DEFICIT 13 2.1.12 RISKS RELATED TO THE INCREASE IN THE COMPANY’S CURRENT LIABILITIES AGAINST ITS
D. Important provisions in determining the lease term for contracts that include renewal options
6.7 Results of the Operations of the Financial Years Ending 31 March 2020G, 2021G, and 2022G
6.7.1 Consolidated Profit or Loss Statement
6.7.1.1 Revenue
The following table shows The Company revenue for the financial years ending 31 March 2020G, 2021G, and 2022G ):
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Table No. ( Revenues
Thousand Saudi Riyals
The Financial Year Ending 31 March Increase/ (decrease) CAGR 2020G
Audited 2021G
Audited 2022G
Audited 31 March
2021G 31 March
2022G 2020-
2022G
Advertising 30.149 19.347 6,292 (35.8%) (67.5%) (54.3%)
Distribution 28.336 27.691 23.027 (2.3%) (16.8%) (9.9%)
Production 27.357 27.145 23.884 (0.8%) (12.0%) (6.6%)
Bookstore & Retail 27.311 13.416 37.452 (50.9%) 179.2% 17.1%
Disposals (16.342) (14.349) (660) (12.2%) (95.4%) (79.9%)
Total 96.810 73.250 89.995 (24.3%) 22.9% (3.6%)
Source: Management Information
The Company’s revenue can be classified into more than one category, however, the revenues recorded during the period from 2020G to 2022G are within the following categories:
Advertising:
This includes the ads provided by The Company on the advertising signs placed in the locations rented from municipalities.
Distribution:
This sector mainly includes the selling of books and educational materials. The Company deals in this sector with several schools with American or British curricula.
Production:
This sector is mainly related to media services and the production of media materials, movies, documentaries, and other activities.
Bookstore and Retail:
This sector includes more than one activity. Through this sector, The Company runs several stationeries and stores in markets and airports.
In general, revenues decreased by 24,3% from 96,8 million Saudi Riyals in 2020G to 73,4 million Saudi Riyals in 2022G as a result of decreased revenues from advertising and bookstore and retail sectors. The decline in the revenues from advertising resulted from the decreased number of contracts procured by The Company during the period from 2020G to 2021G. The decreased revenues of the bookstore and retail sector were affected by the decline of revenues from a significant number of stores and sale centers after the outbreak of the coronavirus and increased competitiveness.
The Company’s revenue re-increased by 22,9% from 73,3 million Saudi Riyals in 2020G to 90,0 million Saudi Riyals in 2021G after the revenues from the bookstore and retail sector increased as a result of opening several stores and sale centers after the pandemic is partially over.
Details of the movement of revenues from each sector are as follows:
Advertising Sector
As mentioned above, the advertising sector is closely related to the billboard services provided by the Company. The Company rents a number of geographical locations by concluding lease contracts with the municipalities and secretariats concerned, and then The Company installs billboards that are designed according to the specifications agreed with the concerned client. The sizes and specifications of such billboards vary from client to another. Advertising revenues gradually decreased by 35.9% from 30.1 million Saudi Riyals in 2020 to 19.3 million Saudi Riyals in 2021, with a further decrease of 67.4% to 6.3 million Saudi Riyals in 2021. Such decrease is due to the decrease in liquidity generally available with the Company. It should be noted that the acquisition of advertising sites managed by the secretariats is made through entering into tenders organized by these secretariats, as participation in such tenders usually requires the deposit of high sums of money.
Distribution Sector
The distribution activity is closely related to the activity of selling books and educational materials. The Company deals with a remarkable number of foreign schools in Riyadh that mainly follow the American curriculum. The Company’s sales in this regard mainly include books, and sales are partially related to a number of programs that The Company offers online.
Revenues associated with the distribution activity decreased by 2.1% from 28.3 million Saudi Riyals in 2020 to 27.7 million Saudi Riyals in 2021, with a further decline of 17% to 23.0 million Saudi Riyals in 2022, and the decline in revenues is mainly due to the competition factor, and the said sector currently faces high competition with a number of suppliers operating in the sector. Such suppliers are currently more competitive as they are able to give relatively high discounts that are not available to The Company which is already unable to lower selling prices due to the lack of a great deal of liquidity.
Production Sector
The production sector is mainly related to the activity of Integrated Production for Audio-visual Media Production Company.
The Company produces media and advertising materials, films and documentaries for a number of ministries, companies and television channels. Revenues from Integrated Production for Audio-visual Media Production Company decreased by 1.1% from 27.4 million Saudi Riyals in 2020 to 27.1 million Saudi Riyals in 2021, with a further decline of 11.8% to 23.9 million Saudi Riyals in 2022. The reported decline in revenue is due to the high cost of the Company’s activity. The films and advertisements produced by the said Company can be classified into two basic categories: films and commercials and films and high-quality advertisements. The cost of these films is relatively high, and it should be noted that the cost of projects implemented between 2020 and 2022 has exceeded the cost estimates set by the Company’s management. The lack of necessary liquidity has also contributed to the decline in the number of projects implemented, specifically films classified as high-quality films.
