How did they calculate these accounts in the cash flow statement?

I want to know how they calculate these accounts in the cash flow statement: for Jarir bookstore (statements are in the attachments)

for the years (2019/2020/2021/2022)

1-Trade receivables

2-Inventories

3-Prepayments and other current assets

4-Accounts payable

5-Accrued expenses and other liabilities

6-Deferred income

JARIR MARKETING COMPANY
(A Saudi Joint Stock Company)
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2020
AND INDEPENDENT AUDITOR’S REPORT
JARIR MARKETING COMPANY
(A Saudi Joint Stock Company)
Consolidated Financial Statements
For the Year Ended December 31, 2020
Page
Independent auditor’s report
1-4
Consolidated statement of financial position
5
Consolidated statement of income
6
Consolidated statement of comprehensive income
7
Consolidated statement of changes in shareholders’ equity
8
Consolidated statement of cash flows
9
Notes to the consolidated financial statements
10 – 50
Independent auditor’s report to the shareholders of Jarir Marketing
Company (A Saudi Joint Stock Company)
Report on the audit of the consolidated financial statements
Our opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the
consolidated financial position of Jarir Marketing Company (the “Company”) and its subsidiaries
(together the “Group”) as at December 31, 2020, 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
issued by the Saudi Organization for Certified Public Accountants (SOCPA).
What we have audited
The Group’s consolidated financial statements comprise:
•
•
•
•
•
•
the consolidated statement of financial position as at December 31, 2020;
the consolidated statement of income for the year then ended;
the consolidated statement of comprehensive income for the year then ended;
the consolidated statement of changes in shareholders’ equity for the year then ended;
the consolidated statement of cash flows for the year then ended; and
the notes to the consolidated financial statements, which include significant accounting policies and
other explanatory information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing, that are endorsed in
the Kingdom of Saudi Arabia. Our responsibilities under those standards are further described in the
Auditor’s responsibilities for the audit of the consolidated financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Group in accordance with the code of professional conduct and ethics,
endorsed in the Kingdom of Saudi Arabia that are relevant to our audit of the consolidated financial
statements and we have fulfilled our other ethical responsibilities in accordance with these
requirements.
Our audit approach
Overview
Key Audit Matters
• Carrying amounts of non-financial assets
As part of designing our audit, we determined materiality and assessed the risks of material
misstatement in the consolidated financial statements. In particular, we considered where management
made subjective judgements; for example, in respect of significant accounting estimates that involved
making assumptions and considering future events that are inherently uncertain. As in all of our audits,
we also addressed the risk of management override of internal controls, including among other matters
consideration of whether there was evidence of bias that represented a risk of material misstatement
due to fraud.
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion
on the consolidated financial statements as a whole, taking into account the structure of the Group, the
accounting processes and controls, and the industry in which the Group operates.
PricewaterhouseCoopers, License No. 25,
Kingdom Tower, P.O. Box 8282, Riyadh 11482, Kingdom of Saudi Arabia
T: +966 (11) 211-0400, F: +966 (11) 211-0401, www.pwc.com/middle-east
Independent auditor’s report to the shareholders of Jarir Marketing
Company (A Saudi Joint Stock Company) – (continued)
Key audit matter
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements of the current period. These matters were addressed in
the context of our audit of the consolidated financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed the key audit
matter
We performed the following procedures:
Carrying amounts of non-financial assets
As at December 31, 2020, the carrying amount of
non-financial assets of the Group amounted to Saudi
Riyals 2.13 billion.
●
Obtained an understanding of the design and
implementation of key controls over the
process of impairment indicator identification.
Management performs a formal assessment at each
reporting period-end to consider whether there is
any indication that the non-financial assets may be
impaired.
●
Evaluated
the
reasonableness
management’s assessment. This included:
In assessing whether there is any indication that an
asset may be impaired, management considers both
external and internal sources of information (e.g.
significant decline in assets value, adverse effect on
the Group in the technological, market, economic or
legal environment, increase in the market rates of
return, decline in market capitalization, obsolescence
or physical damage of an asset etc.).
An assessment was made by the management. As a
result of the exercise, no indicators of impairment
were identified by the management.
●
of
○
testing the input data used in the
assessment to the relevant supporting
documentation;
○
understanding procedures used in the
assessment of any indication that the nonfinancial assets may be impaired; and
○
Checking the mathematical accuracy of
the data used in the assessment.
Assessed the adequacy and appropriateness of
the related disclosures in the accompanying
financial statements.
We considered this to be a key audit matter given the
current situation and management judgment
involved in identifying impairment triggers.
Refer to Note 2, Note 7, Note 8 and Note 9 to the
consolidated financial statements for further
information.
Other information
Management is responsible for the other information. The other information comprises the information
included in the Annual Report of the Group (but does not include the consolidated financial statements
and our auditor’s report thereon), which is expected to be made available to us after the date of this
auditor’s report.
Our opinion on the consolidated financial statements does not cover the other information and we will
not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the
other information identified above and, in doing so, consider whether the other information is materially
inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated.
When we read the annual report, if we conclude that there is a material misstatement therein, we are
required to communicate the matter to those charged with governance.
2
Independent auditor’s report to the shareholders of Jarir Marketing
Company (A Saudi Joint Stock Company) – (continued)
Responsibilities of management and those charged with governance for the
consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with International Financial Reporting Standards, that are endorsed in the
Kingdom of Saudi Arabia and other standards and pronouncements issued by SOCPA, and the
applicable requirements of the Regulations for Companies and the Company’s By-laws, and for such
internal control as management determines is necessary to enable the preparation of consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless management either intends to liquidate the Group
or to cease operations, or has no realistic alternative but to do so.
The Board of directors is responsible for overseeing the Group’s financial reporting process.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with International Standards on Auditing, that are endorsed in
the Kingdom of Saudi Arabia, will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these
consolidated financial statements.
As part of an audit in accordance with International Standards on Auditing, that are endorsed in the
Kingdom of Saudi Arabia, we exercise professional judgment and maintain professional skepticism
throughout the audit. We also:
•
•
Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
of not detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
•
Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Group to cease
to continue as a going concern.
•
Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the
underlying transactions and events in a manner that achieves fair presentation.
•
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the Group audit. We remain
solely responsible for our audit opinion.
3
JARIR MARKETING COMPANY
(A Saudi Joint Stock Company)
Notes to consolidated financial statements for the year ended December 31, 2020
(All amounts in Saudi Riyals thousands unless otherwise stated)
1
General information
Jarir Marketing Company (the “Company”) is a Saudi joint stock company formed pursuant to the
resolution of the Ministry of Commerce and Industry Number 1193 dated Rajab 11, 1421H
(corresponding to October 8, 2000) and registered in Riyadh, Kingdom of Saudi Arabia under
Commercial Registration Number 1010032264 dated Shaa’ban 18, 1400H (corresponding to July 1,
1980).
The Company’s registered office is based in Riyadh. As at December 31, 2020, the Company had 63 retail
showrooms (2019: 59 retail showrooms) in the Kingdom of Saudi Arabia and the other Gulf countries,
in addition to real estate investments in the Arab Republic of Egypt through Jarir Egypt Real Estate
Company SAE.
The objectives of the Company and its subsidiaries (collectively referred to as the “Group”) include; retail
and wholesale trading in office and school supplies, children toys, books, educational aids, office
furniture, engineering equipment, computers and computer systems, electronic and electrical devices,
maintenance of computers and electronic and electrical devices, sports and scout equipment and paper.
It also includes, purchase of residential and commercial buildings and the acquisition of land to
construct buildings for sale or lease for the interest of the Company.
The accompanying consolidated financial statements comprise the financial statements of the Company
and its following subsidiaries:
Country of
Direct and indirect ownership
Subsidiaries
incorporation
as at December 31,
2020
2019
Jarir Bookstore (United Company for Office
Supplies) WLL
Qatar
100%
100%
Jarir Trading Company LLC
UAE
100%
100%
United Bookstore
UAE
100%
100%
Jarir International Central Market WLL
Kuwait
100%
100%
Jarir Egypt Real Estate Company – SAE
Egypt
100%
100%
Jarir Marketing SPC
Bahrain
100%
100%
Certain ownership interests in the subsidiaries are registered in the name of trustees who have formally
assigned their shares to the Company.
The accompanying consolidated financial statements were approved by the Company’s Board of
Directors on March 16, 2021.
2
Summary of significant accounting policies
Significant accounting policies applied in the preparation of these consolidated financial statements are
set out below. These policies are consistently applied to all periods presented, unless otherwise stated.
2.1
Basis of preparation
(i)
Statement of Compliance
These consolidated financial statements of the Group have been prepared in accordance with
International Financial Reporting Standards (IFRS), that are endorsed in the Kingdom of Saudi Arabia
and other standards and pronouncements issued by the Saudi Organization for Certified Public
Accountants (SOCPA), collectively hereafter referred to as “IFRS”.
The amounts in the consolidated financial statements have been presented in Saudi Riyals with all values
rounded to the nearest thousand except where stated otherwise.
10
JARIR MARKETING COMPANY
(A Saudi Joint Stock Company)
Notes to consolidated financial statements for the year ended December 31, 2020
(All amounts in Saudi Riyals thousands unless otherwise stated)
(ii)
Historic cost convention
These consolidated financial statements have been prepared under the historical cost convention, as
modified for financial assets at fair value through profit or loss and by using the actuarial basis for end
of service benefits, on the accrual basis of accounting.
