DEFICIT 13 2.1.12 RISKS RELATED TO THE INCREASE IN THE COMPANY’S CURRENT LIABILITIES AGAINST ITS
G. Non-controlling interest
6.7.7 Results of Operations for Tihama Distribution Company (Subsidiary Company)
6.7.7 Results of Operations for Tihama Distribution Company (Subsidiary
Gross Profit
The gross profit recorded by Tihama Distribution Company increased by 4.3% from SAR 8.9 million in 2020G to SAR 9.3 million in 2021G. This increase was due to the decrease in the cost of revenues that exceeded the decrease in revenues between the two years. The Tihama Distribution Company’s gross profit decreased by 20.4% from 9.3 million Saudi Riyals in 2021G to 7.4 million Saudi Riyals in 2022G. It was due to the lower revenue after losing a number of large customers.
Selling and Marketing Expenses
Selling and marketing expenses consist of employee salaries and benefits, leases, advertising and sales commissions.
Operating expenses decreased by 13.7% from SAR 4.8 million in 2020G to SAR 4.2 million in 2021G. This decrease is mainly due to the decrease in the salaries and benefits of employees, marketing, events and transportation expenses. Then, selling and marketing expenses continued to decrease by 10.6% from 4.2 million Saudi Riyals in 2021 to 3.7 million Saudi Riyals in 2022G as a result of the decrease in employee salaries and benefits and the decrease in rent.
General & Administrative Expenses
General and Administrative Expenses consist of employee salaries and benefits and provision for inventory movement.
General and administrative expenses increased by 27.6% from SAR 2.8 million in 2020G to SAR 3.6 million in 2021G. This increase is mainly due to the increase in the salaries and benefits of the employees, as well as the fees and professional consultancies. The general and administrative expenses continued to increase by 63.2%, from 3.6 million Saudi Riyals in 2021G to 5.8 million Saudi Riyals in 2022G due to the decrease in the fees and professional advice and the provision for the movement of inventory.
Financing costs
Financing expenses increased by 215.8% from 0.1 million Saudi Riyals in 2020G to 0.2 million Saudi Riyals in 2021G. Then, the financing costs recorded a decrease of 69.3% from 0.2 million SAR in 2021G to 49,000 SAR in 2022G.
Impairment Losses of Intangible Assets
The value of impairment losses on intangible assets is related to the “WHSmith” royalty fees. The losses in the depreciation of intangible assets represent 2.5 Saudi Riyals in 2020G.
Provisions for Lawsuits and Claims
A provision for lawsuits and claims amounting to 5.3 Saudi Riyals was recorded in 2021G for a number of lawsuits that were filed against the Company.
Other Revenues
Other income increased by 48.1% from SAR 0.4 million in 2020G to SAR 0.6 million in 2021G. Then, the other revenues decreased by 72.4% from 0.6 million Saudi Riyals in 2021G to 0.2 million Saudi Riyals in 2022G.
Zakat
Zakat increased by 75.4% from 0.5 million Saudi Riyals in 2020G to 0.9 million Saudi Riyals in 2021G. This continued to increase by 7.5% from 0.9 million Saudi Riyals in 2021G to 0.9 million Saudi Riyals in 2022G.
Net Revenue for the year
Tihama Distribution Company recorded an increase in net loss for the year by 220.1% from losses of SAR 1.3 million in 2020G to losses of SAR 4.2 million in 2021G. The increase in net loss was mainly due to lower revenues. Then, the net losses for the year decreased by 28.8% from losses of 4.2 million Saudi Riyals in 2021G to losses of 3.0 million Saudi Riyals in 2022G, and this was due to the continued decrease in revenues.
6.7.7.2 Statement of Financial Position
The following table shows the list of Tihama Distribution Company’s financial position for the financial years ending on March 31, 2020G, 2021G and 2022G.
