Dear Shareholders

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Dear Shareholders . .

Chairman and Board of Directors of Sumou Real Estate Company are

pleased to present the Financial Annual report for the Year ended

31/12/2021. This report aims to provide comprehensive information

about Company’ s financial situation, activities and its outcomes.

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Chairman Speech

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Sumou Real Estate Company continues the path of progress and development, based on its vision to lead the real estate development sector, and based on an approach that relies on professionalism and excellence, and on creating added value for the real estate development sector. And thanks to Allah the Almighty, the Company has succeeded in providing great opportunities, innovative solutions, and the exploration of horizons. This is in addition to the launch of a number of qualitative projects that contribute to the Company’s growth and its advancement of the real estate industry in the Kingdom, in full harmony with the Kingdom’s Vision.2030

Within the framework of this approach, the Company’s operational performance clearly reflects the development of its business and its consistency with the real estate development system in the Kingdom, in a way that keeps pace with the State’s continuous initiatives to meet demand within the real estate sector, in the field of developing integrated neighborhoods and quality projects which serve citizens and provide them with diverse and integrated solutions. The Company’s performance is also consistent with the efforts in the areas of governance, empowerment and sustainability of the real estate sector, which helps to raise levels of achievement and enhances the Kingdom’s ability to increase the percentage of citizens who have bought their own property, as the Company recently signed several agreements to develop large number of infrastructure and superstructure projects in various regions of the Kingdom.

During this phase and in the medium and long term, the Company will continue to develop its means and tools and also apply the latest technologies that keep pace with the challenges of the present and the future, increasing their proficiency and ability to effectively contribute to the establishment of unique and distinct real estate projects worthy of the aspirations of citizens and investors, and working to achieve the Kingdom’s vision and goals, reflecting the Company's experiences and leadership in the modern real estate industry.

In conclusion, I would like to extend my sincere thanks and appreciation to the members of the Board of Directors of Sumou Real Estate Company, the executive management and the work team, for their valuable efforts and achievements.

Wishing them, and all the clients and investors success and progress, asking Allah the Almighty to guide us all for what is good.

On behalf of the Board of Directors, I introduce the annual report of the Company for the year.2021 May the Peace, Mercy and Blessings of Allah, be on all of You..

Ayedh F. Al Qahtani Chairman

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CEO Speech

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Eng. Jarallah M. Alamrah

CEO

Sumou Real Estate Company has taken steady steps to achieve what it seeks of leadership and excellence based on its major accomplishments so far, the advanced position it has reached and its leading role in the real estate industry in the Kingdom. In addition, the Company maintains the desire to advance its business and attract distinguished development opportunities that enhance the Company’s position and achieve higher returns for investors.

The Company’s commitment and keenness to participate in promoting a distinguished real estate industry in the Kingdom has meant that we have launched, this year, a number of large infrastructure and superstructure projects in different regions of the Kingdom, thus contributing to the provision of high-quality real estate products based on excellence and a high degree of professionalism in performance.

Within the framework of the great efforts made by the Company, it worked to provide integrated housing solutions in the housing sector, in cooperation with the Ministry of Municipal and Rural Affairs and Housing, the National Housing Company, the Off-Plan Sales Committee, Trust Companies and the relevant official companies, which contributed to activating cooperation between the public and private sectors to establish quality projects that meet the aspirations of residential communities while also meetng their needs.

The Company’s pursuit of leadership did not stop at the achievements that have been made. Rather, the Company has adapted and developed its business, introduced new real estate products, and provided development services to build towers and high-rise residential buildings that match the Company’s future vision, and align with the aspirations of the State and support its blessed Vision.tnempoleveddnahtworgelbaniatsusgniveihcadnaerutufrethgirbagntiaerc,2030 As we begin a new year full of challenges, visions and ideas, we promise the Company's shareholders that we will do our best to continue the process of excellence and provide added value to the Company while achieving rewarding returns for shareholders and investors, as they are the real capital of the Company, inspiring us to be determined to provide the best in order to maintain the leading and distinguished position the Company has reached so far.

Finally. I would like to thank the shareholders for the confidence they show in the Company. I also extend my thanks and appreciation to the Board of Directors and the Company’s employees for their efforts, continuous support, and for utilizing their expertise to advance achievements and continue the permanent and sustainable growth and development that will enhance and preserve the Company's position.

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Company profile

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Sumou Real Estate Company

Khobar - Prince Turki bin Abdul Aziz Street Sumou Tower–7th floor

P O Box 250, Al-Khobar 31952 Saudi Arabia

Phone: +966 13 8878888 Fax: + 966 13 8878080 Email: [email protected] Website: www.sumou.com.sa

10 3-1 Introduction

Sumou Real Estate Company (“The Company” or “Sumou Real Estate”) was established (initially as a limited liability company under Articles of Association on 15/07/1427H (corresponding to 09/08/2006) and CR issued on 03/06/1428H (corresponding to 18/06/2007), with a capital of (500,000) five hundred thousand Saudi Riyal divided into (1,000) one thousand shares of equal value, the value of each is (500) five hundred Saudi Riyal and all are ordinary cash shares distributed between Sumou Holding company a (owns 50%) (the first partner) and Ayedh Farhan Mubarak Al Saad Al-Qahtani (owns 50%) (the second partner) according to the partner’s resolution certified by the notary public in-charge at Chamber of Commerce and Industry, Eastern Province, No. (63) for the year (1429 H) dated 11/08/1429H (corresponding to 13/08/2008) the shares were redistributed between the two partners so the ownership percentage of the first partner ownership becomes 95% and the second partner 5%.

In accordance with the decision of Minister of Commerce and Investment No. (Q/38) dated 04/02/1431H (corresponding to 19/01/2010), the company was converted from a limited liability company into a closed joint stock company, it was registered in the register of joint-stock companies in Al-Khobar and registered under the commercial registration certificate No. (2051034841) dated 03/06/1428H (corresponding to 18/06/2007).

After the approval of the Capital Market Authority and the Ministry of Commerce was issued, the company turned into a public joint stock company and was listed on the parallel market "Nomu" on 5/11/2020.