(iii)
Critical accounting estimates and judgments
The preparation of consolidated financial statements requires management to use judgment in applying
its accounting policies and estimates and assumptions about the future. Estimates and other judgments
are continuously evaluated and are based on management’s experience and other factors, including
expectations about future events that are believed to be reasonable under the circumstances. Although
these estimates and judgments are based on management’s best knowledge of current events and
actions, actual results ultimately may differ from those estimates. The estimates and assumptions that
have a risk of causing an adjustment to the carrying amounts of assets and liabilities within the next
financial year are discussed below:
(a) Component approach applied to property and equipment and investment properties
In applying the component approach of IAS 16 which requires significant parts of an item of property
and equipment as well as investment properties to be depreciated separately, the cost allocated to the
significant parts as well as respective estimated useful lives are advised by the main contractor for the
properties constructed by the Group. The reasonableness of such cost allocation and the associated
useful lives are assessed by management.
(b) Impairment test for non-financial assets
Judgment is required in assessing whether certain factors would be considered an indicator of
impairment. Management considers both internal and external information to determine whether there
is an indicator of impairment present and, accordingly, whether impairment testing is required. When
impairment testing is required, discounted cash flow models are used to determine the recoverable
amount of respective assets. When market transactions for comparable assets are available, these are
considered in determining the recoverable amount of assets. Significant assumptions used in preparing
discounted cash flow models include growth rates, expected future cash flows, operating costs, capital
expenditures and discount rates. These inputs are based on management’s best estimates of what an
independent market participant would consider appropriate. Changes in these inputs may alter the
results of impairment testing, the amount of the impairment charges recorded in the consolidated
statement of income and the resulting carrying values of assets.
(c) Financial assets at fair value through profit or loss (FVTPL)
These financial assets are investments in unquoted equity where insufficient recent information is
available to measure fair value and management assessment is that cost represents the best estimate of
fair value.
(d) Assumptions for end of service benefits provision
The calculation of end of service benefits provision greatly depends on employees’ estimated length of
service and their estimated salary at end of service. Such estimates were based on the actuarial
assumptions developed by management. Those actuarial assumptions were based on the Group’s
historical data, recent trends, and management plans and forecasts with respect to salary levels.
Life expectancy is not considered a principal actuarial assumption in measuring end of service benefits
provision and therefore, possible changes in life expectancy are not expected to have a significant impact
on the level of obligation, especially since only a few employees are assumed to serve until the retirement
age. Moreover, changes in life expectancy will affect the estimates related to those employees only if life
expectancy becomes less than retirement age and in such cases, the impact is not expected to be
significant.
The discount rate was estimated by reference to yields on the governmental bonds, as management
assessed that there is no deep market in high quality corporate bonds. The Group used a single discount
rate that approximates the estimated timing and amount of benefit payments.
11
JARIR MARKETING COMPANY
(A Saudi Joint Stock Company)
Notes to consolidated financial statements for the year ended December 31, 2020
(All amounts in Saudi Riyals thousands unless otherwise stated)
(e) Provision for impairment of trade receivables
The impairment provision for trade receivables is estimated based on assumptions about risk of default
and expected loss rates. The Group uses judgement in making such assumptions and how changes in
market and economic factors affect expected credit loss. The Group’s judgement is based on the Group’s
past historical trends, market conditions and forward looking estimates at each reporting date.
(f)
Provision for slow moving inventories
Provision for slow moving inventories is maintained at a level considered adequate to provide for
potential loss on inventory items. The level of allowance is determined and guided by the Group’s
policy. An evaluation of inventories, designed to identify potential charges to provision, is performed on
a continuous basis throughout the year. Management uses judgment based on the best available facts
and circumstances, including but not limited to evaluation of individual inventory items’ future
utilization. The amount and timing of recorded expenses for any period would therefore differ based on
the judgments or estimates made. An increase in provision for slow moving inventories would increase
the Group’s recorded expenses and decrease current assets.
(g)
Determining the lease term
The Group as lessee determines the lease term as the non-cancellable period of a lease, together with
both (a) periods covered by an option to extend the lease if the lessee is reasonably certain to exercise
that option and (b) periods covered by an option to terminate the lease if the lessee is reasonably certain
not to exercise that option. For contracts that include extension and termination options, the Group uses
judgement in evaluating whether it is reasonably certain whether to exercise the option to renew or
terminate the lease. In doing so, it considers all relevant factors that create an economic incentive for it
to exercise the renewal or termination. Those factors include current and expected showroom
performance, availability, cost and other terms of substitutes, magnitude of leasehold improvements,
length of extension or renewal, and cost of extension or renewal. Following the commencement date,
the Group reassesses whether it is reasonably certain to exercise an extension option, or not to exercise
a termination option, upon the occurrence of either a significant event or a significant change in
circumstances that is within the control of the Group and affects whether it is reasonably certain to
exercise an option not previously included in its determination of the lease term, or not to exercise an
option previously included in its determination of the lease term.
(iv)
Changes in accounting policy and disclosures
Amended IFRS standards adopted by the Group
The Group has applied the following amendments for the first time for its reporting periods commencing
on or after January 1, 2020:
Amendment to IFRS 16: COVID-19 related rent concessions
In May 2020, IFRS 16 was amended to provide a practical expedient for rent concessions that arise as a
direct consequence of the COVID-19 pandemic allowing a lessee not to assess whether a rent concession
that meets certain criteria is a lease modification and account for such rent concession as if it was not
lease modifications.
Without this amendment, IFRS 16 requires lessees to assess whether changes to lease contracts are lease
modifications as defined in the standard and, if so, a lessee must remeasure the lease liabilities to reflect
the revised lease payments using a revised discount rate, with the effect of the change in the lease
liabilities recorded against the right-of-use asset.
The practical expedient provided by the amendment applies only to rent concessions occurring as a
direct consequence of the COVID-19 pandemic and only if all of the following conditions are met:
(a) the change in lease payments results in revised consideration for the lease that is substantially the
same as, or less than, the consideration for the lease immediately preceding the change;
(b) any reduction in lease payments affects only payments originally due on or before June 30, 2021;
and
(c) there is no substantive change to other terms and conditions of the lease.
12
JARIR MARKETING COMPANY
(A Saudi Joint Stock Company)
Notes to consolidated financial statements for the year ended December 31, 2020
(All amounts in Saudi Riyals thousands unless otherwise stated)
The amendment is effective for annual periods beginning on or after June 1, 2020, however, earlier
application is permitted.
The amendment is applied retrospectively, recognizing the cumulative effect of initially applying that
amendment as an adjustment to the opening balance of retained earnings (or other component of equity,
as appropriate) at the beginning of the annual reporting period in which the lessee first applies the
amendment.
The Group has elected to early adopt the amendments and has applied the practical expedient
introduced by the amendment to all qualifying COVID-19-related rent concessions received by the
Group during the year.
Accordingly, the qualifying rent concessions received are accounted for as negative variable lease
payments and are recognized in profit or loss in the period in which the event or condition that triggers
those payments occurred, e.g. the period when an unconditional rent concession is granted by lessor.
The practical expedient has been applied retrospectively to all eligible rent concessions, but there has
been no retrospective adjustment to the opening balance of retained earnings as all the qualifying rental
concessions have arisen during the current year.
The application of the practical expedient has resulted in the reduction of lease liabilities of Saudi Riyals
17.0 million that has been recognized and presented in ‘other income, net’ in the statement of income
for the current year ended December 31, 2020, in which the events or conditions that trigger those
payments occur.
Amendments to IFRS 9, IAS 39 and IFRS 7 – Interest rate benchmark reform
These amendments provide certain reliefs in connection with interest rate benchmark reform. The
reliefs relate to hedge accounting and have the effect that Interbank Offered Rate (“IBOR”) reform
should not generally cause hedge accounting to terminate. However, any hedge ineffectiveness should
continue to be recorded in the statement of profit or loss and other comprehensive income. These
amendments are applied for annual periods beginning on or after January 1, 2020 and did not have any
impact on consolidated financial statements of the Group.
Amendments to IAS 1 and IAS 8 – Definition of material
The amendments are intended to make the definition of material in IAS 1 easier to understand and are
not intended to alter the underlying concept of materiality in IFRS Standards. The concept of
“obscuring” material information with immaterial information has been included as part of the new
definition. The threshold for materiality influencing users has been changed from “could influence” to
“could reasonably be expected to influence”. The amendments are applied prospectively for annual
periods beginning on or after January 1, 2020 and did not have any impact on consolidated financial
statements of the Group.
Amendments to IFRS 3 – Definition of a business
The amendments clarify that while businesses usually have outputs, outputs are not required for an
integrated set of activities and assets to qualify as a business. To be considered a business an acquired
set of activities and assets must include, at a minimum, an input and a substantive process that together
significantly contribute to the ability to create outputs.
The amendments are applied prospectively to all business combinations and asset acquisitions for which
the acquisition date is on or after the first annual reporting period beginning on or after January 1, 2020.
These amendments did not have any impact on consolidated financial statements of the Group.
