Annual financial statement
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY THE CONSOLIDATED FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR’S REPORT FOR THE YEAR ENDED 31 DECEMBER 2024
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY INDEX PAGES INDEPENDENT AUDITOR’S REPORT 1-5 CONSOLIDATED STATEMENT OF FINANCIAL POSITION 6 AS AT 31 DECEMBER 2024 CONSOLIDATED STATEMENT OF PROFIT OR LOSS 7 FOR THE YEAR ENDED 31 DECEMBER 2024 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 8 FOR THE YEAR ENDED 31 DECEMBER 2024 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 9-10 FOR THE YEAR ENDED 31 DECEMBER 2024 CONSOLIDATED STATEMENT OF CASHFLOWS 11 FOR THE YEAR ENDED 31 DECEMBER 2024 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 12-60 FOR THE YEAR ENDED 31 DECEMBER 2024
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KPMG Professional Services Company Roshn Front, Airport Road P.O. Box 92876 Riyadh 11663 Kingdom of Saudi Arabia Commercial Registration No 1010425494 Headquarters in Riyadh KPMG Professional Services Company, a professional closed joint stock company registered in the Kingdom of Saudi Arabia with a paid-up capital of SAR100,000,000 and a non-partner member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. Independent Auditor Report To the Shareholders of Almarai Company (A Saudi Joint Stock Company) Opinion We have audited the consolidated financial statements of Almarai Company 31 December 2024, the consolidated statements of profit or loss, comprehensive income, changes in equity and cash flows for the year then ended, and notes to the consolidated financial statements, comprising material accounting policies and other explanatory information. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at 31 December 2024, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (IFRS Accounting Standards) that are endorsed in the Kingdom of Saudi Arabia and other standards and pronouncements issued by the Saudi Organization for Chartered and Professional Accountants (SOCPA). 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 Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards), that is 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 . We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters 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.
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2 eport To the Shareholders of Almarai Company (A Saudi Joint Stock Company) (continued) Carrying value of intangible asset - goodwill Refer to Note 5.10 for the accounting policy relating to goodwill and Note 10 for the related disclosures in the accompanying consolidated financial statements. The key audit matter How the matter was addressed in our audit As at 31 December 2024, the carrying value of goodwill amounted to SAR 927 million (2023: SAR 940 million). The goodwill relates to the acquisition of Western Bakeries Limited, Hail Agricultural Development Company, International Dairy and Juice Limited and Bakemart. The management has performed the annual goodwill impairment assessment as at 31 December 2024. As the goodwill is allocated to the respective cash , the impairment assessment was performed by comparing the carrying value of each CGU, including the goodwill, to its recoverable amount. The recoverable amount of each identified CGU was determined based on Value-In-U These calculations employ a discounted cashflow (DCF) model, by using cashflow projections based on financial budgets approved by the management covering a five-year period. calculations for the CGUs includes significant judgement and assumptions relating to cashflow projections, and the discount rates, and is highly sensitive to the changes in these assumptions. We considered impairment of goodwill as a key audit matter, as the estimation of future cash flows and the assumptions involved in calculating the discounted value of these cash flows involve judgement that impacts the determination of recoverable amount and consequently impacts the impairment assessment of goodwill. We performed the following audit procedures in relation to impairment of goodwill: Assessed the design and implementation, controls around goodwill impairment assessment process; Assessed the appropriateness of the Group's goodwill impairment assessment model against the requirements of IAS 36; Involved our specialists for assessing the reasonableness of the VIU calculations and the underlying assumption, including cash flow projections and discount rates used; Tested the accuracy and relevance of the input data used in the model by reference to supporting evidence, including approved budgets, and considered the reasonableness of these budgets by comparing performance against budgets; Performed sensitivity analysis over the key assumptions, principally sales growth rates and discount rates, to ascertain that any adverse reasonably possible changes to the key assumptions would not cause the carrying amount of goodwill to exceed the recoverable amount; and Assessed the adequacy of the disclosures in the consolidated financial statements, including disclosures of key assumptions, judgements and sensitivities.
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3 eport To the Shareholders of Almarai Company (A Saudi Joint Stock Company) (continued) Other Information Management is responsible for the other information. The other information comprises the information included in the annual report but does not include the consolidated financial statements and our auditor report thereon. The annual report is expected to be made available to us after the date of this auditor 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 when it becomes available 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, when made available to us, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance. 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 IFRS Accounting Standards that are endorsed in the Kingdom of Saudi Arabia and other standards and pronouncements issued by SOCPA, the applicable requirements of the Regulations for Companies -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 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. Those charged with governance, the Board of directors, financial reporting process.
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4 eport To the Shareholders of Almarai Company (A Saudi Joint Stock Company) (continued) Auditor Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as 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 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 judgement and maintain professional scepticism 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 Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. and, based on the audit evidence obtained, whether a material uncertainty exists related to events or lity to continue as a going concern. If we conclude that a material uncertainty exists, then we are required to draw attention in our auditor 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 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. Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the group as a basis for forming an opinion on the group financial statements. We are responsible for the direction, supervision and review of the audit work performed for purposes of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit of Almarai Company We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where applicable, actions taken to eliminate threats or safeguards applied.
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5 eport To the Shareholders of Almarai Company (A Saudi Joint Stock Company) (continued) AuditorResponsibilities for the Audit of the Consolidated Financial Statements(continued) From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditorreport unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. KPMG Professional Services Fahad Mubark Aldossari License No.: 469 Riyadh on 19 January 2025 Corresponding to: 19 Rajab1446H
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2024 _________________________ _________________________ ________________________________________ Danko Maras Abdullah Albader HH Prince Naif Bin Sultan Bin Chief Financial Officer Chief Executive Officer Mohammed Bin Saud Al Ka beer Chairman 6 Notes 31 December 2024 31 December 2023 SAR '000 SAR '000 ASSETS Non-Current Assets Property, Plant and Equipment 7 22,750,342 20,807,810 Long-Term Prepayments 8 525,391 525,153 Right-of-Use Assets 9 504,066 473,831 Intangible Assets and Goodwill 10 1,130,692 1,123,769 Biological Assets 11 1,838,353 1,741,819 Investments 12 3,256 5,030 Derivative Financial Instruments 38 27,832 37,225 Deferred Tax Assets 24 3,858 24,307 26,783,790 24,738,944 Current Assets Inventories 13 5,684,420 6,148,189 Biological Assets 11 136,551 135,044 Trade Receivables, Prepayments and Other Receivables 14 2,421,526 2,564,646 Derivative Financial Instruments 38 13,459 15,300 Time Deposit 15 - 1,925,556 Cash and Cash Equivalents 16 528,214 666,336 8,784,170 11,455,071 TOTAL ASSETS 35,567,960 36,194,015 EQUITY AND LIABILITIES Share Capital 17 10,000,000 10,000,000 Statutory Reserve 18 2,966,165 2,966,165 Treasury Shares 20 (538,024) (614,766) Other Reserves 21 (1,311,377) (956,911) Retained Earnings 7,673,972 6,403,231 Equity Attributable to Equity Holders of the Company 18,790,736 17,797,719 Non-Controlling Interests 396 11,106 TOTAL EQUITY 18,791,132 17,808,825 Non-Current Liabilities Loans and Borrowings 22 8,900,245 8,499,169 Lease Liabilities 9 397,701 369,113 Employee Retirement Benefits 23 1,396,542 1,225,730 Derivative Financial Instruments 38 181,812 12,382 Deferred Tax Liabilities 24 61,890 92,107 10,938,190 10,198,501 Current Liabilities Bank Overdrafts 34 52,598 844 Loans and Borrowings 22 1,229,996 3,528,828 Lease Liabilities 9 87,249 81,079 Zakat Payable 25 345,703 249,659 Income Tax Payable 25 36,226 30,789 Trade and Other Payables 26 4,048,921 4,245,868 Derivative Financial Instruments 38 37,945 49,622 5,838,638 8,186,689 TOTAL LIABILITIES 16,776,828 18,385,190 TOTAL EQUITY AND LIABILITIES 35,567,960 36,194,015 The accompanying notes form an integral part of these Consolidated Financial Statements, which have been authorised for issue by the Board of Directors on behalf of the Shareholders and signed on its behalf by:
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 31 DECEMBER 2024 _________________________ _________________________ ________________________________________ Danko Maras Abdullah Albader HH Prince Naif Bin Sultan Bin Chief Financial Officer Chief Executive Officer Mohammed Bin Saud Al Ka beer Chairman 7 Notes 31 December 2024 31 December 2023 SAR '000 SAR '000 Revenue 33 20,979,512 19,575,585 Cost of Sales 27 (14,315,460) (13,524,295) Gross Profit 6,664,052 6,051,290 Selling and Distribution Expenses 28 (2,993,918) (2,789,745) General and Administration Expenses 29 (508,149) (469,023) Other Expenses, net 30 (63,166) (64,461) Impairment Loss on Financial Assets 14 (103,458) (34,173) Operating Profit 2,995,361 2,693,888 Finance Cost, net 31 (530,260) (527,019) Share of Results of Associate 12 (1,774) (1,064) 2,463,327 2,165,805 Zakat 25 (105,326) (85,101) Income Tax 24,25 (44,334) (29,175) Profit for the year 2,313,667 2,051,529 Profit for the year Attributable to: Shareholders of the Company 2,313,100 2,049,123 Non-Controlling Interests 567 2,406 2,313,667 2,051,529 - Basic 32 2.34 2.08 - Diluted 32 2.31 2.05 For the year ended Earnings per Share (SAR), based on Profit for the year Attributable to Shareholders of the Company Profit before Zakat and Income Tax The accompanying notes form an integral part of these Consolidated Financial Statements, which have been authorised for issue by the Board of Directors on behalf of the Shareholders and signed on its behalf by:
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2024 _________________________ _________________________ ________________________________________ Danko Maras Abdullah Albader HH Prince Naif Bin Sultan Bin Chief Financial Officer Chief Executive Officer Mohammed Bin Saud Al Ka beer Chairman 8 Notes 31 December 2024 31 December 2023 SAR '000 SAR '000 Profit for the Year 2,313,667 2,051,529 Items that will not be reclassified to profit or loss: Actuarial Loss on Employee Retirement Benefits 23 (58,915) (85,659) Change in the Fair Value of Equity Investment through FVOCI - 4,174 Items that are or may be reclassified subsequently to profit or loss: Settlement of Cash Flow Hedges Transferred to Inventory / PPE 34,446 (71,464) Foreign Currency Translation Differences (181,226) (146,686) Movement in Fair Value on Cash Flow Hedges (187,955) 27,465 Settlement of Cash Flow Hedges Transferred to Profit or Loss (15,478) (14,430) Other Comprehensive Loss for the year, net of Income Tax (409,128) (286,600) Total Comprehensive Income for the year 1,904,539 1,764,929 Total Comprehensive Income / (Loss) for the year Attributable to: Shareholders of the Company 1,902,907 1,799,986 Non-Controlling Interests 1,632 (35,057) 1,904,539 1,764,929 For the year ended The accompanying notes form an integral part of these Consolidated Financial Statements, which have been authorised for issue by the Board of Directors on behalf of the Shareholders and signed on its behalf by:
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2024 _________________________ _________________________ ________________________________________ Danko Maras Abdullah Albader HH Prince Naif Bin Sultan Bin Chief Financial Officer Chief Executive Officer Mohammed Bin Saud Al Kabeer Chairman 9 Share Capital Statutory Reserve Treasury Shares Other Reserves Retained Earnings Equity Attributable to Equity Holders Non- Controlling Interests Total Equity Balance at 1 January 2023 10,000,000 2,761,251 (866,602) (809,399) 5,586,110 16,671,360 311,505 16,982,865 Profit for the year - - - - 2,049,123 2,049,123 2,406 2,051,529 Other Comprehensive Loss for the year - - - (163,478) (85,659) (249,137) (37,463) (286,600) Total Comprehensive (Loss) / Income - - - (163,478) 1,963,464 1,799,986 (35,057) 1,764,929 Transfer during the year (Refer note 18) - 204,914 - - (204,914) - - - Directors' Remuneration - - - - (4,994) (4,994) - (4,994) Transactions with Owners in their Capacity as Owners Dividend Declared SAR 1 per Share - - - - (982,330) (982,330) - (982,330) Share Based Payment Transactions - - - 30,820 - 30,820 - 30,820 Settlement of Treasury Shares - - 251,836 (24,415) 45,895 273,316 - 273,316 Purchase of Additional Stake in IDJ (Refer note 1) - - - 9,561 - 9,561 (264,561) (255,000) Transactions with Non-Controlling Interests - - - - - - (781) (781) Balance at 31 December 2023 10,000,000 2,966,165 (614,766) (956,911) 6,403,231 17,797,719 11,106 17,808,825 --------------------------------------------------------------------------------------------------------------------SAR '000---------------------------------------------------------------------------------------------------------------------------- The accompanying notes form an integral part of these Consolidated Financial Statements, which have been authorised for issue by the Board of Directors on behalf of the Shareholders and signed on its behalf by:
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2024 _________________________ _________________________ ________________________________________ Danko Maras Abdullah Albader HH Prince Naif Bin Sultan Bin Chief Financial Officer Chief Executive Officer Mohammed Bin Saud Al Kabeer Chairman 10 Share Capital Statutory Reserve Treasury Shares Other Reserves Retained Earnings Equity Attributable to Equity Holders Non- Controlling Interests Total Equity Balance at 1 January 2024 10,000,000 2,966,165 (614,766) (956,911) 6,403,231 17,797,719 11,106 17,808,825 Profit for the year - - - - 2,313,100 2,313,100 567 2,313,667 Other Comprehensive Loss for the year - - - (351,278) (58,915) (410,193) 1,065 (409,128) Total Comprehensive (Loss) / Income - - - (351,278) 2,254,185 1,902,907 1,632 1,904,539 Directors' Remuneration - - - - (5,477) (5,477) - (5,477) Transactions with Owners in their Capacity as Owners Dividend Declared SAR 1 per Share - - - - (988,277) (988,277) - (988,277) Share Based Payment Transactions - - - 37,163 - 37,163 - 37,163 Settlement of Treasury Shares - - 76,742 (23,042) 10,310 64,010 - 64,010 Transactions with Non-Controlling Interests - - - (17,309) - (17,309) (12,342) (29,651) Balance at 31 December 2024 10,000,000 2,966,165 (538,024) (1,311,377) 7,673,972 18,790,736 396 18,791,132 --------------------------------------------------------------------------------------------------------------------SAR '000---------------------------------------------------------------------------------------------------------------------------- The accompanying notes form an integral part of these Consolidated Financial Statements, which have been authorised for issue by the Board of Directors on behalf of the Shareholders and signed on its behalf by:
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2024 _________________________ _________________________ ________________________________________ Danko Maras Abdullah Albader HH Prince Naif Bin Sultan Bin Chief Financial Officer Chief Executive Officer Mohammed Bin Saud Al Ka beer Chairman 11 Notes 31 December 2024 31 December 2023 SAR '000 SAR '000 CASH FLOWS FROM OPERATING ACTIVITIES Profit for the year 2,313,667 2,051,529 Adjustments for non-cash items: Depreciation of Property, Plant and Equipment 7 1,688,316 1,711,751 Amortisation of Long-term Prepayments 8 27,262 27,262 Depreciation of Right-of-Use Assets 9 117,990 110,900 Amortisation of Intangible Assets 10 39,970 37,395 Depreciation of Biological Assets 11 566,338 574,264 Loss arising from Changes in Fair Value less Cost to Sell of Crops 12,218 9,978 Provision for Employee Retirement Benefits 23 182,398 142,712 Provision for Inventories and Trade Receivables 13,14 185,866 86,382 Share Based Payment Expense 37,163 30,820 Finance Cost, net 31 530,260 527,019 Other Expenses, net 30 63,166 64,461 Share of Results of Associate 12 1,774 1,064 Zakat 25 105,326 85,101 Income Tax 24,25 44,334 29,175 Cash From / (Used in) Working Capital 205,883 (939,710) Employee Retirement Benefits Paid 23 (70,501) (59,222) Zakat and Income Tax Paid 24,25 (22,948) (8,255) Net Cash From Operating Activities 6,028,482 4,482,626 CASH FLOWS FROM INVESTING ACTIVITIES Redemption / (Investment) in Time Deposit 1,876,250 (1,876,250) Additions in Long-term Prepayments 8 (27,500) - Proceeds from Sale of Equity Investment 12 - 19,781 Purchase of Warehouse Facilities 1 (187,870) - Additions to Property, Plant and Equipment (3,573,721) (2,505,890) Proceeds from the Disposal of Property, Plant and Equipment 137,383 73,741 Additions to Intangible Assets 10 (60,504) (24,517) Additions to Biological Assets (1,072,814) (1,095,263) Proceeds from the Disposal of Biological Assets 287,126 228,358 Net Cash Used in Investing Activities (2,621,650) (5,180,040) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from Loans and Borrowings 14,767,862 16,099,196 Repayment of Loans and Borrowings (16,576,340) (13,634,845) Purchase of Additional Stake in a Subsidiary 1 - (15,208) Directors' Remuneration (5,477) (4,994) Transactions with Non-Controlling Interests (29,651) (781) Net Cash (Used in) / From Financing Activities (3,539,323) 821,145 Net Change in Cash and Cash Equivalents (132,491) 123,731 Cash and Cash Equivalents at 1 January 666,336 546,916 Effect of Movements in Exchange Rates on Cash and Cash Equivalents (5,631) (4,311) Cash and Cash Equivalents at 31 December 16 528,214 666,336 For the year ended The accompanying notes form an integral part of these Consolidated Financial Statements, which have been authorised for issue by the Board of Directors on behalf of the Shareholders and signed on its behalf by: Trade Receivables, Prepayments and Other Receivables 11,740 5 ,916,048 5 ,489,813 Changes in Working Capital: Inventories 3 48,415 (1,063,947) Biological Assets (11,161) (7,885) (458,951) Trade and Other Payables (143,111) 5 91,073 (255,000) Finance Cost Paid (645,039) (559,199) Dividend Paid 4 0 (986,875) (980,576) Settlement of Treasury Shares 6 4,010 2 73,316 Principal Element of Lease Payments (122,093) (100,764) Interest Element of Lease Payments (5,720)
