Sport Clubs Co. announces its Annual Financial results for the period ending on 2025-12-31

Revenues from men’s clubs (Body Masters) increased by 17.8%, while revenues from ladies’ clubs (Body Motions) increased by 13.5%, Despite the slight decrease in revenues from the Sports Solutions segment (Body Experts) by 1.9%.

- An expense related to the company’s IPO project amounting SAR 4,748,788, compared to SAR 2,851,615 in the previous year.

- in addition to an exceptional gain in the current year resulting from the termination of one lease contract in accordance with International Accounting Standard (IFRS 16), amounting to SAR 711,220, compared to an amount of SAR 2,108,929 during the last year.

It is worth noting that the net profit growth reaches 22.7% when excluding those exceptional items from both periods.

1. Work permits and residency fees

As part of its normal operations, the Group incurs certain government fees related to the issuance and renewal of work permits and residency permits for foreign employees. In prior periods, these fees were capitalized and amortized over the validity period of the related permits, based on management’s previous assumption that the unused portion of such fees could be recovered if the permits were not utilized.

During the current year, the competent government authority issued a clarification confirming that these fees are non-refundable if unused. Based on this clarification, management reassessed the accounting treatment of these costs and concluded that certain amounts previously recognized as current assets no longer meet the definition of an asset under the Conceptual Framework for Financial Reporting, as there is no legally enforceable right to recover these costs and no independent future economic benefits are expected to arise from them.

Accordingly, these amounts were recognized as expenses in the relevant periods.

2. Depreciation of right-of-use assets related to buildings constructed on leased land

The Company also reassessed the accounting treatment for the depreciation of right-of-use assets relating to buildings constructed on leased land. This reassessment was performed in accordance with the interpretation issued by the Saudi Organization for Chartered and Professional Accountants on 30 October 2025 regarding the accounting treatment of improvements and buildings constructed on leased land under IFRS 16 – Leases.

As a result of this reassessment, the Group derecognized certain depreciation amounts that had previously been capitalized and recognized them as additional depreciation relating to right-of-use assets in respect of prior periods.

Accordingly, the comparative financial statements have been restated in accordance with IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors.

A summary of the impact of the restatement on the consolidated financial statements is presented below:

1- The impact on year ended 31 December 2023.

Consolidated Statement of Financial Position:

- Property, plant and equipment decreased by SAR 767,377.

- Prepayments and other receivables decreased by SAR 1,344,463.

- That led to decrease retained earnings by SAR 2,111,840.

2- The impact on the year ended 31 December 2024:

Consolidated Statement of Financial Position:

- Property, plant and equipment decreased by SAR 1,794,236.

- Prepayments and other receivables decreased by SAR 2,282,977.

- Retained earnings increased by SAR 4,077,213.

Consolidated Statement of Profit or Loss and Other Comprehensive Income:

- Cost of revenue, marketing expenses, and general and administrative expenses increased by a total of SAR 1,965,372.

- As a result, profit for the year decreased by SAR 1,965,372.

The above adjustments did not have a material impact on the net cash flows from operating, investing, or financing activities in the consolidated statement of cash flows.