abdullah al-othaim markets company (saudi joint...
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ABDULLAH AL-OTHAIM MARKETS COMPANY
(SAUDI JOINT STOCK COMPANY)
CONSOLIDATED FINANCIAL STATEMENTS AND
AUDITORS’REPORT
FOR THE YEAR ENDED DECEMBER 31, 2012
ABDULLAH AL-OTHAIM MARKETS COMPANY
(SAUDI JOINT STOCK COMPANY)
CONSOLIDATED FINANCIAL STATEMENTS AND AUDITORS' REPORT
FOR THE YEAR ENDED DECEMBER 31, 2012
INDEX PAGE
Auditors' report 1
Consolidated balance sheet 2
Consolidated statement of income 3
Consolidated statement of cash flows 4
Consolidated statement of changes in shareholders’ equity 5
Notes to the consolidated financial statements 6 – 18
ABDULLAH AL-OTHAIM MARKETS COMPANY
(SAUDI JOINT STOCK COMPANY)
CONSOLIDATED BALANCE SHEET
AS AT DECEMBER 31, 2012
The accompanying notes form an integral part of these consolidated financial statements
-2-
Notes
2012
SR
2011
SR
ASSETS
Current assets
Cash on hand and at banks 63,478,659 43,619,168
Inventories, net 3 321,789,805 311,353,260
Prepayments and other receivables 4 79,885,395 105,464,896
Total current assets 465,153,859 460,437,324
Non-current assets
Investments in associated companies and others 6 174,018,032 118,945,249
Property and equipment, net 7 1,075,859,844 1,024,756,613
Projects in progress 8 36,517,123 58,260,734
Intangible assets, net 11,876,824 13,215,328
Total non-current assets 1,298,271,823 1,215,177,924
TOTAL ASSETS 1,763,425,682 1,675,615,248
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term loans and Murabahas 9 (a) 78,193,602 61,432,944
Current portion of long-term loans and Murabahas 9 (b) 105,399,512 103,346,089
Trade payables 656,122,209 694,779,387
Other payables and accrued expenses 10 101,337,415 83,062,487
Total current liabilities 941,052,738 942,620,907
Non-current liabilities
Provision for End-of-service benefits 41,068,395 35,461,372
Long-term loans and Murabahas 9 (b) 100,858,757 166,230,587
Total non-current liabilities 141,927,152 201,691,959
Total liabilities 1,082,979,890 1,144,312,866
Shareholders' equity
Share capital 1 225,000,000 225,000,000
Statutory reserve 12 74,159,034 56,982,411
Voluntary reserve 13 12,453,336 12,453,336
Retained earnings 368,757,084 236,667,477
Unrealized gains from investments in available-for-
sale securities 76,338 199,158
Total shareholders' equity 680,445,792 531,302,382
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 1,763,425,682 1,675,615,248
ABDULLAH AL-OTHAIM MARKETS COMPANY (SAUDI JOINT STOCK COMPANY) CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2012
The accompanying notes form an integral part of these consolidated financial statements
-3-
Notes
2012
SR
2011
SR
Revenues
Sales 4,105,198,404 3,942,797,390
Rent 5 160,978,268 148,115,441
Total revenues 4,266,176,672 4,090,912,831
Cost of revenues (3,940,929,175) (3,767,767,726)
Gross profit 325,247,497 323,145,105
Selling and distribution expenses 17 (113,878,296) (115,020,839)
General and administrative expenses 18 (55,244,940) (50,502,628)
Income from continuous main operations 156,124,261 157,621,638
Company’s share in net profits of the
associate companies 6 30,151,720
12,655,583
Impairment of an investment 6 (929,491) -
Finance expenses (10,910,445) (12,516,125)
Other income (expenses), net 1,080,185 (4,177,922)
Income before zakat 175,516,230 153,583,174
Zakat (3,750,000) (3,500,000)
NET INCOME 171,766,230 150,083,174
Earnings per share 14
From continuous main operations 6.94 7.01
From net income 7.63 6.67
ABDULLAH AL-OTHAIM MARKETS COMPANY (SAUDI JOINT STOCK COMPANY) CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2012
The accompanying notes form an integral part of these consolidated financial statements
-4-
2012 SR
2011 SR
OPERATING ACTIVITIES
Income before zakat 175,516,230 153,583,174
Adjustments for:
Depreciation 82,753,690 73,976,900
Amortization of intangible assets 1,338,504 1,338,504
Losses (Gains) on sale of property and equipment 613,766 (749,181)
Impairment of an investment 929,491 -
Company’s share in net profits of the associate companies (30,151,720) (12,655,583)
Provision for end-of-service benefits 5,607,023 6,577,853
Changes in working capital:
