| Reasons of annual financial results |
The company reported net profit for the year ended December 31, 2016 amounting to 22,334 thousand riyals compared to the net profit of last year amounting to 12,358 thousand riyals, the increase in net profit is due to decrease in net claims incurred by 25,678 thousand riyals, decrease in shareholders impairment of goodwill by 8,459 thousand riyals, decrease in other reserves by 7,457 thousand riyals, decrease in policy acquisition costs by 5,597 thousand riyals, increase in commission income by 1,749 thousand riyals, increase in shareholders income from investment by 1,497 thousand riyals, decrease in change in unexpired risk reserve by 1,187 thousand riyals, which are partly offset by decrease in net premium earned by 18,204 thousand riyals, increase in other general and administrative expenses by 7,468 thousand riyals, decrease in other income, net by 5,662 thousand riyals, increase in operating and administrative salaries by 4,844 thousand riyals, decrease in reinsurance commission income by 3,234 thousand riyals and increase in shareholders general and administrative expenses by 2,011 thousand riyals. |
| External auditor's report containing reservation |
External Auditors in their report emphasis, we draw attention to Note 1 to the accompanying financial statements. On 19 Jumada I 1438H (February 16, 2017), the Company, based on its updated application, received Saudi Arabian Monetary Authoritys (SAMA) approval to decrease its share capital by Saudi Riyals 70 million in order to absorb the accumulated deficit, Note 29(b) to the accompanying financial statements. The Company had a net balance receivable from Gulf Union Insurance and Projects Management Holding Company B.S.C. (c.) (GUIPMC), a shareholder of the Company, amounting to Saudi Riyals 22.29 million as it was under dispute till June 2015. Upon resolution of the dispute and certain adjustments as required in SAMAs Letter, this balance was increased to Saudi Riyals 29.07 million. GUIPMC had earlier confirmed that the balance will be settled by June 30, 2016 but the amounts have not been settled as of December 31, 2016. Subsequent to December 31, 2016, GUIPMC has confirmed that the outstanding amount will be fully settled by June 30, 2017. The Companys management believes that such amount will be collected before the date as confirmed by GUIPMC; and Note 2 to the accompanying financial statements. These financial statements are prepared in accordance with IFRS and not in accordance with the generally accepted accounting standards in the Kingdom of Saudi Arabia. |
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