“Tihama” losses increased to 14.2 million riyals during Q3 ending December 31, 2023

Tihama Advertising and Public Relations Company revealed that the net loss in the third quarter increased to 14.2 million riyals, compared to 9.3 million riyals in the same quarter of last year, by 52.6%. This came after today’s announcement of the preliminary financial results for the period ending on December 31, 2023 (nine months).

The operational loss amounted to 13.4 million riyals in the third quarter, compared to 10.4 million riyals in the same quarter of the previous year, an increase of 28.8%.

The net loss in the 9-month period amounted to 32.3 million riyals, compared to 21 million riyals in the same period last year, an increase of 53.8%.

The loss per share in the current period reached 0.8 riyals, compared to 4.1 riyals in the same period last year.

 The reason for the decrease in revenues during the current quarter compared to the same quarter of the previous year is mainly due to:

A decrease in distribution sector revenues by approximately 1.7 million Saudi riyals, in addition to a decrease in production sector revenues by approximately 5 million Saudi riyals, as the same quarter of the previous year included serial production contracts. Advertising sector revenues also decreased by approximately 0.6 million Saudi riyals as a result of the expiration of a contract. Renting advertising sites.

On the other hand, retail sector revenues increased by approximately 2.7 million Saudi riyals after increasing the number of sector branches.

The reason for the increase in losses during the current quarter compared to the same quarter of the previous year is mainly due to:

– A decrease in gross profit from continuing operations by approximately 6.5 million Saudi riyals, mainly as a result of recording the provision for inventory of slow-moving goods during the current quarter, amounting to approximately 7.5 million Saudi riyals.

On the other hand, the retail sector’s total profit increased by approximately 1.7 million riyals after increasing the number of sector branches.

-The same quarter of the previous year also included profits from discontinued operations (Aventis Global Trading Company – a subsidiary) amounting to approximately 2.6 million Saudi riyals.

This increase was partially offset by:

– An increase in the group’s share of the results of the operations of associate companies by approximately 1.5 million Saudi riyals.

– Other revenues increased by approximately 3.8 million Saudi riyals, mainly recording profits on deposits of approximately 5 million Saudi riyals and 0.7 million Saudi riyals for unclaimed credit balances, in contrast to recording approximately 1.5 million Saudi riyals in profits on the sale of investment properties. During the same quarter of the previous year.

The reason for the decrease in revenues during the current quarter compared to the previous quarter of the year is mainly due to:

Distribution sector revenues decreased by approximately 8 million Saudi riyals, as the previous quarter of the year represents the main supply season for educational institutions in the distribution sector.

The reason for the increase in losses during the current quarter compared to the previous quarter of the year is mainly due to:

– A decrease in the gross profit from continuing operations by approximately 9 million Saudi riyals, as the previous quarter of the year represents the main supply season for educational institutions in the distribution sector, and the provision for slow-moving inventory increased compared to the previous quarter by approximately 7.5 million Saudi riyals.

-An increase in general and selling expenses by approximately 2.4 million Saudi riyals.

The group’s share of the results of the operations of associate companies decreased by approximately 2.9 million Saudi riyals.

This increase was partially offset by:

– Other revenues increased compared to the previous quarter by approximately 4.6 million Saudi riyals, mainly due to an increase in deposit profits of approximately 3.6 million Saudi riyals and 0.7 million Saudi riyals from a discount earned.

– Zakat expense decreased by approximately 1.7 million Saudi riyals, as during the previous quarter of the year an allocation was recorded for amended zakat assessments in the parent company of approximately 1.9 million Saudi riyals.

The reason for the decrease in revenues during the current period compared to the same period of the previous year is mainly due to:

– A decrease in the revenues of the advertising sector by approximately 1.8 million Saudi riyals as a result of the decrease in revenues from existing sites and the expiration of the rental contract for advertising sites, and the production sector by approximately 9.7 million Saudi riyals, as the same period of the previous year included television series production projects. Distribution sector revenues also decreased by approximately 8 million Saudi riyals after losing a number of major customers during the current period compared to the same period of the previous year.

On the other hand, retail sector revenues increased by approximately 5.2 million Saudi riyals after increasing the number of sector branches.

The reason for the increase in losses during the current period compared to the same period of the previous year is mainly due to:

– A decrease in the gross profit from continuing operations by approximately 10.3 million Saudi riyals, mainly due to a decrease in the gross profit of the advertising sector by approximately 2.5 million Saudi riyals as a result of the decrease in sector revenues and the termination of the advertising site rental contract, and the production sector by approximately 0.7 million riyals. Saudi as a result of the decline in sector revenues. Although the revenues of the distribution sector decreased by approximately 8 million Saudi riyals, the cost of revenues for the sector was not affected by this decrease, as the allocation for slow-moving inventory was recorded during the current period at approximately 7.5 million Saudi riyals, and the allocation for slow-moving inventory was recorded in the library sector. Approximately 1.4 million Saudi riyals.

On the other hand, the total profit of the retail sector increased by approximately 2.3 million riyals after increasing the number of branches.

-An increase in general and selling expenses by approximately 6 million Saudi riyals.

During the current period:

– Recording the financial reorganization expenses at approximately 2.8 million Saudi riyals

– Recording impairment losses in the value of trade receivables and other receivable balances amounting to approximately 0.7 million Saudi riyals.

-Increase in zakat allocation by approximately 5.5 million Saudi riyals

This increase was partially offset by:

– An increase in the group’s share of the results of the operations of associate companies by approximately 9.5 million Saudi riyals.

– An increase in other revenues by approximately 5 million Saudi riyals, mainly due to the increase in deposit profits during the current period by approximately 5 million Saudi riyals, and 1.2 million Saudi riyals for unclaimed credit balances and an acquired discount of approximately 0.9 million Saudi riyals. On the other hand, it included The corresponding period recorded profits from the sale of investment properties amounting to approximately 1.5 million Saudi riyals.