(v)
New IFRS standards, amendments to standards and interpretations not yet
effective
The following amendments to standards have been published by IASB that are not mandatory for
December 31, 2020 reporting periods, and where early application is permitted by these amendments
the Group have not early adopted them. All these amendments are effective either for annual reporting
periods beginning on or after 1 January 2022, or for annual reporting periods beginning on or after 1
January 2023, and all are not expected to have a significant impact on the Group’s consolidated financial
statements:
13
JARIR MARKETING COMPANY
(A Saudi Joint Stock Company)
Notes to consolidated financial statements for the year ended December 31, 2020
(All amounts in Saudi Riyals thousands unless otherwise stated)
2.2
Amendments to IAS 1: Classification of Liabilities as Current or Non-current
Amendments to IAS 37: Onerous Contracts – Costs of Fulfilling a Contract
Amendments to IAS 16: Property, Plant and Equipment – Proceeds before Intended Use
Amendments to IFRS 3: Reference to the Conceptual Framework
Subsidiaries
Subsidiaries are those entities which the Company controls. The Company controls an investee if, and
only if, the Company has:
•
•
•
Power over the investee (i.e., existing rights that give it the current ability to direct the relevant
activities of the investee)
Exposure, or rights, to variable returns from its involvement with the investee
The ability to use its power over the investee to affect its returns
The presumption is that a majority of voting rights results in control. All relevant activities are directed
by the Company being the holder of all the voting rights. Subsidiaries are fully consolidated from the
date on which control is transferred to the Group. They are de-consolidated from the date that control
ceases.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their
accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities,
equity, income, expenses and cash flows relating to transactions between members of the Group are
eliminated in full on consolidation.
The acquisition method of accounting is used to account for the acquisition of subsidiaries. The
consideration transferred for the acquisition of subsidiary comprises the:
•
•
•
•
•
the fair value of the assets transferred
liabilities incurred to the former owners of the acquired business
equity interest issued by the Group
fair value of any asset or liability resulting from a contingent consideration arrangement
fair value of any pre-existing equity interest in the subsidiary
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination
are, with limited exceptions, measured initially at their fair values at the acquisition date. The Group
recognizes any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis at
the non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets.
Acquisition-related costs are expensed as incurred.
Non-controlling interests, if any, represent equity interests in subsidiaries owned by outside parties.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the
consolidated statement of income, statement of comprehensive income, statement of changes in equity
and statement of financial position, respectively.
2.3
Foreign currency
The consolidated financial statements are presented in Saudi Riyals, which is the Company’s functional
currency and the Group’s presentation currency. Each subsidiary in the Group determines its own
functional currency (which is the currency of the primary economic environment in which the entity
operates), and as a result, items included in the financial statements of each subsidiary are measured
using that functional currency.
Foreign currency transactions are translated into Saudi Riyals using the exchange rates prevailing at the
dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at the period-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognized in the consolidated statement of income.
14
JARIR MARKETING COMPANY
(A Saudi Joint Stock Company)
Notes to consolidated financial statements for the year ended December 31, 2020
(All amounts in Saudi Riyals thousands unless otherwise stated)
The results and financial position of foreign operations (none of which has the currency of a
hyperinflationary economy) that have a functional currency different from the Group’s presentation
currency are translated into the presentation currency as follows:
•
•
assets and liabilities for each statement of financial position presented are translated at the closing
rate at the date of that statement of financial position;
income and expenses for each statement of income and statement of comprehensive income are
translated at average exchange rates (unless this is not a reasonable approximation of the
cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses
are translated at the dates of the transactions).
On consolidation, exchange differences arising from the translation of any net investment in foreign
entities, are recognized in other comprehensive income. When a foreign operation is sold, the associated
exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.
Exchange differences on monetary items receivable from or payable to a foreign operation for which
settlement is neither planned nor likely to occur and therefore in substance forms a part of the
Company’s net investment in that foreign operation, are recognized in equity through other
comprehensive income and reclassified to the profit or loss on disposal of the net investment.
2.4
Financial Instruments
(a)
Initial recognition and measurement of financial instruments
The Group initially recognizes financial assets and financial liabilities when it becomes party to the
contractual provisions of the financial instrument.
Trade receivables that do not have a significant financing component, initial measurement is at their
transaction price, which is the amount of consideration to which the Group expects to be entitled in
exchange for transferring promised goods or services to a customer, excluding amounts collected on
behalf of third parties.
Except for trade receivables that do not have a significant financing component, initial measurement of
the financial instrument is at its fair value plus or minus, in the case of a financial asset or financial
liability not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable
to the acquisition or issue of the financial asset or financial liability. Transaction costs of financial assets
carried at FVTPL are expensed in the consolidated statement of income.
(b)
Financial assets – subsequent classification and measurement
Financial assets are subsequently measured at amortized cost, fair value through other comprehensive
income or fair value through profit or loss. There are two criteria used to determine how financial assets
should be classified and measured:
(i) the Group’s business model for managing the financial assets; and
(ii) the contractual cash flow characteristics of the financial asset.
Key management personnel have determined that the Group’s financial assets are held within a business
model whose objective is to hold financial assets in order to collect cash flows.
A financial asset is measured at amortized cost if the contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments of principal and interest on the principal amount
outstanding. Otherwise, a financial asset is measured at fair value through profit or loss (FVTPL).
Investments in equity instruments are measured at fair value, and the Group did not elect to present in
other comprehensive income subsequent changes in the fair value of such investment in an equity
instrument. On transition to IFRS, the available for sale investment was reclassified to financial assets
at FVTPL.
For investments in unquoted equity, if insufficient more recent information is available to measure fair
value, or if there is a wide range of possible fair value measurements and cost represents the best
estimate of fair value within that range, cost may be an appropriate estimate of fair value.
15
JARIR MARKETING COMPANY
(A Saudi Joint Stock Company)
Notes to consolidated financial statements for the year ended December 31, 2020
(All amounts in Saudi Riyals thousands unless otherwise stated)
Financial assets are only reclassified between measurement categories, when and only when, the
Group’s business model for managing them changes, which is expected to be uncommon.
The Group derecognizes a financial asset when the rights to the cash flows from the financial asset have
expired or where the Group has transferred substantially all risks and rewards associated with the
financial asset and does not retain control of the financial asset.
(c)
Impairment of financial assets
The Group assesses on a forward-looking basis the expected credit losses associated with its assets
carried at amortized cost.
As required by IFRS 9, the Group applies the simplified approach for trade receivables. As permitted by
IFRS 9, the Group elected to apply the simplified approach for lease receivables, so the Group always
measures the loss allowance at an amount equal to lifetime expected credit losses. The Group uses a
provision matrix in the calculation of the expected credit losses on trade receivables to estimate the
lifetime expected credit losses, applying certain provision rates to respective aging buckets. Trade
receivables are segmented into two segments: (i) wholesale and (ii) corporate sales, as each has its own
credit loss pattern and, accordingly, different aging buckets and provision rates.
Financial assets are written off only when:
(i) the debt is at least one year past due,
(ii) the Group have attempted to recover and engaged in all relevant legal enforcement activities,
(iii) it is concluded that there is no reasonable expectation of recovery, and
(iv) the write-off is approved by the Board of Directors, or management to the extent delegated by the
Board of Directors.
Recoveries made are recognized in the consolidated statement of income.
(d) Financial liabilities – subsequent classification and measurement
Financial liabilities are subsequently measured at amortized cost using the effective interest method.
The effective interest rate is the rate that discounts the estimated future cash payments through the
expected life of the financial liability, or where appropriate, a shorter period to the net carrying amount
on initial recognition.
The Group derecognizes a financial liability (or a part of a financial liability) from its statement of
financial position when, and only when, it is extinguished, i.e. when the obligation specified in the
contract is discharged or cancelled or expires.
(e) Cash and cash equivalents
Cash and cash equivalents include cash at banks and on hand and short-term deposits with a maturity
of three months or less that are readily convertible to known amounts of cash and which are subject to
an insignificant risk of changes in value.
(f) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount presented in the statement of
financial position when, and only when, the Group has a legally enforceable right to offset the recognized
amounts and intends to settle them on a net basis or to realize the asset and settle the liability
simultaneously.
2.5
Inventories
Inventories are carried at the lower of cost or net realizable value. Cost is determined using weighted
average method. Net realizable value is the estimated selling price in the ordinary course of business,
less the estimated costs to sell.
16
JARIR MARKETING COMPANY
(A Saudi Joint Stock Company)
Notes to consolidated financial statements for the year ended December 31, 2020
(All amounts in Saudi Riyals thousands unless otherwise stated)
2.6
Investment properties
Investment properties are properties held to earn rentals and/or for capital appreciation, including
property under construction for such purposes.
Investment properties are stated at cost less of accumulated depreciation and/or accumulated
impairment losses, if any. Cost includes expenditure that is directly attributable to the acquisition of the
items.
Land is not depreciated. Capital work in progress is transferred to the appropriate investment properties
category upon completion and depreciated from the point at which it is ready for use. Depreciation of
buildings is calculated on a straight-line basis over the estimated useful lives of between 20-33 years.
Significant parts of an item of investment properties are depreciated separately.
Investment properties are derecognized either when they have been disposed of or when the investment
property is permanently withdrawn from use and no future economic benefit is expected from its
disposal. If an investment property becomes owner-occupied, it is reclassified as property and
equipment.
The difference between the net disposal proceeds and the carrying amount of the asset is recognized in
the consolidated statement of income in the period of derecognition.
The Group discloses the fair values of investment properties in the notes to the annual consolidated
financial statements.
2.7
Lease accounting
The Group assesses at inception of a contract whether a contract is, or contains, a lease. A contract is, or
contains, a lease if the contract conveys the right to control the use of an identified asset for a period of
time in exchange for consideration.
(i)
The Group as a lessee
At the lease commencement date, the Group recognizes a right-of-use asset and a corresponding lease
liability with respect to all lease agreements in which it is the lessee, except for short-term leases (leases
with a lease term of 12 months or less) and leases of low-value assets, for which the Group recognizes
the lease payments as an operating expense (unless they are incurred to produce assets) on a straightline basis over the term of the lease unless another systematic basis is more representative of the time
pattern in which economic benefits from the leased asset are consumed.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily
determined, the Group uses its incremental borrowing rate. In general, the Group uses its incremental
borrowing rate as the discount rate which has been used to measure all the lease liabilities recognized.
