payments are allocated between lease liabilities and finance cost. The finance cost is recognized in the statement of comprehensive income over the lease term and the right-of-use assets are depreciated using the straight-line method over the useful life of the asset or end of the lease term, to the earlier of any of both methods.