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 12 1. THE COMPANY, ITS SUBSIDIARIES AND ITS BUSINESS DESCRIPTION Almarai Company (the “Company”) is a Saudi Joint Stock Company, which was converted from a limited liability company to a joint stock company on 2 Rajab 1426 A.H. (8 August 2005). The Company initially commenced trading on 19 Dul Hijjah 1411 A.H. (1 July 1991) and operates under Commercial Registration No. 1010084223. Prior to the consolidation of activities in 1991, the core business was trading between 1977 and 1991 under the Almarai brand name. The Company’s Head Office is located at Exit 7, North Ring Road, Al Izdihar District, P.O. Box 8524, Riyadh 11492, Kingdom of Saudi Arabia (“Saudi Arabia”). The Company and its subsidiaries (together, the “Group”) are a major integrated consumer food and beverage Group in the Middle East with leading market share in Saudi Arabia. It also operates in Egypt, Jordan and other Gulf Cooperation Council (“GCC”) countries. Dairy, fruit juices and related food business is operated under the “Almarai”, “Beyti” and “Teeba” brand names. All raw milk production, dairy and fruit juice product processing and related food product manufacturing activities are undertaken in Saudi Arabia, United Arab Emirates (“UAE”), Egypt and Jordan. Dairy, Fruit Juices and related food business in Egypt and Jordan operates through a fully owned subsidiary International Dairy and Juice Limited (“IDJ”). The Group manages IDJ operations through the following key subsidiaries: Jordan - Teeba Investment for Developed Food Processing Egypt - International Company for Agricultural Industries Projects (Beyti) (SAE) Bakery products are manufactured and traded by Western Bakeries Company Limited and Modern Food Industries Company Limited, under the brand names “L’usine” and “7 Days”, respectively. Poultry products are manufactured and traded by Hail Agricultural Development Company under the “Alyoum” and “AlBashayer” brand names. Seafood products are traded under the “Seama” brand name. Ice cream products are traded under the “Almarai” brand name. Infant Nutrition products are manufactured by Almarai Baby Food Company Limited and traded by International Pediatric Nutrition Company under “Nuralac” and “Evolac” brand names. In territories where the Group has operations, final consumer packed products are distributed from manufacturing facilities to local distribution centres by the Group’s long haul distribution fleet. The distribution centres in GCC countries are managed through subsidiaries in UAE, Sultanate of Oman (“Oman”) and Kingdom of Bahrain (“Bahrain”) and an agency agreements in Kuwait and Qatar as follows: UAE - Almarai Emirates Company LLC Oman - Arabian Planets for Trading and Marketing LLC Bahrain - Almarai Company Bahrain W.L.L. Kuwait - Al Kharafi Brothers Dairy Products Company Limited Qatar - Khalid for Foodstuff and Trading Company In other territories, where permissible by law, export sales are made through other subsidiaries. The Group owns and operates arable farms in Argentina and United States of America (“USA”), collectively referred to as “Fondomonte”, through the following key subsidiaries: Argentina - Fondomonte South America S.A USA - Fondomonte Holdings North America LLC The Group’s non-GCC business operations under IDJ and Fondomonte are managed through Almarai Investment Holding Company W.L.L., a company incorporated in Bahrain. Poultry grandparent farming operations are conducted by Pure Breed Poultry Company.
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 13 1. THE COMPANY, ITS SUBSIDIARIES AND ITS BUSINESS DESCRIPTION (Continued…) Value-added meat and poultry products for the Middle East food services industry are manufactured and distributed by Premier Foods Industries Company LLC. Frozen bakery products are produced and sold in the UAE and Bahrain by Bakemart FZ L.L.C, Bakemart L.L.C (UAE), and Bakemart W.L.L (Bahrain). Acquisition: On 3 Rabi Al Thani 1446 (6 October 2024), the Group, through its subsidiary Teeba Investment for Developed Food Processing Company, entered into a Share Purchase Agreement (“SPA”) to acquire 100% shares in Hammoudeh Food Industries, a company based in the Hashemite Kingdom of Jordan, for a total consideration of SAR 263 million. The completion of this acquisition is subject to certain conditions set forth in the SPA, including obtaining the necessary regulatory approvals from authorities in both the Kingdom of Saudi Arabia and the Hashemite Kingdom of Jordan. The financial impact and results of this acquisition will be incorporated into the Group’s Financial Statements upon successful completion of these conditions. Asset Purchase Transactions. On 21 Jumada Al Akhirah 1445 (5 December 2023), the Group entered into an agreement to acquire warehouse facilities based in Saudi Arabia for a value of SAR 187 million. The completion of the acquisition was subject to finalisation of certain conditions/requisites outlined in the agreement. It included approval from regulatory authority and settlement of consideration payable to the counterparty. During the year 2024, the Group obtained the required regulatory approval and settled the consideration. Management determined that substantially all of the fair value acquired was concentrated in the warehouse facilities and concluded that the arrangement did not meet the definition of a business combination under IFRS 3. Accordingly, the transaction was accounted for as an asset acquisition in the financial statements. The acquisition will enhance Almarai’s capabilities to serve its customers with an expanded range of frozen products across the Kingdom of Saudi Arabia. Purchase of Additional Stake in a Subsidiary: On 26 Rajab 1444 A.H. (17 February 2023), the Group acquired the remaining share of 48% in IDJ, owned by PepsiCo, for a total consideration of SAR 255 million paid in cash, resulting in an increase in its shareholding from 52% to 100%. Immediately prior to the purchase, the carrying amount of the existing 48% non-controlling interest (‘NCI’) owned by PepsiCo was SAR 264.6 million. The purchase was accounted for as an equity transaction with owners with no impact on the consolidated statement of profit or loss account for the period ended 31 December 2023. The difference of SAR 9.6 million between the carrying value of NCI and consideration paid was recorded under equity as part of other reserves. Climate change: The Group is subject to short-term and long-term climate change related risks. These risks are inherent part of operating in a food industry. Almarai continually works to reduce the environmental footprint of the business, in part, due to the inherent risks. Greenhouse gas emissions associated with fuel and electricity consumption have an impact not only on the environment but also on Almarai’s financial bottom line. Climate change also creates risks for agricultural production through droughts, pests, diseases, etc. that pose challenges for sustaining and increasing production levels. The Group has developed a sustainability strategy, outlining how it will improve its energy performance through efficient energy consumption and generation from sustainable sources. The strategy focuses on solar power generation, water and energy efficiency, sustainable arable farming practices, landfill waste reduction, commitment to 100% chlorofluorocarbon- free cold storage at its sales depot, and fuel efficiency measures including trailing alternative fuel vehicles.
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 14 1. THE COMPANY, ITS SUBSIDIARIES AND ITS BUSINESS DESCRIPTION (Continued…) Pillar Two: The Organisation for Economic Co-operation and Development (OECD)/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) addresses the tax challenges arising from the digitalisation of the global economy. The Global Anti- Base Erosion Model Rules (Pillar Two model rules) apply to multinational enterprises (MNEs) with annual revenue in excess of EUR 750 million per their consolidated financial statements. These rules, applicable on a jurisdictional basis, aim to ensure a minimum level of taxation on income generated in each jurisdiction in which an entity operates. The Group has assessed its potential exposure to Pillar Two income taxes based on its 2024 country-by-country financial information for constituent entities. Currently, the exposure is limited to the following entities: a) Pillar Two model rules were adopted across European Union member states at the end of 2023 and became effective from 1 January 2024. Fondomonte Inversiones S.L. qualifies for the transitional country-by-country safe harbour for 2024, resulting in no exposure to additional taxes under Pillar Two for the reporting period. b) On 1 September 2024, the National Bureau for Revenue (NBR) of Bahrain enacted Decree-Law No. (11) of 2024, introduced Domestic Minimum Top-Up Tax (DMTT). This law ensures that constituent entities of MNEs located in Bahrain pay a minimum tax of 15% on their profits. However, the DMTT provisions apply to financial years starting on or after 1 January 2025. Consequently, there is no exposure for the financial year ending 31 December 2024. The Group continues to follow Pillar Two legislative developments, as further countries enact the Pillar Two model rules, to evaluate the potential future impact on its Consolidated Financial Statements.
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 15 1. THE COMPANY, ITS SUBSIDIARIES AND ITS BUSINESS DESCRIPTION (Continued…) Details of subsidiary companies are as follows: 2024 2023Almarai Investment Company Limited Saudi Arabia Holding Company 100% 100%SAR1,000,0001,000Almarai Baby Food Company Limited Saudi Arabia Manufacturing Company 100% 100%SAR 200,000,0001,000Almarai Construction Company Limited Saudi Arabia Dormant 100% 100%SAR1,000,0001,000Agricultural Input Company Limited (Mudkhalat) Saudi Arabia Dormant 52% 52%SAR25,000,000250Hail Agricultural Development Company Saudi ArabiaPoultry / Agricultural Company100% 100%SAR 300,000,00010International Baking Services Company Limited Saudi Arabia Trading Company 100% 100%SAR500,000500International Pediatric Nutrition Company Limited Saudi Arabia Trading Company 100% 100%SAR41,000,000410,000Modern Food Industries Company Limited Saudi Arabia Bakery Company 100% 100%SAR 70,000,00070,000Western Bakeries Company Limited Saudi Arabia Bakery Company 100% 100%SAR 200,000,0001,000Pure Breed Poultry Company Limited Saudi Arabia Poultry Company 100% 94%SAR46,500,000465,000Premier Food Industries Company L.L.C Saudi ArabiaManufacturing and Trading Company100% 100%SAR 500,00010Artas United Limited Company Saudi ArabiaTransportation and Storage Company100% 100% SAR 10,000 100Almarai for Meat LLC Saudi Arabia Meat Company 100% 100%SAR1,000,00010Etmam Logistics Maintenance and Operation CompanySaudi Arabia Warehouse Facilities 100% - SAR 10,000 1,000 Number of Shares IssuedName of SubsidiaryCountry of IncorporationBusiness ActivityShareCapitalEffective Ownership Interest
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 16 1. THE COMPANY, ITS SUBSIDIARIES AND ITS BUSINESS DESCRIPTION (Continued…) 2023Agro Terra S.A. Argentina Dormant 100% 100%ARS 33,210,00033,210,000Fondomonte South America S.A. Argentina Agricultural Company 100% 100%ARS 8,550,769,4078,550,769,407Almarai Company Bahrain W.L.L. Bahrain Trading Company 100% 100%BHD100,000 1,000Almarai Investment Holding Company W.L.L. Bahrain Holding Company 100% 100%BHD34,450,000344,500Bakemart W.L.L. BahrainManufacturing and Trading Company100% 100%BHD30,000600IDJ Bahrain Holding Company W.L.L. Bahrain Holding Company 100% 100%BHD250,0002,500International Dairy and Juice Limited Bermuda Holding Company 100% 100%USD7,583,3347,583,334International Dairy and Juice (Egypt) Limited Egypt Holding Company 100% 100%EGP 3,233,750,000323,375,000International Company for Agricultural Industries Projects (Beyti) (SAE)EgyptManufacturing and Trading Company100% 100%EGP4,049,666,670 404,966,667Beyti For Importation and Exportation Company L.L.C.Egypt Trading Company 100% 100%EGP 2,000,0002,000BDC Info Private Limited India Operations Management 100% 100%INR2,750,680275,068Markley Holdings Limited Jersey Dormant 100% 100%GBP5,769,8225,769,822Al Muthedoon for Dairy Production Jordan Dormant 100% 100%JOD500,000500,000Al Atheer Agricultural Company Jordan Dormant 100% 100%JOD750,000750,000 Name of SubsidiaryCountry of IncorporationBusiness ActivityShareCapitalNumber of Shares IssuedEffective Ownership Interest2024
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 17 1. THE COMPANY, ITS SUBSIDIARIES AND ITS BUSINESS DESCRIPTION (Continued…) 2023Al Namouthjya for Plastic Production Jordan Dormant 100% 100%JOD 250,000250,000Al Rawabi for juice and UHT milk Manufacturing Jordan Manufacturing Company 100% 100%JOD500,000500,000Teeba Investment for Developed Food ProcessingJordan Manufacturing Company 100% 100%JOD21,935,36321,935,363Arabian Planets for Trading and Marketing L.L.C. Oman Trading Company 70% 70%OMR150,000150,000Alyoum for Food Products Company L.L.C. Oman Dormant 100% 100%OMR20,000 20,000Fondomonte Inversiones S.L. Spain Holding Company 100% 100%EUR24,964,70824,964,708Hail Development Company Limited Sudan Dormant 100% 100%SDG100,000100Almarai Emirates Company L.L.C. UAE Trading Company 100% 100%AED 300,000 300BDC international L.L.C. UAE Operations Management 100% 100%AED 200,000200Almarai Company Drinks Manufacturing LLC UAE Manufacturing Company 100% 100%AED250,000 (Unpaid)100Bakemart L.L.C UAEManufacturing and Trading Company100% 100%AED300,000300Bakemart FZ L.L.C UAEManufacturing and Trading Company100% 100%AED300,000300Fondomonte Holding North America L.L.C. USA Holding Company 100% 100%USD500,00050,000Fondomonte Arizona L.L.C. USA Agricultural Company 100% 100%USD500,00050,000Fondomonte California L.L.C. USA Agricultural Company 100% 100% - - Hayday Farm Operation L.L.C. USA Agricultural Company 100% 100% - - ShareCapitalNumber of Shares IssuedName of SubsidiaryCountry of IncorporationBusiness Activity2024Effective Ownership Interest
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 18 2. BASIS OF PREPARATION 2.1 Statement of Compliance These Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) Accounting Standards as endorsed in the Kingdom of Saudi Arabia and other standards and pronouncements that are issued by Saudi Organization for Chartered and Professional Accountants (“SOCPA”) (here and after refer to as “IFRS as endorsed in Saudi Arabia”). 2.2 Preparation of the Consolidated Financial Statements These Consolidated Financial Statements have been prepared on the historical cost basis except for the following material items in the Consolidated Statement of Financial Position: Derivative financial instruments are measured at fair value. The employee retirement benefit is recognised at the present value of future obligations using the Projected Unit Credit Method. Biological Assets, where fair value is reliably measurable, have been measured at fair value. (Refer note 6.1) 3. BASIS OF CONSOLIDATION These Consolidated Financial Statements comprising the Consolidated Statement of Financial Position, Consolidated Statement of Profit or Loss, Consolidated Statement of Comprehensive Income, Consolidated Statement of Changes in Equity, Consolidated Statement of Cash Flows and notes to the Consolidated Financial Statements of the Group include assets, liabilities and the results of the operations of the Company and its subsidiaries, as set out in note (1). The Company and its subsidiaries are collectively referred to as the “Group”. Subsidiaries are entities controlled by the Group. Subsidiaries are consolidated from the date on which control commences until the date on which control ceases. The Group accounts for the business combinations using the acquisition method when control is transferred to the Group. The consideration transferred in the acquisition is generally measured at fair value, as are the identified net assets acquired and fair value of pre-existing equity interest in the subsidiary. The excess of the cost of acquisition and amount of Non – Controlling Interest (“NCI”) over the fair value of the identifiable net assets acquired is recorded as goodwill in the Consolidated Statement of Financial Position. NCI is measured at their proportionate share of the acquiree’s identifiable net assets at the date of acquisition. If the business combination is achieved in stages, the acquisition date carrying value of the Group’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date. Any gains or losses arising from such remeasurement are recognised in the Consolidated Statement of Profit or Loss. Intra-group balances and transactions and any unrealised income and expenses arising from intra-group transactions, are eliminated. Accounting policies of subsidiaries are aligned, where necessary, to ensure consistency with the policies adopted by the Group. The Company and its subsidiaries have the same reporting periods. 4. FUNCTIONAL AND PRESENTATION CURRENCY These Consolidated Financial Statements are presented in SAR, which is the Company’s functional and the Group’s presentation currency. All amounts have been rounded to the nearest thousand, unless otherwise indicated. 5. MATERIAL ACCOUNTING POLICIES 5.1. New Standards, Amendment to Standards and Interpretations: The Group has applied the following standards and amendments, where applicable, for the first time for their annual reporting period commencing 1 January 2024. 5.1.1. Amendments to IFRS 16 – Leases on sale and leaseback: These amendments include requirements for sale and leaseback transactions in IFRS 16 to explain how an entity accounts for a sale and leaseback after the date of the transaction. Sale and leaseback transactions where some or all the lease payments are variable lease payments that do not depend on an index or rate are most likely to be impacted.