Inventories (10,436,545) (26,077,528)
Prepayments and other receivables 25,579,501 (16,720,398)
Trade payables, other payables and accrued expenses (20,362,202) 119,574,359
Zakat paid (3,770,048) (3,712,420)
Net cash from operating activities 227,617,690 295,135,680
INVESTING ACTIVITIES
Investments in associated companies and others (45,098,374) (900,000)
Additions to property, equipment and projects in progress (114,795,803) (209,666,747)
Dividends received from an associated company 19,125,000 -
Proceeds on sale of property and equipment 2,068,727 1,151,760
Net cash used in investing activities (138,700,450) (209,414,987)
FINANCING ACTIVITIES
Loans and Murabahas (46,557,749) (19,837,431)
Cash dividends (22,500,000) (67,500,000)
Net cash used in financing activities (69,057,749) (87,337,431)
Net change in cash on hand and at banks 19,859,491 (1,616,738)
Cash on hand and at banks at January 1 43,619,168 45,235,906
CASH ON HAND AND AT BANKS AT DECEMBER 31 63,478,659 43,619,168
Non cash transactions:
Unrealized (losses) gains on investment in available-for-sale
securities (122,820) 199,158
ABDULLAH AL-OTHAIM MARKETS COMPANY (SAUDI JOINT STOCK COMPANY) CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE YEAR ENDED DECEMBER 31, 2012
The accompanying notes form an integral part of these consolidated financial statements
-5-
Notes
Share capital
SR
Statutory
reserve
SR
Voluntary
reserve
SR
Retained
earnings
SR
Unrealized gains
from investments
in available-for-
sale securities
SR
Total
SR
Balance at January 1, 2011 225,000,000 41,974,094 12,453,336 169,092,620 - 448,520,050
Net income for year 2011 - - - 150,083,174 - 150,083,174
Transfer to statutory reserve 12 - 15,008,317 - (15,008,317) - -
Unrealized gains on investment
in available-for-sale securities
-
-
-
-
199,158
199,158
Cash dividends 15 - - - (67,500,000) - (67,500,000)
Balance at December 31, 2011 225,000,000 56,982,411 12,453,336 236,667,477 199,158 531,302,382
Net income for year 2012 - - 171,766,230 - 171,766,230
Transfer to statutory reserve 12 - 17,176,623 - (17,176,623) - -
Unrealized losses on investment
in available-for-sale securities
-
-
-
- (122,820) (122,820)
Cash dividends 15 - - - (22,500,000) - (22,500,000)
Balance at December 31, 2012 225,000,000 74,159,034 12,453,336 368,757,084 76,338 680,445,792
ABDULLAH AL-OTHAIM MARKETS COMPANY
(SAUDI JOINT STOCK COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2012
-6-
1. ORGANIZATION AND ACTIVITY
Abdullah Al-Othaim Markets Company is a Saudi Joint Stock company registered in
Riyadh on Rajab 7, 1400 (May 21, 1980) under Commercial Registration Number
1010031185. The Company was converted from a limited liability into a joint stock
Company according to the ministerial decree No. 227/G on Ramadan 3, 1428
(corresponding to September 15, 2007).
The share capital of the Company amounting to SR 225 million is divided into 22.5
million shares of SR 10 each.
The Company’s main activity is to undertake wholesale trading in food supplies, fish,
meat, cars and its spare parts, agricultural crops and livestock, household
equipment, constructing, managing, operating and maintaining of super markets
and malls, cooked and non-cooked catering services, computer services, operating
and maintaining electrical and mechanical equipment, constructing, operating and
maintaining of storage and cooling warehouses.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements have been prepared in
accordance with the accounting standards generally accepted in the Kingdom of
Saudi Arabia issued by the Saudi Organization for Certified Public Accountants. The
following is a summary of significant accounting policies applied by the Company.
Basis of consolidation
During 2011, the Company established limited liability companies in the Kingdom of
Saudi Arabia which are fully owned, directly and indirectly, by the Company. The
investment in these companies in year 2011 was stated at cost since the financial
statements for these companies have not been prepared and the companies did
not engage in any commercial activities during year 2011. Therefore, they were not
consolidated in 2011.