The current capital of the company is (375,000,000) Three hundred and seventy-five million Saudi Riyal divided into (37,500,000) thirty-seven million five hundred thousand ordinary shares paid in full, with a nominal value of (10) ten Riyal per share.

The company’s headquarters is located in Al-Khobar, with the following address:

3- Company Profile

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11 Major shareholders (who own 5% or more of the company’s shares)

There is one major shareholder in the company, and the following table shows the number of shares and the percentage of its ownership

Shareholder No. of Shares %

Sumou Holding 23,617,265 62.97

Bayeneh A. Al Qahtani 2,062,500 5.50

Fawaz S. A. Al Rajhi 1,912,500 5.10

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12 3-2 Company Activities

The purposes for which the company was formed according to its articles of association are: 1) real estate activities and construction.

The company engages in these activities after obtaining the necessary licenses from the relevant competent authorities According to the commercial registry certificate the company has been authorized to carry out the following:

General construction of residential buildings, general construction of non-residential buildings, including (schools, hospitals, hotels), the construction of airports and their facilities, general construction of non-residential steel buildings, construction of prefabricated buildings in locations, and renovations of residential and non-residential buildings , off-plan sale.

The company carries out its activities through its headquarters in Khobar and its branch in Jeddah.

As of the date of this prospectus, the company does not engage in any activity outside the Kingdom and does not have any assets or properties outside the Kingdom

The company's current activity is Real Estate Development Management and real estate development in the Kingdom of Saudi Arabia, and this many include the following tasks:

Managing the development and execution of infrastructure works (sanitary, water, electricity, etc.), as well as superstructure works.

Preparing a list of engineering and consulting firms and presenting to the customer for approval and send RFP’s to the prequalified ones.

Prepare contracts for consultants, tender and committees to launch a tender and send RFP’s to the prequalified ones..

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Preparing the work program for developing the project, determining the initial estimated cost, and preparing the flow schedule and project schedule.

Work with the engineering firms to develop a Business plan according to which designs, and plans are prepared for all phases of the project.

Manage the exaction of all works during all stages of development, provide monthly (technical and financial) reports to the client on the progress of the project, and issue recommendations necessary to the customer in connection with any action to be taken.

Follow-up and review the designs, plans and detailed studies of the project with the engineering firm, to carry out tasks of quantity survey and finding a mechanism for ease of reviewing the BOQ to be implemented and submitting a recommendation to the customer to approve the design and the final plan.

Assist in solving problems and obstacles related to the process of development and implementation, if any.

Approve submit the progress payments after consultants’approval, final inspection procedures, trial and operating procedures.

manage the necessary requirements to divide the project land into releasable plots.

Construction of various housing units, including villas and duplexes, and the construction of commercial and industrial residential compounds and invest, manage or rent.

Construction, purchasing, owning, managing, maintaining, and operating leisure hospitality projects and managing them, whether for the company or third parties.

As well, in some projects where the company sees the strength of its economic viability, it enters into as an investor partner, whether directly or through joint ventures, at a certain rate varies from a project to another, and the company also invests in lands for the purpose of selling.

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14 3-3 Sumou’s Main Business Activities

The company performs its work and provides its services through two business models, as follow:

Developer and Builder

As a real estate developer, Sumou provides a full comprehensive solutions to its clients including design, financing ,project management, execution and sales

Development manager

As a development manager , Sumou manages the entire project’s operations with execution assigned to a third party.

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15 3-4 Vision

To become the most distinguished company in Real Estate Development management

3-5 Mission

To develop innovative and high-quality real estate projects that contribute to societies development and attaining favorable returns for customers

3-6 Values

Trust - Transparency - Innovation - Quality - Leadership - Client’s Satisfaction

3-7 Strategy

Sumou has been keen to build a special system in projects development to ensure professional work, accuracy, top quality outputs

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3-8 Sumou real estate development action plan

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17 3-9 Strength Points and Competitive Advantages

1. A history of achievements and profits: During the past 15 years, the company has been developing and managing development projects more than 26 with a total area of(60) million square meters.

2. Efficiency of financial and business model: The company relies on providing management and implementation services for real estate projects. This is in addition to investment in the field of real estate development. It is considered the first company working as a real estate developer to put its name at the parallel market.

3. Portfolio of current and future mega projects: The company manages a portfolio of current projects with a total area of (48) million square meters. The company is expected to sign contracts for projects to develop and manage future real estate with a total area of(100) million square meters.

4. Stable growth at net profits: The company achieved profits with stable growth along the previous years.

5. Geographical diversity: The company has developed projects nationwide. Meanwhile, the company is currently managing projects in the eastern, central western and northern regions.

6. In-kind shares at real estate projects: The company owns shares at some of the projects under its management in exchange for its business in order to achieve lucrative returns and profits for the company through real estate investment.

7. Alliances with real estate development companies: Sumou Real Estate Company has signed agreements with several companies to develop and manage real estate projects such as Al-Inma Investment, Al-Balad Al-Amin Company, Jeddah Urban Development Company and Al- Riyadh Construction Company, and many others.

8. A specialized team-work: Mr. Ayedh Al-Qahtani participated at implementing approximately (30) million square meters during his work at the real estate development market. He has managed also to build a specialized team work at Sumou Real Estate Company to study opportunities and provide development, implementation and financial solutions.

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9. Providing support and expertise at implementing mega projects (value and quality): Similar to the Makkah Gate project in various cities along Kingdom of Saudi Arabia.

10. Covering all aspects of real estate development activity: by making the best use of the depth of the company's management experience (its leaders, consultants, and work team) at selecting profitable projects, selecting new sites for land, and taking advantage of the variables of real estate market.

11. The company equipped with the latest automated and high-tech Management Information Systems (MIS).

12. The company processed an administrative offices equipped with all operating requirements and the capability of meeting the needs of customers.

13. Meeting all the requirements and aspirations of customers, investors and achieving the requirements of society and future generations.

14. Strategic Relationships and Partnerships: The company has managed to form strategic relationships, along the past years, that enable it to implement mega projects at real estate development sector.