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 19 5. MATERIAL ACCOUNTING POLICIES (Continued…) 5.1. New Standards, Amendment to Standards and Interpretations (Continued…) 5.1.2. Amendments IAS 1 – Non-current liabilities with covenants and Classification of Liabilities as Current or Non- current Amendments These amendments clarify how conditions with which an entity must comply within twelve months after the reporting period affect the classification of a liability. The amendments also aim to improve information an entity provides related to liabilities subject to these conditions. 5.1.3. Amendments to IAS 7 and IFRS 7 – Supplier finance arrangements These amendments require disclosures to enhance the transparency of supplier finance arrangements and their effects on an entity’s liabilities, cash flows and exposure to liquidity risk. The adoption of above amendments does not have any material impact on the Consolidated Financial Statements during the year. - 5.2. Standards issued but not yet effective Following are the new standards and amendments to standards which are effective for annual periods beginning on or after 1 January 2025 and earlier application is permitted for certain new standards and amendments; however, the Group has not early adopted them in preparing these Consolidated Financial Statements. The Group is currently evaluating the impact of the adoption of these standards on the Consolidated Financial Statements. 5.2.1. Amendments to IAS 27 – Lack of exchangeability An entity is impacted by the amendments when it has a transaction or an operation in a foreign currency that is not exchangeable into another currency at a measurement date for a specified purpose. 5.2.2. Amendments to IFRS 9 and IFRS 7 - Classification and Measurement of Financial Instruments These amendments: - clarify the requirements for the timing of recognition and derecognition of some financial assets and liabilities, with a new exception for some financial liabilities settled through an electronic cash transfer system; - clarify and add further guidance for assessing whether a financial asset meets the solely payments of principal and interest (SPPI) criterion; - add new disclosures for certain instruments with contractual terms that can change cash flows (such as some instruments with features linked to the achievement of environment, social and governance (ESG) targets); and - make updates to the disclosures for equity instruments designated at Fair Value through Other Comprehensive Income (FVOCI). 5.2.3. IFRS 18, ‘Presentation and Disclosure in Financial Statements’ This is the new standard on presentation and disclosure in financial statements, with a focus on updates to the statement of profit or loss. The key new concepts introduced in IFRS 18 relate to: - the structure of the statement of profit or loss; - required disclosures in the financial statements for certain profit or loss performance measures that are reported outside an entity’s financial statements (that is, management-defined performance measures); and - enhanced principles on aggregation and disaggregation which apply to the primary financial statements and notes in general. 5.3. Cash and Cash Equivalents Cash and cash equivalents include bank balances, cheques and cash in hand and deposits with original maturities of three months or less, if any. 5.4. Time Deposits Time Deposits include placements with banks and other short-term highly liquid investments, with original maturities of more than three months but not more than one year from the date of placement. Time deposits are placed with financial institutions with investment grade rating which are considered to have low credit risk. Investment income in time deposits is accrued on a timely basis by reference to the principal outstanding and at the applicable effective interest rate.
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 20 5. MATERIAL ACCOUNTING POLICIES (Continued…) 5.5. Property, Plant and Equipment Property, Plant and Equipment, including bearer plants, are measured at cost less accumulated depreciation and accumulated impairment loss, if any. Cost comprises of expenditure that is directly attributable to the acquisition of the asset. Cost includes the reclassifications from equity of any gains or losses on qualifying cash flow hedges relating to purchases of Property, Plant and Equipment. Cost also includes expenditures that are directly attributable to the acquisition / growing of the plant till its maturity. Any gain or loss on disposal of an item of Property, Plant and Equipment is recognised in the Consolidated Statement of Profit or Loss. Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Group and amount can be measured reliably. The cost less estimated residual value is depreciated on a straight-line basis over the following estimated useful lives of the assets where depreciation is charged based on the expected use: Buildings 5 – 40 years Plant, Machinery and Equipment 2 – 20 years Motor Vehicles 6 – 10 years Bearer Plants 2 – 40 years Land, Capital Work in Progress and Immature plants are not depreciated. Capital work in progress at year end includes certain assets that have been acquired but are not ready for their intended use. These assets are transferred to relevant assets categories and are depreciated once they are available for their intended use. The assets' residual values, useful lives and impairment indicators are reviewed at each financial year end and adjusted prospectively, if considered necessary. If significant parts of an item of property, plant and equipment have different useful lives then they are accounted for as separate items of property, plant and equipment. 5.6. Inventories Inventories are measured at the lower of cost and net realisable value (“NRV”). Cost is determined using the weighted average method. Cost comprises all direct manufacturing expenditure based on the normal level of activity and transportation and handling costs. Cost includes the reclassifications from equity of any gains or losses on qualifying cash flow hedges relating to purchases of inventories. NRV comprises estimated selling price less further production costs to completion and appropriate selling and distribution costs. Cost of inventories is recognised as an expense and included in cost of sales. Agriculture produce harvested from biological assets are measured at fair value less cost to sell at the point of harvest. Spares are valued at lower of cost and NRV. Cost is determined on the weighted average cost basis. 5.7. Investments in Associates An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. The results and assets and liabilities of associates are incorporated in these Consolidated Financial Statements using the equity method of accounting. Under the equity method, an investment in an associate is initially recognised in the Consolidated Statement of Financial Position at cost and adjusted thereafter to recognise the Group’s share of the profit or loss and other comprehensive income of the associate. When the Group’s share of losses of an associate exceeds the Group’s interest in that an associate (which includes any long-term interests that, in substance, form part of the Group’s net investment in the associate, the Group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate. If the associate subsequently reports profits, the Group resumes recognising its share of those profits only after its share of the profits equals the share of losses not recognised.
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 21 5. MATERIAL ACCOUNTING POLICIES (Continued…) An investment in an associate is accounted for using the equity method from the date on which the investee becomes an associate. On acquisition of the investment in an associate, any excess of the cost of the investment over the Group’s share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill, which is included within the carrying amount of the investment. Any excess of the Group’s share of the net fair value of associate's identifiable assets and liabilities over the cost of the investment, after reassessment, is recognised immediately in the Consolidated Statement of Profit or Loss in the period in which the investment is acquired. When a Group entity transacts with an associate of the Group, profits or losses resulting from the transactions with the associate are recognised in the Group’s Consolidated Financial Statements only to the extent of interests in the associate that are not related to the Group. 5.8. Right-of-Use Assets and Lease Liabilities The Group recognises new assets and liabilities for its leases of various types of contracts including warehouse and depot facilities, accommodation/office rental premises, commercial vehicles etc. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the Consolidated Statement of Profit or Loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in the Consolidated Statement of Profit or Loss. Short-term leases are leases with a lease term of 12 months or less. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes. In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options are only included in the lease term if the lease is reasonably certain to be extended. In determining the lease term, the management generally considers certain factors including historical lease durations, significant leasehold improvements over the term of the lease that have significant economic benefit to the Group’s operation, the importance of the leased asset to the Group’s operation and whether alternatives are available for the Group and business disruption required to replace the leased asset. 5.9. Biological Assets Biological assets are measured at fair value less cost to sell except when fair value cannot be measured reliably. Where fair value cannot be measured reliably biological assets are stated at cost of purchase or cost of rearing or growing to the point of commercial production (termed as biological assets appreciation), less accumulated depreciation and accumulated impairment loss, if any. The costs of immature biological assets are determined by the cost of rearing or growing to their respective age. Immature biological assets are not depreciated. Biological assets are depreciated on a straight-line basis to their estimated residual values over periods as summarised below: Dairy Herd 4 Lactation cycles Breeder Birds – After Maturity 36 weeks (laying period) 5.10. Intangible Assets and Goodwill Intangible Assets Intangible assets other than goodwill are measured at cost, less accumulated amortisation and accumulated impairment losses, if any. Intangible assets are amortised on a straight-line basis over the estimated useful lives of 3- 15 years. Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Group and amount can be measured reliably. Intangible assets' residual values, useful lives and impairment indicators are reviewed at each financial year end and adjusted prospectively, if considered necessary.
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 22 5. MATERIAL ACCOUNTING POLICIES (Continued…) 5.10. Intangible Assets and Goodwill (Continued…) Goodwill Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment losses, if any. For the purposes of impairment testing, goodwill is allocated to each of the Group’s CGU (or groups of CGU) that is expected to benefit from the synergies of the combination. A CGU to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the CGU is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit (Also see note 5.14.2). Any impairment loss for goodwill is recognised directly in the Consolidated Statement of Profit or Loss. An impairment loss recognised for goodwill is not reversed in subsequent periods. On disposal of the relevant CGU, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. 5.11. Zakat and Income Tax Zakat is provided for in accordance with the Zakat, Tax and Customs Authority (“ZATCA”) regulations. Income tax for foreign entities is provided for in accordance with the relevant income tax regulations of the countries of incorporation. Adjustments arising from final zakat and income tax assessments are recorded in the period in which such assessments are made. The income tax expense or credit for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the company and its subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. 5.12. Deferred Tax Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the Consolidated Financial Statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences and unused tax losses can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference and unused tax losses arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint venture. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 23 5. MATERIAL ACCOUNTING POLICIES (Continued…) 5.13. Financial Instruments 5.13.1. Non-Derivative Financial Instruments a) Non-Derivative Financial Assets The Group classifies its financial assets in the following measurement categories: - those to be measured subsequently at fair value (either through Other Comprehensive Income (“OCI”) or through profit or loss), and - those to be measured at amortised cost. The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows. For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI). For Investments designated as FVOCI and for which management has an intention to sell such investments within a period of 12 months from the financial year end, are classified under current assets. The Group initially recognises financial assets on the trade date at which the Group becomes a party to the contractual provisions of the instrument. The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in the transferred financial asset that is created or retained by the Group is recognised as a separate asset or liability. Financial assets and liabilities are offset and the net amount is presented in the Consolidated Statement of Financial Position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. The Group has the following non-derivative financial assets; Financial Assets at Amortised Cost Financial assets held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest (“SPPI”) are measured at amortised cost. A gain or loss on a debt investment subsequently measured at amortised cost and not part of a hedging relationship is recognised in the Consolidated Statement of Profit or Loss when the asset is derecognised or impaired. Interest income from these financial assets is included in finance income using the effective interest rate method. Financial Assets at FVOCI The Group generally elects to recognise changes in the fair value of investments in equity in OCI. These changes are accumulated within the ‘other reserve’ classified under equity. The Group may transfer this amount from other reserve to retained earnings when the relevant shares are derecognised. Dividends from such investments continue to be recognised in the Consolidated Statement of Profit or Loss as other income when the Group’s right to receive payments is established. Accumulated gains and losses on these financial assets are never recycled to the Consolidated Statement of Profit or Loss. b) Non-Derivative Financial Liabilities Financial liabilities are recognised initially on the trade date, which is the date that the Group becomes a party to the contractual provisions of the instrument. The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expired. Financial assets and liabilities are offset and the net amount is presented in the Consolidated Statement of Financial Position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 24 5. MATERIAL ACCOUNTING POLICIES (Continued…) 5.13. Financial Instruments (Continued…) 5.13.1. Non-Derivative Financial Instruments (Continued…) The Group recognises non-derivative financial liabilities initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition these financial liabilities are measured at amortised cost using the effective interest method. Non-derivative financial liabilities of the Group comprise of bank borrowings and trade and other payables. 5.13.2. Derivative Financial Instruments and Hedge Accounting Derivative financial instruments including forward foreign exchange contracts, commission rate swaps and commodity derivatives are measured at fair value. All derivatives are carried at their fair value as assets where the fair value is positive and as liabilities where the fair value is negative. Any related transaction costs are recognised in the Consolidated Statement of Profit or Loss as incurred. Fair values are obtained by reference to quoted market prices, discounted cash flow models and pricing models, as appropriate. Subsequent to initial recognition, any change in fair value is recognized on the basis of hedge accounting. The Group designates its derivatives as hedging instruments in qualifying hedging relationships to manage exposures to interest rate, foreign currency, and commodity price risks, including exposures arising from highly probable forecast transactions and firm commitments. In order to manage particular risk, the Group applies hedge accounting for transactions that meet specific criteria. In order to qualify for hedge accounting, the hedge should be expected to be highly effective i.e. the changes in fair value or cash flows of the hedging instrument should effectively offset corresponding changes in the hedged item and should be reliably measurable. At inception of the hedge, the risk management objective and strategy is documented including the identification of the hedging instrument, the related hedged item, the nature of risk being hedged, and how the Group will assess the effectiveness of the hedging relationship. A formal assessment is undertaken by comparing the hedging instrument’s effectiveness in offsetting the changes in fair value or cash flows attributable to the hedged risk in the hedged item, both at inception and at each quarter end on an ongoing basis. Prospective testing is performed mainly through matching the critical terms of both hedge item and instrument. When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivative is recognised in the Consolidated Statement of Other Comprehensive Income and accumulated in the hedging reserve shown within other reserves under equity. The ineffective portion, if material, is recognized in the Consolidated Statement of Profit or Loss, within other gains/(losses). In hedges of foreign currency contracts, ineffectiveness may arise if the timing of the forecast transaction changes from what was originally estimated, or if there are changes in the credit risk of the Group or the derivative counterparty. In hedges of interest rate swaps, ineffectiveness may arise if the credit value/debit value adjustment on the interest rate swaps which is not matched by the loan. In hedges of commodity purchases, ineffectiveness may arise if the timing of the forecast transaction changes from what was originally estimated; and changes in the credit risk of the Group or the derivative counterparty. The amount accumulated in equity is reclassified to the Consolidated Statement of Profit or Loss in the period during which the hedged forecast cash flows affect profit or loss or the hedged item affects profit or loss. If the forecast transaction is no longer expected to occur, the hedge no longer meets the criteria for hedge accounting, the hedging instrument expires or is sold, terminated or exercised, or the designation is revoked, then hedge accounting is discontinued prospectively. If the forecast transaction is no longer expected to occur, then the amount accumulated in equity is reclassified to the Consolidated Statement of Profit or Loss. The fair values of derivative financial instruments designated in hedge relationships are disclosed in note 39. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months; it is classified as a current asset or liability when the remaining maturity of the hedged item is less than 12 months.
