DEFICIT 13 2.1.12 RISKS RELATED TO THE INCREASE IN THE COMPANY’S CURRENT LIABILITIES AGAINST ITS
G. Non-controlling interest
6.7.6 Results of operations for Integrated Production for Audio -Visual Media Production Company (Subsidiary)
Liabilities:
Non-current Liabilities
Non-current liabilities consist of long-term lease liabilities, long-term loans and employee benefit liabilities. Non-current liabilities increased by 74.6% or amounting to 10.3 million Saudi Riyals from 13.8 million Saudi Riyals as on March 31, 2020G to 24.2 million Saudi Riyals as on March 31, 2021G as a result of an increase in the value of long-term loans from 3.7 million Saudi Riyals as on March 31, 2020G to 17.0 million Saudi Riyals as on March 31, 2021G. Then, it decreased by 79.6% or by a value of 19.2 million Saudi Riyals to 4.9 million Saudi Riyals as on March 31, 2022G as a result of the repayment of long-term loans.
Current Liabilities:
Current liabilities mainly consist of trade and other payables. The current liabilities decreased by 5.3% or by SAR 5.0 million from SAR 94.9 million as on March 31, 2020G to SAR 89.9 million as on March 31, 2021G due to a decrease in short-term lease liabilities. Then, the current liabilities increased by 19.4%, or by 17.4, to 107.4 million Saudi Riyals as on March 31, 2022, as a result of the increase in the current portion of long-term lease liabilities from 3.0 million Saudi Riyals as on March 31, 2021G to 20.3 million Saudi Riyals as on March 31, 2022G.
6.7.6 Results of operations for Integrated Production for Audio -Visual Media
Revenues
The Company’s revenues are mainly related to revenues from advertising activities, which include commercial products that include commercial campaigns implemented for customers, i.e. advertisements broadcast on social media platforms and T.V. channels, as well as products related to commercial series and documentaries. The Integrated Production for Audio -Visual Media products are classified between commercial products and high-quality products. The revenues of Integrated Production for Audio -Visual Media Production increased by 30.7% from 20.8 million Saudi Riyals in 2020G to 27.1 million Saudi Riyals in 2021G. The increase was focused on raising the revenues obtained from a number of high-value projects that were implemented for a number of ministries and T.V. channels. Revenues decreased by 12.0% to 23.9 million Saudi Riyals in 2022G. It was due to the decrease in the number of executed contracts, due to the lack of the required budget.
Revenue Cost
The cost of revenue consists mainly of production costs and advertising content. The cost of revenue for the Integrated Production for Audio -Visual Media Production Company increased by 93.0% from 13.1 million Saudi Riyals in 2020G to 25.3 million Saudi Riyals in 2021G, with an additional increase of 6.3% to 26.9 million Saudi Riyals in 2022G. The increase was affected by the high costs incurred on the mega projects implemented for a number of ministries and channels. It should be noted that the costs incurred on these projects exceeded the original estimates.
Gross Profit / (Loss)
The total profit recorded by the Integrated Production for Audio -Visual Media Production Company decreased by 76.3%
from 7.6 million Saudi Riyals in 2020G to 1.8 million Saudi Riyals in 2021G, with a recorded loss of 3.0 million Saudi Riyals in 2022G. The indicated profit decrease and loss were affected by the higher costs incurred.
Selling and Marketing Expenses
Selling and marketing expenses decreased by 36.3% from 5.3 million Saudi Riyals in 2020G to 3.4 million Saudi Riyals in 2021G. There were no significant differences in the selling and marketing expenses between 2021G and 2022G.
General & Administrative Expenses
The revenues of Integrated Production for Audio -Visual Media Production recorded minor general and administrative Expenses of 0.5 million Saudi Riyals in 2021G and 0.7 million Saudi Riyals in 2022G. These expenses mainly included the salaries and benefits of the administrative staff.
Financing costs
Financing costs increased by 76.6% from SAR 57 thousand in 2020G to SAR 101 thousand in 2021G. Financing costs recorded a decrease of 31.4% from 101 thousand Saudi Riyals in 2021G to 69 thousand Saudi Riyals in 2022G.