15. Sumou owns a certified quality guide: It includes the company's policy to achieve the highest levels of quality at the field of business development management, planning, engineering and projects and to maintain the implementation of quality system, in accordance with the specifications I9001: 2008 by providing all the necessary resources, competencies and providing the necessary training to raise the level of performance, in a manner exceeding expectations .

16. Qualifications : Sumou has been awarded a qualification certificate as a real estate developer, approved by Ministry of Housing and its programs/initiatives.

17. Sumou Real Estate Company is classified and qualified as a real estate developer in many agencies within the Kingdom, including Saudi Aramco, NEOM, Qiddiya, Civil Aviation Authority (GACA) and others.

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The company's projects and

investments

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4-1 Completed Projects

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4-1 Completed Projects

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4-2 Current Projects

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Location : Western Region - Makkah Area : 1,609,575 m2

Land use : Mixed-Use

Tasks : Infrastructure & Superstructure development managing

Location : Western Region - Jeddah Area : 36,000,000 m2

Land Use : Residential - Commercial Tasks : Infrastructure & Superstructure

development managing , marketing and sales

Accommodation and tranquility Future of Jeddah

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Land Use : Residential - Commercial Tasks : Infrastructure development &

execution managing Location : Western Region - Makkah

Area : 1,220,391 m2

Land Use : Residential - Commercial Tasks : Infrastructure development

managing

Life Spaciousness Luxury View

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Location : Western Region - Jeddah Area : 104,766 m2

Land Use : Residential- 412 villa

Tasks : Superstructure development &

execution managing, marketing and sales

Land Use : Commercial –Investment Tasks : Infrastructure development

managing, marketing and Leasing

Elevate Life Resources Hub

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Location : Eastern Region –Al Khobar Area : 1,000,000 m2

Location : Western Region - Jeddah Area : 33,399 m2

Land Use : Residential –Investment Tasks : Technical & Engineering Services

Luxurious Lifestyle Highness & Luxurious

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Location : Eastern Region –Dammam Area : 59,584 m2

Land Use : Residential villas

Location : Northern Region - Arar Area : 588,134 m2

Luxurious privacy Jewel of the North

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Location : Eastern Region –Dhahran Area : 213,788 m2

Location : Eastern Region –Khobar Area : 90,014 m2

Land Use : Residential villas

Execution managing , marketing and sales

Golden Triangle Al Khobar Eye

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Location : Eastern Region –Al Khobar Area : 2,789,220 m2

Land Use : Residential - Commercial Tasks : Infrastructure development

managing Location : Eastern Region –Dammam

Area : 300,000 m2

Eastern Pearl Elegant Life

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32 4-3 Properties owned by Sumou Real Estate Company

The company owns (18) plots of land as shown below, all of which was mortgaged in favor of Al-Jazira Bank as a guarantee of the banking facilities obtained by the company from Al-Jazira Bank. The mortgage was released after the full repayment of the loan on 16/02/2021. The table below shows the details of these lands:

Note: Part of lands was mortgaged in favor of Banque Saudi FRANSI as a guarantee for the bank facilities, agreement with the bank was renewed on 10/10/2021.

# Lands Location Uses Area

1 Business Oasis (17) title deed Dammam Mixed-Use 48,177

2 Half moon land Al Khobar Residential 8,850

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33 4-4 Associates & Subsidiaries:

4-4-1 Dhahiat Gharbia Company :

Dhahiat Gharbia Company is a limited liability company, owned by Sumou holding at 75% and by Sumou real estate at 25% as shown in the table below. Dhahiat Gharbia Company was established under CR No. (4030202037) dated 04/07/1431H (corresponding to 15/06/2010) with a capital of (100,000) one hundred thousand Saudi Riyal having its head office in Jeddah.

Dhahiat Gharbia Company was established with the purpose of entering into a partnership with the Makkah Gate Company for establishment of Dhahiat Sumou Company. (75% for Dhahiat Gharbia Company and 25% for the Makkah Gate Company) and the goal of establishing the Dhahiat Sumou Company is to execute Dhahiat Sumou project.

# Shareholders Ownership % No. of Shares Shares Value (SR)

1 Sumou Holding Co. 75% 7,500 75,000

2 Sumou Real Estate Co. 25% 2,500 25,000

Total 100% 10,000 100,000

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The following is an analysis of the results of Dhahiat Gharbia Company, and Sumou Real Estate's share as of December 31 :

Item 2020 2021

TOTAL ASSETS 1,345,496,005 1,310,704,668

TOTAL LIABILITIES 10,795,961 22,498,051

TOTAL SHAREHOLDERS’ EQUITY 1,334,700,044 1,288,206,617

PERIOD LOSSES (1,381,796) (3,791,269)

COMPREHENSIVE LOSS (42,689,235) (39,270,373)

SRE COMPANY’S SHARE OF YEAR’S LOSS (345,449) (947,817)

SRE COMPANY’S SHARE OF YEAR’S

COMPREHENSIVE LOSS (10,672,309) (9,817,593)

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4-4-2 TANAL for Real Estate Investment & Development Company :

TANAL Real Estate Company is a limited liability company, was established under CR No. (1010580864) dated 22/09/1440H with a capital of (100,000 SR) one hundred thousand Saudi Riyal having its head office in Riyadh.

Company capital is consisting of :

# Shareholders Ownership % No. of Shares Shares Value (SR) Total Shares Value (SR)

1 Riyadh Tamer Company 69.38% 6,938 10 69,380

2 Sumou Holding Company 20.62% 2,062 10 20,620

3 Sumou Real Estate Company 10.00% 1,000 10 10,000

Total 100% 10,000 10 100,000

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The following is an analysis of the results of TANAL Real Estate Company, and Sumou Real Estate's share as of December 31, 2020 :

TOTAL ASSETS 678,789,797

TOTAL LIABILITIES 28,719,315

TOTAL SHAREHOLDERS’ EQUITY 650,070,482

PROFIT 326,485,103

COMPREHENSIVE PROFIT 326,485,103

SRE COMPANY SHARE 32,648,510

Note: Sumou Real Estate Company's investment in TANAL Investment and Real Estate Development Company began during the year 2021

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4-4-3 ALMAHAFIL trading and contracting company ltd. :

ALMAHAFIL trading and contracting company, is a limited liability company, was established under CR No. (4030127728) dated 15/04/1420H with a capital of (100,000) one hundred thousand Saudi Riyal having its head office in Jeddah.

