Our responsibilities under these standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. Key audit matters are those matters which, in our professional judgment, were of greatest importance to our audit of the consolidated financial statements for the current year. We have fulfilled the responsibility described in the section Auditor's responsibility for auditing the consolidated financial statements in our report, including in relation to these matters.
Also, the potential impact of the impairment of investment properties could be material to the Group's consolidated financial statements. Refer to the summary of significant accounting policies to the consolidated financial statements (note 4) and for details of investment properties and fair values (note 15). Ensured that the consolidated annual accounts contain adequate disclosures regarding the valuation of investment properties.
The other information consists of the information contained in the Group's 2020 annual report, except for the consolidated financial statements and the auditor's report thereon.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2020
BASIS OF PREPARATION
The Group's consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and their interpretations as issued by the International Accounting Standards Board (“IASB”) as adopted in the Kingdom of Saudi Arabia and other standards and statements endorsed by the Saudi Organization for Certified Public Accountants (collectively referred to as “IFRS” as adopted in the Kingdom of Saudi Arabia”). The consolidated financial statements have been prepared on a historical cost basis, with the exception of investments in equity instruments designated at FVOCI and investments designated at FVPL that are valued at fair value. The consolidated financial statements are presented in Saudi Riyals, which is also the functional currency of the Group.
BASIS OF CONSOLIDATION
Consolidation of a subsidiary begins when the Group acquires control of the subsidiary and ceases when the Group loses control of the subsidiary. Income or loss and any component of other comprehensive income (OCI) is attributable to the equity holders of the Group's parent company and non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Group's accounting policies.
All intra-group assets and liabilities, equity, income, expenses and cash flows related to transactions between members of the Group are completely eliminated during consolidation. If the Group loses control over a subsidiary, it derecognizes the related assets (including goodwill), liabilities, non-controlling interest and other components of equity, while any resulting gain or loss is recognized in income or loss.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 31 December 2020. In thousands of Saudi Riyals unless otherwise stated). The Group reassesses whether it controls the investee if facts and circumstances indicate that one or more of the three elements of control have changed. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group acquires control until the date the Group ceases to control the subsidiary.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Operating versus non-operating classification of assets and liabilities (continued).
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Current versus non-current classification of assets and liabilities (continued)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Revenue recognition (continued)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) General and administrative expenses
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Property and equipment (continued)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Foreign currency (continued)
Leases
- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Intangible assets
- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Financial instruments
- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Financial instruments (continued)
- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Cash and cash equivalents
- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) New and amended standards and interpretations
- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Standards issued but not yet effective
- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Standards issued but not yet effective (continued)
Amortization expense for intangible assets with finite lives is recognized in the consolidated income statement in the expense category that is consistent with the function of the intangible asset. Gains or losses arising from the derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the consolidated income statement when the asset is derecognised. The classification of financial assets depends on the Group's business model for managing its financial assets and on the contractual terms of the cash flows.
Transaction costs of financial assets measured at fair value through the income statement are recognized in the consolidated income statement as they occur. Financial assets with cash flows other than principal and interest payments are classified and measured at fair value through profit or loss, regardless of business model. Expected credit losses are measured as the difference between the present value of the contractual cash flows owed to the Group under the contract and the cash flows that the Group expects to receive.
Financial liabilities at FVPL continue to be recorded at fair value with changes recorded in the consolidated statement of income. The liability is initially measured at fair value adjusted for transaction costs directly attributable to the issuance of the guarantee. The difference in the respective carrying amounts is recognized in the consolidated statement of income.
The liability recognized in the consolidated statement of financial position in relation to employee defined benefit obligations is the present value of employee defined benefit obligations at the end of the reporting period. Changes in the present value of the employee end-of-service benefit obligation resulting from plan amendments or curtailments are recognized immediately in the consolidated statement of income as past service cost. New and amended standards and interpretations that have been issued, but not yet effective, up to the date of publication of the Group's consolidated financial statements are disclosed below.