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 25 5. MATERIAL ACCOUNTING POLICIES (Continued…) 5.13. Impairment 5.14.1. Non-Derivative Financial Assets The Group assesses on a forward-looking basis the Expected Credit Losses (“ECL”) associated with its debt instruments as part of its financial assets, carried at amortised cost and FVOCI. For accounts receivables, the Group applies the simplified approach, which requires expected lifetime losses to be recognised from initial recognition of the receivables. To measure the expected credit losses, receivables have been grouped based on shared credit risk characteristics and the days past due. Expected loss rates were derived from historical information of the Group and are adjusted to reflect the expected future outcome which also incorporates forward looking information for macroeconomic factors such as inflation and gross domestic product growth rate. Other financial assets such as employees’ receivables, bank balances have low credit risk and the impact of applying ECL is immaterial. 5.14.2 Impairment of Non-Financial Assets Non-financial assets (other than biological assets measured at fair value, inventories and deferred tax assets) are reviewed at each reporting date to identify circumstances indicating occurrence of impairment loss or reversal of impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss or reversal of impairment loss (if any). A cash-generating units (“CGU”) to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the CGU to which the asset belongs. Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. An impairment loss is recognised immediately in the Consolidated Statement of Profit or Loss. When an impairment loss subsequently reverses, the carrying amount of the asset (or a CGU) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or CGU) in prior years. A reversal of an impairment loss is recognised immediately in the Consolidated Statement of Profit or Loss. 5.15. Employee Retirement Benefits Employee Retirement benefits are payable to all employees employed under the terms and conditions of the Labor Laws applicable on the Company and its subsidiaries, on termination of their employment contracts. The Group’s obligation in respect of employee retirement benefits is calculated by estimating the amount of future benefits that employees have earned in current and prior periods and discounting that amount to arrive at present value. Group sets the assumptions used in determining the key elements of the costs of meeting such future obligations. These assumptions are set after consultation with the Group's actuaries and include those used to determine regular service costs and the financing elements related to the liabilities. The calculation of employee retirement benefit liability is performed by a qualified actuary using the projected unit credit method.
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 26 5. MATERIAL ACCOUNTING POLICIES (Continued…) 5.15. Employee Retirement Benefits (Continued…) Re-measurement of employee retirement benefit liability, which comprise of actuarial gains and losses are recognised immediately in the Consolidated Statement of Comprehensive Income. The Group determines interest expense on the employee retirement benefit liability for the period by applying the discount rate used to measure the employee retirement benefit liability at the beginning of the annual period, taking into account any change in the net employee retirement benefit liability during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to employee retirement benefits are recognised in the Consolidated Statement of Profit or Loss. 5.16. Treasury Shares Own equity instruments that are reacquired (treasury shares), for discharging obligations under Employee Equity Participation Programmes (“EEPP”), are recognised at cost and presented as a deduction from equity and are adjusted for any transaction costs, dividends and gains or losses on sale of such shares. No gain or loss is recognised in the Consolidated Statement of Profit or Loss on the purchase, sale, issue or cancellation of the Group’s own equity instruments. Any difference between the carrying amount and the consideration, if reissued, is recognised in retained earnings. 5.17. Share Based Payment Transactions Certain employees of the Group receive remuneration in the form of equity settled share-based payments under the EEPP, whereby employees render services as consideration for the equity instruments (options or shares) granted under EEPP as disclosed in note 19. The fair value of the employee services received in exchange for the grant of options or shares is recognised as an expense in the Consolidated Statement of Profit or Loss, together with a corresponding increase in other reserves, in equity, over the period during which the vesting conditions are fulfilled. The Other Reserves (representing the cumulative expense arising from ESOP) is transferred into Retained Earnings upon expiry of the EEPP, whether or not the equity instruments vest to the employees. The cumulative expense recognised for EEPP at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. When the terms of the EEPP are modified, the minimum expense recognised is the expense as if the terms had not been modified, if the original terms of the award are met. An additional expense is recognised for any modification that increases the total fair value of the share-based payment transaction or is otherwise beneficial to the employee as measured at the date of the modification. When the EEPP is terminated, it is treated as if the equity instruments vested on the date of termination, and any expense not yet recognised for the award is recognised immediately. This includes any award where non-vesting conditions within the control of either the entity or the employee are not met. However, if a new EEPP is substituted for the terminated ESOP and designated as a replacement award on the date that it is granted, the terminated and new EEPP are treated as if they were a modification of the original EEPP, as described in the previous paragraph. 5.18. Conversion of Foreign Currency Transactions Foreign currency transactions are initially recognised by the Group’s entities at their respective functional currencies’ spot rate at transaction date. At the reporting date, monetary assets and liabilities denominated in foreign currencies are converted into SAR at the exchange rates ruling on such date. Any resulting exchange differences are charged or credited to the Consolidated Statement of Profit or Loss as appropriate. As at the reporting date, the assets and liabilities of the foreign subsidiaries are translated into SAR, at the rate of exchange ruling at the Consolidated Statement of Financial Position date and their Consolidated Statement of Profit or Loss are translated at the weighted average exchange rates for the year. Components of equity, other than retained earnings, are translated at the rate ruling at the date of occurrence of each component. Translation adjustments in respect of these components of equity are recorded through Consolidated Statement of Other Comprehensive Income.
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 27 5. MATERIAL ACCOUNTING POLICIES (Continued…) 5.19. Revenue Recognition The Group generates revenue from a number of product lines, these include: - Dairy and Juice - Bakery - Poultry - Other activities (Arable, Horticulture, Infant Nutrition, Seafood products and Food Services) Revenue is recognised when there is a contract with a customer for the transfer of products across various product categories and geographical regions. Revenue is recognised in the Consolidated Statement of Profit or Loss when a performance obligation is satisfied, at the price allocated to that performance obligation. This is defined as the point in time when control of the products has been transferred to the customer, the amount of revenue can be measured reliably, and collection is probable. The transfer of control to customers takes place according to trade agreement terms. Revenue represents the fair value of the consideration received or receivable for goods sold, net of returns, trade discounts and volume rebates. Products are sold principally on a sale or return basis. Allowances for expected sales returns are calculated based on the forecasted return of expired products based on historical experience. Expected sales returns are netted off against revenue with the corresponding impact in trade and other payables. The goods are often sold with retrospective volume discounts based on aggregate sales over a 12 months period. Revenue from these sales is recognised based on the price specified in the contract, net of the estimated volume discounts. Accumulated experience is used to estimate and provide for the discounts, using the expected value method, and revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. The related liability (included in trade and other payables) is recognised for expected volume discounts payable to customers in relation to sales made during the year. 5.20. Government Grants The Group receives government grants on import of feeds for its biological assets and on poultry production. Government grants are initially recognised within other liabilities at fair value when there is reasonable assurance that it will be received, and the Group will comply with the conditions associated with the grant. Government grants are recognised in the Consolidated Statement of Profit or Loss on a systematic basis over the periods in which the Group recognises as expenses the related inventories against which the grants are intended to compensate. 5.21. Borrowings Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in Consolidated Statement of Profit or Loss over the period of the borrowings using the effective interest method. Borrowings are removed from the Consolidated Statement of Financial Position when the obligation specified in the contract is discharged, cancelled or expired. The borrowings are classified as current liability if there is no right to defer settlement for at least 12 months from the reporting period. 5.22. Borrowing Costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time, that is more than one year, to get ready for their intended use, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use. No borrowing costs are capitalised during idle periods. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in the Consolidated Statement of Profit or Loss in the period in which they are incurred.
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 28 5. MATERIAL ACCOUNTING POLICIES (Continued…) 5.23. Segmental 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 Group’s relevant Business Heads’ (Chief Operating Decision Makers) which in the Group’s case is to make decisions about resources to be allocated to the segment and to assess its performance, and for which discrete financial information is available. Segment results that are reported to the Group’s relevant Business Heads include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. The Group’s operating segments are analysed and aggregated based on the nature of products and uniformity in the production processes. 6. USE OF JUDGEMENTS AND ESTIMATES The preparation of these Consolidated Financial Statements, in conformity with IFRS as endorsed in the Saudi Arabia, requires the use of judgements, estimates and assumptions. Such estimates and assumptions may affect the balances reported for certain assets and liabilities as well as the disclosure of certain contingent assets and liabilities as at the Consolidated Statement of Financial Position date. Any estimates or assumptions affecting assets and liabilities may also affect the reported revenues and expenses for the same reporting period. Although these estimates are based on management’s best knowledge of current events and actions, actual results ultimately may differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively. 6.1. Judgement Information about the judgement made in applying the Group’s accounting policy on biological assets with respect to dairy herd and poultry flock is given below; The Group’s dairy herd comprises both immature and mature livestock. Immature livestock comprises dairy cows that are intended to be reared to maturity. These cows are held to produce milk or offspring but have not yet produced their first calf and begun milk production. Costs incurred in rearing immature livestock are capitalised to the Consolidated Statement of Financial Position. The directly attributable costs in bringing the asset to the location and condition necessary to be capable of operation include various components including but not limited to birth related charges, feed cost and labour charges. Mature livestock includes dairy cows that have produced their first calf and begun milk production. Costs incurred in relation to mature livestock are recognised in the Consolidated Statement of Profit or Loss immediately as an expense. IAS 41 “Agriculture” requires measurement at fair value less costs to sell from initial recognition of such biological assets up to the point of harvest, other than when fair value cannot be measured reliably on initial recognition. Management has concluded as follows on the fair value measurement hierarchies in the context of dairy herd valuation: Level 1 - there is no active market for dairy cows in Saudi Arabia and therefore a level 1 valuation is not possible. Level 2 - there is no observable market data available and due to the significant differences in location, environment, associated costs, average yields, majority of distribution within Saudi Arabia and distance to active markets means that a level 2 valuation is not possible. Level 3 - Discounted cash flow (“DCF”) techniques (income or market approach) - the lack of a relevant active markets for unpasteurised milk and other intermediate product requires that any valuation technique would use overall revenue as a basis for any valuation and then eliminate costs and associated profit margin relating to pasteurisation, manufacturing, packaging, sales and distribution so as to determine the net indirect cash inflows. Further, given the wide range of product portfolio and customer channels in the Group’s dairy businesses, varied profit margins across the product and channel mix would also need to be considered while applying any valuation technique. Management considers that any fair value so derived would be clearly unreliable as the costs of the biological assets’ operation are a relatively small part of the Group’s overall activities and any imputed cash flows derived from such a valuation approach would be overly dependent on a large number of assumptions, many of which could not be derived from, or compared to, market assumptions or observed data.
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 29 6. USE OF JUDGEMENTS AND ESTIMATES 6.1. Judgement (Continued…) Cost or current replacement cost – management considers that any replacement cost approach would need to incorporate the cost of replacing existing dairy herd of same nature and size. As discussed above, level 1 and 2 valuations for dairy herd are not possible. As the dairy herd are currently accounted for at cost less accumulated depreciation and impairment losses, management believes that any depreciated replacement cost of existing nature and size (could it be so determined) would not be less than the current carrying value of the dairy herd. Poultry flock includes Breeder Birds, Eggs and Broiler Birds. Breeder Birds are held for the purpose of laying eggs which are ultimately hatched into Broiler Birds. The Group considers that the fair value of its poultry flock approximates the cost of rearing or growth of its poultry flock to the point of commercial production due to their short period of life. The aforementioned costs include purchase cost of day old chick, feeding costs, labor costs, veterinary costs and other overhead costs. Cost incurred in respect of breeder birds subsequent to the beginning of their productive cycle are expensed in the income statement. 6.2. Assumptions and estimation uncertainties Assumptions and estimation uncertainties that have a significant risk of resulting in material adjustments to the carrying amount of assets and liabilities are included below; a) Goodwill - Annual impairment testing of goodwill: Goodwill impairment tests are performed for the group of CGU to which goodwill is allocated. The group of CGU is defined based on certain acquisitions and CGU’s arising from those acquisitions. The structure and groups of CGU are assessed on an annual basis. The impairment test of goodwill is performed at least annually for each group of CGUs to which goodwill is allocated. To determine the value in use, the discounted cash flow models are used. The most important parameters in the impairment test include assumptions related to sales growth rate and pre-tax discount rates. Also refer to note 10 for sensitivity related to these assumptions for the respective CGU. b) Expected future free cash flows: The projected free cash flows are based on current forecasts and targets set for five year period. These are determined at CGU level in the forecast and target planning process as well as based on external sources of information and industry-relevant observations such as macroeconomic indicators and market conditions. All applied assumptions are challenged through the forecast and target planning process based on management’s best estimates and expectations, which are judgmental by nature. They include expectations regarding revenue growth, Earnings Before Interest and Tax (“EBIT”) margins and capital expenditure. c) Measurement of employee retirement benefits liability - key actuarial assumptions: Estimates are applied when setting actuarial assumptions such as the discount rate, expected future salary increases, inflation and mortality. The actuarial assumptions vary from country to country, based on national economic and social conditions. They are set using available market data and compared with benchmarks to ensure consistency on an annual basis (Refer note 23 for sensitivity related to employee retirement benefits liability). d) Dairy herd - Average lactation cycle – Refer note 30.1 e) Trade Receivables - Allowance for impairment of trade receivables – Refer note 14.
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 30 7. PROPERTY, PLANT AND EQUIPMENT LandandBuildingsPlant, Machinery and EquipmentMotor VehiclesCapital Work-in-Progress*Mature PlantationsImmature PlantationsTotalSAR '000SAR '000SAR '000SAR '000SAR '000SAR '000SAR '000CostAt 1 January 202415,495,130 16,741,397 3,113,607 2,237,460 88,059 8,921 37,684,574 Additions during the year- - - 3,682,811 - 25,657 3,708,468 Purchase of Warehouse Facility164,918 5,210 6,857 - - - 176,985 Transfers during the year241,563 783,894 436,012 (1,461,469) 23,555 (23,555) - Disposals during the year(126,986) (238,459) (140,101) - (29,010) - (534,556) Currency Translation Difference(50,629) (177,153) (9,213) (3,778) 89 28 (240,656) At 31 December 202415,723,996 17,114,889 3,407,162 4,455,024 82,693 11,051 40,794,815 .Accumulated DepreciationAt 1 January 20244,226,188 10,764,894 1,849,370 - 36,312 - 16,876,764 Depreciation for the year469,617 997,984 188,991 - 31,724 - 1,688,316 Disposals during the year(40,865) (229,616) (127,977) - (29,010) - (427,468) Currency Translation Difference(13,211) (72,204) (7,763) - 39 - (93,139) At 31 December 20244,641,729 11,461,058 1,902,621 - 39,065 - 18,044,473 - Net Book Value At 31 December 202411,082,267 5,653,831 1,504,541 4,455,024 43,628 11,051 22,750,342 Bearer Plants *Capital work-in-progress as at 31 December 2024 primarily represents cost incurred on updates of existing production facilities including poultry business expansion, distribution facilities and depot development.