Sumou Real Estate Company acquired an 80% stake in ALMAHAFIL Trading and Contracting Company Ltd. on 10/06/2021 CE corresponding to 29/02/1443 AH. 1,321,749.48 square meters, which the company rents on a long-term lease (25 years) - to establish a multi-purpose public utility market, and Sumou Real Estate Company will manage the development and implementation of the project.

# Shareholders Ownership % No. of Shares Shares Value (SR) Total Shares Value (SR)

1 Sumou Real Estate Company %80 800 100 80,000

2 Zyad Bassam Mohamad Albassam 18% 180 100 18,000

3 Mazen Mohamad Ibrahim Batarjy 2% 20 100 2,000

Total 100% 1,000 100 100,000

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The following is an analysis of the results of ALMAHAFIL trading and contracting company ltd., and Sumou Real Estate's share as of 31 December 2021 :

TOTAL ASSETS 20,926,263

TOTAL LIABILITIES 22,599,754

TOTAL SHAREHOLDERS’ EQUITY (1,673,491)

LOSSES (1,699,168)

SRE COMPANY SHARE (1,359,334)

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Financial information

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40 5-1 Comparison of the company operation results :

summary of the financial results of Sumou Real Estate Company for the period from 2017 to 2021:

Income Statement 31 Dec 2017 31 Dec 2018 31 Dec 2019 31 Dec 2020 31 Dec 2021 Consolidated*

Revenues 113,169,228 257,749,363 179,985,634 97,158,599 103,128,366

Cost of Revenues )11,611,015( )164,243,229( )82,934,668( )9,883,438( )38,329,104(

Gross Profit 101,558,213 93,506,134 97,050,966 87,275,161 64,799,262

General and Administrative (16,394,394) (13,346,605) (13,553,950) )7,253,043( )11,524,120( Income from operation activates 85,163,819 80,159,529 83,497,016 80,022,118 53,275,142

Finance Cost (16,988,425) (10,120,949) (11,306,557) (7,406,596) )1,561,427(

Share of loss from associates )1,795,553( )908,744( )591,251( (345,449) 31,700,693

Other Income/loss 265,090 115,909 16,000 964,677 )98,821(

Net profit before zakat provision 66,644,931 69,245,745 71,615,208 73,234,750 83,315,587

Zakat provision (1,763,540) (1,766,668) (1,817,195) (1,853,524) )2,445,894(

Net profit for the period 64,881,391 67,479,077 69,798,013 71,381,226 80,869,693

Net profit for the year attributable to

shareholders 64,881,391 67,479,077 69,798,013 71,381,226 81,209,527

Net loss for the year for non-controlling

interests --- --- --- --- )339,834(

Other comprehensive income (456,390) 5,943,938 (9,444,046) (10,699,782) )9,005,273( Total Comprehensive income for the period 64,425,001 73,423,015 60,353,967 60,681,444 71,864,420

* As a result of Sumou Real EstateCompany’sacquisition of 80% of the capital of ALMAHAFIL Trading and Contracting Company during the month of October 2021 AD, the financial statements issued for the year 2021 AD are considered consolidated financial statements.

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41 5-2 Comparison of assets and liabilities of the company :

Financial Position (SR) 31 Dec 2017 31 Dec 2018 31 Dec 2019 31 Dec 2020 31 Dec 2021 Consolidated*

Total Current Asset 38,390,967 41,587,932 36,788,482 37,130,502 127,750,375

Total non-Current Assets 526,488,099 531,259,983 532,293,725 521,306,927 492,269,176

Total Assets 564,879,066 572,847,915 569,082,207 558,437,429 620,019,551

Total Current Liabilities 96,721,639 33,430,649 24,776,022 154,425,834 54,785,104 Total non-Current Liabilities 163,288,774 215,871,257 166,371,214 2,895,180 110,998,476

Total Liabilities 260,010,413 249,301,906 191,147,236 157,321,014 165,783,580 Share Holder’s Equity 304,868,653 323,546,009 377,934,971 401,116,415 454,570,669

Non-controlling interest --- --- --- --- )334,698(

Total Liabilities and Share Holder’s Equity 564,879,066 572,847,915 569,082,207 558,437,429 620,019,551

* As a result of Sumou Real Estate Company’s acquisition of 80% of the capital of ALMAHAFIL Trading and Contracting Company during the month of October 2021 AD, the financial statements issued for the year 2021 AD are considered consolidated financial statements.

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42 5-3 Comparison of Cash flow Statement of the company :

Cash flow Statement (SR) 31 Dec 2017 31 Dec 2018 31 Dec 2019 31 Dec 2020 31 Dec 2021 Consolidated*

Cash and Bank Balance at the Beg of the

year 72,405,576 7,197,313 8,194,213 6,773,820 7,635,012

Net Cash Provided by operation activity 44,571,205 99,617,086 61,398,943 64,721,120 47,176,146 Net Cash (used in) investing activity 96,718,784 )645,113( )27,819,336( 3,640,072 146,070,316 Net Cash (used in) Financing activity )206,498,252( )97,975,073( )35,000,000( )67,500,000( )129,026,800( Cash and Bank Balance at the End of the

year 7,197,313 8,194,213 6,773,820 7,635,012 71,854,674**

* As a result of Sumou Real Estate Company’s acquisition of 80% of the capital of ALMAHAFIL Trading and Contracting Company during the month of October 2021 AD, the financial statements issued for the year 2021 AD are considered consolidated financial statements.

** As on December 31, 2021, AD, the restricted balances with banks amounted to (53,544,521) Saudi riyals, (6,251,491) Saudi riyals for the year 2020, represented in the bank account balances restricted for off-plan sales projects (Wafi) and the use of this cash is limited to exchange on those projects only and collections The cash to which it relates, and therefore it was considered cash and the like.

