- Decline in the project revenue primarily due to delay in signing of new contracts in the commercial and industrial valley sectors during the current year.

- Decline in the operational revenue due to lower demand in hospitality businesses.

- The fiscal year 2023 included one-off revenue impact of SAR 263m as a result of periodic reassessment of life cycle cost estimates for residential and industrial projects under which revenue was being recognized based on the percentage of completion over time.

a) Gross loss of SAR 119m during 2024 compared to a gross profit of SAR 432m in the corresponding year mainly attributed to the following factors:

- Decrease in gross profit on projects by SAR 507m compared to corresponding year due to decrease in sales of residential properties and industrial and commercial lands, as well as the one-off revenue impact of SAR 263m during 2023 as a result of periodic reassessment of life cycle cost estimates for residential and industrial projects under which revenue was being recognized based on percentage of completion over time.

- Increase in gross loss from operations by SAR 44m mainly due to a decrease in hospitality revenue resulting from overall lower demand.

b) Increase in operational expenses (general administrative and marketing) during the current year by SAR 41m compared to the corresponding year mainly driven by higher employee costs, legal provisions, and marketing expenses on city activation.

c) Increase in financial charges during current year by SAR 136m compared to the corresponding year mainly driven by the utilization of additional loan facility of SAR 550m during the current year and the slight increase in SAIBOR throughout the year as compared to the prior year.

d) Decrease in other operating income for the current year by SAR 102m compared to the corresponding year mainly attributed to the following factors:

- Decrease in gain on disposal of investment property by SAR 47m due to lower disposals.

- No educational endowment fund income was realized in one of the company’s subsidiaries in the current year, as compared to SAR 38m realized in the prior year.

- One-off reversal of excess provision and forfeiture income of SAR 56 million in the last year compared to one-off other income of SAR 45 million due to court ruling granted in favor of the Group during the current year.

e) Loss of SAR 93m in the share of equity accounted investees during the current year compared to the profit of SAR 2m in the corresponding year.

However, the increase in net loss was partially offset by the reversal provision for Expected Credit Loss (ECL) by SAR 70m during the current year compared to the expense of SAR 19m in the corresponding year as a result of enhanced quality of collections and reassessment of the provision as per accounting standards.

Following the implementation of the first pillar of the Capital Optimization Plan (COP), the Company has successfully extinguished its accumulated losses as of September 30, 2024 through a capital decrease approved by the Extraordinary General Assembly on December 31, 2024.

The elements and the completed pillars of the capital optimization plan are summarized as follows:

1. The Capital Decrease: resulted in an enhanced capital structure and balance sheet, which extinguished the accumulated losses as of 30 September 2024.

2. The New Shareholder Loan: The Company signed the binding agreement with the PIF for a shareholder loan up to SAR 1,000m.

3. Bank Debt Restructuring: The Company signed a non-binding term sheet to reschedule its financing agreements with Alinma Bank, Saudi Awwal Bank, Banque Saudi Fransi and The Saudi National Bank (together, the “Banks”), to reschedule all obligations due to the Banks from the Company, currently standing at approximately SAR 3,471 m, under one new common terms syndicated agreement, As part of the rescheduling, a new credit facility would be made available to the Company by the Banks to partially settle previously unpaid charges to the Banks, with total commitment of approximately SAR 301.4m.

4. Debt Conversion: The Company’s Board recommended the increase of the Company’s capital through converting the debt of the PIF, which totals SAR 4,118,221,465 to ordinary new shares, which represents the amounts due by the Company to the PIF under: (a) the shareholder loan agreement, and (b) the debt recently novated from the Ministry of Finance to the PIF.

For more details about the capital optimization plan, please refer to the Company’s announcement on 05 Rabi Alawwal 1446H (corresponding to 08 September 2024G).