Development Works Food says accumulated losses reach 27% of capital

Logo of Development Works Food Co.

Development Works Food Co. announced that its accumulated losses reached 27% (SAR 8.25 million) of its capital, based on the company’s annual financial results for 2024 disclosed on Tadawul on May 1, 2025.

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In a statement on Tadawul, the company attributed the increase in accumulated losses primarily to the impact of removing the auditor’s qualification that was included in the previous audit report for the 2023 financial statements.

The qualification was related to the application of IFRS 16 on the right-of-use assets and lease liabilities. It also concerned the depreciation of leasehold improvements included under property and equipment, the reasonableness of the applied depreciation rates in relation to lease terms, as well as other income from subleasing and whether such sublease agreements qualify as operating or finance leases.

The company stated that it appointed an independent financial advisor to assess the impact. As a result, the advisor made changes to accounting estimates concerning lease terms, discount rates, and depreciation rates of improvements related to prior years.

This impact was reviewed by the company’s external auditor, leading to an additional SAR 3.23 million being recorded under accumulated losses for 2022, reflecting the entire impact of that year and prior periods, and SAR 805,430 for 2023.

The company confirmed that on May 1, 2025, it recognized this impact in its financial results and adjusted its accounting for right-of-use assets following a reassessment of the standard’s application. It also noted that it will implement the procedures and guidelines applicable to listed companies whose accumulated losses reach 20% or more of their capital.

Development Works Food affirmed its commitment to taking the necessary steps to address these losses and improve its financial performance, noting that management is currently working to enhance operational efficiency and explore new revenue opportunities.

The company emphasized the importance of transparency and full disclosure to its shareholders and the public, adding that it will announce any material developments related to its financial position in a timely manner and in accordance with applicable regulations.

According to data available on Argaam, Development Works Food posted net earnings of SAR 1.3 million (after minority interest) in 2024, compared to a net loss of SAR 5.2 million in 2023.