Lease payments included in the measurement of the lease liability comprise:
•
•
•
•
•
fixed lease payments (including in-substance fixed payments), less any lease incentives;
variable lease payments that depend on an index or rate, initially measured using the index or rate
at the commencement date;
the amount expected to be payable by the lessee under residual value guarantees;
the exercise price of purchase options, if the lessee is reasonably certain to exercise the options; and
payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to
terminate the lease.
The lease liability is presented as a separate line in the consolidated statement of financial position,
classified as current and non-current.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the
lease liability (using the effective interest rate method) and by reducing the carrying amount to reflect
the lease payments made.
17
JARIR MARKETING COMPANY
(A Saudi Joint Stock Company)
Notes to consolidated financial statements for the year ended December 31, 2020
(All amounts in Saudi Riyals thousands unless otherwise stated)
The Group remeasures the lease liability (and makes a corresponding adjustment to the related rightof-use asset) whenever:
•
•
•
the lease term has changed or there is a change in the assessment of exercise of a purchase option,
in which case the lease liability is remeasured by discounting the revised lease payments using a
revised discount rate.
the lease payments change due to changes in an index or rate or a change in expected payment under
a guaranteed residual value, in which cases the lease liability is remeasured by discounting the
revised lease payments using the initial discount rate (unless the lease payments change is due to a
change in a floating interest rate, in which case a revised discount rate is used).
a lease contract is modified, and the lease modification is not accounted for as a separate lease, in
which case the lease liability is remeasured by discounting the revised lease payments using a revised
discount rate.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease
payments made at or before the commencement day and any initial direct costs. They are subsequently
measured at cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated over the shorter period of the lease term or the economic useful life
of the underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-ofuse asset reflects that the Group expects to exercise a purchase option, the related right-of-use asset is
depreciated over the economic useful life of the underlying asset. The depreciation starts at the
commencement date of the lease.
The right-of-use assets are presented as a separate line in the consolidated statement of financial
position, unless the right-of-use asset meet the definition of investment property and in such case it is
presented in the consolidated statement of financial position within investment property.
Variable rents that do not depend on an index or rate are not included in the measurement the lease
liability and the right-of-use asset, and the related payments are recognized as an expense (unless they
are incurred to produce assets) in the period in which the event or condition that triggers those payments
occurs.
(ii)
The Group as a lessor
When the Group acts as a lessor, it determines at lease inception whether each lease is a finance lease or
an operating lease. To classify each lease, the Group makes an overall assessment of whether the lease
transfers substantially all of the risks and rewards incidental to ownership of the underlying asset. In
such case the lease is a finance lease, otherwise it is an operating lease.
When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sublease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset
arising from the head lease, not with reference to the underlying asset.
If an arrangement contains lease and non-lease components, then the Group applies IFRS 15 to allocate
the consideration in the contract. The Group applies the derecognition and impairment requirements in
IFRS 9 to the finance lease receivables.
Lease payments received under operating leases are recognized as income on a straight-line basis over
the lease term as part of other income.
2.8
Property and equipment
Property and equipment are stated at cost, net of accumulated depreciation and/or accumulated
impairment losses, if any. Cost includes expenditure that is directly attributable to the acquisition of the
items.
Major inspections are recognized in the carrying amount of the property and equipment as a
replacement if the recognition criteria are satisfied. All other repair and maintenance costs are
recognized in the consolidated statement of income as incurred.
18
JARIR MARKETING COMPANY
(A Saudi Joint Stock Company)
Notes to consolidated financial statements for the year ended December 31, 2020
(All amounts in Saudi Riyals thousands unless otherwise stated)
Land is not depreciated. Capital work in progress is transferred to the appropriate property and
equipment category upon completion and depreciated from the point at which it is ready for use.
Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets as follows:
Buildings
Machinery and equipment
Furniture and fixtures
Motor vehicles
Computers
Leasehold improvements
20 – 33 years
5 – 13.33 years
5 -10 years
4 years
5 years
3 years
Significant parts of an item of property and equipment are depreciated separately.
An item of property and equipment is derecognized upon disposal or when no future economic benefits
are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated
as the difference between the net disposal proceeds and the carrying amount of the asset) is included in
the consolidated statement of income when the asset is derecognized. When the use of a property
changes from owner-occupied to investment property, the property is reclassified as investment
property.
The residual values, useful lives and methods of depreciation of property and equipment are reviewed
at each financial year-end and adjusted prospectively, if appropriate.
2.9
Impairment of non-financial assets
The Group assesses at the end of each reporting period whether there is any indication that non-financial
assets may be impaired.
Non-financial assets other than goodwill, if any, are tested for impairment when events or changes in
circumstances indicate that the carrying amount may not be recoverable. Goodwill, if any, is tested for
impairment annually. For the purpose of measuring recoverable amounts, assets are grouped at the
lowest levels for which there are separately identifiable cash flows (cash-generating units ‘CGUs’).
Recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use (being
the present value of the expected future cash flows of the relevant asset or CGU, as determined by
management). When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset
is considered impaired and is written down to its recoverable amount. Such impairment loss is
recognized in the consolidated statement of income in the period it has occurred.
The Group assesses at the end of each reporting period whether there is any indication that an
impairment loss recognized in prior periods for an asset other than goodwill, if any, may no longer exist
or may have decreased. A previously recognized impairment loss is reversed only if there has been a
change in the estimates used to determine the asset’s recoverable amount since the last impairment loss
was recognized. Such reversal is recognized in the consolidated statement of income. Impairment losses
on goodwill, if any, are not reversible.
2.10
Provisions
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of
a past event, it is probable that an outflow of resources embodying economic benefits will be required to
settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are
not recognized for future operating losses.
Where the Group expects some or all of a provision to be reimbursed, for example under an insurance
contract, the reimbursement is recognized as a separate asset but only when the reimbursement is
virtually certain. The expense relating to a provision is presented in the consolidated statement of
income net of any reimbursement.
19
JARIR MARKETING COMPANY
(A Saudi Joint Stock Company)
Notes to consolidated financial statements for the year ended December 31, 2020
(All amounts in Saudi Riyals thousands unless otherwise stated)
2.11
Zakat and income taxes
The Company is subject to zakat in accordance with the regulations of the General Authority of Zakat
and Tax (the “GAZT”). Provision for zakat is computed in accordance with the regulations of GAZT and
is charged to the consolidated statement of income. Differences rising from final assessments are
accounted for in the reporting period in which such assessments are finalized, with associated
adjustments to zakat provision recognized in the consolidated statement of income.
The Company withholds taxes with non-residents as required under Saudi Arabian Income Tax Law.
Foreign subsidiaries are subject to income taxes in their respective countries of domicile. Such income
taxes are charged to the consolidated statement of income.
2.12
Employee benefits
(a)
Provision for end-of-service benefits
The level of benefit provided is based on the length of service and earnings of the person entitled, and
computed in accordance with the rules stated under the Saudi Arabian Labor and Workmen Law.
The liability for of end of service benefits, being a defined benefit plan, is determined using the projected
unit credit method with actuarial valuations being conducted at end of annual reporting periods. The
related liability recognized in the consolidated statement of financial position is the present value of the
end of service benefits obligation at the end of the reporting period.
The discount rate applied in arriving at the present value of the end of service benefits obligation
represents the yield on government bonds, by applying a single discount rate that approximately reflects
the estimated timing and amount of benefit payments.
End of service benefits costs are categorized as follows:
(i)
current service cost (increase in the present value of end of service benefits obligation resulting
from employee service in the current period)
(ii) interest expense (calculated by applying the discount rate at the beginning of the period to the end
of service benefits liability); and
(iii) remeasurement.
Current service cost and the interest expense arising on the end of service benefits liability are included
in the same line items in the consolidated statement of income as the related compensation cost.
Remeasurement, comprising actuarial gains and losses, is recognized in full in the period in which they
occur, in other comprehensive income without recycling to the profit or loss in subsequent periods.
Amounts recognized in other comprehensive income are recognized immediately in retained earnings.
(b) Short-term employee benefits
Short-term employee benefits are employee benefits that are expected to be settled wholly before twelve
months after the end of the annual reporting period in which the employees render the related service.
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as
the related service is provided.
A liability is recognized for the amount expected to be paid under short-term cash bonus if the Group
has a present legal or constructive obligation to pay this amount as a result of past service provided by
the employee, and the obligation can be estimated reliably.
(c)
Employees’ incentive program
The Group adopts an employees’ incentive program (the Program) whereby the Group grants selected
employees the right to receive incentive cash compensation at the end of a vesting period if specified
conditions are met. The amount of compensation is linked to the growth in net income as reported in
the annual consolidated financial statements of the Group. Since the incentives are not expected to be
settled wholly within twelve months after the end of the annual reporting period in which the employees
render the related service, the liability for the Program is measured as the present value of the estimated
future payments in respect of services provided by employees up to the reporting date using the
20
JARIR MARKETING COMPANY
(A Saudi Joint Stock Company)
Notes to consolidated financial statements for the year ended December 31, 2020
(All amounts in Saudi Riyals thousands unless otherwise stated)
projected unit credit method. The estimated future payments are discounted using the relevant yield on
government bonds. Remeasurement is recognized in the consolidated statement of income in the period
in which they arise. The liability for the Program is classified under current and non-current liability
based on the expected date of settlement.