The auditor’s report included the following reservation:

As shown in Note No. (6) Investments in Associated Companies Using the Equity Method in the attached condensed interim consolidated financial statements, the Group has an investment in associated companies “Wunderman Thomson MENA Company” amounting to 31,057,474 Saudi riyals, which is accounted for using the equity method, and a share has been recorded. The collection of this investment is according to financial statements prepared by management for the year ending on March 31, 2023 AD, as well as for the three and nine-month periods ending on December 31, 2023 AD, where the initial summary consolidated statement of profit or loss included profits in the amount of 7,783,151 Saudi riyals, in addition to a loss in the amount of 1,221,139 Saudi riyals. In the interim summary and consolidated statement of comprehensive income, we were unable to obtain sufficient evidence directly or through alternative procedures regarding the investment balance as of December 31, 2023, as well as the group’s share in profit or loss and comprehensive income for the three and nine-month periods ending on the same date. Accordingly, we were not able to determine whether adjustments to this amount were necessary. As of December 31, 2023 AD.

Material uncertainty related to the going concern principle:

We draw attention to Note 3-4 of the attached condensed interim consolidated financial statements, which indicates that the group has accumulated losses in the amount of 141,436,073 Saudi riyals as of December 31, 2023 AD, representing 35.4% of the company’s capital on the same date (March 31, 2023 AD amount 87,629,894 Saudi riyals, which represents 175% of the company’s capital. The group also has negative cash flows from operating activities amounting to 28,280,824 Saudi riyals. The total comprehensive loss for the nine-month period ending on December 31, 2023 amounted to 33,533,391 Saudi riyals. The group has plans to invest and work to restore The restructuring is in accordance with what is described in Note No. 3-4 and it is expected that the group will continue. As a result of the restructuring process not being completed until the date of the report and the knowledge of the results from this process, these circumstances indicate the existence of a fundamental uncertainty, which may raise significant doubts about the group’s ability to survive. As a going concern. Our conclusion has not been modified with respect to this matter.

The auditor’s report included a reference to other matters as follows:

The group’s interim condensed consolidated financial statements for the three and nine-month periods ending on December 31, 2022 were examined by another auditor, who expressed a modified conclusion on those condensed interim consolidated financial statements on February 7, 2023. The group’s consolidated financial statements for the fiscal year were also reviewed. ended on March 31, 2023 AD by another auditor and expressed a modified opinion on those consolidated financial statements on June 22, 2023 AD. The reason for amending the previous auditor’s opinion was the following: “The group’s investments in associate companies were recorded, which were accounted for using the equity method.” Ownership based on financial statements prepared by the company’s management, and the balance of investments in the group’s condensed consolidated statement of financial position as of December 31, 2022 amounted to 29,015,417 Saudi riyals, and the group’s share profits were included in the group’s condensed consolidated statement of profit or loss for the period ending on that date at an amount 959,113 Saudi riyals, and we were not able to obtain sufficient evidence directly or through procedures regarding the group’s investment balances in the above company as of December 31, 2022 AD, as well as the group’s share in the other comprehensive income of the above company for the same period, and accordingly we were not able to determine Whether it is necessary to make adjustments to this amount.”

– During the previous fiscal years, a subsidiary company recorded other revenues from rental privileges for real estate leasing contracts, taking into account that they were related to conditional rental privileges, and since these privileges are potential in nature and the conditions for obtaining these privileges were not met, and therefore it did not meet the necessary conditions for their registration.

The Group canceled the recording of other income from lease concessions and adjusted the opening balance of short-term rental obligations as of March 31, 2022 AD. The effect of this amendment was proven on the opening balance of accumulated losses as of March 31, 2022 AD, while amending the comparative information for the consolidated statement of financial position as of March 31, 2022, March 31, 2023, and the consolidated statement of profit or loss and cash flow statement for the comparative financial period ending on December 31, 2022, and the loss per share for the three and nine-month periods ending on December 31, 2022.

Some comparative figures for the previous year have been reclassified to be consistent with the current year’s presentation and in accordance with the requirements of International Financial Reporting Standard No. (5) Non-current assets prepared for sale and discontinued operations.

-The loss per share for the current period was calculated by dividing the net loss for the period attributable to the shareholders of the parent company, which amounted to 31.9 million riyals, by the weighted average number of shares outstanding during the period, which amounted to 39,745,455 shares. The loss per share for the similar period of the previous year was also calculated by dividing the net loss for the period attributable to To the shareholders of the parent company, amounting to 20.5 million riyals based on the weighted average number of shares outstanding during the corresponding period, amounting to 5,000,000 shares. On April 2, 2023, the extraordinary general assembly of shareholders agreed to increase the capital of the parent company by 350 million Saudi riyals through the issuance of priority rights shares, which affected the average reference for ordinary shares outstanding since then.

-The accumulated losses as of December 31, 2023 amounted to approximately 141.4 million riyals, representing 35.4% of the company’s capital, which amounted to 400 million Saudi riyals, as of December 31, 2023 (approximately 87.6 million riyals, representing 175%). Of the company’s capital, amounting to 50 million riyals as of March 31, 2023 AD).

The reason for the increase in accumulated losses is due to losses during the current quarter amounting to 14.2 million Saudi riyals.

The group is working to restructure some of its subsidiaries and continue to expand the retail sector operations to increase revenues sufficient to cover its expenses and achieve operating profits in subsequent years. The group expects an improvement in its commercial activities and revenue growth during the coming year, driven by the full operation of the new branches in the retail sector, the development of the distribution sector operations, and an increase in the profitability margin, especially in the production sector.