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 31 7. PROPERTY, PLANT AND EQUIPMENT (Continued…) LandandBuildingsPlant, Machinery and EquipmentMotor VehiclesCapital Work-in-Progress*Mature PlantationsImmature PlantationsTotalSAR '000SAR '000SAR '000SAR '000SAR '000SAR '000SAR '000CostAt 1 January 202315,119,036 16,276,320 2,917,627 1,266,455 95,525 16,140 35,691,103 Additions during the year- - - 2,528,453 - 25,595 2,554,048 Transfers during the year426,166 780,678 348,859 (1,555,703) 32,772 (32,772) - Disposals during the year(12,956) (204,698) (146,118) - (40,102) - (403,874) Currency Translation Difference(37,116) (110,903) (6,761) (1,745) (136) (42) (156,703) At 31 December 202315,495,130 16,741,397 3,113,607 2,237,460 88,059 8,921 37,684,574 .Accumulated DepreciationAt 1 January 20233,796,757 9,958,452 1,778,225 - 43,132 - 15,576,566 Depreciation for the year450,050 1,032,390 195,968 - 33,343 - 1,711,751 Disposals during the year(12,309) (185,235) (119,714) - (40,102) - (357,360) Currency Translation Difference(8,310) (40,713) (5,109) - (61) - (54,193) At 31 December 20234,226,188 10,764,894 1,849,370 - 36,312 - 16,876,764 - Net Book Value At 31 December 202311,268,942 5,976,503 1,264,237 2,237,460 51,747 8,921 20,807,810 Bearer Plant 7.1. Capital Work-in-Progress includes SAR 134.7 million of borrowing costs capitalised during the year (2023: SAR 48.2 million). Average interest rate on borrowings as of 31 December 2024 is 5.9 % per annum (2023: 5.5%). (Refer note 31) 7.2. Refer note 22 for information on property, plant and equipment pledged as security by the Group.
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 32 8. LONG-TERM PREPAYMENTS 31 December 202431 December 2023SAR '000 SAR '000Opening Balance525,153 552,415 Additions27,500 - Amortisation (27,262) (27,262) Closing Balance525,391 525,153 Long-term prepayments comprise of amounts paid to or paid on behalf of the Saudi Electric Company for the commissioning and installation of power grids at the manufacturing sites and are amortised over the period of the respective agreements. 9. RIGHTS-OF-USE ASSETS AND LEASE LIABILITIES Right-of-use assets - class wise depreciation charge and balances are as follows: DepreciationBalanceDepreciationBalanceSAR '000SAR '000SAR '000SAR '000Land39,443 329,000 38,365 326,763 Buildings76,652 163,045 70,005 133,024 Vehicles494 1,314 951 2,739 Equipment49 70 49 119 Plant and Machinery1,352 10,637 1,530 11,186 Total Right-of-Use Assets117,990 504,066 110,900 473,831 31 December 202331 December 2024 Additions to Right-of-Use assets during the year ended 31 December 2024 are SAR 121.4 million (31 December 2023: SAR 93.2 million). Lease liabilities as at year end are as follows: 31 December 2024 31 December 2023 SAR '000SAR '000Non-Current portion of Lease Liabilities397,701 369,113 Current portion of Lease Liabilities87,249 81,079 Total Lease Liabilities484,950 450,192 The total interest expense on lease liabilities recognised during the year ended 31 December 2024 is SAR 20.0 million (2023: SAR 15.9 million). Expenses relating to short-term and low-value asset leases are SAR 32 million and SAR 2.5 million, respectively (2023: SAR 19.4 million and SAR 2.6 million, respectively). The total cash outflow for leases in 2024 was SAR 127.8 million (2023: SAR 116.0 million). 10. INTANGIBLE ASSETS AND GOODWILL 31 December 202431 December 2023SAR '000 SAR '000Software Licenses (Refer note 10.1)193,715 168,821 Goodwill (Refer note 10.2)927,055 940,066 Customer Relationships and Brands (Refer note 10.3)9,922 14,882 1,130,692 1,123,769 167,224 167,224
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 33 10. INTANGIBLE ASSETS AND GOODWILL (Continued…) 10.1. Software Licenses Software LicensesSoftware Licenses in Progress*TotalSAR '000SAR '000SAR '000CostAt 1 January 2024546,840 24,427 571,267 Additions during the year- 60,504 60,504 Transfers during the year47,177 (47,177) - Disposals during the year(11,164) - (11,164) Currency Translation Difference(2,315) (1) (2,316) At 31 December 2024580,538 37,753 618,291 Accumulated AmortisationAt 1 January 2024 402,446 - 402,446 Amortisation for the year35,010 - 35,010 Disposals during the year(11,164) - (11,164) Currency Translation Difference(1,716) - (1,716) At 31 December 2024424,576 - 424,576 Net Book Value At 31 December 2024155,962 37,753 193,715 CostAt 1 January 2023531,536 17,926 549,462 Additions during the year- 24,517 24,517 Transfers during the year18,004 (18,004) - Disposals during the year(1,509) - (1,509) Currency Translation Difference(1,191) (12) (1,203) At 31 December 2023546,840 24,427 571,267 Accumulated AmortisationAt 1 January 2023372,419 - 372,419 Amortisation for the year32,435 - 32,435 Disposals during the year(1,378) - (1,378) Currency Translation Difference(1,030) - (1,030) At 31 December 2023402,446 - 402,446 Net Book Value At 31 December 2023144,394 24,427 168,821 *Software licenses in progress include certain software under installation. This majorly includes externally acquired software and licenses.
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 34 10. INTANGIBLE ASSETS AND GOODWILL (Continued…) 10.2. Goodwill The goodwill relates to the acquisition of Western Bakeries Company Limited (WB) in 2007, Hail Agricultural Development Company (HADCO) in 2009, International Dairy and Juice Limited (IDJ) in 2012 and Bakemart in 2022. WB HADCO IDJ Bakemart TotalSAR '000SAR '000SAR '000SAR '000SAR '000CostAt 1 January 2024548,636 244,832 477,299 30,177 1,300,944 Currency Translation Difference- - (45,619) (20) (45,639) At 31 December 2024 548,636 244,832 431,680 30,157 1,255,305 Accumulated ImpairmentAt 1 January 2024- - 328,250 - 328,250 At 31 December 2024 - - 328,250 - 328,250 Net Carrying Value At 31 December 2024548,636 244,832 103,430 30,157 927,055 CostAt 1 January 2023548,636 244,832 477,299 30,177 1,300,944 Currency Translation Difference- - (32,560) (68) (32,628) At 31 December 2023 548,636 244,832 444,739 30,109 1,268,316 Accumulated ImpairmentAt 1 January 2023- - 328,250 - 328,250 At 31 December 2023 - - 328,250 - 328,250 Net Carrying Value At 31 December 2023548,636 244,832 116,489 30,109 940,066 WB and Bakemart forms part of the Bakery Products reporting segment, HADCO represents Poultry reporting segment while IDJ falls under the Dairy and Juice reporting segment having its CGU in Jordan and Egypt by the name of Teeba and Beyti, respectively. Goodwill is subject to annual impairment testing. Assets are tested for impairment by comparing the carrying amount of each CGU to the recoverable amount which has been determined based on a value in use calculation using cash flow projections based on financial forecasts approved by management covering a five-year period. The pre-tax discount rate is applied to cash flow projections for respective CGUs that varies in the range of 8.0% to 16.0 %. For the terminal value, the Gordon Growth Model is applied to the cash flows of the final forecast year, with a long-term growth rate of 2.0%. The calculation of value in use is most sensitive to the assumptions on pre-tax discount rates. Management has determined the values assigned to each of the above key assumptions as follows: Assumption Approach used to determine values Sales growth rate Average annual growth rate over the five-year forecast period; based on past performance and management’s expectations of market development. Pre-tax discount rate A discount rate, namely weighted average cost of capital (WACC), is applied for specific business areas based on assumptions regarding interest rates, tax rates and risk premiums and is recalculated to a before-tax rate ('Pre-tax discount rate'). Assumptions used for value-in-use calculations to which the recoverable amount is most sensitive were:
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 35 10. INTANGIBLE ASSETS AND GOODWILL (Continued…) 10.2. Goodwill (Continued…) Sensitivity to Changes in Assumptions – WB The implications of changes to the key assumptions are discussed below. (a) Sales Growth Assumption The sales growth in the forecast period has been estimated to be a compounded annual growth rate of 4.0%. If all other assumptions remain constant; the calculation of value-in-use is not significantly impacted by material change in compounded annual growth rate. (b) Pre-tax discount rate The Pre-tax discount rate in the forecast period has been estimated to be 8.0%. If all other assumptions remain constant; the calculation of value-in-use is not significantly impacted by material change in the pre-tax discount rate. Sensitivity to Changes in Assumptions – HADCO The implications of changes to the key assumptions are discussed below. (a) Sales Growth Assumption The sales growth in the forecast period has been estimated to be a compounded annual growth rate of 2.0%. If all other assumptions remain constant; the calculation of value-in-use is not significantly impacted by material change in compounded annual growth rate. (b) Pre-tax discount rate The Pre-tax discount rate in the forecast period has been estimated to be 8.0 % If all other assumptions remain constant; the calculation of value-in-use is not significantly impacted by material change in the pre-tax discount rate. Sensitivity to Changes in Assumptions – IDJ The implications of changes to the key assumptions are discussed below. (a) Sales Growth Assumption The sales growth in the forecast period has been estimated to be a compounded annual growth rate of 11%. If all other assumptions remain constant; a reduction of this growth rate by 17% would give a value in use equal to the current carrying amount. (b) Pre-tax discount rate The Pre-tax discount rate in the forecast period has been estimated to be 16%. If all other assumptions remain constant; the calculation of value-in-use is not significantly impacted by material change in the pre-tax discount rate. Sensitivity to Changes in Assumptions – Bakemart The implications of changes to the key assumptions are discussed below. (a) Sales Growth Assumption The sales growth in the forecast period has been estimated to be a compounded annual growth rate of 3.6%. If all other assumptions remain constant; the calculation of value-in-use is not significantly impacted by material change in compounded annual growth rate. (b) Pre-tax discount rate The Pre-tax discount rate in the forecast period has been estimated to be 9.0 %. If all other assumptions remain constant; the calculation of value-in-use is not significantly impacted by material change in the pre-tax discount rate. 10.3 Customer Relationships and Brands The customer relationships and brands were acquired as part of a business combination. They are recognised at their fair value at the date of acquisition and are subsequently amortised on a straight-line method based on the timing of projected cash flows of the contracts/ business over their estimated useful lives. 2024 2023SAR '000SAR '000Opening14,882 19,842 Amortisation(4,960) (4,960) At 31 December9,922 14,882
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 36 11. BIOLOGICAL ASSETS The Group’s biological assets consist of dairy herd, poultry birds and plantations. Biological assets owned by the Group are measured as follows: - Dairy Herd and Poultry Flock: At cost less accumulated depreciation and impairment losses, if any (Refer note 6.1). - Crops: The crops that have reached a considerable degree of biological development have been stated at the present value of the net cash flows that will be provided by such crops in progress, estimated on the basis of the degree of biological development and the risks related to the completion of the development process of crops sown. Dairy Herd Breeder Birds Other Poultry Crops TotalSAR '000SAR '000SAR '000SAR '000SAR '000CostAt 1 January 20242,440,990 300,603 110,991 - 2,852,584 Additions during the year*813,553 259,261 1,940,735 - 3,013,549 Transfers to Inventories- - (1,932,770) - (1,932,770) Disposals during the year(625,455) (218,199) (271) - (843,925) Currency Translation Difference 75 - - - 75 At 31 December 20242,629,163 341,665 118,685 - 3,089,513 Accumulated DepreciationAt 1 January 2024851,273 148,501 - - 999,774 Depreciation for the year349,693 216,645 - - 566,338 Disposals during the year(216,741) (216,916) - - (433,657) Currency Translation Difference 20 - - - 20 At 31 December 2024984,245 148,230 - - 1,132,475 Net Book Value At 31 December 20241,644,918 193,435 118,685 - 1,957,038 Dairy Herd Breeder Birds Other Poultry Crops TotalSAR '000 SAR '000 SAR '000 SAR '000 SAR '000Measured at Fair ValueAt 1 January 2024- - - 24,053 24,053 Additions during the year- - - 280,426 280,426 Transfers to Inventories- - - (277,230) (277,230) Loss Arising from Changes in Fair Value less Cost to Sell- - - (9,415) (9,415) Currency Translation Difference- - - 32 32 At 31 December 2024- - - 17,866 17,866 Carrying AmountAt 31 December 2024- - - 17,866 17,866 Biological Assets Classification:At 31 December 2024Biological Assets Classified as Non-Current Assets1,644,918 193,435 - - 1,838,353 Biological Assets Classified as Current Assets- - 118,685 17,866 136,551 1,644,918 193,435 118,685 17,866 1,974,904 *Additions include Biological Assets appreciation amounting to SAR 778.2 million.
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 37 11. BIOLOGICAL ASSETS (Continued…) Dairy Herd Breeder Birds Other Poultry Crops TotalSAR '000SAR '000SAR '000SAR '000SAR '000CostAt 1 January 20232,195,568 224,892 104,326 - 2,524,786 Additions during the year*872,991 222,272 2,039,280 - 3,134,543 Transfers to Inventories - - (2,032,615) - (2,032,615) Disposals during the year(627,518) (146,561) - - (774,079) Currency Translation Difference(51) - - - (51) At 31 December 20232,440,990 300,603 110,991 - 2,852,584 Accumulated DepreciationAt 1 January 2023745,039 110,522 - - 855,561 Depreciation for the year396,701 177,563 - - 574,264 Disposals during the year(290,452) (139,584) - - (430,036) Currency Translation Difference(15) - - - (15) At 31 December 2023851,273 148,501 - - 999,774 Net Book Value At 31 December 20231,589,717 152,102 110,991 - 1,852,810 Dairy Herd Breeder Birds Other Poultry Crops TotalSAR '000SAR '000SAR '000SAR '000SAR '000Measured at Fair ValueAt 1 January 2023- - - 18,486 18,486 Additions during the year- - - 421,815 421,815 Transfers to Inventories- - - (420,594) (420,594) Gain Arising from Changes in Fair Value less Cost to Sell- - - 4,389 4,389 Currency Translation Difference- - - (43) (43) At 31 December 2023- - - 24,053 24,053 Carrying AmountAt 31 December 2023- - - 24,053 24,053 Biological Assets Classification:At 31 December 2023Biological Assets Classified as Non-Current Assets1,589,717 152,102 - - 1,741,819 Biological Assets Classified as Current Assets- - 110,991 24,053 135,044 1,589,717 152,102 110,991 24,053 1,876,863 *Additions include Biological Assets appreciation amounting to SAR 719.4 million. Dairy Herd represents heifers and cows held for milk production. Parent Poultry Birds are held for the purpose of laying eggs which are hatched into Broiler Birds (Other Poultry). Crops are mainly held for the purpose of serving as animal feed which are consumed internally.
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 38 11. BIOLOGICAL ASSETS (Continued…) Agricultural Risk Management: The Group is subject to following risks relating to its agricultural activities: (a) Failure to secure long-term production of fodder Fodder production has been strategically shifted overseas/outside Saudi Arabia as per domestic law and regulations. The Group has developed an extensive supply chain network in North America and South America, covering both own and sourced fodder production, to ensure continuous supply of fodder for its dairy herd. Saudi Arabia’s farms also carry a large Inventory of forage to ensure no disruption of supply. (b) Large scale loss of biological assets due to disease/pandemic Strong bio-security procedures, livestock and poultry flock located on multiple sites to reduce risk, disease control and vaccination program are in place along with screening and quarantine of incoming animals. Professional vet group within the farming division ensure large scale losses do not occur. (c) Severe operational disruption (Fire, Flood, etc.) The Group is prepared to respond to operational disruptions to minimise losses and remain viable. An effective Business Continuity Plan is continually reviewed and adapted for the changing nature of operational disruptions. Risk assessments are continually performed to identify possible events that could cause significant disruptions. Risk of business disruption from flood has been removed through farm design. Farm buildings are constructed in areas that do not have flash floods and also elevated above ground level.