2.13
Statutory reserve
In accordance with the Regulations for Companies in the Kingdom of Saudi Arabia, the Company is
required to transfer 10% of its net income to a statutory reserve until such reserve equals minimum of
30% of share capital. This reserve is not available for distribution to the shareholders of the Company.
2.14
Sales revenue
Sales revenue is measured based on the consideration specified in a contract with a customer excluding
amounts collected on behalf of third parties, if any. The Group generally recognizes revenue at a point
in time when it transfers control over a product to a customer, which typically occurs when the product
is delivered to the customer. Sales revenue exclude value added tax (VAT) collected. Sales are shown in
the consolidated statement of income net of returns and any discounts given.
The following is a description of principal activities, from which the Group generates its revenue:
(i)
Sales in retail outlets
The Group owns and operates a chain of retail outlets under the “Jarir bookstore” brand, selling office
supplies, school supplies, books, computers and peripherals, computer supplies, smartphones and
accessories, electronics, art and craft supplies, video games and kids’ development products.
Sales revenue is recognized when the customer takes possession of the product sold by a Group entity.
Payment of the transaction price is due immediately when the customer purchases the product.
The Group’s return policy grants customers the right of return within three days with certain
requirements and certain exceptions.
(ii) Wholesales
The Group sells office supplies, school supplies, computer supplies and art & craft supplies to other
resellers. Sales are recognized when control of the products has transferred, being when the products
are delivered to the reseller and there is no unfulfilled obligation that could affect the reseller’s
acceptance of the products. This type of sales involves credit terms of 30-90 days. Typically, wholesales
are non-returnable, and goods might be returned only at management’s discretion.
(iii) Sale to corporate customers
The Group sells office supplies, school supplies, computer supplies, and art & craft supplies to corporate
customers for their own use. Sales are recognized when the products are delivered to the customer and
the Group has objective evidence that all criteria for acceptance have been satisfied. Typically, this type
of sales involves credit terms of 30-90 days, and for certain customers, goods are returnable within 90
days provided goods are in their original condition.
(iv)
Online sales
Retail sales are also conducted online in the Kingdom through “Jarir.com” website and “Jarir Bookstore
app”. Sales are recognized when the products are delivered to the customers by the shipping agent.
Payment of the transaction price is normally received upon or before placing online orders and
recognized as a liability until the recognition of sales.
For all types of sales, historical experience suggests that the amount of returns is immaterial, and
accordingly, no refund liability is recognized at the time of sale. The validity of this conclusion is assessed
at each reporting date. If the returns pattern changed, the Group would recognize a refund liability and
corresponding asset (right to the returned goods) for products expected to be returned, with revenue
and related cost of sales adjusted accordingly.
21
JARIR MARKETING COMPANY
(A Saudi Joint Stock Company)
Notes to consolidated financial statements for the year ended December 31, 2020
(All amounts in Saudi Riyals thousands unless otherwise stated)
In all the above types, the stated price is the transaction price, and the Group does not have contracts
where the period between the transfer of the promised goods to the customer and payment by the
customer exceeds one year, and as a result, the Group does not adjust transaction prices for the time
value of money.
The Group typically sells computers, peripherals smartphone and other electronic devices with standard
warranties that provide assurance to the consumer that the product will work as intended normally for
12 months to 24 months from the date of sale. Provision is made for estimated warranty claims in respect
of products sold which are still under warranty at the end of the reporting period. The provision is
estimated based on historical warranty claim information, suppliers’ recommendation, and recent
trends.
The Group typically sells its own gift vouchers to its customers. The amounts collected from such sales
are recognized as a liability being a performance obligation and recognized as revenue when the gift
vouchers are redeemed by the customers. As per the terms of the gift voucher, its validity is one year.
2.15
Cost of sales and operating expenses
Cost of sales consists of the costs previously included in the measurement of inventory that has been
sold to customers, warehouse costs, cost of distribution to outlets, and all the costs of retail outlets
including salaries, wages and benefits, operating expenses, depreciation and occupancy costs.
Other operating expenses are classified as either general and administrative or selling and marketing
expenses.
2.16
Rental revenue
Rental revenue from operating leases on investment properties as well as subleases within leased
properties where the Group is lessee is accounted for on a straight-line basis over the lease terms and
recognized in the consolidated statement of income. Rents received in advance represent rents collected
from tenants and are unearned at the reporting date and presented under current liability in the
consolidated statement of financial position. Operating lease receivables represent the amount of rent
receivables arising from operating lease contracts. Rental revenue from these properties is included
under ‘other income’ in the consolidated statement of income.
2.17
Finance charges
Financing charges, if any, are recognized within ’finance costs in the consolidated statement of income
using the effective interest rate method, except for borrowing costs relating to qualifying assets, if any,
which are capitalized as part of the cost of that asset.
The effective interest method is a method of calculating the amortized cost of a financial liability and of
allocating the interest expense over the relevant period. The effective interest rate is the rate that exactly
discounts estimated future cash payments throughout the expected life of the financial instrument to
the net carrying amount of the financial liability.
2.18
Earnings per share
The Group presents basic, and diluted (if any), earnings per share (EPS) data for its common shares.
Basic EPS is calculated by dividing the profit or loss attributable to common shareholders of the
Company by the weighted average number of common shares outstanding during the period, adjusted
for own shares held (if any). Diluted EPS, if any, is determined by adjusting the profit or loss attributable
to common shareholders and the weighted average number of common shares outstanding, adjusted for
own shares held, for the effects of all dilutive potential common shares.
2.19
Segment reporting
An operating segment is a component of the Group that engages in business activities from which it may
earn revenues and incur expenses, including revenues and expenses that relate to transactions with any
of the Group’s other components. All operating segments’ operating results are reviewed regularly by
the chief executive officer of the Group, being the chief operating decision-maker, to make decisions
22
JARIR MARKETING COMPANY
(A Saudi Joint Stock Company)
Notes to consolidated financial statements for the year ended December 31, 2020
(All amounts in Saudi Riyals thousands unless otherwise stated)
about resources to be allocated to the segment and assess its performance, and for which discrete
financial statements are available.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
executive officer.
2.20
Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The fair value measurement is based
on the presumption that the transaction to sell the asset or transfer the liability takes place either:
•
•
In the principal market for the asset or liability or
In the absence of a principal market, in the most advantageous market for the asset or liability
The fair value of an asset/liability is measured using the assumptions that market participants would
use when pricing those assets, with the assumption that market participants act in their economic best
interest.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient
data are available to measure fair value, maximizing the use of relevant observable inputs and
minimizing the use of unobservable inputs.
All assets for which fair value is disclosed in the annual consolidated financial statements are categorized
within the fair value hierarchy. This is described, as follows, based on the lowest level input that is
significant to the fair value measurement as a whole:
•
•
•
Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 – Valuation techniques for which the lowest level input that is significant to the fair value
measurement is directly or indirectly observable
Level 3 – Valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable.
To measure the fair value of properties, the Group engages an independent valuer who holds a
recognized and relevant professional qualification and has recent experience in the location and category
of the asset being valued.
Management reviews valuer’s report and assesses appropriateness of assumptions and valuation
techniques and the overall reasonableness of valuation. For the purpose of fair value disclosures, the
Group has determined classes of assets based on the nature, characteristics and risks of the asset and
the level of the fair value hierarchy, as explained above. Management determined that the investment
properties consist of two classes of assets: (i) office, retail and residential properties in KSA and (ii) office
and retail properties in Egypt.
2.21
Current versus non-current classification
The Group presents assets and liabilities in the consolidated statement of financial position based on
current/ non-current classification. An asset is current when it is:
Expected to be realized or intended to be sold or consumed in the normal operating cycle
Held primarily for the purpose of trading
Expected to be realized within twelve months after the reporting period, or
Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at
least twelve months after the reporting period.
All other assets are classified as non-current.
•
•
•
•
23
JARIR MARKETING COMPANY
(A Saudi Joint Stock Company)
Notes to consolidated financial statements for the year ended December 31, 2020
(All amounts in Saudi Riyals thousands unless otherwise stated)
A liability is current when:
It is expected to be settled in the normal operating cycle
It is held primarily for the purpose of trading
It is due to be settled within twelve months after the reporting period, or
There is no unconditional right to defer the settlement of the liability for at least twelve months after
the reporting period.
All other liabilities are classified as non-current.