):
71
Table No. ( 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 15 38 141 152.5% 269.2% 205.3%
Investments in associates using the equity method 1.190 428 428 (64.0%) - (40.0%)
Total Non-Current Assets 1.205 467 569 (61.3%) 22.0% (31.3%)
Current Assets
Stock, Net 22.578 22.332 23.141 (1.1%) 3.6% 1.2%
Trade payables and other payables, net 6.315 8.852 4.831 40.2% (45.4%) (12.5%)
Cash and Cash Equivalents 219 219 525 (0.2%) 139.6% 54.7%
Total Current Assets 29.113 31.403 28.496 7.9% (9.3%) (1.1%)
Total Assets 30.317 31.870 29.066 5.1% (8.8%) (2.1%)
Equity and Liabilities Equity
Capital 3.500 3.500 3.500 - - -
Reserve for Measurement of Employees Benefit Liability 164 60 (54) (63.5%) (190.8%) N/A
Fair Value Change Reserve - (761) (761) N/A N/A N/A
Statutory Reserve 1.750 1.750 1.750 - - -
Accumulated Profit/(loss) 5.303 1.152 (1.804) (78.3%) (256.6%) N/A
Total Equity 10.717 5.700 2.631 (46.8%) (53.9%) (50.5%)
Non-current Liabilities
Long-term lease liabilities 519 - - N/A N/A N/A
employee benefits liability 403 672 659 66.6% (1.9%) 27.9%
Total non-current liabilities 923 672 659 (27.2%) (1.9%) (15.5%)
Current Liabilities
Trade creditors and other credit balances 17.060 24.533 24.238 43.8% (1.2%) 19.2%
Current portion of long-term lease liabilities 1.075 - - (100.0%) N/A (100.0%)
Zakat Payable 542 965 1.538 78.0% 59.4% 68.4%
Total Current Liabilities 18.677 25.497 25.776 36.5% 1.1% 17.5%
Total Liabilities 19.600 26.170 26.435 33.5% 1.0% 16.1%
Total equity and liabilities 30.317 31.870 29.066 5.1% (8.8%) (2.1%)
Source: Management Information.
Non-Current Assets:
Non-current assets consist mainly of investments in associates, using the equity method, property and equipment. Non- current assets decreased by 61.3% or by a value of 0.7 million Saudi Riyals from 1.2 million Saudi Riyals as of March 31, 2020G to 0.5 million Saudi Riyals as on March 31, 2021G. It was due to the decrease in investments in associates using the equity method, from 1.2 million Saudi Riyals as on March 31, 2020G to 0.4 million Saudi Riyals as on March 31, 2021G. Then, the non-current assets increased by 22.0% or by a value of 0.1 million Saudi Riyals from 0.5 million Saudi Riyals as on March 31, 2021G to 0.6 million Saudi Riyals as in 2022G as a result of an increase in the property and equipment. Net from 38.0 thousand Saudi Riyals as on March 31, 2021G to 0.1 million Saudi Riyals as on March 31, 2022G.
Current Assets:
Current assets consist of inventory, trade and other receivables, cash and cash equivalents. Current assets increased by 7.9% or by a value of 2.3 million Saudi Riyals from 29.1 million Saudi Riyals as on March 31, 2020G to 31.4 million Saudi Riyals as on March 31, 2021G as a result of an increase in trade and other receivables from 63 million Saudi Riyals as on March 31, 2020 to 8.9 million Saudi Riyals on March 31, 2021, then, the current assets decreased by 9.3%, or 2.9 million Saudi Riyals from 31.4 million Saudi Riyals as on March 31, 2021G to 28.5 million Saudi Riyals as on March 31, 2022G as a result of a decrease in trade and other receivables, with a net value from 8.9 million Saudi Riyals as on March 31, 2021G to 4.8 million Saudi Riyals as on March 31, 2022G.
Equity:
Equity decreased by 46.8% or by a value of SAR 5.0 million from SAR 10.7 million as on March 31, 2020G to SAR 5.7 million as on March 31, 2021G as a result of a decrease in profits from SAR 5.3 million as on March 31, 2020G to SAR 1.2 million as on March 31, 2021G, and continued to decrease by 53.9%, or 3.1 million Saudi Riyals, from 5.7 million Saudi Riyals in 2021G to 2.6 million Saudi Riyals as in 2022G. It was due to the decrease in accumulated profits from 1.2 million Saudi Riyals as on March 31, 2021G to losses of 1.8 million Saudi Riyals as on March 31, 2022G.
Non-current Liabilities:
Non-current liabilities consist of long-term lease and employee benefit obligations. Non-current liabilities decreased by 27.2% or by an amount of SAR 0.2 million from SAR 0.9 million as on March 31, 2020G to SAR 0.7 million as on March 31, 2021G as a result of an increase in employee benefits obligations from SAR 0.4 million as on March 31, 2020G to 0.7 One million Saudi Riyals as on March 31, 2021G. Then, the non-current liabilities stabilized at SR 0.7 million between March 31, 2021G and March 31, 2022G.
Current Liabilities:
Current liabilities consist of trade and credit balances, the current portion of long-term lease liabilities and Zakat payable.
The current liabilities increased by 36.5% or by a value of 6.8 million Saudi Riyals from 18.7 million Saudi Riyals as on March 31, 2020G to 25.5 million Saudi Riyals as on March 31, 2021G as a result of an increase in trade and other credit balances from SAR 17.1 million as on March 31, 2020G to 24.5 million Saudi Riyals as on March 31, 2021G. Then, the current liabilities increased by 1.1%, or 0.3 million Saudi Riyals, from 25.5 million Saudi Riyals as on March 31, 2021G to 25.8 million Saudi Riyals as on March 31, 2022G. It was due to the increase in the payable Zakat from 1.0 million Saudi Riyals as on March 31, 2021G to losses of 1.5 million Saudi Riyals as on March 31, 2022G.