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43 5-4 Impact of the main activities on the company's business and it’s contribution in the company Results :

The company’s revenues are mainly based on Managing the development and contracting of real estate projects. A certain fees is calculated as a percentage of the total development cost of the real estate projects. Sumou realestate’score competencies are to handle the projects as an integrated contractor which includes various execution works from the beginning to the end of the project. In addition, various sub-contractors are hired by Sumou Real Estate Company for the completion of various jobs while Sumou real estate manages the project at the same time. Based on that, the company revenues from contracting for real estate projects are calculated from the total cost of the project with a specific profit margin. Revenues arising from managing the development of the projects are solely based on the management of development related tasks and does not include execution work. It is calculated on pre-determined basis with the customer as a percentage from the total cost of the project.

Item 2017 2018 2019 2020 2021

Project management fees 13,646,019 201,644,648 66,897,831 92,518,527 67,910,738

Real estate project revenues 88,273,209 56,104,665 113,087,803 --- 33,217,628

Contracting revenue 11,250,000 50 --- 1,000,000 2,000,000

Land sale revenue --- --- --- 3,640,072 ---

Total 113,169,228 257,749,363 179,985,634 97,158,599 103,128,366

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5-5 The fundamental differences in the operating results compared to the results of the previous year of the company :

Year Geographical analysis of the company's total revenue

Central Region Northern Region Eastern Region Western Region TOTAL

2020 10,000,000 15,000,000 32,378,797 39,779,802 97,158,599

2021 --- 15,000,000 14,669,712 73,458,654 103,128,366

The reason for the increase in net income for the year 2021 compared to the same period in 2020 by 14% is attributed to the increase in the company’s revenues from operating activities compared to the year 2020 by 6%, in addition to realizing investment returns resulting from the company’s share in the investment in the TANAL Company for Development and Real Estate Investment, and for the company’s establishment Early repayment of loans, which led to a reduction in the financing cost for the year 2021 AD compared to the same period for the year 2020 AD

Item 2021 2020 Changes %

Revenues 103,128,366 97,158,599 5,969,767 %6

Cost of revenue )38,329,104( )9,883,438( )28,445,666( )%287.81(

Gross profit 64,799,262 87,275,161 )22,475,899( )%25.75(

Net Income 81,209,527 71,381,226 9,828,301 14%

5-6 Geographical analysis of the company's total revenues for the years 2020 and 2021 as follows :

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45 5-7 Financial indicators :

Financial indicators 31 Dec 2017 31 Dec 2018 31 Dec 2019 31 Dec 2020 31 Dec 2021 Consolidated

Revenue growth rate 321.56% %127,76 (30.17%) (%46) %6

Growth rate in net income 5.19% %4 3% %2 14%

Gross profit margin 89.74% %36,28 54% %90 %63

Net profit margin attributable to

shareholders 57.33% %26,18 39% %73 %79

Current Ratio 39% 1,24 1.48 %24 2,33

Revenue / total assets 20% %45 32% 17% %17.5

Debt / equity ratio 65.61% %52,55 51% 39% %36.5

Debt / total assets ratio 35.41% %29,68 34% 28% %26.7

Return on assets 11.48% %11,78 13% %13 %13.8

Return on equity attributable to

shareholders 21.28% %20,86 18% %18 %19

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46 5-8 Bank loans and dealing with government agencies :

5-8-1 Bank loans:

This item represents facilities and loans granted by Bank ALJAZIRA, and the financial position of this loan as the following:

Year Bal as of 1 Jan Collection during

year Repayment Bal as of 31 Dec

2020 140,000,000 --- )30,000,000( 110,000,000

2021 110,000,000 --- )110,000,000( ---

5-8-2 Bank facilities :

On October 10, 2021, the credit facility agreement with Banque Saudi FRANSI compliant with Islamic law was renewed, with a total value of 114,000,000 Saudi riyals, in exchange for a promissory note for the full amount in favor of the financing entity, in addition to a real estate mortgage. The purpose of the agreement is to finance the company’s projects .

Total value of facilities from Banque Saudi FRANSI Year

64,000,000 2020

114,020,000 2021

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5-8-3 Interactions with government agencies: - This item represents the company's position in dealing with government agencies as follows :

Paid during year 2021 Paid during year 2020 Due for the year 2021 Due for the year 2020

Zakat 1,853,524 1,806,645 2,409,580 1,853,524

VAT 3,555,254 3,523,777 )3,371,006( ---

Government Fees 324,866 82,057 --- ---

During the year, a zakat assessment was received for the years 2019 and 2020 and according to the executive regulations of the Zakat, Tax and Customs Authority that a cash deposit must be paid in order for the objection to be accepted, and Sumou Real Estate Company paid 1,300,180.95 riyals for the 2019 objection, and 812,086.02 riyals for the 2020 objection, respectively, Accordingly, the objections submitted were accepted

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48 5-9 International Accounting Standards for Financial Reporting :

The financial statements for the year ended December 31, 2021 prepared in accordance with the International Financial Reporting Standards ,The company follows the International Accounting Standards (IFRS) since the beginning of 2017, according to the approval of the Saudi Organization for Certified Public Accountants, therefore there is no fundamental difference from the approved accounting standards, The company has evaluated the impact resulting from the shift from the generally accepted accounting standards issued by the Saudi Organization for Certified Public Accountants to the international financial reporting standards adopted in the Kingdom of Saudi Arabia and made the necessary adjustments in the company's financial statements as on January 1, 2017 and December 31, 2017.

As of the fiscal year ending on 12/31/2021, two financial statements will be issued, which are non-consolidated financial statements and consolidated financial statements, in accordance with International Financial Statements Standard No. IFRS # 10, which results from the 80% control of Mahafel Trading and Contracting Company Ltd.