Revenues classified under the production sector in 2020 included revenues from Nassaj AlKhayal for Audio-visual Media Production Company. The said Company did not collect any revenues between 2021 and 2022. The revenues collected during the year 2020 were associated with a film produced by the Company. The film was shown in cinemas and on online platforms, and The Company also received some revenue from a number of companies that appeared in the film. The Company did not produce similar films in 2021 and 2022 due to the lack of necessary liquidity and the lack of suitable projects.
Bookstore and Retail Sector
The following table shows the revenues of the bookstore and retail sector from libraries for the financial years ended 31 March 2020, 2021, and 2022.
):
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Table No. ( Revenues of the bookstore and retail sector
SAR’000
Financial year ended March 31st Increase / (decrease) CAGR 2020G
(Audited) 2021G
(Audited) 2022G
(Unaudited) 31 March
2021G 31 March
2022G 2020G - 2022G
Bookstore 1.181 3.394 615 %187.3 (% 81.9) (% 27.9)
Education 9.478 3.940 23.227 (58.4%) 489.5% 56.5%
Aventus 16.651 6.082 13.610 (63.5%) 123.8% (9.6%)
Total 27.311 13.416 37.452 (50.9%) 179.2% 17.1%
Source: Management Information
The revenues classified under the bookstore sector and the sale of retail are associated with two basic types of revenues:
revenues obtained from selling books and the relevant bookstore and revenues obtained from the shops run by the Group at airports and commercial markets.
Bookstore
Bookstore sale activities are associated with the Tihama Modem Bookstores Company, which operates libraries spread in the Kingdom of Saudi Arabia. The activity includes the sale of the necessary books and stationery. The revenues recorded by the aforementioned Company increased by 187.3% from 1.2 million Saudi Riyals 2020G to 3.4 million Saudi Riyals in 2021G, then the revenues returned and decreased by 81.9% to 0.6 million Saudi Riyals in 2022G. The rise was mainly influenced by the opening of a new sale center in the Riyadh region (Al -Nakheel Center). On the other hand, the decrease in revenues in 2022G was generally related to the closure of the largest number of stores and sales centers as a result of the absence of profitability, and the decision to close was affected by several factors that include the competition faced by The Company and the effect of the spread of Corona Virus.
It is worth noting that the largest part of the products that are sold in libraries managed by the Tihama Modem Bookstores Company are products that are relatively high selling prices. Additionally, the purchasing power of customers in the areas where these libraries are managed are moderate. On the other hand, these libraries faced high competition by a number of libraries and suppliers who were able to provide competitive prices to customers. The factors referred to led to a noticeable decrease in the profitability of the libraries that The Company runs through its subsidiary (Tihama Modem Bookstores Company). In this sense, The Company made a decision to close the libraries and shops that recorded successive losses and the Company’s plan is currently required to reopen a number of libraries and sales centers in new geographical areas in order to follow new sale policies and pricing with a view to competing and profit.
Education
Tihama Education Company operates a number of shops that sell various daily supplies. These stores are mainly managed in major commercial centers and airports. The revenues recorded by The Company decreased by 58.4% from 9.5 million Saudi Riyals in 2020 to 3.9 million Saudi Riyals in 2021G. The aforementioned decrease was mainly affected by the precautionary measures and the various restrictions imposed during the period of the spread of Corona Virus. The said period witnessed the closure of the largest part of the commercial centers and the movement of navigation in the Kingdom’s airports for a period that spanned for many months, which significantly affected the revenues recorded in the period between 2020 and 2021G.
The revenues returned and rose by 489.5% to 23.2 million Saudi Riyals in 2022G after opening a number of new stores and the increase in activity in general after the Corona’s pandemic declined.
Aventus
As in the case of Tihama Education Company, Aventus’s activities are associated with the operation of daily supplies stores in commercial centers and airports. The revenues recorded by the Company decreased by 63.5% from 16.7 million Saudi Riyals in 2020G to 6.1 million Saudi Riyals in 2021G, then returned and decreased by 123.8% to 13.6 million Saudi Riyals in 2022G. As in the case of the revenues of the Tihama Education Company, the decrease was affected in 2021G with the spread of the Corona pandemic, and the rise in 2022G was driven by the return of the work activity after the Corona’s pandemic declined and the opening of a number of new stores and sales centers.
On May 9, 2022G, an agreement was signed between Aventus Global Trading Company, operating in the United Arab Emirates, and Nextbite Trading Company in order to sell a set of assets and transfer the obligations related to the commercial operations of Aventus Global Trading Company. The agreement is subject to obtaining all the necessary approvals from the stakeholders and relevant bodies to complete the process of transferring franchise rights and lease contracts. On October 4, 2022G, Aventus Global Trading Company obtained the necessary approvals from the stakeholders and relevant bodies to complete the process of transferring franchise rights and lease contracts. Accordingly, the process of transferring the assets and liabilities related to the commercial operations of Aventus Global Trading Company and the procedures for selling the company’s stock to the buyer (Next Byte Trading Company) were completed.