Other Revenues
The Integrated Production for Audio -Visual Media Production Company any other revenues in 2020G. Integrated Production for Audio -Visual Media Production recorded a decrease in other revenues by 115.8% from 79 thousand Saudi Riyals in 2021G to a loss of 12 thousand Saudi Riyals in 2022G. Other revenues/expenses include miscellaneous expenses and revenues that are not related to the Integrated Production for Audio -Visual Media Production Company’s main audiovisual production operations.
Share of income in associates
The Integrated Production for Audio -Visual Media Production Company recorded an income share in the associate companies of 93 thousand Saudi Riyals in 2022G.
Zakat
Zakat base is calculated based on the integrated production Company’s understanding of the Zakat regulations in force in the Kingdom of Saudi Arabia. Zakat regulations in Saudi Arabia are subject to varying interpretations. The assessments issued by Zakat Authority may differ from the declarations submitted by the Integrated Production for Audio -Visual Media Production Company. The Zakat expenses recorded by the Integrated Production for Audio -Visual Media Production Company decreased by 42.3% from 116 thousand Saudi Riyals in 2020G to 67 thousand Saudi Riyals in 2021G, and the
mentioned decrease was in line with the decrease in operating profit for the year between the two years. Then, the Integrated Production for Audio -Visual Media Production Company recorded an increase in Zakat by 4.9% from 67 thousand Saudi Riyals in 2021G to 70 thousand Saudi Riyals in 2022G.
Net profit/loss for the year
The net profit of the Integrated Production for Audio -Visual Media Production Company shifted from a profit of 2.1 million Saudi Riyals in 2020G to a net loss of 2.2 million Saudi Riyals in 2021G. The decline was mainly affected by the increase in the cost of revenue between the two mentioned years. Then, the net loss for the year increased by 24.0% from losses of SAR 2.2 million in 2021G to SAR 7.3 million in 2022G. The increase in the net losses was mainly affected by lower revenue and higher cost of revenue between the two mentioned years.
6.7.6.2 Statement of Financial Position
The following table shows the statement of financial position for Integrated Production for Audio -Visual Media Production Company for the financial years ending as on March 31, 2020G, 2021G and 2022G.
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Table No. ( Summary Statement of Financial Position
Thousand Saudi Riyals
Financial year ended 31 March Increase / (Decrease) 2020- 2022G 2020G CAGR
Restated 2021G
Restated 2022G
Restated 31 March
2021G 31 March 2022G Assets
Non-Current Assets
Property and Equipment, Net 533 766 715 43.7% (6.6%) 15.9%
Right to use assets, net 429 253 17 (40.9%) (93.2%) (80.0%)
Intangible assets, net - 35 135 N/A 285.7% N/A
Total Non-Current Assets 961 1.054 867 9.7% (17.7%) (5.0%)
Current Assets
Trade payables and other payables, net 4.027 10.309 9.164 156.0% (11.1%) 50.9%
Cash and Cash Equivalents 332 5.051 661 1.422.9% (86.9%) 41.2%
Total Current Assets 4.358 15.360 9.826 252.4% (36.0%) 50.1%
Total Assets 5.320 16.414 10.693 208.6% (34.9%) 41.8%
Equity and Liabilities Equity
Capital 10 10 10 - - -
Statutory Reserve - 3 3 N/A - -
Reserve for Measurement of Employees Benefit Liability 8 (60) (5) (839.6%) (91.2%) N/A
Accumulated Profit/(loss) 2.122 (34) (7.354) N/A 21.550.6% N/A
Total Equity 2.140 (81) (7.346) (103.8%) 8.953.0% N/A
Non-current Liabilities
Long term lease liabilities 188 - - (100.0%) N/A N/A
employee benefits liability 146 276 329 88.9% 19.2% 50.0%
Total non-current liabilities 335 276 329 (17.4%) 19.2% (0.8%)
Current Liabilities
Trade creditors and other credit balances 2.494 15.915 17.640 538.2% 10.8% 166.0%
Short-term lease liabilities 235 237 - (0.6%) (100.0%) (100.0%)
Zakat Payable 116 67 70 (42). 4%) 4.9% (22.2%)
Total Current Liabilities 2.845 16.219 17.710 470.1% 9.2% 149.5%
Total Liabilities 3.180 16.495 18.039 418.8% 9.4% 138.2%
Total equity and liabilities 5.320 16.414 10.693 208.6% (34.9%) 41.8%
Source: Management Information.