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 39 12. INVESTMENTS The investments comprise the following: NaturePrincipal activityCountry of Incorporation / Principal Place of Business31 December 202431 December 202331 December 202431 December 2023%%SAR '000SAR '000Maria Fondomonte S.A. (Refer note 12.1 and 12.2) AssociateSource, process and sale of forage supplies Romania49.0% 49.0% 3,256 5,030 3,256 5,030 Investments in Associate 12.1. Movement in the investment in associate is as follows: 20242023SAR '000SAR '000Opening balance5,030 6,108 Share of Results for the year(1,774) (1,064) Currency Translation Difference- (14) Closing balance3,256 5,030
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 40 12. INVESTMENTS (Continued…) 12.2. On 22 Safar 1441 A.H. (21 October 2019) the Group acquired 49% equity interest in Maria Fondomonte S.A. (the “Associate”) to strengthen its dairy herd feed supply. The Group reviewed this investment for impairment on account of breach of certain clauses set forth in the shareholders’ agreement (the “Agreement”) dated 21 October 2019. Based on fair valuation of Group’s equity stake in the Associate, an impairment loss of SAR 82.9 million was recognised in ‘Other expenses’ in the Consolidated Statement of Profit or Loss during the year ended 31 December 2022. The Group has taken legal action under the Agreement, within the jurisdiction of Romania, to recover its investment in the Associate. The Group will reassess the carrying value of this investment at each reporting period and adjust or reverse the impairment in subsequent periods accordingly. 13. INVENTORIES 31 December 202431 December 2023SAR '000 SAR '000Raw Materials4,208,808 4,681,722 Finished Goods1,061,679 990,163 Spares821,907 826,221 Work in Progress234,961 241,829 Total Inventories6,327,355 6,739,935 Less: Allowance (Refer note 13.1)(642,935) (591,746) Total5,684,420 6,148,189 13.1. Movement in allowance is as follows: 2024 2023SAR '000 SAR '000Opening balance591,746 541,347 Allowance made and written off during the year54,935 52,209 Currency Translation Difference (3,746) (1,810) Closing balance642,935 591,746 13.2. Allowance for inventories is based on nature of inventories, their expiry and sales expectation based on historic trends and other qualitative factors. 14. TRADE RECEIVABLES, PREPAYMENTS AND OTHER RECEIVABLES 31 December 202431 December 2023SAR '000SAR '000Trade Receivables - Third Parties1,964,690 1,890,630 - Related Parties (Refer note 37) - 160,561 1,964,690 2,051,191 (257,832) (160,768) Net Trade Receivables1,706,858 1,890,423 Prepayments503,311 494,109 Government Grants107,251 96,107 Other Receivables104,106 84,007 2,421,526 2,564,646 Less: Allowance for impairment of trade receivables (Refer note 14.1)
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 41 14. TRADE RECEIVABLES, PREPAYMENTS AND OTHER RECEIVABLES (Continued…) 31 December 202431 December 2023SAR '000 SAR '000Ageing of Trade ReceivablesUp to 2 months1,444,290 1,500,209 2 - 3 months166,536 179,253 More than 3 months353,864 371,729 1,964,690 2,051,191 Movement in allowance for impairment of trade receivables is as follows: 2024 2023SAR '000SAR '000At the beginning of the year160,768 139,707 Allowance made and written off during the year (Refer note 14.2)98,519 22,296 Currency Translation Difference(1,455) (1,235) At the end of the year257,832 160,768 14.1.Trade receivables disclosed above are classified as financial assets at amortised cost. 14.2.Trade receivables are written off where there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the Group, and a failure to make contractual payments. 14.3.The credit terms of the trade receivables vary across the business segments of the Group and therefore any significant change in product-mix also affects the ageing profile of trade receivables accordingly. 15. TIME DEPOSITS 31 December 202431 December 2023SAR '000SAR '000Time Deposit (Refer note 15.1)- 1,925,556 - 1,925,556 15.1. The average rate on time deposit (Murabaha) for the year ended 31 December 2023 was 5.9% with a maturity of less than one year. 15.2. Time deposit was redeemed on its date of maturity i.e. 24 Shaban 1445 A.H. (5 March 2024). 16. CASH AND CASH EQUIVALENTS 31 December 202431 December 2023SAR '000 SAR '000Cash at Bank - Current accounts (Refer note 16.1)460,893 643,658 Cash at Bank - Deposits (Refer note 16.2)36,824 274 Cash in Hand30,497 22,404 528,214 666,336 16.1.Cash available in banks are non-interest bearing. 16.2.The average rate on bank deposits during 2024 is 5.3% (2023: 5.3%) per annum with an average maturity of less than a month. 16.3.The cash and cash equivalents include SAR 9.7 million (2023: SAR 30.4) million earmarked in dividend accounts.
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 42 17. SHARE CAPITAL The Company’s share capital at 31 December 2024 amounted to SAR 10,000 million (2023: SAR 10,000 million), consisting of 1,000 million (2023: 1,000 million) fully paid and issued shares of SAR 10 each. Holders of these shares are entitled to dividends as declared from time to time and entitled to one vote per share at general assembly meeting. 18. STATUTORY RESERVE The statutory reserve included in the consolidated financial statements as of December 31, 2024, and December 31, 2023, was required under the Company’s previous by-laws. However, following amendments to the Company's by-laws during the year ended December 31, 2024, the requirement to set aside a statutory reserve has been removed. 19. EMPLOYEE EQUITY PARTICIPATION PROGRAMS 19.1. Employee Stock Option Program (“ESOP”): The Group has offered certain employees (the “Eligible Employees”) the option (the “Option”) for equity ownership (treasury shares) opportunities and performance-based incentives which will result in more alignment between the interest of both shareholders and these employees. The vesting of the Option is dependent on meeting performance targets (such as. earnings per share) set by the Company along with the required period of stay in service by the Eligible Employees. The exercise of the Option is contingent upon the shares of the Company continuing to be listed on the Tadawul. Treasury shares that have not been granted to Eligible Employees in the reporting period for which those were earmarked shall carry over to the next reporting period. The number of share options and the exercise price has been retrospectively adjusted for the prior period to reflect the effect of the bonus share issue. The ESOP 2018 was granted in Muharram 1440 A.H. (September 2018). The number of shares shall not exceed 4,000,000 shares. The ESOP 2019 was granted in Dhul-Hijjah 1440 A.H. (August 2019). The number of shares shall not exceed 4,500,000 shares. The ESOP 2020 was granted in Rajab 1441 A.H. (March 2020). The number of shares shall not exceed 4,100,000 shares. The fair value per Option is estimated at the grant date using the Black Scholes Merton pricing model, taking into account the terms and conditions upon which the share options were granted. ESOP2018ESOP2019ESOP2020Input to the Model;Dividend Yield (%)1.4%1.5%1.7%Expected Volatility (%)19.1%22.9%23.1%Risk Free Interest Rate (%)3.0%3.0%2.1%Contractual Life of Share Options (Years)2.42.52.9Share Price (SAR) at Grant Date49.251.937.0Exercise Price (SAR) at Grant Date55.055.050.0Fair Value per Option (SAR)4.16.72.1Weighted Average Share Price during respective year (SAR)53.252.651.3 The expected life of the share options is based on historical data and current expectations and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the Options is indicative of future trends, which may also not necessarily be the actual outcome.
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 43 19. EMPLOYEE EQUITY PARTICIPATION PROGRAMS (Continued…) 19.1. Employee Stock Option Program (“ESOP”) (Continued…) The following table sets out the number of the, and movements in, ESOP share options during the year: 2024 2023At the beginning of the year3,181,000 9,614,000 Settled during the year(1,201,000) (5,187,000) Forfeited during the year(359,000) (1,246,000) At the end of the year1,621,000 3,181,000 19.2. Employee Share Plan (“ESP”): Under the ESP, the equity instruments (the shares) are granted to the eligible employees for equity ownership (treasury shares) under the same terms and conditions as mentioned above for ESOP. The fair value per award is determined using the market price of the Company’s share at the grant date. The ESP 2021 was granted in Rabi Al-Thani 1443 A.H. (November 2021). The number of shares awarded under the plan were 472,500 shares. The ESP 2022 was granted in Shaban 1443 A.H. (March 2022). The number of shares awarded under the plan were 513,500 shares. The ESP 2023 was granted in Rajab 1444 A.H. (January 2023). The number of shares awarded under the plan were 755,500 shares. The ESP 2024 was granted in Rajab 1445 A.H. (January 2024). The number of shares awarded under the plan were 810,500 shares. The following table sets out the number of the, and movements in, ESP shares during the year: 2024 2023At the beginning of the year1,741,500 986,000 Granted during the year810,500 755,500 Settled during the year(398,500) - Forfeited during the year(21,000) - At the end of the year2,132,500 1,741,500 20. TREASURY SHARES 31 December 202431 December 2023SAR '000 SAR '000At the beginning of the year614,766 866,602 Settled during the year(76,742) (251,836) At the end of the year538,024 614,766
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 44 21. OTHER RESERVES Notes31 December 202431 December 2023SAR '000 SAR '000Hedging Reserve178,466 9,479 Currency Translation Reserve21.11,014,584 833,358 Others21.2118,327 114,074 1,311,377 956,911 21.1. During 2024, the Egyptian pound recorded an average 39.1% (2023: 20.1%) devaluation in rate against the SAR. As a result, currency translation adjustment has been recorded in relation to the translation of foreign operations in Egypt. 21.2. Others include movement for balances related share-based payment expenses SAR 37.2 million and settlement of treasury shares SAR 23 million. 22. LOANS AND BORROWINGS Notes31 December 202431 December 2023SAR '000 SAR '000Islamic Banking Facilities (Murabaha)22.15,551,280 4,758,147 Saudi Industrial Development Fund ("SIDF")22.2334,872 614,789 Banking Facilities of Non-GCC Subsidiaries22.356,084 59,407 Supranational (Murabaha)22.4118,415 209,674 Agricultural Development Fund ("ADF")22.538,263 56,570 6,098,914 5,698,587 International Sukuk22.62,801,331 2,800,582 8,900,245 8,499,169 Islamic Banking Facilities (Murabaha) 22.1 418,203 524,844 Saudi Industrial Development Fund ("SIDF")22.2277,260 262,384 Banking Facilities of Non-GCC Subsidiaries22.346,766 153,177 Supranational (Murabaha)22.496,160 96,025 Agricultural Development Fund ("ADF")22.5327,787 526,907 1,166,176 1,563,337 International Sukuk22.663,820 1,965,491 1,229,996 3,528,828 Total Loan and Borrowings10,130,241 12,027,997 Non-Current LiabilitiesCurrent Liabilities 22.1.The borrowings under Islamic banking facilities (Murabaha) are secured by promissory notes given by the Group and are denominated in SAR. The Islamic banking facilities (Murabaha) with a maturity period of less than two years are predominantly of a revolving nature. During the year ended 31 December 2024, the Group entered into new Islamic Banking facilities for SAR 281.4 million (2023: SAR 600 million). As at 31 December 2024, SAR 4,456.5 million Islamic banking facilities (Murabaha) were unutilised and available for drawdown with maturities predominantly greater than five years (2023: SAR 5,298.2 million). 22.2.The borrowings of the Group from the SIDF, denominated in SAR, are secured by a mortgage on land, building, plant and machineries equivalent to the outstanding borrowings. As at 31 December 2024, the Group had no unutilised SIDF facilities available for drawdown (2023: Nil). Assets held as collateral are subject to restriction of disposal until the loan is settled or the disposal is approved by SIDF.
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 45 22. LOANS AND BORROWINGS (Continued…) 22.3.These banking facilities of Non-GCC subsidiaries represent foreign currency denominated borrowings, including USD, EGP and JOD from foreign banking and developing institutions, secured by guarantees provided by the Company. As at 31 December 2024, SAR equivalent 414.1 million (2023: SAR 311.5 million) facilities were unutilised and available for drawdown. 22.4.The borrowings granted by Supranational (“IFC”- Member of World Bank Group and "EBRD" - European Bank for Reconstruction and Development) are Murabaha facilities and in USD, secured by promissory notes given by the Group. As at 31 December 2024, the Group had no unutilised facility available for drawdown (2023: SAR 281.4 million). 22.5.The borrowing from ADF, denominated in SAR, is secured by a mortgage on land, building, plant and machineries equivalent to the outstanding borrowings. As at 31 December 2024, the Group had no unutilised ADF facilities available (2023: Nil). Assets mortgaged are subject to the restriction of disposal until the loan is settled or the disposal is approved by ADF. 22.6.On 28 Jumada Al-Akhirah 1440 A.H, (5 March 2019), the Group issued its first International Sukuk – Series I amounting to USD 500.0 million out of USD 2000.0 million Euro Medium Term Note Programme at a par value of USD 0.2 million each. The International Sukuk Issuance beared a return of 4.3% per annum payable semi-annually in arrears. The International Sukuk – Series I was redeemed on its date of maturity i.e. 24 Shaban 1445 A.H. (5 March 2024). On 7 Muharram 1445 A.H, (25 July 2023), the Group issued its International Sukuk – Series II amounting to USD 750 million (equivalent SAR 2,814.4 million) out of USD 2,000 million (equivalent SAR 7,505 million) Euro Medium Term Note Programme at a par value of USD 0.2 million each. The International Sukuk – Series II Issuance bears a return of 5.2% per annum payable semi-annually in arrears. The International Sukuk – Series II will be redeemed at par on its date of maturity i.e. 28 Rabi Al Thani 1455 A.H. (25 July 2033). The loans contain certain covenants. A future breach of covenants may lead to renegotiation. The covenants are monitored on a monthly basis by management, in case of potential breach, actions are taken by management to ensure compliance. As at 31 December 2024, there has not been any non-compliance observed for any of the covenants. 23. EMPLOYEE RETIREMENT BENEFITS 2024 2023SAR '000SAR '000Opening Balance1,225,730 1,056,581 Consolidated Statement of Profit or LossCurrent Service Cost115,587 98,727 Interest Cost55,494 43,985 Past Service Cost11,317 - Consolidated Statement of Comprehensive IncomeActuarial Loss58,915 85,659 Cash Movements:Benefits paid(70,501) (59,222) Closing Balance1,396,542 1,225,730
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 46 23. EMPLOYEE RETIREMENT BENEFITS (Continued…) 2024 2023 SAR '000 SAR '000 Sensitivity in Employee Retirement Benefits LiabilitySalary Inflation1 % Decrease1,286,119 1,141,043 Base1,396,542 1,225,730 1 % Increase1,524,385 1,320,349 Discount Rate1 % Decrease1,525,769 1,321,485 Base1,396,542 1,225,730 1 % Increase1,287,030 1,141,657 The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the employee retirement benefits to significant actuarial assumptions, the same method (present value of the employee retirement benefits calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the employee retirement benefits recognised in the Consolidated Statement of Financial Position. Demographic Assumptions 31 December 202431 December 2023GCC employeesNumber of Employees43,918 41,044 Weighted average age of employees (years)36 36 Weighted average years of past service7 7 Weighted average duration of the employee retirement benefit liability is 8.1 years. The significant assumptions used to determine the present value of the defined benefit obligations for the years ended December 31 are as follows: 2024 2023Discount Rate4.9% - 6.8%4.2% - 6.4%Long-term Salary Growth Rate4.9% - 6.8%4.2% - 6.4% Risk Exposure: The Group is exposed to a number of risks, the most significant of which are detailed below: Inflation risk The majority of the plan's benefit obligations are linked to inflation and higher inflation will lead to higher liabilities. Changes in bond yields Decrease in corporate bond yields will increase plan liabilities. 24. DEFERRED TAX Following are the major deferred tax assets and liabilities recognised by the Group: 24.1. Deferred Tax Assets 2024 2023SAR '000SAR '000Opening Balance 24,307 29,674 Decrease during the year(12,404) (110) Currency Translation Difference(8,045) (5,257) Closing Balance3,858 24,307
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 47 24. DEFERRED TAX (Continued…) 24.1. Deferred Tax Assets (Continued…) Deferred tax assets relate to unused tax losses for its subsidiaries in Argentina and Egypt. Management believes that future taxable profits will be available against which deferred tax assets can be realised. 24.2. Deferred Tax Liabilities 2024 2023SAR '000 SAR '000Opening Balance92,107 90,489 Increase during the year13,658 11,415 Transfer(27,923) - Currency Translation Difference(15,952) (9,797) Closing Balance61,890 92,107 Deferred tax liability relates to taxable temporary differences arising majorly on Property, Plant and Equipment. 25. ZAKAT AND INCOME TAX 31 December 202431 December 2023SAR '000SAR '000Zakat Provision (Refer note 25.1) 345,703 249,659 Income Tax Provision (Refer note 25.2) 36,226 30,789 381,929 280,448 25.1. Zakat Provision Zakat is charged at the higher of net adjusted income or Zakat base as required by the ZATCA. The key elements of zakat base primarily include equity components, net income and liabilities adjusted for zakat purpose. 2024 2023SAR '000SAR '000Opening Balance249,659 168,596 Charge for the year105,326 85,101 (9,282) (4,038) Closing Balance345,703 249,659 Payments The Company filed its Consolidated Zakat returns for all the years up to 2023. The Zakat assessments for all the years up to 2020 for Almarai Company have been closed and settled with the ZATCA. 25.2. Income Tax Provision 2024 2023SAR '000SAR '000Opening Balance30,789 17,503 Charge for the year18,272 17,650 (13,666) (4,217) Currency Translation Adjustment831 (147) Closing Balance36,226 30,789 Payments Foreign subsidiaries filed their tax returns for all years up to 2023 and settled their tax liabilities accordingly. While all the returns have been filed, final assessments are pending for certain years.
