Tihama loss declines 36% to SR7.4 mln in Q1‎

Tihama Advertising and Public Relations Co. recorded a net loss after zakat and tax of 7.4 million riyals in the first quarter, compared to a loss of 11.5 million riyals in the same quarter of last year, a decrease of 36%. This came after today’s announcement of the financial results for the period ending in 2022- 06-30 (3 months).

The operational loss amounted to 7 million riyals in the first quarter, compared to a loss of 11 million riyals in the same quarter of the previous year, down 36%.

The loss per share in the current period amounted to 1.43 riyals, compared to a loss of 2.31 riyals in the same period last year.

The reason for the decrease in losses in the current period compared to the comparative period of previous year is mainly due to the increase in gross profit by approximately 5.5 million SR, the gross profit of the advertising sector increased by approximately 1.4 million SR mainly due to the decrease in the cost of revenue associated with the end of lease contracts for a number of advertising sites, the gross profit of the retail sector increased by approximately 5 million SR after opening new branches at the airports, hotels and hospitals. In addition to increase in Distribution sector gross profit by around 0.5 million SR. In contrast, the gross profit of the production sector decreased by approximately 1.3 million SR.

This decrease in losses was partially offset by an increase in selling and administrative expenses by approximately 1 million SR, mainly as a result of the expansion of the retail sector operations, also the comparative quarter of the previous year included provision for expected credit losses of approximately 1.1 million SR.

The reason for the increase in losses during the current quarter compared to the previous quarter by approximately 0.3 million SR is mainly due to the decrease in other revenues by approximately 7 million SR, as rent concessions decreased by approximately 4.8 million SR compared to the previous quarter and the previous quarter included other revenues from the settlement of advertising sites lease contracts of around 2.4 million SR. Share of the profits from associates decreased by approximately 2.3 million SR. Zakat provision increased by approximately 2.6 million SR, as last quarter included a reversal of zakat provision for prior years by nearly 2.1 million SR.

This increase in loss was partially offset by the increase in gross profit by approximately 4.9 million SR, mainly from the increase in revenues and the decrease in the cost of revenues compared to previous quarter. Selling and general expenses also decreased by approximately 5.7 million SR, as the previous quarter included a provision for slow-moving inventory of around 4 million SR and the reduction of selling and general expenses by approximately 1.7 million SR. Financial expenses also decreased by approximately 0.9 million SR.

Modification, Qualification or Emphasis of a Matter as Stated within the External Auditor Opinion

The Auditor’s Report includes the following qualifications:

As indicated in note (6/1), investments in associates are included in the attached condensed consolidated interim financial statements, which indicates that the Group’s investment in the United Advertising Company Limited and J. Walter Thompson MENA, which are associate companies acquired in prior years, and it is accounted for using the equity method, amounted to 8,096,430 SR and 29,978,999 SR, respectively, in the interim condensed consolidated financial position as at June 30,2022, and the Group’s share of the net income of the above companies was included based on financial statements prepared by the management amounted to 984,183 SR and 299,250 SR, respectively, in the interim condensed consolidated statement of profit or loss and comprehensive loss for the period then ended. We were unable to obtain sufficient audit evidence directly or through alternative audit procedures regarding the investment balances of the Group in the above two companies as at June 30,2022, as well as the Group’s share in the net comprehensive income of the above companies for the same period, and accordingly we were not able to determine whether it was necessary to make any adjustments to these amounts.

Material uncertainty relating to going concern.

We draw attention to note (2/4) to the interim condensed consolidated financial statements, which indicates that the Group’s accumulated losses amounted to 31.8 SR million, which is 63.6% of the Company’s share capital as at June 30, 2022. Further, the Group’s current liabilities exceeded its current assets by 56.5 SR million as at the same date. Further the Group has a negative operating cash flow amounted to 4.7 SR million as at the same date. These circumstances indicate the existence of a material uncertainty that may cast significant doubt on the Group’s ability to continue as a going concern. As disclosed in note (2/4), management has made an assessment of the Group’s ability to continue as a going concern, and accordingly, these consolidated financial statements have been prepared on the going concern basis. Our conclusion on this matter has not been modified.

Additional Information:

Losses per share for the current period were calculated on the net loss attributable to equity holders of the parent company of SAR 7.13 million based on the weighted average number of shares issued during the period of 5,000,000 shares, the losses per share for the comparative period were calculated on the net loss attributable to equity holders of the parent company of SAR 11.53 million based on the weighted average number of shares issued during the comparative period of 5,000,000 shares. The weighted average number of shares for the two periods ending on June 30, 2022, and 2021 was arrived at by taking the effect of capital reduction based on the approval of the Extraordinary General Assembly on February 23, 2022 from the beginning of the earliest presented period.

The accumulated losses as on June 30, 2022, exceeded more than half of the company’s capital, as the accumulated losses amounted to 31.8 million SR, or 63.6% of the capital of 50 million SR as on June 30, 2022.

The reason for the increase in accumulated losses is to losses during the current quarter, which amounted to 7.13 million SR

Procedures and Instructions Applicable on Companies Listed in Saudi Capital Market Whose Accumulated Losses Reach 20% or more out of the Capital Thereof will continue to apply.