The consolidated financial statements include the financial statements of Abdullah
AlOthaim Markets Company (the "Company") and the financial statements of the
following subsidiaries: Capital Ownership %
SR Direct Indirect
Haley Holding Co. 100,000 99% 1%
Universal Marketing Center Co. 100,000 99% 1%
Seven Services Co. 100,000 99% 1%
Bayt Alwatan Co. 100,000 99% 1%
Marafeq Tashgheel Co. 500,000 - 100%
ABDULLAH AL-OTHAIM MARKETS COMPANY
(SAUDI JOINT STOCK COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 2012
-7-
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Use of estimates
The preparation of consolidated financial statements in conformity with generally
accepted accounting standards requires the use of estimates and assumptions that
could affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements in addition to
the reported amounts of revenues and expenses during the year. Although these
estimates are based on management’s best knowledge of current events and
activities available with the management, actual results may ultimately differ from
those estimates.
Accounting convention
The consolidated financial statements are prepared under the historical cost and
accrual basis conventions, except for the Investment in available-for-sale securities
which is accounted for using fair value and investment in associated companies
which are accounted for using equity method.
Revenue recognition
Sales are recognized upon delivery of goods to customers. Income from rent is
recognized on accrual basis over the period of lease contracts.
Expenses
Selling and distribution expenses principally comprise of costs incurred in the
distribution and sale of the Company’s products. All other expenses are classified as
general and administrative expenses.
General and administrative expenses include direct and indirect costs not specifically
part of cost of revenues as required under generally accepted accounting
standards. Allocations between general and administrative expenses and cost of
revenues, when required, are made on consistent basis.
Cost of sales
Cost of sales includes the cost of purchases and expenses related to the outlets.
Accounting for lease agreements
All leases entered into by the Company are classified as operating leases. Rental
payments are charged to the statement of income using the straight-line method
over the term of the operating lease contract.
The lease amounts received by the Company as a lessor in operating lease contracts
are recognized in the statement of income using the straight-line method over the
period of the related leases.
ABDULLAH AL-OTHAIM MARKETS COMPANY
(SAUDI JOINT STOCK COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 2012
-8-
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Investments in Associated companies and others
Investment in an associated company which is 13.65% owned and in which the
Company exercises significant influence through its participation in its financial and
operational policies is accounted for using equity method, under which the
investment is initially stated at cost and adjusted thereafter for the change in the
Company's share in net assets of the investee. Company's share of the net profit or
loss of the investee is reported in the consolidated statement of income.
Investments in companies which are less than 20% owned and where the fair value is
no readily determinable are stated at cost. Appropriate provision is made for any
other than temporary impairment in the value of these investments. Income is
reported upon declaration.
Investments in securities are classified in the balance sheet as investments available
for sale at fair value. Unrealized gains or losses are reported in the equity. Realized
gains or losses on disposal of investments in securities available for sale are reported
in the income statement. Dividends from investments available for sale are reported
in the income statement.
If the fair value is not available, these investments are stated at cost. Cost is adjusted
to reflect any other than temporary impairment in the value.
Inventories
Inventories are stated at the lower of cost or market value. Cost is determined using
the weighted average costing method.
Property and equipment
Property and equipment are stated at cost less accumulated depreciation.