•
•
•
•
3
Cash and cash equivalents
2020
2019
92,417
4,673
97,090
23,729
5,057
28,786
2020
2019
166,620
(23,224)
143,396
197,484
(17,370)
180,114
Cash at bank
Cash in hand
4
Trade receivables
Trade receivables
Less: allowance for impairment of trade receivables
Movement in allowance for impairment of trade receivables is as follows:
January 1
Additions
Write-offs
Reversals
December 31
5
2020
2019
17,370
5,907
(50)
(3)
23,224
18,036
(16)
(650)
17,370
2020
2019
530,833
339,364
150,404
122,002
182,943
82,145
35,696
1,197
15,723
1,460,307
(152,448)
1,307,859
577,590
349,267
120,983
126,884
104,128
70,594
38,535
1,507
13,215
1,402,703
(142,744)
1,259,959
2020
2019
142,744
9,704
152,448
151,044
(8,300)
142,744
Inventories
Smart phones, electronics and accessories
Computers and related supplies and programs
Office supplies
Books
School supplies
Video games and smart TVs
Engineering and technical supplies
Goods in transit
Other
Less: provision for slow moving inventories
Movement in provision for slow moving inventories is as follows:
January 1
Additions
Reversal
December 31
24
JARIR MARKETING COMPANY
(A Saudi Joint Stock Company)
Notes to consolidated financial statements for the year ended December 31, 2020
(All amounts in Saudi Riyals thousands unless otherwise stated)
6
Prepayments and other current assets
Advances to suppliers
Prepaid rentals
Employees receivable
Less: Provision for doubtful employee receivables
Other prepayments
Claims on vendors
Lease and other receivables
Less: Provision for doubtful lease receivables
7
2020
2019
127,801
8,612
31,542
(2,617)
28,925
16,275
78,877
45,046
(14,155)
30,891
291,381
158,614
5,975
32,918
(2,165)
30,753
13,344
71,968
51,639
(11,931)
39,708
320,362
Investment properties
Cost
January 1, 2020
Additions to owned assets
Disposals of owned assets
Impact of lease modification on right-ofuse assets
Transfers from construction and other
work in progress
Net transfers to property and equipment
Exchange difference
December 31, 2020
Land
Construction
and other work
Buildings
in progress
Total
126,537
–
247,910
(51)
87,362
16,330
–
461,809
16,330
(51)
–
(456)
–
(456)
(2,307)
124,230
14,977
(20)
351
262,711
(14,977)
(2,101)
685
87,299
(4,428)
1,036
474,240
–
(36,259)
(6,647)
(6,038)
51
(73)
(48,966)
(7,226)
1,882
(119)
(5,463)
(43,485)
(6,647)
(6,038)
51
1,882
(192)
(54,429)
124,230
213,745
81,836
419,811
Accumulated depreciation and
impairment
January 1, 2020
Depreciation of owned assets
Depreciation of right-of-use assets
Disposals
Reversal of impairment
Exchange difference
December 31, 2020
Net book value
25
JARIR MARKETING COMPANY
(A Saudi Joint Stock Company)
Notes to consolidated financial statements for the year ended December 31, 2020
(All amounts in Saudi Riyals thousands unless otherwise stated)
Construction
and other work
Buildings
in progress
Land
Cost
January 1, 2019
Right-of-use assets recognized on the
transition to IFRS 16 at January 1, 2019
Adjusted balance as at January 1, 2019
Additions to owned assets
Right-of-use assets added during the year
Impact of lease modification on right-ofuse assets recognized during the year
Right-of-use assets derecognized against
finance lease receivable
Transfers from construction and other
work in progress
Net transfers from property and equipment
Exchange difference
December 31, 2019
121,211
149,191
77,329
347,731
121,211
–
47,654
196,845
72
96
77,329
36,010
–
47,654
395,385
36,082
96
–
(969)
–
(969)
–
(891)
–
(891)
5,326
126,537
30,381
20,576
1,800
247,910
(30,381)
529
3,875
87,362
26,431
5,675
461,809
–
(23,748)
(6,216)
(6,077)
101
(319)
(36,259)
(10,229)
4,148
(1,145)
(7,226)
(33,977)
(6,216)
(6,077)
4,148
101
(1,464)
(43,485)
126,537
211,651
80,136
418,324
Accumulated depreciation and
impairment
January 1, 2019
Depreciation of owned assets
Depreciation of right-of-use assets
Reversal of impairment
Net transfers to property and equipment
Exchange difference
December 31, 2019
Net book value
Total
All investment properties are held for rental income and not for capital appreciation.
7.1
Fair value of investment property
For the purpose of fair value disclosure, management determined that the investment properties consist
of three classes of assets: (i) freehold office, retail and residential properties in the Kingdom of Saudi
Arabia (KSA), (ii) freehold office and retail properties in Egypt and (iii) Right-of-use assets recognized
as per the requirements of IFRS 16 as follows:
(Saudi Riyals in millions)
December 31, 2020
December 31, 2019
Carrying
Carrying
Amount
Fair Value Amount
Fair Value
Freehold office, retail and residential
properties in KSA
Freehold office and retail properties in Egypt
Right-of-use assets
Total
340.6
45.9
33.3
419.8
26
723.1
104.7
73.5
901.3
334.7
43.8
39.8
418.3
652.9
99.8
79.9
832.6
JARIR MARKETING COMPANY
(A Saudi Joint Stock Company)
Notes to consolidated financial statements for the year ended December 31, 2020
(All amounts in Saudi Riyals thousands unless otherwise stated)
The fair value of investment property presented in the above table is based on valuation by independent
valuers who hold recognized and relevant professional qualifications and have recent experience in the
location and category of the investment property being valued.
(i) Freehold office, retail and residential properties in KSA
The fair value measurements of the office, retail and residential properties in KSA as at the above dates
were all performed by Barcode Company (Abdulkarim Mohammed Abanme and Moath Mohammed
Abanme, both are accredited valuers by the Saudi Authority for Accredited Valuers (Taqeem), holding
membership number 1210000001 and 1210000730, respectively). Barcode Company is independent
valuer not related to the Group who holds recognized and relevant professional qualifications and has
recent experience in the location and category of the investment property being valued.
The fair value measurement in its entirety is classified into level 2 and 3 based on the valuation
techniques used in estimating the fair value and related inputs.
For completed properties, the fair value was determined based on capitalization of net income method,
where the market rentals of the properties are assessed in light of the rentals of similar properties in the
market and operating expenses are estimated based on market averages and valuer’s knowledge. The
capitalization rate used is adopted by reference to the yield rates normally used for similar properties
and location and adjusted based on the valuer’s knowledge of the factors specific to the respective
properties.
For under-construction properties, the fair value of land was determined based on the market
comparable approach that reflects prices for similar properties, while the fair value on construction
works was determined based on the cost approach by reference to the actual cost provided by the Group.
In estimating the fair value of the properties, the highest and best use of the properties is their current
use.
(ii) Freehold office and retail properties in Egypt
The fair value measurements of the office and retail properties in Egypt are performed by Deyar El Safwa
(Eng. Mohamed Abdulrahman Ahmed Youssef), accredited real estate valuer by the Financial
Regulatory Authority (in Egypt), Reg. number 93.
The valuer is an independent valuer who is not related to the Group, holds recognized and relevant
professional qualifications and has recent experience in the location and category of the investment
property being valued.
The fair value was determined based on the market comparable approach.
The fair value measurement in its entirety is classified into level 2. Adjustment to level 2 inputs that are
significant to the entire measurement did not use significant unobservable inputs.
For a property which had a fair value (less cost of disposal) greater than its net book value at December
31, 2020, and its estimated value in use did not exceed its fair value (less cost of disposal), its carrying
amount has been increased to its recoverable amount (being fair value less cost of disposal). The
respective reversal of prior impairment loss amounting Saudi Riyals 1.9 million is recognized in the
statement of income for the year ended December 31, 2020, (2019: Saudi Riyals 4.1 million).
(iii) Right-of-use assets:
Right-of-use assets within the investment properties exist in KSA and Qatar.
The fair value measurements of right-of-use assets in KSA were performed by Barcode Company
referred to above.
27
JARIR MARKETING COMPANY
(A Saudi Joint Stock Company)
Notes to consolidated financial statements for the year ended December 31, 2020
(All amounts in Saudi Riyals thousands unless otherwise stated)
The fair value measurements of right-of-use assets in Qatar were performed by ValuStrat LLC in Qatar.
ValuStrat is a Royal Institution of Chartered Surveyors (RICS) regulated firm. ValuStrat is independent
valuer not related to the Group and has sufficient and current knowledge of the Qatari market and the
skills and understanding to undertake an objective and unbiased valuation competently. It has recent
and sufficient experience in the location and category of the investment property being valued.
The fair value measurement of the right-of-use assets in its entirety is classified into level 3 based on the
valuation techniques used in estimating the fair value and related inputs. The discounted cash flow
method has been used as the valuation approach.
There has been no change to the valuation techniques as of December 31, 2020 compared to December
31, 2019 for all fair value measurements.
7.2
Amounts included in the statement of income related to investment properties
The statement of income includes, among others, the following amounts related to investment
properties:
2020
2019
Rental income
Maintenance and repair expenses from property that generated
rental income
Maintenance and repair expenses from property that did not
generate rental income
43,418
38,528
1,308
1,207
612
409
Rental income includes the rental income generated by both freehold and right-of-use investment
properties.
The Group has no significant contractual obligations for repairs or maintenance of its investment
properties.
