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. The key audit matters concern those matters that, in our professional judgment, were most significant in our audit of the consolidated financial statements for the current period.
Basis of measurement
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) that have been adopted by the Kingdom of Saudi Arabia (“KSA”) and other standards and pronouncements that have been adopted by the Saudi Organization for Certified Public Accountants and Professionals ("SOCPA") (also referred to as "IFRS approved in KAS").
Functional and presentation currency
Significant accounting judgements, estimates and assumptions
Significant accounting judgements, estimates and assumptions (continued)
Judgements Going concern
Significant accounting judgements, estimates and assumptions (continued) .2 Estimates and assumptions
Significant accounting judgements, estimates and assumptions (continued) .2 Estimates and assumptions (continued)
The Group has consistently applied the following accounting policies for all periods presented in these consolidated financial statements, unless otherwise stated (see also Note 4).
Basis of consolidation
The carrying amount of the investment is adjusted to recognize changes in the Group's share of the net assets of the associate since the acquisition date. The statement of profit or loss reflects the Group's share of the results of operations of the associate.
Revenue Recognition
Determine the transaction price: The transaction price is the amount of money to which the Company expects to be entitled in exchange for the transfer of promised goods or services to a customer. Allocation of the Transaction Price to the Performance Obligations in the Contract: For a contract that has more than one performance obligation, the Company will allocate the transaction price for each performance obligation into an amount that describes the sum of the amount by which the Company expects to be the right in exchange for the fulfillment of any performance obligation.
Expenses Cost of revenue
The Company typically awards customers additional “Loyalty Points,” which are used in the same manner as points normally purchased. These Loyalty Points give rise to a separate performance obligation because they confer a material right on the customer. A portion of the transaction price is allocated to loyalty points awarded to customers based on the relative stand-alone sales price and is recognized as a contract liability until the points are redeemed.
Revenue is recognized when the customer redeems the points or when the customer is unlikely to redeem the loyalty points.
Borrowing costs
Zakat and tax Zakat
When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and at the time of the transaction affects neither accounting profit nor taxable profit or loss. Deferred tax assets are recognized for all deductible temporary differences, carryforwards of unused tax credits and potential unused tax losses. When a deferred tax claim related to a deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction affects neither accounting profit nor taxable profit or loss.
With respect to deductible temporary differences related to investments in subsidiaries, participations and interests in joint arrangements, deferred tax assets are recognized only to the extent that it is possible that the temporary differences will be reversed in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
Property and equipment Recognition and measurement
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to utilize all or part of the deferred tax asset. Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will enable the deferred tax asset to be recovered. The costs of ongoing maintenance of tangible fixed assets are recognized in the consolidated income statement when incurred.
Depreciation is recognized in the consolidated income statement on a straight-line basis over the estimated useful life of each part of an item of property, plant and equipment.
Intangible assets
The Group conducted an internal technical review and engaged an independent third party specialist to carry out an evaluation of the useful lives of vehicles and residual values. The effect of these changes on actual and expected depreciation expense included in cost of revenue was as follows. Intangible assets with indefinite useful lives are not amortized but are tested annually for impairment, either individually or at the cash-generating unit level.
The indefinite life estimate is reviewed annually to determine whether the indefinite life is still sustainable.
Leases
In calculating the present value of the lease payments, the Group uses its incremental borrowing rate at the lease inception date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease obligations increases to reflect the increase in interest and is reduced for lease payments made. Lease payments for short-term leases and leases of low-value assets are recognized as expense on a straight-line basis over the lease term.
Rental income is calculated evenly over the duration of the lease and, due to its business nature, is included in income in the consolidated income statement.
Inventories
Lease payments also include the exercise price of a secure purchase option to be exercised by the Group and lease termination penalty payments if the lease term reflects the Group exercising the option to terminate. It also applies the exemption from recognition of low-value leased assets to leases of office equipment that are considered low-value. IBR therefore reflects what the Group 'will have to pay', which requires estimation when there are no observable charges or when they need to be adjusted to reflect the terms and conditions of the lease.
Initial direct costs incurred when negotiating and mediating an operating lease contract are added to the accounting value of the leased asset and recognized over the lease term on the same basis as rental income.
Cash and cash equivalents
The accounting value of inventories is recognized as cost of sales when the inventories are sold. Vehicles for sale that were previously held as part of property and equipment for leasing and rental arrangements are transferred to inventories at their carrying amount when they cease to be held for leasing and rental purposes and are held for sale in the ordinary course of business. Other costs are only included in the vehicle inventory cost to the extent they are incurred in bringing the vehicles to their current location and condition necessary to complete the sale.
Other costs are included in the purchase price of spare parts and supplies only to the extent incurred when they are brought to their current location and condition.
Financial instruments
Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments). Financial assets at fair value through profit and loss Financial assets at amortized cost (debt instruments). The group currently has no financial assets recognized at fair value through profit or loss.
The Group has not designated any financial liabilities as measured at fair value with changes in value recognized in the profit and loss account.
Impairment of non-financial assets
The difference in the respective accounting values is recognized in the consolidated income statement. iii) Offsetting of financial instruments. Financial assets and financial liabilities are offset, and the net amount is reported in the consolidated statement of financial position, if there is a currently legally enforceable right to offset the recognized amounts, and there is an intention to settle on a net basis in order to realize the assets and settle the liabilities simultaneously. A previously recognized impairment loss is only reversed if there has been a change in the assumptions used to calculate the asset's recoverable amount since the last impairment loss was recognised.
Such reversal is recognized in the consolidated statement of profit or loss unless the asset is carried at a revalued amount, in which case the reversal is treated as a revaluation increase.
Provisions
For assets other than goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously recognized impairment losses no longer exist or have decreased. The reversal is limited so that the asset's carrying amount does not exceed its recoverable amount, nor does it exceed the carrying amount that would have been determined, without impairment, if no impairment loss had been recognized for the asset in prior years . Intangible assets, with the exception of goodwill, with indefinite useful lives are tested for impairment annually on December 31 at the CGU level, as appropriate, and when circumstances indicate that the carrying amount may be impaired.
Cash dividend and non-cash distribution to equity holders of the parent
Interest rate benchmark reform
The Group's zakat levy is based on the consolidated financial statement of the Parent Company. As mentioned in note 1 and 16, with effect from 26 January 2020, the Parent Company acquired remaining 51% shareholding from an existing associate established in India, namely Unitrans Infotech Services India Private Limited ("the subsidiary") for a total consideration of SR 2.869 million. The Group's most important financial assets include trade and other receivables and cash and cash equivalents.
The board of directors is fully responsible for the establishment and control of the group's risk management framework. The Group's management monitors such fluctuations and adequately controls their impact on the consolidated financial statements. For the purposes of the Group's capital management, capital includes issued capital, statutory reserves and retained earnings attributable to the controlling company's capital owners.
Level 2 Level 3 Total
The fair value of an asset or liability is measured using the assumptions that market participants would use in pricing the asset or liability, assuming that market participants are acting in their economic best interests. A fair value measurement of a non-financial asset takes into account the ability of a market participant to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant who would use the asset in its highest and best use. If the inputs used to measure the fair value of an asset or liability fall into different levels of the fair value hierarchy, the fair value measurement as a whole is categorized in the same level of the fair value hierarchy as the lowest level of input that is significant to the entire measurement.
The Group recognizes transfers between levels of the fair value hierarchy at the end of the reporting period in which the change occurred.