Financial Instruments – Fees in the ’10 per cent’ test for derecognition of financial liabilities
- USE OF ESTIMATES AND JUDGMENTS
- COST OF REVENUE
- GENERAL AND ADMINISTRATIVE EXPENSES
- SELLING AND MARKETING EXPENSES
- OTHER INCOME
- LOSS PER SHARE
- INVESTMENT IN AN ASSOCIATE
- INVESTMENTS IN EQUITY INSTRUMENTS
When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. The activities of the Group and its subsidiaries are mainly carried out in the Kingdom of Saudi Arabia. The management of the Company has agreed with the fund manager of Alinma Alakaria Property Fund (wholly owned fund) to waive management fees previously accrued amounting to SR 18.8 million upon liquidation of the fund.
Basic and diluted loss per share is calculated by dividing the loss for the year attributable to holders of common shares of the parent company by the weighted average number of common shares outstanding during the year. Also, one of the projects was canceled due to the issuance of orders stating that the development of a number of lands north of Riyadh, with a book value of SR 7.3 million, should be halted. During the year the Group sold land with a carrying amount of SR 9.3 million for SR 53 million, recognizing a gain of SR 44.3 million (note 12).
Investment properties include buildings with a net book value of SR 626 million (2019: SR 639 million) constructed on land leased from the High Commission for the Development of Arriyadh under two contracts of 99 and 50 years, with effect from January 7, 1993 and July 6, 2009, respectively, on the basis of economic law, which will be transferred to the Authority at the end of the contract period. a) Countries not available for use. The impact on the net realizable value of these lands is still uncertain and depends on the final results of the investigation by the assigned committees. The effect of the extent of this investigation remains uncertain and dependent on future developments in the plan of the relevant government authorities.
Management will continue to assess the impact of the development on the consolidated financial statements. Per As of 31 December 2020 and 31 December 2019, the Group owns 16.67% in Riyadh Holding Company, a joint-stock company registered in the Kingdom of Saudi Arabia. In 2018, the group recognized a provision for impairment of the entire amount, as the counterparty defaulted on its obligations.
During the year ended December 31, 2019, the Group initiated legal procedures to recover the amount. During the year, the Group sold investments defined in FVOCI with an initial value of SR 60 million for SR 96.8 million (2019: nil) and the realized gain on disposal of this investment since inception amounting to SR 36.8 million was reclassified from reserves other in accumulated losses. .
- CASH AND CASH EQUIVALENTS
- SHARE CAPITAL
- STATUTORY RESERVE
- CONTRACTUAL RESERVE
- NON-CONTROLLING INTERESTS
- TERM LOANS
- EMPLOYEES’ DEFINED BENEFIT OBLIGATIONS
- TRADE PAYABLES
- UNEARNED REVENUE
- RELATED PARTY TRANSACTIONS AND BALANCES
- FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
- FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
- FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued) Credit risk
- FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued) Liquidity risk – continued
- SUBSEQUENT EVENT
- SIGNIFCANT EVENT
- APPROVAL OF THE CONSOLIDATED FINANCIAL STATEMENTS
During 2016, the Group obtained a long-term Islamic loan from a local bank in the amount of SR 2.12 billion. The long-term loan granted to the Group is secured by the Group's collateralized investment properties (note 15). During 2018, the Group received another long-term Islamic loan from a local bank in the amount of SR 650 million.
The long-term loan granted to the Group is secured by the Group's guaranteed land. The Group undertook to deposit at least 50% of the Group's income in their accounts with the lending bank. The Group Management fully utilized the loan proceeds for the Group's ongoing projects and 80% of the borrowing costs were eligible for capitalization during the year ended 31 December 2020 (31 December 2019: 95%).
Related parties represent the Group's major shareholders and entities controlled or significantly influenced by such parties. The Group's exposure to the risk of changes in market profit rates mainly relates to the loans. The Group's listed and unlisted shares are sensitive to market price risks arising from uncertainties about the future value of the investment securities.
Reports on the share portfolio are submitted regularly to the group's top management. Credit risk from balances with banks and financial institutions is managed by the group's finance department in accordance with the group's policy. Per On 31 December 2020, the group's short-term liabilities exceeded current assets by SR 1,993 million.
The table below shows the remaining contractual due dates of the Group's financial obligations and the agreed repayment terms. This table has been prepared based on the discounted cash flows of the Group's financial obligations and as of the nearest date on which the Group is obligated to repay.
