| Reasons of annual financial results |
The increase in losses during the current year compared to last year arose from charging the consolidated statement of income with SAR 19.6 million as an impairment loss in it's investment in the Gulf Company for the Development of Systems and Nouvo Tech Company representing two limited liability Saudi Companies in which the company owns 30% of the share capital, noting that both companies did not realize any revenue since their inception in year 2010G up until now, in addition there was an increase in provision for doubtful debts of SAR 2.55 million. In this year the Company also recognized an increase in zakat provisions of approximately SAR 1 million. During previous year the Company recognized other income from the sale of a property in Jeddah of SAR 17.9 million. In return finance charges have decreased by approximately SAR 6 million following Company's successful restructuring of it's debts, along with an increase in share of profit from associates of approximately SAR 10 million. Last year was charged with around SAR 11 million relating to rents for previous financial years, after the primary judgment of the Court of Appeal in Dammam was issued in favor of the General Authority for Kind Fahd Causeway. |
| External auditor's report containing reservation |
The Auditor 's Report includes the following qualifications: As disclosed in note (6) we have not been able to determine the impact of the non-issuance of the financial statements of the associates. Accordingly, we have relied on the management accounts prepared by the Company's management of the associates, and the Company did not recognize any profits or losses on investment in United Advertising Limited Company for the years ended 2016 and 2015, and we were unable to obtain adequate and appropriate audit evidence directly or through alternative audit procedures to determine the Company's share of the change in net assets of the entity Exhausted by them. Accordingly, we are unable to determine whether any changes to the consolidated financial statements are necessary. As disclosed in note (20) the consolidated financial statements were prepared under the Going Concern concept, but the delay in the company renting some Advertising sites and the incurred losses of some of its subsidiaries has led to a deficit in its operational results and of the statement of cash flows for certain subsidiaries such as Tihama Modern Bookstores, Tihama Holding for Commercial Investment, Tihama International Advertising and Istidama International Real Estate Company, the company provided to us it's future plans with respect to the collection of its debts and settlements with creditors and revitalization of operational activities.The Company's accumulated losses as of 31 March 2017 amounted to SAR 94,817,612 representing 63% of the Company's paid-up capital, Note (20) included the extraordinary General Assembly approval to extinguish part of the accumulated losses by reducing the Company's capital from SAR 150 million to SAR 75 million, through the cancellation of 7.5 million shares. The number of shares after the reduction became 7.5 million shares. Accordingly, on that date accumulated losses decreased to SAR 19,817,612 representing 26% of the company's capital after the reduction. As disclosed in note (20), the Company's current liabilities exceed its current assets by SAR 21,937,316 as at 31 March 2017, this is an indicator of the Company's inability to continue as a going concern. The Management plan is to address these losses and capital deficiency as disclosed in above mentioned note. As disclosed in note (6), the consolidated financial statements include an investment in a subsidiary company, International Advertising Services Limited, whose financial statements have not been consolidated as its financial statements has not been issued since the year 2012 due to siezure of the company's operations as of 16 November 2011. We have not been able to obtain sufficient and appropriate audit evidence directly or through alternative audit procedures to determine the validity of the disclosed financial statements. Accordingly, we are unable to determine whether any changes to the consolidated financial statements are necessary. The Auditor 's Report draws the attention to the following: As disclosed in Note (12), some subsidiaries have not yet submitted Zakat declarations such as Tihama Holding for Commercial Investment, Tihama Modern Bookstores Company, Istidama International Real Estate Company and Tihama International Advertising Company. Tihama Distribution Company has not submitted its Zakat declarations for the years since 2014. The management of the subsidiaries has made provisions for zakat annually. |
| Reclassifications in annual financial results |
Certain comparative figures have been reclassified to conform with current year reporting. The comparative figures were re-issued after the deconsolidation of the financial statements of the International Advertising Services Company. |
| Other notes |
Revenues for the year ended 31 March 2017 amounted to SAR 86.6 million compared to SAR 102.6 million last year, a decrease of 15.6%. The total shareholders' equity (after excluding the minority interest) as at 31 March 2017 amounted to SAR 50.9 million compared to SAR 103.3 million as at 31 March 2016, a decrease of 50.7%. The Company's operating results for this year have been materially affected by the provision for impairment of the value of the investments in Gulf Tech and Nouvo Tech companies by approximately SR 19.6 million, if the effect of this provision is eliminated, the operting losses would be reduced to SAR 34.9 million. Earnings per share for the current year and the comparative year were calculated based on the number of shares issued as of 31 March 2017 of 15,000,000 shares. On 13 April 2017, the share capital was reduced by canceling 7,500,000 shares. The number of shares issued after the reduction was 7,500,000 shares. The net loss for the year ended 31 March 2017 was higher than the reported net loss for the period ended 31 March 2017 by SAR 5.2 million as a result of the increase in losses of one of the subsidiaries based on the audited financial statements of SAR 2.65 million, in addition to increasing the provision for doubtful debts by SAR 2.55 million. The Consolidated financial statements of the Company have been prepared in accordance with the Financial Reporting Standard issued by the Saudi Organization for Certified Public Accountants. As of 13 April 2017 and after the capital reduction, the accumulated losses of the Company amounted to SAR 19,817,612 representing 26% of the Company's new share capital . The main reasons for the return of the accumulated losses above 20% of capital are attributable to the increase of additional losses in a subsidiary company by SR 2.65 million, in addition to the increase in provision for doubtful debts amounting to SR 2.55 million. The Company shall apply the procedures and instructions issued by the Capital Market Authority for listed companies have accumulated losses of 20% or more of their capital. The Company shall: Announce to the public without delay when they modify their position by reducing their cumulative losses below 20% of capital. |
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