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Jabal Omar Development Company announces the consolidated financial results for the year ending on 12-31-2021

Element ListCurrent YearPrevious Year%Change
Sales/Revenue 310.36176.6875.662
Gross Profit (Loss) -224.64-424.69-47.104
Operational Profit (Loss) -458.34-790.7-42.033
Net Profit (Loss) after Zakat and Tax 946.21-1,339.01-
Total Comprehensive Income 948.7-1,340.83-
Total Share Holders Equity (after Deducting Minority Equity) 8,626.7236,987.02323.467
Profit (Loss) per Share 1.02-1.44
All figures are in (Millions) Saudi Arabia, Riyals
Element ListExplanation
The reason of the increase (decrease) in the net profit during the current year compared to the last year is The reason for net profit during the year 2021 compared to loss in last year is mainly attributed to the following:

- Increase in revenue during 2021 compared to 2020 due to ease of COVID-19 restriction by government

- Implementation of cost optimization initiatives during 2021.

-Gain recognized on sale of 2 plots of land in Jabal Omar project which was announced on Tadawul on 13 December 2020 and 30 September 2021 respectively.

- Modification gain recognized on restructuring of Ministry of Finance direct loan as well as SABB and SNB facility which was announced on Tadawul on 5 October 2021 and 21 November 2021 respectively.

Statement of the type of external auditor's report Qualified opinion
Modification, Qualification or Emphasis of a Matter as Stated within the External Auditor Opinion As of 31 December 2021, the net carrying value of property, plant and equipment and investment properties (collectively “the Assets”) reported in the Group’s consolidated statement of financial position amounted to SR 19,369 million and SR 5,024 million, respectively. In view of substantial reduction in cash generated from the Group’s hotels and other commercial operations, as well as the interruption in the development of the Group’s real estate projects primarily due to the outbreak of COVID-19 pandemic, and in accordance with the requirements of IAS 36 Impairment of assets, the Group’s management performed an impairment assessment on its Assets as of 31 December 2021 by comparing the Assets’ carrying values with the recoverable amount, being the higher of fair value less costs to sell and value-in-use (VIU). Accordingly, the Group’s management engaged external valuers ("valuers") to determine the fair values of the assets and carried out an internal assessment to determine the VIU. As a result of the Group management’s assessment, it concluded that no impairment provision is required on its Assets as of 31 December 2021. We reviewed and challenged the significant judgments, assumptions and estimates used by the Group’s management including its determination of the appropriate valuation methodologies, and noted that in our view recoverable values of certain Assets that comprised property, plant and equipment and investment properties with net carrying values of SR 9,672 million and SR 391 million, respectively as at 31 December 2021, were determined mainly using cost approach, while a permitted valuation approach by the applicable accounting standards, is not appropriate considering the nature and current and expected use of the Assets. We also noted that certain significant assumptions used in the calculation of certain Asset’s VIUs and fair values using income approach were not supported by reasonable basis. Had the Group management used valuation methodology that is aligned with the requirements of the applicable accounting framework, as well as assumptions that are reasonably supported, certain elements in the accompanying consolidated financial statements together with the related disclosures would have been materially affected. The effects on the consolidated financial statements have not been determined.

We have audited the consolidated financial statements of Jabal Omar Development Company – A Saudi Joint Stock Company - (the “Company” or the “Parent Company”) and its subsidiaries (the “Group”), which comprise the consolidated statement of financial position as at 31 December 2021, and the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, except for the effects of the matter described in the Basis for Qualified Opinion section of our report, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at 31 December 2021, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards that are endorsed in the Kingdom of Saudi Arabia and other standards and pronouncements that are endorsed by the Saudi Organization for Chartered and Professional Accountants (“SOCPA”).

We draw attention to note 1 to the consolidated financial statements, which indicates that the Group’s current liabilities exceeded its current assets by SR 2,280 million and the Group had accumulated losses amounting to SR 1,179 million as at 31 December 2021. As stated in note 1, these events or conditions, along with other matters as set forth in note 1, indicate that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

1) We draw attention to note 1 of the consolidated financial statements, which describes that AlInma Makkah Real Estate Fund’s (“Fund”) balances and transactions as at and for the years ended 31 December 2021 and 2020 have been consolidated based on management’s assessment of a binding and non-revokable agreement, executed between the Company and the Fund manager pursuant to the approval of the transaction by the Fund’s unit holders on 9 January 2022 which are further subject to formal approvals. Our opinion is not modified in respect of this matter.

2) We draw attention to note 15 (a) of the consolidated financial statements, which describes that during the year ended 31 December 2021, the Group announced the restructuring of loan facility from the Ministry of Finance (“MoF”) which involves significant modifications of loan terms and conversion of certain portion of the existing loan into a subordinated perpetual instrument. Pursuant to receipt of binding term sheets from MoF, confirmation from the facility agent and approval of Board of Directors (BoD) of acceptance of term sheets, the Group derecognized the existing facility and recognized new facilities resulting in recognition of a gain amounting to SR 1.4 billion. The Group management is in the process of finalizing the signing the facilities agreement as at reporting date. Our opinion is not modified in respect of this matter.

Reclassification of Comparison Items not applicable
Additional Information The accumulated losses as at 31 December 2021 amounted to SR 1,274 million, equivalent to 14% of the Company's capital compare to accumulated lossess as at 31 December 2020 amounted to SR 2,128 million, equivalent to 23% of Company's capital

The Capital Market Authority and Saudi Exchange take no responsibility for the contents of this disclosure, make no representations as to its accuracy or completeness, and expressly disclaim any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this disclosure, and the issuer accepts full responsibility for the accuracy of the information contained in it and confirms, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts or information the omission of which would make the disclosure misleading, incomplete or inaccurate.

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