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 48 26. TRADE AND OTHER PAYABLES Management considers that the carrying amount of trade payables approximates to their fair value. 31 December 202431 December 2023SAR '000 SAR '000Trade Payable- Third Parties1,489,386 1,912,113 - Related Parties (Refer note 37)- 15,074 Accrued Expenses (Refer note 26.1)2,139,575 1,974,481 Other Payables419,960 344,200 4,048,921 4,245,868 26.1. Accrued expenses include accrual against volume discounts and trade support costs amounting to SAR 619.9 million (2023: SAR 511.3 million), payroll related accrual amounting to SAR 288.4 million (2023: SAR 333.4 million) and accrual against expected sales returns amounting to SAR 95 million (2023: SAR 81.1 million). Other payables include unrecognised portion of Government grants related to inventories, dividend payables and advance from customers at the reporting date. 27. COST OF SALES 2024 2023SAR '000 SAR '000Material Consumed9,017,906 8,711,725 Government Grants(279,702) (383,510) Employee Costs2,155,890 1,917,104 Depreciation of Property, Plant and Equipment1,416,610 1,450,812 Infrastructure Support and Services986,740 873,151 Depreciation of Biological Assets566,338 574,264 Utilities472,685 389,118 Vaccines and Drugs174,428 171,233 Outside Processing Charges61,929 69,580 Consumables64,956 56,018 Depreciation of Right-of-Use Assets41,409 41,642 Amortisation of Long-term Prepayments (Refer note 8)27,262 27,262 Amortisation of Intangible Assets12,060 19,162 Other Expenses375,163 326,153 Less:Appreciation of Biological Assets (Refer note 11)(778,214) (719,419) 14,315,460 13,524,295
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 49 28. SELLING AND DISTRIBUTION EXPENSES 2024 2023SAR '000 SAR '000Employee Costs1,753,243 1,590,975 Marketing Expenses532,820 540,220 Depreciation of Property, Plant and Equipment250,401 238,116 Infrastructure Support and Services239,791 214,974 Depreciation of Right-of-Use Assets65,036 60,470 Utilities27,945 25,838 Consumables9,225 7,554 Amortisation of Intangible Assets2,586 2,339 Other Expenses 112,871 109,259 2,993,918 2,789,745 2 29. GENERAL AND ADMINISTRATION EXPENSES 2024 2023SAR '000 SAR '000Employee Costs284,855 268,046 Insurance98,198 88,797 Infrastructure Support and Services55,428 51,185 Depreciation of Property, Plant and Equipment21,305 22,823 Amortisation of Intangible Assets25,324 15,894 Depreciation of Right-of-Use Assets 11,545 8,788 Utilities6,756 5,353 Consumables1,047 1,175 Other Expenses3,691 6,962 508,149 469,023 30. OTHER EXPENSES, NET 2024 2023SAR '000 SAR '000Loss on Disposal of Biological Assets (Refer note 30.1) 123,142 115,685 Gain on Disposal of Property, Plant and Equipment(30,295) (27,227) Net Gain on Disposal of Right-of-Use Assets (1,090) (493) Dividend on Equity Investment - (570) Other Income (5,523) (3,962) Exchange Gain (23,068) (18,972) 63,166 64,461 30.1. Each cow within the dairy herd is depreciated over the average useful life of approximately 4 lactations (Refer note 5.9). In order to maintain the size and health of the dairy herd, a significant proportion of the herd is culled or sold each year based on an assessment by management of the productivity, breeding and efficiency of each herd member and only those meeting predefined levels are retained. It is not possible to predict in advance which herd members will be culled early or late and accordingly the average useful life of approximately 4 lactations is applied across the whole of the dairy herd.
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 50 30. OTHER EXPENSES, NET (Continued…) Underperforming herd members are often sold in a secondary market where the value received for each herd member is generally not linked to the age of the herd member. Herd members culled or sold before 4 lactations will typically have a depreciated cost higher than the expected residual value and thus a loss on disposal will generally arise. Management believe that such loss on disposal broadly offsets the absence of depreciation on those herd members that survive beyond the average 4 lactation period and accordingly neither the profit for the year nor the net carrying cost of the dairy herd as reported in the Consolidated Statement of Financial Position is materially distorted. 31. FINANCE COST, NET 2024 2023SAR '000 SAR '000Interest and Finance Charges692,939 622,319 Interest on Lease Liabilities19,968 15,978 Interest Income on other Deposits(31,593) (56,133) Exchange Gain / (Loss)(829) 7,443 Interest Capitalisation(134,747) (48,158) Net Gain on Settlement of Interest Rate Swap Instrument(15,478) (14,430) 530,260 527,019 32. EARNINGS PER SHARE The calculation of the basic and diluted earnings per share is based on the following data: 2024 20232,313,100 2,049,123 Number of shares '000'988,191 984,567 1,000,000 1,000,000 - Basic 2.34 2.08 - Diluted 2.31 2.05 Profit for the year attributable to the shareholders of the Company SAR '000'Earnings per Share (SAR), based on Profit for the year attributable to Shareholders of the CompanyWeighted average number of ordinary shares for the purposes of basic earnings Weighted average number of ordinary shares for the purposes of diluted earning Weighted average number of shares are retrospectively adjusted to reflect the effect of Bonus Shares and are adjusted to take account of Treasury Shares held under the Almarai Employee Equity Participation Programme. 33. SEGMENT REPORTING The Group’s principal business activities involve manufacturing and trading of dairy and juice products under Almarai, Beyti and Teeba brands, bakery products under L’usine and 7 Days brands and poultry products under Alyoum and AlBashayer brands. Other activities include arable, horticulture, infant nutrition, seafood and value added meat products. Selected financial information as at 31 December 2024 and 31 December 2023, and for the year then ended, categorised by these business segments, is as follows: Dairy and Juice Milk production, dairy, fruits juice, ice cream product processing and distribution Bakery Bakery products manufacturing and distribution Poultry Poultry products manufacturing and distribution Other Activities Arable, horticulture, infant nutrition, seafood and value added meat products
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 51 33. SEGMENT REPORTING (Continued…) Dairy and Juice Bakery PoultryOther Activities TotalSAR '000 SAR '000 SAR '000 SAR '000 SAR '00031 December 2024Revenue 14,094,150 2,661,579 3,794,209 1,493,041 22,042,979 Third Party Revenue14,007,348 2,661,579 3,794,209 516,376 20,979,512 (1,418,049) (233,945) (611,069) (176,813) (2,439,876) Share of Results of Associate- - - (1,774) (1,774) 1,488,971 403,325 485,782 (64,978) 2,313,100 Profit / (Loss) for the year 1,489,538 403,325 485,782 (64,978) 2,313,667 Total Assets21,120,578 1,982,800 9,074,896 3,389,686 35,567,960 Total Liabilities12,799,436 427,890 2,886,540 662,962 16,776,828 31 December 2023Revenue 12,997,638 2,584,458 3,518,336 1,761,375 20,861,807 Third Party Revenue 12,902,558 2,584,458 3,518,336 570,233 19,575,585 (1,458,524) (216,638) (553,097) (233,313) (2,461,572) Share of Results of Associate- - - (1,064) (1,064) 1,298,163 384,417 428,098 (61,555) 2,049,123 Profit / (Loss) for the year 1,298,813 384,417 429,854 (61,555) 2,051,529 Total Assets 23,977,931 1,985,481 7,260,844 2,969,759 36,194,015 Total Liabilities 12,999,332 492,391 4,160,985 732,482 18,385,190 Depreciation and AmortisationProfit / (Loss) attributable to Shareholders of the CompanyDepreciation and AmortisationProfit / (Loss) attributable to Shareholders of the Company The Group’s revenue is derived from contracts with customers for sale of consumer products. Control of products is transferred at a point in time and directly sold to customers. Segment assets are measured in the same way as in the Consolidated Financial Statements. These assets are allocated and analysed based on the operations of the segment. The Group’s management does not analyse total assets based on its geographical location and therefore country-wise total assets are not disclosed in these Consolidated Financial Statements. The revenue from business segments categorised by geographical region is as follows: Dairy and Juice Bakery Poultry Other Activities TotalSAR '000 SAR '000 SAR '000 SAR '000 SAR '00031 December 2024Saudi Arabia8,599,142 1,940,169 3,094,353 270,507 13,904,171 Other GCC Countries2,969,012 690,148 570,739 52,711 4,282,610 Other Countries2,439,194 31,262 129,117 193,158 2,792,731 Total14,007,348 2,661,579 3,794,209 516,376 20,979,512 31 December 2023Saudi Arabia8,069,853 1,925,337 2,940,774 252,254 13,188,218 Other GCC Countries2,756,774 618,228 459,530 31,237 3,865,769 Other Countries2,075,931 40,893 118,032 286,742 2,521,598 Total12,902,558 2,584,458 3,518,336 570,233 19,575,585 The geographical distribution of Group’s non-current assets excluding financial assets and deferred tax asset is as follows: 2024 2023SAR '000 SAR '000Saudi Arabia23,476,658 21,305,363 Other GCC Countries889,781 864,683 Other Countries2,385,661 2,507,366 Total26,752,100 24,677,412
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 52 34. BANK OVERDRAFTS It represents the overdrafts facility arrangement in IDJ (Egypt and Jordan) amounting to SAR 60.9 million (2023: SAR 40.4 million), secured by corporate guarantee given by the Company. The average rate on overdrafts facility during 2024 was 28.5% and 8.6% per annum for Egypt and Jordan respectively. (2023: 20.5% and 9.8%) 35. CASH FLOW INFORMATION 35.1.Non-cash Investing and Finance Activities Borrowing Cost Capitalised as part of Capital Work-in-Progress (Refer note 7). Acquisition of Right-of-Use-Assets (Refer note 9). 35.2.Net Debt Reconciliation Loans and BorrowingsBank OverdraftsLease LiabilitiesSub-totalCash and Cash EquivalentsTime Deposit Net TotalSAR '000SAR '000SAR '000SAR '000SAR '000SAR '000SAR '000Opening balance as at 1 January 202412,027,997 844 450,192 12,479,033 666,336 1,925,556 9,887,141 Financing cash flows(1,861,066) 52,588 (127,813) (1,936,291) (132,491) (1,803,800) Redemption- - - - - (1,876,250) 1,876,250 Changes in Leases- - 152,090 152,090 - 152,090 Finance Cost/Income625,873 19,166 19,968 665,007 - 16,436 648,571 Finance Cost/Income Paid/Received(625,873) (19,166) (5,720) (650,759) - (65,742) (585,017) Currency Translation Adjustment(36,690) (834) (3,767) (41,291) (5,631) (35,660) Closing balance as at 31 December 202410,130,241 52,598 484,950 10,667,789 528,214 - 10,139,575 Opening balance as at 1 January 20239,514,033 87,130 466,830 10,067,993 546,916 - 9,521,077 Financing cash flows2,546,208 (81,857) (100,764) 2,363,587 123,731 - 2,239,856 Investment- - - - - 1,876,250 (1,876,250) Changes in Leases- - 98,228 98,228 - - 98,228 Finance Cost/Income550,563 5,537 15,978 572,078 - 49,306 522,772 Finance Cost/Income Paid/Received(553,662) (5,537) (15,208) (574,407) - - (574,407) Currency Translation Adjustment(29,145) (4,429) (14,872) (48,446) (4,311) - (44,135) Closing balance as at 31 December 202312,027,997 844 450,192 12,479,033 666,336 1,925,556 9,887,141 Liabilities from financing activitiesAsset 36. COMMITMENT AND CONTINGENCIES 36.1.The contingent liabilities against letters of credit are SAR 485 million at 31 December 2024 (2023: SAR 491 million). 36.2. The contingent liabilities against letters of outward guarantee and corporate guarantee are SAR 815 million at 31 December 2024 (2023: SAR 877 million). Contingent liabilities against letters of credit and letters of guarantee expire as follows. 31 December 202431 December 2023SAR '000SAR '000Within One year891,525 905,308 Two to Five years287,848 360,040 After Five years120,383 103,192 Total1,299,756 1,368,540 36.3.The Group had capital commitments amounting to SAR 4.4 billion at 31 December 2024 in respect of ongoing projects (2023: SAR 3.1 billion). The majority of the capital commitments are for poultry business expansion, updating the existing production facilities, sales depot development, distribution fleet, fridges and IT equipment. 36.4.Refer to note 25.1 for Zakat related matters.