8
Right-of-use assets
The following table presents information about the right-of-use assets, other than those included in the
investment properties:
2020
2019
Buildings
Buildings
Assets recognized on transition to IFRS 16 at January 1, 2019
Carrying amount as at December 31
Additions during the year
Lease modifications/reassessment/termination
Depreciation charge for the year
28
586,714
13,345
(10,973)
85,619
658,280
663,995
88,842
(14,559)
78,193
JARIR MARKETING COMPANY
(A Saudi Joint Stock Company)
Notes to consolidated financial statements for the year ended December 31, 2020
(All amounts in Saudi Riyals thousands unless otherwise stated)
9
Property and equipment
Land
Buildings
Machinery
and
equipment
Furniture
and
fixtures
Motor
vehicles
Computers
Construction
and other
Leasehold
work in
improveprogress
ments
(CWIP)
Total
Cost
January 1, 2020
Additions
Disposals
Net transfers from
investment property
Transfers from CWIP
Exchange difference
December 31, 2020
488,452
–
509,725
–
11,930
49
(55)
164,510
3,216
(2,136)
21,147
1,248
(1,436)
56,945
2,566
(66)
149,543
6
(4,003)
120,908
72,482
–
1,523,160
79,567
(7,696)
2,307
490,759
20
53,255
9
563,009
11,924
11,743
2
177,335
545
21,504
5,011
1
64,457
15,499
161,045
2,101
(86,053)
543
109,981
4,428
555
1,600,014
Accumulated
depreciation
January 1, 2020
Additions
Disposals
Exchange difference
December 31, 2020
Net book value
490,759
(126,485)
(17,266)
(2)
(143,753)
419,256
(10,512)
(477)
56
(10,933)
991
(100,884)
(10,666)
748
(110,802)
66,533
(18,785)
(1,177)
1,434
(18,528)
2,976
(44,231)
(6,960)
58
(51,133)
13,324
(120,227)
(22,013)
1,890
(140,350)
20,695
109,981
(421,124)
(58,559)
4,186
(2)
(475,499)
1,124,515
29
JARIR MARKETING COMPANY
(A Saudi Joint Stock Company)
Notes to consolidated financial statements for the year ended December 31, 2020
(All amounts in Saudi Riyals thousands unless otherwise stated)
Land
Cost
January 1, 2019
Additions
Disposals
Transfers to right-of-use
assets
Net transfers to
investment property
Transfers from CWIP
Exchange difference
December 31, 2019
Accumulated
depreciation
January 1, 2019
Additions
Disposals
Transfers to right-of-use
assets
Net transfers from
investment property
Exchange difference
December 31, 2019
Net book value
Machinery Furniture
and
and
Buildings equipment
fixtures
Motor
vehicles Computers
Construction
and other Buildings
Leasehold
work in
under
improveprogress
finance
ments
(CWIP)
lease
Total
503,257
(9,479)
483,316
8
–
11,693
238
(151)
151,979
4,865
(1,771)
21,370
808
(1,323)
51,890
4,461
(683)
129,315
89
(9)
123,159
73,691
–
13,860
–
1,489,839
84,160
(13,416)
–
–
–
–
–
–
–
–
(13,860)
(13,860)
(5,326)
488,452
(20,576)
46,899
78
509,725
150
11,930
9,437
164,510
292
21,147
1,277
56,945
20,148
149,543
(529)
(78,203)
2,790
120,908
–
(26,431)
2,868
1,523,160
–
(110,474)
(15,900)
–
(10,089)
(571)
148
(92,430)
(10,173)
1,719
(18,806)
(1,302)
1,323
(39,546)
(5,345)
660
(98,962)
(21,274)
9
–
(4,235)
–
(374,542)
(54,565)
3,859
–
–
–
–
–
–
–
–
4,235
4,235
–
(101)
(10)
–
–
–
–
–
–
–
(101)
(10)
–
(126,485)
(10,512)
(100,884)
(18,785)
(44,231)
(120,227)
–
–
(421,124)
488,452
383,240
1,418
63,626
2,362
12,714
29,316
120,908
–
1,102,036
As at December 31, 2020, property and equipment and investment property include lands amounting to Saudi Riyals 24.7 million (2019: Saudi Riyals 24.7 million) which
are registered under the name of related parties and others and the beneficial ownership has been transferred to the Group.
30
JARIR MARKETING COMPANY
(A Saudi Joint Stock Company)
Notes to consolidated financial statements for the year ended December 31, 2020
(All amounts in Saudi Riyals thousands unless otherwise stated)
10
Bank borrowings and term loans
As at December 31, 2020
Interest rate
Outstanding
balance
Contractual maturity
Short term Tawarruq facility
1.45%
100,000
Due on 4 and 5 January 2021
Total
100,000
As at December 31, 2019
Short term Tawarruq facility
2.94%-3.24%
300,000
Islamic debit current account
(overdraft)
2.00% +
SIBOR
6,923
Conventional overdraft
2.00% +
SIBOR
34,604
Total
Various maturities, the last of
which is February 12, 2020
Account must be brought into a
credit balance at a minimum
once a year
Account must be brought into a
credit balance at a minimum
once a year.
For a bank, there is no
requirement to clear the
outstanding overdraft balance.
341,527
Changes in bank borrowings and term loans arose from cash flows.
10.1 Finance cost
Interest on overdraft facility (Islamic debit current
account)
Interest on overdraft facility – conventional
Interest on Murabaha/Tawarruq term loans
Interest on lease liabilities
11
Accounts payable
Trade payables
Advances from customers
Employees
Other
31
2020
2019
676
57
2,060
45,685
48,478
1,389
148
10,722
48,917
61,176
2020
2019
935,601
86,604
8,937
41,666
1,072,808
826,152
58,807
6,349
21,811
913,119
JARIR MARKETING COMPANY
(A Saudi Joint Stock Company)
Notes to consolidated financial statements for the year ended December 31, 2020
(All amounts in Saudi Riyals thousands unless otherwise stated)
12
Accrued expenses and other liabilities
Accrued bonus and commission
Warranty charges provision
Accrued salaries, wages and benefits
Other
12.1
Note
12.1
2020
2019
76,133
17,108
28,015
19,972
141,228
66,790
13,164
21,411
24,126
125,491
Warranty provision
A provision is recognized for expected warranty claims on products sold for which Group is liable to
cover warranty. It is expected all these costs will be incurred within two years after the reporting date.
Assumptions used to calculate the provision for warranties are based on product sales, date of sale,
warranty period, and estimated level of repairs and warranty costs.
The estimate has been made based on historical warranty trend and recommendation of vendors has
been considered and may vary as a result of cost changes, manufacturing processes and change in
products quality.
Movement in provision for warranty is as follows:
2020
2019
13,164
25,387
(21,443)
17,108
20,637
14,543
(22,016)
13,164
Note
2020
2019
13.1
13.2
4,106
14,007
18,113
(14,398)
3,715
4,498
12,756
17,254
(13,147)
4,107
January 1
Added during the year
Utilized during the year
December 31
13
Deferred income
Gain on sale and lease back
Rental income
Current maturity shown under current liabilities
13.1
Gain on sale and lease back
The gain on sale and leaseback represents the unamortized gain recognized on a sale-lease-back
transaction in 2013 amounted to Saudi Riyals 7 million and which pertains to the then classified finance
lease portion of the transaction. This gain is being amortized over the lease term.
13.2
Rental income
Rental income represents amounts received from rental activity but not earned as at December 31, 2020
and 2019. Such amounts will be recognized as revenue in the subsequent year.
32
JARIR MARKETING COMPANY
(A Saudi Joint Stock Company)
Notes to consolidated financial statements for the year ended December 31, 2020
(All amounts in Saudi Riyals thousands unless otherwise stated)
14
Zakat and income tax matters
Zakat is calculated at 2.5% on the higher of approximate zakat base or adjusted net income. Zakat is
calculated based on the consolidated financial statements of Jarir Marketing Company.
14.1
Component of zakat base
The significant components of the zakat base of the Company under zakat regulations are as follows:
Share capital at beginning of year
Statutory reserve at beginning of year
Retained earnings at beginning of year
Foreign currency translation reserve
Provisions
Loans and equivalents
Liabilities used to finance deductible assets
Adjusted net income for the year
Additions to property and equipment and investment
property
Dividends paid during the year in excess of retained
earnings at beginning of year
Financial assets (investments)
Investment properties
Right-of-use assets
Property and equipment
Zakat provision
Dividends announced and paid
Approximate zakat base
Note
2020
2019
14.2
1,200,000
194,472
317,232
(64,194)
312,937
24,127
694,602
424,660
1,200,000
95,999
476,557
(66,614)
312,033
12,669
758,728
425,907
95,897
120,242
606,768
(27,951)
(419,811)
(586,714)
(1,124,515)
18,175
(924,000)
741,685
501,443
(27,951)
(418,324)
(663,995)
(1,102,036)
11,727
(978,000)
658,385
In accordance with zakat regulations applicable to zakat years starting from January 1, 2019, zakat base,
excluding the adjusted net income element, is subject to zakat at 2.5% adjusted by ratio of Gregorian to
Hijri year number of days (e.g. 2.5% * 365/354). Zakat is calculated at 2.5% on the adjusted net income
element.
14.2
Adjusted net income
Income before zakat and income tax
Adjustments:
Provisions during the year
Dividends paid in excess of retained earnings at
beginning of year
Additions to property and equipment and investment
property
Adjusted net income for year
14.3
2020
1,052,411
2019
1,009,819
74,914
37,773
(606,768)
(501,443)
(95,897)
424,660
(120,242)
425,907
2020
36,727
49,000
(18,552)
67,175
2019
28,316
25,000
(16,589)
36,727
Provision for zakat
The movement in the zakat provision for the year was as follows:
January 1
Provisions
Payments
December 31
14.4
Status of zakat assessments
The GAZT finalized the assessments for the years till 2010, and there are no outstanding zakat dues. In
2019, the Group received zakat assessments from GAZT for the years 2011 to 2015, claiming zakat
differences totaling Saudi Riyals 25.6 million as compared to zakat paid for those years.
33
JARIR MARKETING COMPANY
(A Saudi Joint Stock Company)
Notes to consolidated financial statements for the year ended December 31, 2020
(All amounts in Saudi Riyals thousands unless otherwise stated)
The Group objected to those assessments and filed an appeal letter in due time. Early 2020, The Group
received a notification from GAZT that the appeal had been rejected and accordingly the Group escalated
the case to the General Secretariat of Tax Committees “GSTC” in due time. Both the Group and GAZT
communicated their views to GSTC in due time. After hearing sessions with the Tax Committee for
Resolution of Tax Violations and Disputes (the “Committee”), the Committee resolved that substantially
all the objections made by the Group are rejected. The Group shall escalate its objection to the
Committee’s resolution to the Appeal Committee for Tax Violations and Disputes in due time.