Depreciation is provided over the estimated useful lives of the applicable assets using
the straight line method. Leasehold improvements and buildings constructed on
leased lands are amortized over the shorter of the estimated useful life of these assets
or the remaining term of the lease. The estimated lives of the principal classes of
assets are as follows:
Years
Machinery and equipment 10
Buildings 5 – 25
Vehicles 5 – 7
Computers 5 – 7
Furniture and fixtures 7
Leasehold improvements 10
ABDULLAH AL-OTHAIM MARKETS COMPANY
(SAUDI JOINT STOCK COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 2012
-9-
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Impairment of long-term assets
The Company reviews on regular basis the carrying amount of its tangible assets to
determine whether there is any indication that those assets have suffered impairment
in value. In case such indication exists, the recoverable amount of the assets is
estimated in order to determine the extent of the impairment, if any. Where it is not
possible to estimate the recoverable amount of individual assets, the Company
estimates the recoverable amount of the cash generating unit to which the asset
belongs. If the recoverable amount of an asset or cash-generating unit is estimated to be less
than its carrying amount, the carrying amount of the asset or cash-generating unit is
reduced to its recoverable amount. Impairment loss is recognized as an expense in
the consolidated statement of income immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset or
cash-generating unit is increased to the revised estimate of its recoverable amount,
but so that the increased carrying amount does not exceed the carrying amount
that would have been determined had no impairment loss been recognized for the
asset or cash-generating unit in prior years. A reversal of an impairment loss is
recognized as income in the consolidated statement of income immediately. Borrowing cost
Borrowing costs directly attributable to acquisitions or constructions of qualifying
assets, which are the assets that necessarily take a substantial period of time to get
ready for their intended use or sale, are added to the cost of those assets until the
assets are substantially ready for their intended use or sale. All other borrowing costs
are charged to the consolidated statement of income in the period in which they
are incurred. Intangible assets
Intangible assets represent costs incurred for the purpose of using rented stores (key
money). These assets are amortized over the term of the related contract lease. Foreign currency translation
Foreign currency transactions are translated into Saudi Riyals at the rates of
exchange prevailing at the time of the transactions. Monetary assets and liabilities
denominated in foreign currencies at the balance sheet date are translated at the
exchange rates prevailing at that date. Gains and losses from settlement and
translation of foreign currency transactions are included in the consolidated
statement of income. Provision for End-of-service Benefits
End-of-service benefits are provided in accordance with the Saudi Arabian Labor
Law and are reduced by the payments to employees. Differences in indemnities, if
any, are computed and paid to employees upon termination. Zakat
The Company is subject to the regulations of the Department of Zakat and Income
Tax (“DZIT”) in the Kingdom of Saudi Arabia. Zakat is provided on an accrual basis.
The zakat charge is computed on the zakat base. Any difference in the estimate is
recorded when the final assessment is approved, at which time the provision is
cleared.
ABDULLAH AL-OTHAIM MARKETS COMPANY
(SAUDI JOINT STOCK COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 2012
-10-
3. INVENTORIES, NET 2012
SR
2011
SR
Main warehouses goods 98,093,529 96,285,893
Branches goods 223,696,276 215,067,367
321,789,805 311,353,260
4. PREPAYMENTS AND OTHER RECEIVABLES
2012
SR
2011
SR
Prepaid expenses 60,119,025 67,844,079
Advance payments to suppliers 6,837,666 16,407,151
Stores rent receivables 3,261,995 4,066,828
Employees’ receivables 1,797,558 1,798,121
Margin on letters of credit and letters of guarantees 3,982,168 8,869,905
Others 3,886,983 6,478,812
79,885,395 105,464,896
Prepayments include an amount of SR 16.4 million (2011: SR 21.4 million) which
represents rents paid to a related party in advance against early payment discount.
5. RELATED PARTY TRANSACTIONS During the period, the Company transacted with the following related parties. The
terms of these transactions and expenses were executed in accordance with the
Company’s management approval:
Company’s name Relationship
Al Othaim Holding Company Founding Shareholder
Abdullah Al Othaim Real Estate Investment
and
Development Co. Associated Company
The significant transactions and related amounts are as follows:
Transactions
2012
SR
2011
SR
Rent expenses 11,442,528 9,923,481
Rent income 37,560,575 37,445,958
ABDULLAH AL-OTHAIM MARKETS COMPANY
(SAUDI JOINT STOCK COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 2012
-11-
6. INVESTMENTS IN ASSOCIATED COMPANIES AND OTHERS
Investments consist of the following:
Notes
2012
SR
2011
SR
Investment in an associated company a 122,458,619 114,446,091
Investment in an associated company of a
subsidiary b 48,512,566 -
Investment in National Laboratories Co, Net c 2,470,509 3,400,000
Investments in available-for-sale securities 576,338 699,158
Investments in non-consolidated subsidiaries - 400,000
174,018,032 118,945,249
a- Investment in an associated company
2012
SR
2011
SR
Balance, January 1 114,446,091 101,790,508
Company's share in net profits 27,137,528 12,655,583
Cash dividends received (19,125,000) -
Balance, December 31 122,458,619 114,446,091
The investment in associated company represents 13.65% of the share capital of
Abdullah Al-Othaim Real Estate Investment and Development Company. The
remaining percentage is owned by Al-Othaim Holding Company, Mr. Abdullah
Saleh Al-Othaim and his family members.
b- This item represents investments in companies associated to the subsidiaries of Abdullah Al Othaim Markets Company. These companies are engaged in Food
business.
c- The Company invested in 6% of the share capital of National Laboratories Company, a limited liability company registered in Dammam city. Through
periodic review of the value of the investment, it has been determined that the
company is incurring continuous losses, which resulted in an impairment of the
investment by SR 929,491 reported in the consolidated statement of income.