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Risks

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The company pays attention to potential risks, and the company periodically reviews these risks and Determine appropriate way to overcome this risks, and the following risks are the main risks and Doesn’t include all the risks that the company may face, but may be there are additional risks that are not known to the company at the present time : -

6-1 Risks related to the company's activity and operations

Risks of newly forming a new board of directors' committees and failure to implement governance rules

The company has approved and implemented some of the articles of the corporate governance regulation issued by the Capital Market Authority, as Sumou Real Estate Company issued its corporate governance rules and it’s approved by the company's extraordinary general assembly on 8/16/2020 , which is the audit committee's work and the remuneration and compensation policy regulations. The work regulations of the Nomination and Remuneration Committee, in addition to the previous regulations, the company applies part of the Corporate Governance Regulations issued by the Capital Market Authority, which is a guiding list for companies listed on the Parallel Market, NUMOU, and the company has developed other policies approved by the Board of Directors that ensure compliance with the rules and practices of corporate governance.

Risks related to the failure of the company to collect its dues

If one of the contracting parties with the company fails to pay its dues, because of its financial solvency, the disruption of its operations, procrastination or bankruptcy, it will adversely affect the financial position of the company, its cash flows and the results of its operations. Also, in the case of projects executed by Sumo Real Estate Company as an integrated contractor, if the contracting authority falters or delays in paying the dues of the company, the company will be forced to delay the payment of the dues of the subcontractors, thus delaying the projects.

6- Risks

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Risks related to contracts and transactions of related parties

The company is related to dealings and contracts with related parties including associate companies such as the Dhahiat Sumou Company in addition to its dealings with the main shareholder, Sumou Holding Company on one hand and the Chairman of the company’s board Mr. Ayedh Al-Qahtani on the other hand, these contracts are made on strictly commercial grounds These contracts and transactions are subject to approval of the Board of Directors and the approval of the ordinary general assembly of the company. Therefore, in the event that the company's ordinary general assembly votes not to agree to renew licenses to deal With related parties for any reason this will adversely affect the company’s business.

Risks of inability to implement business plan and achieve the targeted growth strategy

The company's future performance depends on its ability and success in implementing its business plan and implementing the targeted growth strategy. Therefore, in the event the company is unable to successfully implement its future plans for any reason such as lack of funding, lack of employment, or lack of obtaining the necessary licenses or others.

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Credit risk

Credit risk is represented in the failure of one of the parties to contracts of financial instruments to fulfill its contractual obligations, which leads to the company incurring financial losses. The company is exposed to credit risks on its bank balances and receivables as follows:

31 December 2021 31 December 2020

Cash in bank 71,854,674 7,635,012

Receivables 1,150,000 11,308,855

Total 73,004,674 18,943,867

Liquidity risk

Liquidity risk is the difficulty that the company encounters in raising funds to meet commitments related to financial instruments. Liquidity risk can result from the inability to sell a financial asset quickly at an amount close to its fair value.

Liquidity risk is managed by monitoring it on a regular basis to ensure the availability of funds necessary to meet the company's future obligations.

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Risk of VAT impact

The customer is the one who bears value-added tax , It is expected that the company will raise its service fees to reflect the value added tax, which leads to an increase in the price of the company's services by the amount of the tax. Therefore, if the company is able to fully charge the value-added tax to the customer, the prices of its services will increase, which leads to a decrease in the demand for it and thus the operations of The company and its profits negatively,.

6-2 Risks related to market and sector

Risks related to competitive environment

The main activity of the company is management and execution of real estate development, and this field is characterized by high competition, therefore, in the event that current or potential competitors provide prices or competitive conditions or better solutions than those provided by the company,

Risks of change in the relevant laws and regulations

Like other companies operating in the Kingdom of Saudi Arabia, the company is subject to a number of laws and regulations that may be changed or updated by the competent authorities. Likewise, new laws and regulations may be issued by the relevant official authorities from time to another time.

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Risks related to imposing other fees and taxes

The company's business is currently subject to value added tax, and it is possible to impose fees and other taxes on companies by the government in the future, and if new taxes or fees are imposed on companies other than the ones currently applied, this will adversely and substantially affect the company's net profits.

Difficulty to monetize real estate investments

Real estate investments are by nature long-term investments that are difficult to sell compared to other investments, especially in light of slowing demand for land and real estate in the Kingdom, and this may make the changing nature of the market conditions of the company’s real estate portfolio and commercial real estate in an inappropriate position at any time in the future, which will increase the difficulty of monetization the company's real estate investments, and hence materially and adversely affects the company's business.

Risk of fluctuating interest rates

The interest rates may change according to economic, political, or organizational changes locally or globally, whether fixed or variable that are due to the financiers of the company and therefore this will lead to an increase in the financing costs that the company needs, which will have an adverse impact on the company’s business,

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Contracts with related parties

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The company acknowledges that there are no valid contracts or arrangements related to business of the company, in which the board of directors chairman, or any one of the members of the board of directors, the chief executive officer, or the financial department manager, has been involved in or having a substantial interest, other than what is mentioned below, and it does not negatively affect in whatsoever, on the business and income of the company, without having any conditions or priority transactions.

The company has also the following dealings and transactions, deemed as contracts with related parties:

1- An agreement between Sumou Real Estate Company and Adeer Real Estate Company (a company owned by Sumou Holding Co., a shareholder at the company), with the purpose of managing the development of the infrastructure of the land on which DURRAT ALMUBARAKIYA project was established in Arar, owned by Adeer Real Estate Company, An appendix to the basic agreement was signed on 06/05/1441AH (corresponding to 01/01/2020) for an amount of (30,000,000 riyals) thirty million Saudi riyals. The company's revenues from this project for 2021 amounted to fifteen million (15,000,000) Saudi riyals, and there are no conditions or preferential benefits at the contract.

2- An agreement between Sumou Real Estate Company and Adeer Real Estate Company (a company owned by Sumou Holding Co., a shareholder at the company), with the purpose of leasing its branch office in Jeddah. This contract was signed on 01/14/2021, the term of contract is three years, ending on 12/31/2023. The amounts paid by the company for 2021, hit three hundred and eight thousand six hundred thirty-two (308,632) Saudi riyals, and there are no conditions or preferential benefits at the contract.