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 53 37. TRANSACTIONS AND BALANCES WITH RELATED PARTIES During the normal course of its operations, the Group had the following significant transactions with related parties during the year ended 31 December 2024 and 2023 along with their balances: 1 January - 15 December 2024*1 January - 31 December 202331 December 2024*31 December 2023SAR '000SAR '000SAR '000SAR '000Sales ToPanda Retail Company*967,764 802,370 - 160,484 Herfy Food Services*3,202 161 - 77 Total970,966 802,531 - 160,561 Purchases From57,249 73,338 - (5,561) 87,983 81,443 - (9,513) Total 145,232 154,781 - (15,074) Nature of TransactionUnited Sugar Company*International Food Industries Co* Transaction Amount Balance at * Effective from 15 December 2024, the relationships with Savola Group companies no longer qualify as related party relationships under IFRS as endorsed in Saudi Arabia. Accordingly, all transactions executed with Savola Group companies during the period from 1 January 2024 to 15 December 2024 have been disclosed as related party transactions. Members of the Board of Directors do not receive any remuneration for their role in managing the Group unless approved by the General Assembly. Members of the Board of Directors receive an attendance allowance for Board and Board Committee meetings. Executive Directors receive fixed remuneration as a result of their direct duties and responsibilities. The Senior Executives, including the Chief Executive Officer and the Chief Financial Officer, receive remuneration according to the employment contracts signed with them. The following table illustrates details of remuneration and compensation paid to Directors and Key Management Personnel: Non Executive / Independent Board MembersOther Key Management PersonnelTotalNon Executive / Independent Board MembersOther Key Management PersonnelTotalShort-term employee benefits 6,006 29,374 35,380 4,155 21,744 25,899 Shared Based Payment - 5,926 5,926 - 4,993 4,993 Post-employment benefits - 1,223 1,223 - 857 857 Total6,006 36,523 42,529 4,155 27,594 31,749 31 December 2023SAR '00031 December 2024SAR '000Key Management PersonnelKey Management Personnel Sales and purchases (including services) carried out to/from related parties during the year based on the price lists in force and terms that would be available to third parties in the normal course of business. 38. DERIVATIVE FINANCIAL INSTRUMENTS At 31 December 2024, the Group had various financial derivatives that were designated as cash flow hedge instruments to cover cash flow fluctuations arising from commission rates, foreign exchange prices and commodity prices that are subject to market price fluctuations. As per Group policy, derivative instruments are not used for trading or speculative purposes. At 31 December 2024, the Group had 16 commission rate swap agreements in place with a total notional amount of SAR 1.8 billion. At 31 December 2023, the Group had 23 commission rate swap agreements in place with a total notional amount of SAR 2.5 billion. The swaps result in the Group receiving floating Saudi Arabian Interbank Offered Rate (SAIBOR) rates while paying fixed rates of commission rate under certain conditions. The swaps are being used to hedge the exposure to commission rate changes of the Group’s Islamic borrowings.
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 54 38. DERIVATIVE FINANCIAL INSTRUMENTS (Continued..) The Group enters into hedging strategies by using various financial derivatives to cover foreign exchange firm commitments and forecasted transactions that are highly probable. The Group enters into various commodity derivatives to hedge the price of certain commodity purchases. These derivatives match the maturity of the expected commodity purchases and use the same underlying index as for the hedged item, therefore does not result in basis risk. All financial derivatives are carried in the Consolidated Statement of Financial Position at fair value. All cash flow hedges are considered highly effective. The application of hedge accounting effectively results in recognising interest expense at a fixed interest rate for the hedged floating rate loans and inventory and PPE at the fixed foreign currency rate for the hedged purchases. The following table detail the notional principal amounts and remaining terms outstanding as at the reporting date: CurrentSAR '000Non-CurrentSAR '000AssetsSAR '000LiabilitiesSAR '00031 December 2024Forward currency contracts1,998,476 7,729,299 4,356 180,988 Interest rate swaps200,000 1,600,000 27,832 - Commodity Derivatives524,216 21,787 9,103 38,769 2,722,692 9,351,086 41,291 219,757 31 December 2023Forward currency contracts2,654,927 6,662,369 33,912 14,259 Interest rate swaps800,000 1,700,000 16,879 451 Commodity Derivatives804,454 34,539 1,734 47,294 4,259,381 8,396,908 52,525 62,004 Carrying amount of the hedging instrumentNotional amount of the hedging instruments 39. FINANCIAL INSTRUMENTS 39.1. Fair value measurement of financial instruments 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. Underlying the definition of fair value is the presumption that the Group is a going concern and there is no intention or requirement to curtail materially the scale of its operations or to undertake a transaction on adverse terms. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm's length basis. When measuring the fair value, the Group uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows. Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that can be accessed at the measurement date. Level 2: Inputs other than quoted prices included in Level 1 that are observable for the identical asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices). Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs). The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 55 39. FINANCIAL INSTRUMENTS (Continued…) 39.1. Fair value measurement of financial instruments (Continued…) Carrying amountHedging InstrumentsLevel 1 Level 2 Level 331 December 2024...…………………………………………........SAR '000…...........…………………………………………Financial Assets Derivative Financial Instruments41,291 - 41,291 - Financial LiabilitiesDerivative Financial Instruments219,757 - 219,757 - 31 December 2023Financial Assets Derivative Financial Instruments52,525 - 52,525 - Financial LiabilitiesDerivative Financial Instruments62,004 - 62,004 - Fair Value Level 2 derivative financial instruments include forwards, commission rate swaps and commodity derivatives. These derivatives are valued using widely recognised valuation models. The Group relies on the counterparty for the valuation of these derivatives. The valuation techniques applied by the counterparties include the use of forward pricing standard models using present value calculations and mid-market valuations. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, credit spreads, foreign exchange rates, and forward and spot prices. 39.2. Risk Management of Financial Instruments The Group’s activities expose it to a variety of financial risks; credit risk, liquidity risk, market price risk and capital management risk. The Group’s risk management is predominantly centralised under policies approved by the Board of Directors. The Group treasury identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units. The board approves the overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity. Credit Risk: Credit risk is the risk that one party to financial instruments will fail to discharge an obligation and cause the other party to incur a financial loss. The Group is exposed to credit risk on its bank balances, trade receivables and receivables from related parties and derivative financial instruments as follows. 31 December 202431 December 2023SAR '000SAR '000Cash at Bank (Refer note 16)497,717 643,932 Time Deposit (Refer note 15)- 1,925,556 Trade Receivables - Third Parties1,964,690 1,890,630 Trade Receivables - Related Parties (Refer note 37)- 160,561 Derivative Financial Instruments (Refer note 38)41,291 52,525 Other Receivables (Refer note 14)104,106 84,007 2,607,804 4,757,211 The carrying amount of financial assets represents the maximum credit exposure.
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 56 39. FINANCIAL INSTRUMENTS (Continued…) 39.2. Risk Management of Financial Instruments (Continued…) Credit risk on receivable and bank balances is limited as: - Cash balances, term deposits, time deposits and derivative financial instruments are held with banks with sound credit ratings ranging from BBB- and above. - The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables. These adjusted loss rates in the current year are similar to the effective loss rates observed in the prior year. The Group has identified the GDP, unemployment rate, inflation rate and interest rate of the countries in which it sells its goods and services to be the most relevant factors, and accordingly adjusted the historical loss rates based on expected changes in these factors. Trade receivables outstanding balance comprises of 63% (2023: 66%) in KSA, 28 % (2023: 25%) in GCC (other than KSA) and 10% (2023: 9%) in other Countries. The five largest customers account approximately for 35% of outstanding trade receivables at 31 December 2024 (2023: 34%). The Group manages credit risk with respect to receivables from customers by monitoring in accordance with defined policies and procedures. The Group seeks to limit its credit risk with respect to customers by setting credit limits for individual customers and by monitoring outstanding receivables on an ongoing basis. Liquidity Risk: Liquidity risk is the risk that an enterprise will encounter difficulty in raising funds to meet commitments associated with financial instruments. Liquidity risk may result from the inability to sell a financial asset quickly at an amount close to its fair value. Following are the contractual maturities at the end of the reporting period of financial liabilities. The amounts are grossed and undiscounted and include estimated interest till maturity. Carrying AmountOn Demand or Less than 1 year 1 year to 5 yearsMore than 5 years TotalNon Derivative Financial LiabilitiesBank Overdrafts 52,598 71,764 - - 71,764 Loans and Borrowings 10,130,241 1,718,272 5,527,604 5,111,328 12,357,204 Trade and other payables 3,828,941 3,828,941 - - 3,828,941 Lease Liabilities 484,950 104,343 223,074 327,363 654,780 14,496,730 5,723,320 5,750,678 5,438,691 16,912,689 Derivative Financial LiabilitiesForward currency contracts180,988 134 170,906 - 171,040 Commodity Derivatives38,769 37,811 906 - 38,717 219,757 37,945 171,812 - 209,757 31 December 2024….………………...…………………………………………………….SAR '000……………………………………………………………………………...........................
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 57 39. FINANCIAL INSTRUMENTS (Continued…) 39.2. Risk Management of Financial Instruments (Continued…) Carrying AmountOn Demand or Less than 1 year 1 year to 5 yearsMore than 5 years TotalNon Derivative Financial LiabilitiesBank Overdrafts 844 933 - - 933 Loans and Borrowings 12,027,997 3,985,657 4,824,766 4,920,751 13,731,174 Trade and other payables 4,023,358 4,023,358 - - 4,023,358 Trade Payables to Related Parties 15,074 15,074 - - 15,074 Lease Liabilities 450,192 88,700 193,270 320,490 602,460 16,517,465 8,113,722 5,018,036 5,241,241 18,372,999 Derivative Financial LiabilitiesForward currency contracts14,259 3,185 10,409 - 13,594 Interest rate swaps451 3 422 - 425 Commodity Derivatives47,294 46,434 808 - 47,242 62,004 49,622 11,639 - 61,261 31 December 2023….………………...…………………………………………………….SAR '000……………………………………………………………………………........................... Liquidity risk is managed by monitoring on a regular basis that sufficient funds and banking and other credit facilities are available to meet the Group’s future commitments. The Group’s terms of sales require amounts to be paid either on a cash on delivery or on a terms basis. Market Risk: Market price risk is the risk that value of a financial instrument will fluctuate as a result of changes in market prices, such as, commission rates, commodity prices and foreign currency exchange rates, will affect the Group's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. The Group uses derivatives to manage market risks. The Group seeks to apply hedge accounting to manage volatility in profit or loss. Commission Rate Risk: Commission Rate Risk is the exposure associated with the effect of fluctuations in the prevailing commission rates on the Group’s financial position and cash flows. Islamic banking facilities (Murabaha), International Finance Corporation facility, other banking facilities of non-GCC subsidiaries and Sukuk amounting to SAR 4,808.5 million at 31 December 2024 (2023: SAR 4,647.8 million) bear variable financing commission charges at the prevailing market rates. The Group’s policy is to manage its financing charges using a mix of fixed and variable commission rate debts. The policy is to keep 50% to 60% of its borrowings at fixed commission rate. Currently, 53% of the total outstanding borrowings at 31 December 2024 (2023: 61%) are at fixed commission rate. Further variable borrowing carry commission rate at prevailing market rates indexed to SAIBOR. The swap contracts require settlement of net interest receivable or payable every 90 or 180 days. The settlement dates coincide with the dates on which interest is payable on the underlying debt. The following table demonstrates the sensitivity of the income to reasonably possible changes in commission rates, related to variable rate borrowings (net of hedge) with all other variables held constant.
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 58 39. FINANCIAL INSTRUMENTS (Continued…) 39.2. Risk Management of Financial Instruments (Continued…) Effect on income for the yearSAR’00031 December 2024SAR+10048,085 SAR-100(48,085)31 December 2023SAR+10046,478 SAR-100(46,478)Increase / decrease in basis points of commission rates Commodity Price Risk: Commodity Price Risk is the risk associated with changes in prices to certain commodities including corn, sugar and soya etc. that the Group is exposed to and its unfavourable effect on the Group’s costs and cash flow. This commodity price risk arises from forecasted purchases of certain commodities that the Group uses as raw material, which is managed and mitigated by entering into commodity derivatives. The Group enters into various commodity derivatives to hedge the price of certain commodity purchases. These derivatives match the maturity of the expected commodity purchases and use the same underlying index as for the hedged item. The sensitivity of the commodity prices to reasonably possible changes in rates by 5% would have increased / (decreased) profit by SAR 18.9 million (2023: SAR 12.5 million). Currency Risk: Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates. Currency risk arises when future commercial transactions and recognised assets and liabilities are denominated in currency that’s not the Group’s currency. The Group exposure to foreign currency risk is primarily limited to transactions in Kuwaiti Dinar (“KWD”), Euro (“EUR”) and Great British Pounds (“GBP”). The fluctuation in exchange rates against KWD, EUR and GBP are monitored on a continuous basis. Quantitative data regarding the Group’s exposure to currency risk arising from currencies is as follows: KWDEURGBPTotalSAR '000SAR '000SAR '000SAR '00031 December 2024Cash at Bank25,698 18,129 2,128 45,955 Cash in Hand11,815 66 44 11,925 Trade Receivables and Other Receivables124,914 319,366 4,718 448,998 Short term Borrowings- (25,914) - (25,914) Long Term Borrowings- (52,704) - (52,704) Trade Payables(1,101) (2,450) (142) (3,693) Net Statement of Financial Position exposure161,326 256,493 6,748 424,567
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 59 39. FINANCIAL INSTRUMENTS (Continued…) 39.2. Risk Management of Financial Instruments (Continued…) KWDEURGBPTotalSAR '000SAR '000SAR '000SAR '00031 December 2023Cash at Bank45,788 10,132 21,905 77,825 Cash in Hand5,704 41 13 5,758 Trade Receivables and Other Receivables 122,303 - 141 122,444 Short term Borrowings- (24,887) - (24,887) Long Term Borrowings- (75,501) - (75,501) Trade Payables(2,873) (84,491) - (87,364) Net Statement of Financial Position exposure170,922 (174,706) 22,059 18,275 The Group uses forward currency contracts to eliminate volatility in currency exposures. Management believes that the currency risk for forecast payments and capital expenditure is adequately managed primarily through entering into foreign currency forward purchase agreements. The Group treasury’s risk management policy is to hedge between 65% to 90% of forecast non-pegged USD cash flows for accounts payable and capital expenditure purchases up to one year in advance, subject to a review of the cost of implementing each hedge. For the year ended 31 December 2024, approximately 80% of forecast payments and capital expenditures were hedged in respect of foreign currency risk. The hedge of forecast payments and capital expenditures qualified as ‘highly probable’ qualified forecast transactions for hedge accounting purposes. The forward purchase agreements are secured by promissory notes given by the Group. The sensitivity of the currency to reasonably possible changes in rates by 5% would have increased / (decreased) profit by SAR 46.43 million (2023: SAR 40.8 million). A strengthening / (weakening) of the KWD, EUR and GBP by 10% against all other currencies would have affected the measurement of financial instruments (includes financial assets and liabilities) denominated in foreign currency and would have increased / (decreased) equity by the amounts shown below: 31 December 202431 December 2023SAR '000SAR '000KWD16,133 17,092 EUR25,649 (17,471) GBP 675 2,206 42,457 1,827 Capital Management: The Board's policy is to maintain an efficient capital base so as to maintain investor, creditor and market confidence and to sustain the future development of its business. The Board of Directors monitor the return on capital employed and the level of dividends to ordinary shareholders. The Group's objectives when managing capital are: i) to safeguard the entity's ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders, and ii) to provide an adequate return to shareholders.
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ALMARAI COMPANY A SAUDI JOINT STOCK COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 60 39. FINANCIAL INSTRUMENTS (Continued…) 39.2. Risk Management of Financial Instruments (Continued…) Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by adjusted equity. The Group’s gearing ratios at the year end of the reporting year were as follows; 2024 2023SAR '000 SAR '000Total Loans and Borrowings (Refer a)10,182,839 12,028,841 Time Deposit- (1,925,556) Cash and Cash Equivalents(528,214) (666,336) Net debt9,654,625 9,436,949 Adjusted Equity (Refer b)17,660,440 16,685,056 Gearing54.7%56.6% a) This includes bank overdrafts. b) Adjusted equity is total equity net of intangible assets and goodwill. 40. DIVIDENDS APPROVED AND PAID On 23 Ramadan 1445 A.H. (2 April 2024) the shareholders in their Extraordinary General Assembly Meeting approved dividends of SAR 1,000 million (SAR 1 per share) for the year ended 31 December 2023. Dividends amounting to SAR 11.7 million were not paid on treasury shares. 41. DIVIDENDS PROPOSED The Board of Directors have proposed, for shareholders’ approval at the General Assembly Meeting, dividends of SAR 1 billion (SAR 1 per share) for the year ended 31 December 2024. 42. SUBSEQUENT EVENTS In the opinion of the management, there have been no significant subsequent events since the year-end that require disclosure or adjustment in these Consolidated Financial Statements. 43. BOARD OF DIRECTORS APPROVAL These Consolidated Financial Statements were approved by the Board of Directors on 19 Rajab 1446 A.H. (19 January 2025).