In 2020, the Group received zakat assessments from GAZT for the years 2016 to 2018, claiming zakat
differences totaling Saudi Riyals 35.9 million as compared to zakat paid for those years. The Group
objected to the assessments but substantially all the objections were rejected by GAZT. The Group
escalated the case pertaining to the years 2016 to 2018 to the General Secretariat of Tax Committees
“GSTC” in due time.
The major reason for all those zakat differences was that GAZT in their assessments did not allow
deduction of dividends in excess of the opening balance of retained earnings. The Group has been
adopting a generous dividend payout policy consistently coupled with quarterly dividends, and has been
maintaining relatively low year-end retained earnings largely because of this dividend policy, and the
several capitalizations of retained earnings took place in the past, and therefore, in each of the
aforementioned years, total dividends exceeded the opening balance of retained earnings. From the
Group’s perspective, those dividends are deductible in full being actually distributed to the shareholders
within the respective zakatable year in which the Group deducted dividends. The opening balance of
retained earnings should not be used as a barrier to deductibility of valid dividends that were declared
and paid in accordance with the applicable regulations. While the Group believes it has rightfully
deducted such dividends from zakat base in accordance with Sharia principles, the Group added Saudi
Riyals 21 million to zakat provision during the year to meet the probable zakat differences arising from
such disputes.
14.5
Income tax
The amount of income tax recognized in the consolidated statement of income typically pertains to either
or both of the subsidiaries in Qatar and Egypt.
15
End of service benefits
The Company’s end of service benefits plan is an unfunded plan. Cash generated by operations are quite
sufficient to meet end of service benefit obligations as they become due.
15.1
Changes in the end of service benefit liability
January 1
Interest cost
Current service cost
End of service benefit expense recognized in profit
or loss
Benefits paid
Actuarial changes arising from experience
adjustments
Actuarial changes arising from changes in
demographic assumptions
Actuarial changes arising from changes in financial
assumptions
Amount of actuarial loss included in other
comprehensive income
December 31
2020
2019
146,362
3,709
18,167
133,612
4,548
13,649
21,876
(10,092)
18,197
(6,607)
(9,770)
(2,767)
5,544
3,224
5,533
703
1,307
159,453
1,160
146,362
End of service benefit expenses are included in the same line items in the consolidated statement of
income as the related compensation cost.
34
JARIR MARKETING COMPANY
(A Saudi Joint Stock Company)
Notes to consolidated financial statements for the year ended December 31, 2020
(All amounts in Saudi Riyals thousands unless otherwise stated)
Experience adjustments are the effects of differences between the previous actuarial assumptions and
what has actually occurred.
15.2
Assumptions used and risks
The principal assumptions used in determining end of service benefit liability are shown below:
Discount rate
Weighted average of the annual increase in compensation
used in the calculation of end of service
Weighted average future number of years of service
2020
2019
1.50%
2.50%
6.20%
3.7
6.10%
4.0
The end of service benefit typically exposes the Group to actuarial risks such as interest risk, longevity
risk and salary risk as follows:
Interest risk: As explained in Note 2.12, the discount rate used to calculate the present value of the end
of service benefits obligation is estimated by reference to yields on the governmental bonds. A decrease
in the bond interest rate will increase the end of service benefit liability.
Longevity risk: The present value of the end of service benefits obligation is calculated by reference to
the best estimate of the number of years of employment. An increase in the number of remaining years
of employment will increase the end of service benefit liability.
Salary risk: The end of service benefits liability is calculated by reference to the best estimate of future
salaries of employees. An increase in the salary of employees will increase the end of service benefit
liability.
15.3
Assumptions used and risks
A quantitative sensitivity analysis for significant assumption on the end of service benefit liability as at
December 31, 2020 and 2019 is, as shown below:
(Saudi Riyals in millions)
2020
2019
Discount rate:
0.5 % increase
0.5% decrease
(2.9)
3.0
(2.9)
3.0
(Saudi Riyals in millions)
2020
2019
Weighted average of the annual increase in
compensation used in the calculation of end
of service:
2% increase
2% decrease
11.6
(10.5)
11.7
(10.7)
Weighted average future number of years of
service:
Increase by 1 year
Decrease by 1 year
13.3
(9.3)
10.2
(7.2)
The sensitivity analyses above have been determined based on a method that extrapolates the impact on
the end of service benefit liability as a result of reasonable changes in key assumptions occurring at the
end of the reporting period. The sensitivity analysis are based on a change in a significant assumption,
keeping all other assumptions constant. The sensitivity analysis may not be representative of an actual
change in the end of service benefit liability as it is unlikely that changes in assumptions would occur in
isolation of one another.
35
JARIR MARKETING COMPANY
(A Saudi Joint Stock Company)
Notes to consolidated financial statements for the year ended December 31, 2020
(All amounts in Saudi Riyals thousands unless otherwise stated)
In presenting the above sensitivity analysis, the present value of the defined benefit obligation has been
calculated using the projected unit credit method at the end of the reporting period, which is the same
as that applied in calculating the end of service benefit liability recognized in the consolidated statement
of financial position.
The methods and assumptions used in preparing the sensitivity analyses for the 2020 and 2019
presented above are consistent.
16 Related party matters
16.1
Related parties’ transactions
Significant transactions with related parties in the ordinary course of business included in the
consolidated financial statements are summarized below:
Board of directors Salaries, wages and benefits (charged to
profit or loss)
Salaries, wages and benefits (in other
comprehensive income)
Parties related to Construction and engineering services – cost
the Board of
Rent income
Directors
Rent expense
Consulting services – income
16.2
2020
2019
33,608
33,852
859
70,954
8,958
6,993
767
(4,313)
89,789
3,625
8,301
842
Related parties balance
Significant year-end balance arising from transactions with related parties are as follows:
2020
2019
4,834
3,595
Receivable from related parties
Parties related to the Board of Directors
16.3
Key management personnel
Key management personnel, including all members of the board of directors, compensation comprised
the following:
2020
2019
Short-term employee benefits
Post-employment benefits (end of service benefits charged to
profit or loss)
Post-employment benefits (end of service benefits in other
comprehensive income)
Other long-term benefits (long-term incentive plan)
36,530
36,007
1,906
2,480
3,444
1,410
(5,849)
1,595
Short-term employee benefits of the Group’s key management personnel include salaries, allowances,
cash and non-cash benefits, bonuses, and contributions to General Organization for Social Insurance.
17
Share capital
The share capital of the Company as of December 31, 2020 comprises of 120 million shares (2019: 120
million shares) stated at Saudi Riyals 10 per share.
18
Statutory reserve
In accordance with the Regulations for Companies in the Kingdom of Saudi Arabia, the Company is
required to transfer 10% of its net income to a statutory reserve until such reserve equals to 30% of its
share capital. This reserve is currently not available for distribution to the shareholders of the Company.
36
JARIR MARKETING COMPANY
(A Saudi Joint Stock Company)
Notes to consolidated financial statements for the year ended December 31, 2020
(All amounts in Saudi Riyals thousands unless otherwise stated)
19
Revenue
Set out below is the disaggregation of the Group’s revenue:
The following table sets out the Group’s revenue disaggregated by products and services category by
reportable segment:
(Saudi Riyals in millions)
Retail
All other
2020
outlets Wholesale E-commerce
segments
Total
Smartphones, electronics and
accessories
Other IT and digital products
and services
Books and office, school and
arts supplies
2019
Smartphones, electronics and
accessories
Other IT and digital products
and services
Books and office, school and
arts supplies
4,203
–
623
3
4,829
2,847
3
533
39
3,422
694
7,744
222
225
61
1,217
78
120
1,055
9,306
(Saudi Riyals in millions)
All other
Wholesale
E-commerce
segments
Total
Retail
outlets
4,255
–
231
2
4,489
2,420
3
146
37
2,606
866
7,541
359
362
20
397
85
124
1,330
8,425
Comparative information has been restated to reflect the newly reportable segment “E-commerce” as a
separate segment. Refer to Note 26.
The following table sets out the Group’s revenue disaggregated by products and services category by
geographical market:
(Saudi Riyals in millions)
Kingdom of
Other Gulf
Saudi
Countries
Arabia
and Egypt
2020
Smartphones, electronics and accessories
Other IT and digital products and services
Books and office, school and arts supplies
Total
4,713
3,192
914
8,819
116
230
141
487
4,829
3,422
1,055
9,306
4,344
2,445
1,172
7,961
145
161
158
464
4,489
2,606
1,330
8,425
2019
Smartphones, electronics and accessories
Other IT and digital products and services
Books and office, school and arts supplies
All the above revenues are recognized at a point in time.
37
JARIR MARKETING COMPANY
(A Saudi Joint Stock Company)
Notes to consolidated financial statements for the year ended December 31, 2020
(All amounts in Saudi Riyals thousands unless otherwise stated)
20
Cost of sales
Purchases of goods
Changes in inventories
Cost of goods sold
Salaries, wages and benefits
Depreciation
Rental
Other
21
2020
2019
7,484,707
(47,899)
7,436,808
309,277
137,186
4,033
89,898
7,977,202
6,813,855
(202,286)
6,611,569
293,720
127,418
7,380
111,255
7,151,342
2020
2019
93,580
4,153
6,484
2,060
2,909
189
25,130
13,534
148,039
90,074
3,922
4,889
2,319
2,981
11
837
13,772
118,805
General and administrative expenses
Salaries, wages and benefits
Professional services
Depreciation
Utilities
Maintenance
Rentals
Voluntary contributions an…