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3- An agreement between Sumou Real Estate Company and Adeer Real Estate Company (a company owned by Sumou Holding, the shareholder in the company) with the purpose of managing the development of the superstructure of the land on which the AREEN project is built and owned by Adeer Real Estate Company. The contract was signed on 6/1/1441H (corresponding to 01/01/2020) for a development fees 10% of the total project cost. The company's revenues from this project for 2021 amounted to five million (5,000,000) Saudi riyals, and there are no conditions or preferential benefits at the contract.

4- An agreement between Sumou Real Estate Company and Sumou Holding Company (shareholder in the company) for the purpose of managing the development of the Khobar Corniche land located in Al-Nawras district, east of the PETROMIN scheme, which is owned by Sumou Holding Company and other partners. The contract was signed on 03/23/2021 The company's revenues from this project for 2021 amounted to (9,669,712 riyals) nine million six hundred and sixty-nine thousand seven hundred and twelve Saudi riyals, and there are no preferential terms or benefits in the contract.

5- An agreement between Sumou Real Estate Company and ASMO Real Estate Development Company (owned by Sumou Holding Company, the shareholder in the company) for the purpose of providing technical services to develop the project of ASMO Real Estate Development Company towers located in the city of Jeddah. The agreement was signed on 10/28/2021 AD, and the company’s revenues amounted to 2021 An amount of (23,000,000 riyals) twenty-three million Saudi riyals, and there are no preferential terms or benefits in the contract.

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6- During the period, Sumou Real Estate Company signed a loan repayment agreement with Sumou Holding Company, according to which Sumou Real Estate Company waived an amount of 113,160,313 Saudi riyals from its share in the Makkah Entrance Project in favor of Sumou Holding Company in return for Sumou Holding Company to repay the loan based on Sumou Real Estate Company for the benefit of the bank. During the period, the company also signed a share-swap agreement with Sumou Holding Company, according to which Sumou Holding Company waived (10%) of its share in the ownership of TANAL Real Estate Development and Investment Company as on December 31, 2020 in favor of Sumou Real Estate Company in the amount of 68,055,780 Saudi riyals in exchange for Sumou Company Holding on an investment share of the same value in the entrance to Makkah project.

7- An agreement between Sumou Real Estate Company and Adair Real Estate Company (a company owned by Sumou Holding, the shareholder in the company) for the purpose of marketing the Dar Sumou project, within the KHAYALA residential project (Area 2), located in Al-HAMDANIYA District - Jeddah. The agreement was signed on 1/22/1442 AH corresponding to 2020 /9/10 AD, according to which Adeer Real Estate Company obtains 2.5% of the total sales, not including the value of the project land. The volume of dealings for this project during the year 2021 AD amounted to (8,352,632 riyals) eight million three hundred fifty-two thousand six hundred thirty-two riyals Saudi, and there are no preferential terms or benefits in the contract.

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Board of Directors of the company, Committees and executive

management

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8- Board Members

Ayedh Farhan Al Qahtani Chairman

Saeed Salem AL Nahdi Deputy chairman

Khalid Saleh AL Aqeel Board member Essam Ahmed Kalthoum

Board member

Faisal Abdullah Al Khaldi Board member

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The company shall be managed by a board of directors consisting of (5) five members elected by the ordinary general assembly of shareholders for a period not exceeding (3) three years.

The members of the Board of Directors were appointed by the Ordinary General Assembly held on 04/05/1443 AH (corresponding to 08/12/2021AD), which begins on 24/12/2021AD, and for a period of three years ending on 23/12/2024AD.

8-1 Board members and Board Secretary

Ayedh Al-Qahtani owns 100% of Sumou Society Company, which owns 4.86% of Sumou Real Estate Company, so Ayedh Al-Qahtani owns in Sumou Real Estate Company through the ownership of Sumou Society Company 4.86%.

Ayedh Al-Qahtani owns 60% of Bisan Commercial and Real Estate Company, which owns 2.24% of Sumou Real Estate Company so Ayedh Al-Qahtani owns in Sumou Real Estate Company through the ownership of Bisan Company is 1.34%.

Ayedh Al-Qahtani indirectly owns shares in Sumou Real Estate Company through his ownership in Sumou Holding Company, which owns 62.98% of Sumou Real Estate Company, as Bisan Commercial and Real Estate Company (Ayedh Al-Qahtani owned 60% ) 40% of Sumou Holding company, and therefore, the percentage of Ayedh Al-Qahtani in Sumou Real Estate Company through the ownership of Bisan Company in the Sumou Holding Company is 24%, and Sumou Society Company–(Ayedh Al-Qahtani owned 100%) 60% of Sumu Holding Company Thus, the percentage of Ayedh Al-Qahtani in Sumou Real Estate Company through the ownership in Sumou Holding Company is 52.9%.

The following is an overview of the current board members and the board's secretary:

Board members

Name Title Nationality Membership

status

Direct ownership percentage

Indirect ownership

percentage (31-12-2021) Date of membership After offering After offering

Ayedh Farhan Al-Qahtani Chairman Saudi Non-executive 59.1% 24-12-2021

Saeed Salem AL Nahdi Deputy chairman Bahraini Non-executive - 24-12-2021

Faisal Abdullah Alkhaldi Board member Saudi independent - 24-12-2021

Khalid Saleh AL Aqeel Board member Saudi independent - 24-12-2021

Essam Ahmed Kalthoum Board member Saudi Non-executive - 24-12-2021

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62 Name Ayedh Farhan Al Qahtani

Nationality Saudi

Position Chairman of the Board of Directors

Education Bachelor’s degree in industrial management - King Fahad University of Petroleum and Minerals, Dhahran - Saudi Arabia-1999.

Experiences

- member of the Board of Directors of Dhahiat Sumou Fund from 2017 to the date of this report.

- Member of the Board of Directors of the Riyadh Development Fund from 2015 to the date of this report.

- Chairman of the Board of Directors of Musharaka Capital from 2013 until the date of this report.

- Chairman of the Board of Directors of Dhahiat Sumo Real Estate Development Company since 2012 until the date of this report.