ABDULLAH AL-OTHAIM MARKETS COMPANY
(SAUDI JOINT STOCK COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 2012
-12-
7. PROPERTY AND EQUIPMENT, NET
Lands
SR
Machinery and
equipment SR
Buildings SR
Vehicles SR
Computers SR
Furniture
and fixtures SR
Leasehold
improvements SR
Total SR
Cost
January 1, 2012 318,838,660 188,067,334 484,368,323 52,312,989 80,754,810 112,059,566 108,936,778 1,345,338,460
Additions 19,195,125 18,205,693 53,070,268 10,376,155 10,074,234 11,494,432 14,123,507 136,539,414
Disposals - (4,430,324) - (618,900) (5,667,642 ) (3,925,437) (108,229 ) (14,750,532)
December 31, 2012 338,033,785 201,842,703 537,438,591 62,070,244 85,161,402 119,628,561 122,952,056 1,467,127,342
Accumulated
depreciation
January 1, 2012 - 81,600,863 58,960,507 35,464,849 36,313,580 66,278,619 41,963,429 320,581,847
Charge for the period - 18,711,596 28,711,833 7,469,309 6,264,275 10,800,139 10,796,538 82,753,690
Disposals - (2,706,064) - (537,275) (4,942,173) (3,881,267) (1,260) (12,068,039)
December 31, 2012 - 97,606,395 87,672,340 42,396,883 37,635,682 73,197,491 52,758,707 391,267,498
Net book value
December 31, 2012 338,033,785 104,236,308 449,766,251 19,673,361 47,525,720 46,431,070 70,193,349 1,075,859,844
December 31, 2011 318,838,660 106,466,471 425,407,816 16,848,140 44,441,230 45,780,947 66,973,349 1,024,756,613
• On March 29, 2010, the Company purchased investment lands in Madinah from a related party (Abdullah Al Othaim Real Estate Investment and
Development Co.), for an amount of SR 98 million for the purpose of constructing a shopping mall project and the investment in residential and office
buildings. The approval for the purchase of lands was granted in the second shareholders' ordinary general assembly meeting held on April 7, 2010.
Some title deeds of the land were transferred to the name of the Company while other title deeds amounting to SR 37 million are still under progress.
• Land mentioned above amounting to SR 166 million (2011: SR 165 million) are mortgaged to some local banks as collateral against banks facilities (Note
9b). No capital commitments associated with these projects exist as at the consolidated balance sheet date.
• Additions include an amount of SR 68,268,504 (2011: SR 18,231,505) transferred from projects in progress.
ABDULLAH AL-OTHAIM MARKETS COMPANY
(SAUDI JOINT STOCK COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 2012
-13-
8. PROJECTS IN PROGRESS
Projects in progress mainly represent costs incurred for developing new stores and
constructing logistic facilities. The contractual commitments relating to projects in
progress as at December 31, 2012 amounted to SR 10.2 million (December 31, 2011:
SR 17.3 million).
During the year, an amount of SR 68,268,504 (2011: SR 18,231,505) was transferred to
property and equipment (Note 7).
9. LOANS AND MURABAHAS
a) Short-term murabahas
The Company has facilities from local commercial banks in the form of short-term
murabahas to finance its working capital. Unutilized balance of these murabahas
loans as at December 31, 2012 amounted to SR 191.8 million (December 31, 2011: SR
178.6 million).
b) Long-term loans and murabahas:
December 31, 2012
Current portion
SR
Non-current
portion
SR
Total
SR
Bank Al-Bilad Loan 56,217,694 22,676,939 78,894,633
Saudi Hollandi Bank Loans 31,000,000 60,000,000 91,000,000
SAMBA Financial Group Loan 18,181,818 18,181,818 36,363,636
105,399,512 100,858,757 206,258,269
December 31, 2011
Current portion
SR
Non-current
portion
SR
Total
SR
Saudi Industrial Development
Fund Loan 400,000 243,500 643,500
Bank Al Bilad Loan 53,001,644 74,987,087 127,988,731
Saudi Hollandi Bank Loans 34,666,667 91,000,000 125,666,667
Saudi British Bank Loan 15,277,778 - 15,277,778
103,346,089 166,230,587 269,576,676
These facilities are secured by personal guarantees of one of the shareholders and
mortgage of lands title deeds owned by the Company with a book value of SR 166
million as at December 31, 2012 (December 31, 2011: SR 165 million).
