As detailed in Note No. (10) on the consolidated financial statements related to investments in companies using the equity method, we were unable to obtain the audited financial statements in accordance with International Financial Reporting Standards approved in the Kingdom of Saudi Arabia for East Asia Agricultural Investment Company, and the group did not prove its share in The results of the investee company’s business, given that the investee company did not issue internal or audited financial statements for the year ending on December 31, 2022 AD, and we were unable to perform other alternative audit procedures to determine whether there were any amendments that might have been necessary to make to each of the consolidated statement of financial position Consolidated profits or losses and other comprehensive income, consolidated changes in equity and consolidated cash flows for the fiscal years ending on December 31, 2022 AD and 2021 AD.

Emphasis of matter

As indicated in Note 6 to the consolidated financial statements, the consolidated financial statements of the Group includes the financial statements of Masader Agricultural Feed Mill Ltd. Company, (Subsidiary Company) in which the statutory procedures to transfer ownership of assets and all operation activities to the Company, in accordance with the signed agreement between the establishment owner (one of the shareholders) and the Company, have not been completed and our opinion is not modified in respect of this matter, which total assets of Masader Agricultural Feed Mill Ltd. Company included in these consolidated financial statements amount to SAR 26.12 million, and total liabilities amounted to SAR 47.96 million, revenues amounted to SAR 1.5 million, and the total expenses amounted to SAR 16.13 million.

We would like to draw attention to Note No. (33) on the consolidated financial statements, which indicates that the total accumulated losses of the group amounted to SAR 149,043,050, representing 38% of the capital (2021: SAR 96,412,880, representing 25% of the capital), and current liabilities exceeded its current assets, which led to a deficit in working capital in the amount of SAR 46,547,575. The group also realized a negative net cash from operating activities in the amount of SAR 19,455,687 (2021: SAR 83,489,487). However, the group relies mainly on the successful implementation of the group's budget plans to generate cash flows sufficient to enable it to fulfil its obligations when they accrued and to continue its operations without a significant deficit. The group's management believes that the consolidated financial statements of the group have been prepared on the basis of going concern and the absence of impairment in the value of assets. These matters, along with other matters described in Note No. (33), indicate the existence of material uncertainties and impairments in the value of assets, which may indicate that there is significant doubt about the Group's ability to continue its business. Our opinion has not been modified in respect of this matter.

Other Matter

The company's consolidated financial statements for the year ending on December 31, 2021 AD were reviewed by another auditor, who expressed a qualified opinion on those lists based on his report issued on Ramadan 3, 1443 AH, corresponding to April 4, 2022 AD.

The following is the basis for the qualified opinion on the audit of the Group's consolidated financial statements for the year ending on December 31, 2021:

We were not able to obtain the financial statements of the East Asia Agricultural Investment Company, and as a result of this matter, we were unable to determine whether there were any adjustments that might have been necessary to make to each of the consolidated statement of financial position as of December 31, 2021 AD, and the consolidated financial statements for the year ending in December 31, 2021 for each of the consolidated financial statements of profit or loss, other comprehensive income, consolidated changes in equity and cash flows for the fiscal year ending on that date.

Basic earnings per share and reduced earnings per share (if any) are presented for ordinary shares, where basic earnings per share is calculated by dividing profits or losses of ordinary shareholders of the group by the weighted average number of ordinary shares outstanding during the year, adjusted for the number of ordinary shares repurchased or issued during the year. Reduced earnings per share is calculated by adjusting the profit or loss of the groups ordinary shareholders and the weighted average number of shares outstanding during the year for the effects of all the reduced ordinary shares that are likely to be issued during the year.

The weighted average number of ordinary shares amounted to 39,176,700 shares, and the basic loss per share for the year is (1.40) riyals compared to an amount of (2.07) from the previous comparative year.

Subsequent events

On March 15, 2023 Tabuk Agricultural Development Company announces the sale of 10% of its total shares owned in Food Horizons Company Limited (a Subsidiary Company) with 800,000 shares, in a value of 29.6 million Saudi riyals, by offering the shares of Food Horizons Company in the parallel market, Nomu, The book value of those shares is As of September 30, 2022 AD, according to the approved and unaudited financial statements of Food Horizons Company - 9.1 million Saudi riyals, which has led to a cash inflows for the company in the amount of 29.6 million Saudi riyals and an exceptional decrease in the accumulated losses in the amount of 19.3 million Saudi riyals (after deducting offering costs), noting That Tabuk Agriculture Development Company has not lost control on Food Horizons Company and still owns 3,200,000 shares (equivalent to 40%) in Food Horizons Company, which is still a subsidiary of Tabuk Agriculture Development Company.

The value of the accumulated losses as on December 31, 2022 AD amounted to 149 million Saudi Riyals, Which is equivalent to 38% of the company capital of 391.767 million Saudi Riyals, and the date of attaining these losses was December 31, 2022 AD, where the main reasons of these losses are the impairment of properties and equipment related to a subsidiary, increase in value add tax VAT reassessment, increase of provision for governmental grants from ministry of finance related to a subsidiary, charging cost of issuing for shareholders equity instruments to retained losses, increase in cost of sales, increase in general and administrative expenses and increase in selling and distribution expenses.

The company will complete the procedures and instructions issued by the Capital Market Authority regarding companies whose shares are listed in the Saudi stock market, whose accumulated losses amounted to 35% or more, and less than 50% of their capital.