Tihama Lose as much as SR10.9mln, in Q3

A Tihama Advertising and Public Relations company has lost as much as 10.9 million after zakat and tax in Q3, compared to SR16.8 million, in the same quarter the previous year, a 35% decrease.

This came after the preliminary financial results for the period ending on 12/31/2012, 9-months, were released.

During Q3, the operating loss was SR13.4 million, compared to SR16 million in the same quarter the previous year, a 17% decline.

The total profit for Q3 was SR2.8 million, up from SR2.3 million in the same quarter the previous year, a 22% increase.

The current period’s net loss after zakat and tax was SR30.6 million, compared to a loss of SR37.4 million in the previous year’s similar period, a decline of 18%.

The current period had a loss of SR1.67 per share, compared to a loss of SR2.33 the prior year.

The rationale for the drop in losses in the current quarter compared to the same quarter last year is mostly attributable to SR2 million decrease in selling and administrative expenses.

A provision for expected credit losses of approximately SR1.8 million was recorded in the same quarter of the previous year, and the company’s share increased by approximately SR3.5 million from the results of the associate companies’ business, in addition to a decrease in financing expenses of approximately SR0.9 million and a decrease in the Zakat provision of approximately SR1 million.

This decrease in expenditures was somewhat compensated for by SR2.3 million fall in other revenues.

This decline is mostly attributable to a reduction in other revenues of roughly SR1.5 million, due to the deduction of rents.

The increase in losses in the current quarter compared to the previous quarter is primarily due to a decrease in gross profit of approximately SR8.2 million, as the total profit in the distribution sector decreased by approximately SR6.2 million, due to the previous quarter’s season of supplying educational materials to schools.

The production sector’s gross profit fell by almost SR3.9 million, while the retail sector’s overall profit grew by nearly SR2 million after launching new branches at airports.

Despite the impact of the development of the retail sector operations on the increase in selling expenses, this drop in profit was somewhat offset by a decrease in selling and administrative expenses of roughly SR2.5 million.

The increase in other revenues of around SR1.7 million is primarily attributable to the recording of other revenues for the deduction of rents acquired of about SR1.6 million, during the current quarter.

The zakat provision was also reduced by almost SR0.5 million, since an additional provision for amended zakat assessments for a subsidiary firm was recorded in the prior quarter.

The decrease in losses in the current period compared to the same period last year, is primarily due to an increase in gross profit of approximately SR6.9 million, as the total profit in the retail sector increased by approximately SR8.9 million after opening new branches at airports.

This is in addition to the fact that the same period last year included the closure of branches as part of the precautionary measures to combat terrorism.

As a result of a decrease in advertising spending and media production from customers during the outbreak of the new Corona virus, the total profit of the distribution sector decreased by approximately SR2.8 million, while the total profit of the production sector decreased by approximately SR1.8 million.

The company’s portion of the associate companies’ operating performance increased by about SR7.2 million.

The expenses for the offering of the capital increase of approximately SR2.8 million, during the same period of the previous year, where the approval and completion of the offering procedures and the capital increase, during the same period of the previous year, where the approval and completion of the offering procedures and the capital increase, during the same period of the previous year, where the approval and completion of the offering procedures and the capital increase, during the same period of the previous year, where the approval and completion of the offering procedures and the capital.

The Zakat provision fell by almost SR1.5 million, as an additional provision for amended Zakat assessments was recorded, during the same period the prior year. Financing costs were reduced by about SR1.7 million.

This drop was somewhat offset by an increase of approximately SR10.8 million, in selling and administrative expenses, mostly due to the development of retail operations.

Other income declined by roughly SR 2.4 million, owing mostly to a decrease of around SR1.7 million, in other income from discounting rents.

The auditor’s report contained the following reservations:

What is shown in note (1/5) investments in associate companies in the accompanying interim condensed consolidated financial statements, which indicates that the Group’s investment in United Advertising Company Limited and J. Walter Thomson MENA, which were acquired in previous years, was recorded using the equity method, amounting to SR6,035,341 and SR30,274,147, respectively, in the interim condensed consolidated financial statements, is accounted for using the equity method, amounting to 6,035,3.

The group’s share of the net income of the two companies mentioned above, amounting to SR2,330,061 and SR2,407,852, respectively, was included in the statement of profit or loss and other comprehensive consolidated interim condensed statement for the period ending on that date, based on financial statements prepared by the two companies’ management.

We were unable to obtain sufficient audit evidence regarding the group’s investment balances in the above two companies as of December 31, 2021, as well as the group’s share of the above two companies’ comprehensive net profit for the same period, either directly or through alternative audit procedures, and accordingly, we were not able to determine whether it is necessary to make any adjustments to these amounts.

Material uncertainty relating to going concern

This is noted in (4/2) to the condensed consolidated intermediate financial statements, which shows that the group’s accumulated losses as of December 31 2021 totaled roughly SR141.7 million, or more than half of the company’s capital.

As of the same day, the group’s current liabilities were roughly SR46.5 million higher than its current assets.

These factors suggest that there is material uncertainty regarding the group’s capacity to continue as a going concern.

Our position on this subject has not changed.

The Group amended the evidence of the effect of the acquisition of a non-controlling interest in a subsidiary company, which was recorded in the consolidated income statement in the amount of SR3,459,628 during the financial year ending March 31, 2021, as this transaction relates to the acquisition of a stake in a subsidiary without a change in control during the period ending December 31, 2021. Accordingly, it was reported as an equity transaction, with the increase in consideration over the carrying value of the non-controlling interest of SR3,459,628 reflected in the parent company’s equity.

The update of the comparative information for the interim condensed consolidated statement of financial position as of March 31, 2021, has proven the effect of this adjustment on the opening accumulated losses balance as of March 31, 2021.

The Group amended the recognition of the impact of the acquisition of a non-controlling interest in a subsidiary company, which was recorded in the intangible assets as goodwill in the amount of SR7,231,139, during the financial year ending on March 31, 2021, as this transaction relates to the acquisition of a non-controlling interest in a subsidiary company, which was recorded during the financial year ending on March 31, 2021 within the intangible assets as goodwill in the amount of SR7,231,139.

With the adjustment of comparative information for the interim condensed consolidated statement of financial position, an additional interest in a subsidiary without a change in control was recorded as an equity transaction, and the increase, in consideration for the book value of the non-controlling interest amounting to SR7,231,139 is recognized within the equity attributable to the parent company, as of the 31st of March, 2021.

The company has also reclassified some comparison data to align with the current year’s presentation.

The loss per share for the current period was derived by dividing the parent company’s net loss for the period, which totaled SR29.2 million, by the weighted average number of shares outstanding during the period, which totaled 17,500,000 shares.

The loss per share for the same period the prior year was computed by dividing the net loss attributable to the company’s shareholders by the net loss for that period. The mother, worth SR31.7 million, is based on the weighted average number of outstanding shares for the same period, which was 13,609,091.

As of December 31, 2021, the total losses amounted to SR141.7 million, or 81% of the capital of SR175 million.

Companies listed on the Saudi stock exchange that have amassed losses of 20% or more of their capital will continue to be subject to the procedures and guidelines in place.