ABDULLAH AL-OTHAIM MARKETS COMPANY
(SAUDI JOINT STOCK COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 2012
-14-
10. OTHER PAYABLES AND ACCRUED EXPENSES
2012
SR 2011 SR
Due to employees 33,639,195 33,531,219
Othaim cards (received in advance) 17,241,279 11,923,456
Deferred revenues – Iktissab credit 20,499,117 11,524,339
Advanced payments of shops’ rent 3,952,278 5,202,911
Accrued utilities expenses 5,059,463 5,056,021
Zakat provision (Note 11) 4,281,225 4,301,273
Refundable deposits 6,311,341 4,024,569
Others 10,353,517 7,498,699
101,337,415 83,062,487
11. ZAKAT
The principal elements of the zakat base are as follows:
2012 SR
2011 SR
Calculation of zakat base
Shareholders’ equity beginning of year 508,603,222 381,020 ,050
Income before zakat 175,516,230 153,583,174
Long term liabilities 247,326,664 305,038,048
Non-current assets (1,298,271,823) (1,215,177,924)
Some figures were adjusted to arrive to the Zakat base.
Due to negative zakat base, Zakat provision is computed based on adjusted net
income.
The movement in provision for zakat is as follows:
2012 SR
2011 SR
Balance at January 1 4,301,273 4,513,693
Payments during the year (3,770,048) (3,712,420)
Provision for the year 3,750,000 3,500,000
Balance at December 31 4,281,225 4,301,273
The Company received the final assessments until 2007. The Company has also filed
its zakat returns for the years 2008, 2009, 2010 and 2011 which are still under review by
DZIT.
ABDULLAH AL-OTHAIM MARKETS COMPANY
(SAUDI JOINT STOCK COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 2012
-15-
12. STATUTORY RESERVE
In accordance with Regulations for Companies in Saudi Arabia, the Company has
established a statutory reserve by the appropriation of 10% of net income until the
reserve reaches 50% of the share capital. This reserve is not available for dividend
distribution.
13. VOLUNTARY RESERVE
The extraordinary general assembly in its meeting held on Jumad Al-Awal 2, 1430
(corresponding to April 27, 2009) approved a voluntary reserve of 20% from year 2008
net income and appropriated it for the expansion of the Company’s operations.
14. EARNINGS PER SHARE
Earnings per share are calculated based on the net income and the income from
continuous main operations for the year divided by the weighted average number of
shares for the year ended December 31, 2012 and 2011 amounting to 22.5 million
shares.
15. DIVIDENDS
In its meeting held on October 3 , 2012, the shareholders’ General Assembly
approved the distribution of cash dividends of SR 22.5 million, which represents SR 1
per share for the year ended December 31, 2011.
In its meeting held on March 28, 2011, the shareholders’ General Assembly
approved the distribution of cash dividends of SR 67.5 million, which represents SR 3
per share for the year ended December 31, 2010.
16. SUBSEQUENT EVENTS
The board of directors proposed in its meeting held on February 4, 2013 cash
dividends of SR 67.5 million for the year ended December 31, 2012 which represents
SR 3 per share.