Assets
Non-Current Assets:
Non-current assets consist mainly of right of using assets, property and equipment. Non-current Assets increased by 9.7%
or amounting to 0.1 million Saudi Riyals from 1.0 million Saudi Riyals as on March 31, 2020G to 1.1 million Saudi Riyals as on March 31, 2021G as a result of an increase of the property and Equipment from 0.5 million Saudi Riyals as on March 31, 2020G to 0.8 million Saudi Riyals as on March 31, 2021G. Then, the non-current assets decreased by 17.7% or by 0.2 million Saudi Riyals to 0.9 million Saudi Riyals as on March 31, 2022G as a result of the decrease in the right to use assets from 0.3 million Saudi Riyals as on March 31, 2021G to 17 thousand Saudi Riyals as on March 31, 2022G.
Current Assets:
Current assets consist of trade and other net receivables, cash and cash equivalents. Current assets increased by 252.4%
or with a value of 11.0 million Saudi Riyals from 4.4 million Saudi Riyals as on March 31, 2020G to 15.4 million Saudi Riyals as on March 31, 2021G as a result of an increase in trade and other receivables from SAR 4.0 million on March 31, 2020G to 10.3 million Saudi Riyals as on March 31, 2021G. This increase is mainly due to the increase in revenues from the Integrated Production for Audio -Visual Media Production Company during the same period. Then, current assets decreased by 36.0%
or by a value of 5.5 million Saudi Riyals to 9.8 million Saudi Riyals as on March 31, 2022G as a result of a decrease in the balance of cash and cash equivalents from 5.1 million Saudi Riyals on March 31, 2021G to 0.7 million Saudi Riyals as on March 31, 2022G.
Equity and Liabilities:
Equity:
Equity decreased by 103.8% or by a value of 2.2 million Saudi Riyals from 2.1 million Saudi Riyals as on March 31, 2020G to (81) thousand Saudi Riyals as on March 31, 2021G as a result of a decrease in retained earnings from 2.1 million Saudi Riyals on March 31, 2020G to losses of 34,000 Saudi Riyals as on March 31, 2021G. This increase is mainly due to the shift in the net profit of the Integrated Production for Audio -Visual Media Production Company from a profit of 2.1 million Saudi Riyals in 2020 to a net loss of 2.2 million Saudi Riyals in 2021. Then, equity decreased by 7.2 million Saudi Riyals to (7.3) million Saudi Riyals as on March 31, 2022G, as a result of the high losses incurred in 2022G.
Non-current Liabilities:
Non-current liabilities consist of long-term lease liabilities and employee benefit liabilities. Non-current liabilities decreased by 17.4% or by SAR 0.1 million from SAR 0.3 million as on March 31, 2020G to SAR 0.2 million as on March 31, 2021G due to the decrease in long-term lease liabilities to zero as on March 31, 2021G. Then, the non-current liabilities increased by 19.2% or by a value of 53 thousand Saudi Riyals to 0.3 million Saudi Riyals as on March 31, 2022G as a result of the increase in employee benefits liabilities to 0.3 million Saudi Riyals as on March 31, 2022G.
Current Liabilities:
Current liabilities mainly consist of trade and other payables. Current Liabilities increased by 470.1% or with a value of 13.4 million Saudi Riyals from 2.9 million Saudi Riyals as on March 31, 2020G to 16.2 million Saudi Riyals as on March 31, 2021G as a result of an increase in trade and other receivables from SAR 4.0 million on March 31, 2020G to 10.3 million Saudi Riyals as on March 31, 2021G. This increase is mainly due to the increase in revenues from the Integrated Production for Audio -Visual Media Production Company during the same period. Then, current liabilities increased by 9.4%, or by 1.5 million Saudi Riyals, to 16.2 million Saudi Riyals as on March 31, 2022, as a result of the increase in trade and other receivables to 17.6 million Saudi Riyals as on March 31, 2022. This increase is mainly due to the increase in revenues from the Integrated Production for Audio -Visual Media Production Company during the same period.