- Chairman of the Real Estate Committee in the Eastern Chamber of Commerce from 2010-2012.

- Chairman of the Board of Directors of Tanal Real Estate Development and Investment Company since2019until the date of this report.

- Member of the Board of Directors of Iktifa Agricultural Company since 2009 until the date of this report.

- Chairman of the Board of Trustees of the Ibn Mubarak Foundation for Community Service, 2008-2009.

- Chairman of the Board of Directors of Sumou Holding Company since 2007 until the date of this report.

- Chairman of the Board of Directors of Sumou Real Estate Company -2007 until the date of this report.

- Chairman of the Board of Directors of POWERCO Company since 2013 until the date of this report.

- Member of the Board of Directors of the Eastern Chamber of Commerce- 2006 2009.

- Member of the Board of Directors of Riyadh Development Company- 2010-2015.

- Board member and one of the founders of the Al-Oula real estate development company- 2002- 2008.

- Chairman of the Board of Directors of Dahiat murrojj Jeddah Company since 2013 until the date of this report.

- Chairman of the Board of Directors of Bisan Commercial and Real Estate Investment Company since2020until the date of this report.

- Member of the Board of Directors of Casa piou Company since 2008 until the date of this report.

- Member of the Board of Directors of Ruba building real estate Company since 2013 until the date of this report.

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63 Name Saeed Salem Mohammed Al Nahdi

Nationality Bahraini

Position Deputy Chairman

Education Bachelor’sdegree in business administration - University of Bahrain, Manama - Kingdom of Bahrain- 1993.

Experiences

- CEO of Sumou Holding Company since 2015 until the date of this report.

- Member of the Board of Directors of Tanal Real Estate Development and Investment Company since 2019 until the date of this report.

- Member of the Board of Directors of Murooj Al-Jeddah Company from 2013G until the date of this report.

- Member of the Board of Directors of Dhahiat Sumo Real Estate Development Company since 2012 until the date of this report.

- Member of the Board of Directors of Iktifa Agricultural Company since 2009G until the date of this report.

- Chairman of the Board of Directors of Ajar Investment Company since 2020 until the date of this report.

- Member of the Youth Delegation of the Bahrain Center for Studies and Research-1992-1995.

- Director General of Bahrain Flour Mills Company from 2004- 2008.

- Executive Director of Unilever Gulf region, Yemen and North Africa- 1992- 2004.

- Chairman of the Board of Directors of Samt content Company since 2019 until the date of this report.

- Chairman of the Board of Directors of Manset maksb financial Company since 2020 until the date of this report.

- Chairman of the Board of Directors of Khairat Company since 2019 until the date of this report.

- Chairman of the Board of Directors of arfaa Company since 2020 until the date of this report.

- Chairman of the Board of Directors of Ruba building real estate Company since 2019 until the date of this report.

- Chairman of the Board of Directors of Arabian Secor Company since 2017 until the date of this report.

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64 Name Faisal Abdullah Al-Khaldi

Nationality Saudi

Position Member of the Board of Directors.

Education Bachelor of Engineering in Applied Civil Engineering - King Fahad University of Petroleum and Minerals, Dhahran - Saudi Arabia- 1990.

Experiences

- Chairman of the Board of Directors of Prisma Metal Industries Company since 2007 until the date of this report.

- Vice Chairman of Saudi Baytur Construction Company- 2008- 2018.

- Vice Chairman and Managing Director of Tanami Holding Company since 2007 until the date of this report.

- Managing Director of Zohour Alreef Trading Company since2014until the date of this report.

- Managing Director of Al-Hindi Holding Company since2008until the date of this report.

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65 Name Khaled Saleh AL Aqeel

Nationality Saudi

Education Bachelor’s degree in accounting - King Saud University, Riyadh - Kingdom of Saudi Arabia- 1987.

Experiences

- Chairman of the Board of Directors of the Saudi Equity Fund of the Gulf Securities Company from 2017 until date of this report.

- Adviser to the Saudi British Bank (SABB) for all banking activities from 2016 to June 2020.

- Chairman of the Audit Committee of Musharaka Capital Company since 2015 until the date of this report.

- Member of the Board of Directors of Musharaka Capital Company from 2015 until the date of this report.

- Chairman of the Islamic Banking Committee at the Saudi Arabian Monetary Agency for all Saudi banks 2012- 2013 and member of the committee-2012-2016.

- Head of Islamic Banking Services at the Saudi British Bank (SABB)–2011- 2016.

- Global Head of HSBC Islamic Bank products from2010until the end of 2011.

- Director General of Treasury, Bank Al-Bilad-2007-2011.

- Executive Director of Corporate Banking Services (Islamic Banking Services) at SABB Bank -2002-2007.

- Director of the International Corporate Sector at Al-Rajhi Bank 2000- 2002.

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Name Essam Ahmed Kalthoum

Nationality Saudi

Education Bachelor’s degree in civil engineering - King Fahad University of Petroleum and Minerals, Dhahran - Saudi Arabia- 1982.

Experiences

- Part-time Consultant - Project Director of Haram Visions in the Public Investment Fund since 2016 until date of this report.

- Founder and Chairman of the Board of Directors of the company as a result of the property and business services from 2018 until the date of this report.

- Managing Director and President of Makkah Gate Company 2011-2017.

- Executive Director of Al Shamiya Real Estate Development Group -2007-2011.

- Member of the Board of Directors of the Real Estate Development Fund in Makkah to finance Jabal Omar project from 2017 to the date of this report.

- Advisor to the Vice-President of Al-Thumama Group- 2005- 2007.

- Advisor to the Vice President of Al Saif Group Company from 2004G until 2005.

- Deputy Director General for General Services and Investment at the Royal Commission for Jubail and Yanbu- 1999-2004.

- President of Cristel Industrial Company from 1990 until 1999

- Member of the Board of Directors of Murooj Al-Jeddah Company from 2019 until the date of this report.

- Member of the Board of Directors of Alinma Makkah Real Estate Fund from 2017 until the date of this report.

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