17. SELLING AND DISTRIBUTION EXPENSES
2012
SR
2011
SR
Salaries and benefits 63,175,189 61,833,554
Advertisements, media and marketing support 14,806,489 20,066,404
Depreciation and amortization 11,458,985 10,756,633
Rent 5,598,350 4,953,983
Branches freight expenses 5,046,748 4,506,352
Maintenance and repairs 3,157,756 4,111,727
Fuel, oils and supplies 3,545,251 3,040,920
Utilities 3,001,760 2,758,404
Insurance expenses 1,007,591 1,009,457
Others 3,080,177 1,983,405
113,878,296 115,020,839
ABDULLAH AL-OTHAIM MARKETS COMPANY
(SAUDI JOINT STOCK COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 2012
-16-
18. GENERAL AND ADMINISTRATIVE EXPENSES 2012
SR
2011
SR
Salaries and benefits 37,493,504 36,726,206
Rent 2,304,116 2,248,640
Depreciation and amortization 3,622,507 2,976,663
Professional fees 653,830 446,375
Utilities 1,963,406 1,365,537
Subscription fees 1,872,767 1,335,970
Maintenance and repairs 1,270,249 1,245,725
Hospitality 608,081 778,741
Others 2,059,736 988,836
Fuel, oils and supplies 863,211 878,155
Donations to approved charities 2,378,114 1,354,692
Insurance 155,419 157,088
55,244,940 50,502,628
19. SEGMENTAL INFORMATION
The Company’s activities are focused on retail and wholesale of food stuff and
carries out its operations in the Kingdom of Saudi Arabia, in addition to constructing
commercial malls and investing in their sales or leases. Some selected information
was summarized for each business segment as at December 31:
For the year ended December 31, 2012
Retail and
wholesale
SR
Real estate
and leasing
(Rent)
SR
Total
SR
Sales 4,105,198,404 - 4,105,198,404
Rents income 93,769,817 67,208,451 160,978,268
Property and equipment, net 547,270,505 528,589,339 1,075,859,844
Gross Profit 297,520,762 27,726,735 325,247,497
For the year ended December 31, 2011
Retail and
wholesale
SR
Real estate and
leasing (Rent)
SR
Total
SR
Sales 3,942,797,390 - 3,942,797,390
Rents income 84,978,990 63,136,451 148,115,441
Property and equipment, net 496,515,101 528,241,512 1,024,756,613
Gross Profit 294,840,132 28,304,973 323,145,105
ABDULLAH AL-OTHAIM MARKETS COMPANY
(SAUDI JOINT STOCK COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 2012
-17-
20. COMMITMENTS AND CONTINGENCIES
a) As at December 31 the Company had the following commitments and
contingent liabilities:
2012
SR
2011
SR
Letters of credit 7,850,789 47,474,987
Letters of guarantee 13,930,450 20,668,300
Capital commitments on projects in progress 10,168,222 17,349,963
b) Commitments against operating lease agreements
The outstanding lease commitments of the Company related to non-cancelable
long-term operating leases for the Company’s branches and malls as at
December 31 are as follows:
2012
SR
2011
SR
Less than one year 47,294,579 46,153,869
More than one year, but less than 5 years 170,600,620 166,425,990
More than 5 years, but less than 20 years 215,974,766 268,568,645
21. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
Fair value is the amount for which an asset could be exchanged, or a liability settled
between knowledgeable willing parties in an arm’s length transaction. As the
Company’s financial instruments are compiled under the historical cost convention,
differences can arise between the book values and fair value estimates.
Management believes that the fair values of the Company’s financial assets and
liabilities are not materially different from their carrying values.
Financial instruments reported in the balance sheet principally include cash on hand
and at banks, prepayments and other receivables, payables, trade payables and
accrued expenses, short-term and long-term loans and Murabahas.
Credit risk is the risk that one party will fail to discharge an obligation and cause the
other party to incur a financial loss. The Company has no significant concentration
of credit risk. Cash is substantially placed with local banks with sound credit ratings.
Prepayments and other receivables are carried net of provision for doubtful debts, if
any.
ABDULLAH AL-OTHAIM MARKETS COMPANY
(SAUDI JOINT STOCK COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 2012
-18-
Commission rate risk is the exposure to various risks associated with the effect of
fluctuations in the prevailing commission rates on the Company’s financial position
and cash flows. The Company monitors the fluctuations in commission rates and
believes that the effect of the commission rate risk is not material.
Currency risk is the risk that the value of financial instruments will fluctuate due to
changes in foreign exchange rates. The Company’s transactions are principally in
Saudi riyals and U.S. dollars. Management monitors the fluctuations in currency
exchange rates and believes that the currency risk is not material.
Liquidity risk is the risk that Company will be unable to meet its funding requirements
primarily for loan commitments. The Company maintains adequate funding to meet
such obligations when they become due.
22. APPROVAL OF THE FINANCIAL STATEMENTS
Financial statements had been approved by the Board of Directors on February 4,
2013.
23. COMPARATIVE FIGURES
Certain figures for 2011 have been reclassified to conform with the presentation in
the current year.