Hydrocarbon Saudi

C. R. No.
2050055625
L&T Hydrocarbon Saudi Company

2nd Floor, ATCO Building
King Khalid Street
P.O. Box 718, Dammam 31421
‫شركة ال أند تي هيدروكربون السعودية‬ Kingdom of Saudi Arabia
Tel: +966 13 8334163/ 8334170
Fax: +966 13 8334175
www.Lnthydrocarbon.com
DIRECTORS REPORT
Dear Members,
The Directors have pleasure in presenting the Independent Auditor’s report

and Financial Statements for the year ended 31st December 2021.
1. FINANCIAL RESULTS/FINANCIAL HIGHLIGHTS:
2021 2020
Particulars
SAR SAR
Contract Revenue 313,479,072 356,072,064
Cost of Revenue (339,719,319) (440,222,250)
Costs recharged to affiliates 23,209,411 24,243,961
Gross Loss (3,030,836) (59,906,225)
Less:General & Administrative Expenses (835,198) (755,406)
Less: Finance Costs (2,555,390) (4,700,458)
Add: Other Income 7,952,668 7,868,021
Net profit before income tax 1,531,244 (57,494,068)
Less : Income Tax (1,881,340) (224,360)
Net profit / (Loss) for the year (350,096) (57,718,428)
2. Capital & Finance:
During the year the Company has repaid “Nil” amount of ICD to holding
company L&T Hydrocarbon Engineering Limited.
3. Capital Expenditure:
As at December 31, 2021, the gross fixed and intangible assets

including leased Assets, stood at SAR 19.76 million and the net fixed
and intangible assets, at SAR 10.46 million. Capital expenditure during
year is SAR 5.88 Mn
‫ المملكة العربية السعودية‬,31421 ‫ الدمام‬,718 .‫ب‬.‫ ص‬,‫ شارع الملك خالد‬,‫ الطابق الثاني‬,‫بناية اتكو‬
A wholly owned subsidiary of L&T Hydrocarbon Engineering Limited

C. R. No. 2050055625

King Khalid Street
Kingdom of Saudi Arabia
Tel: +966 13 8334163/ 8334170
Fax: +966 13 8334175
4. Particulars of loans given, investments made, guarantees given or
security provided by the Company:
The Company has disclosed the particulars of the loans given “Nil” ,
investments made or guarantees given or security provided in Note No.
25 of the financial statements.
5. State of Company Affairs / Business Prospects:
The gross sales and other income for the financial year under review
were SAR 336.68 million as against SAR 380.31 million for the
previous financial year registering a decrease of 11.47%.
The profit before tax from continuing operations including extraordinary

and exceptional items was SAR 1.53 million as against loss of SAR
57.49 million respectively for the previous financial year, registering an
increase of profit 102.66%.
6. Reporting of Frauds:
The Auditors of the Company have not reported any fraud committed
against the Company by its officers or employees.
7. Risk Management Policy:
The Company has formulated a risk management policy and has in

place a mechanism to inform the Board Members about risk
assessment and minimization procedures and periodical review to
ensure that executive management controls risk by means of a
properly designed framework.
8. Details of Directors and Key Managerial Personnel

appointed/resigned during the year:
None
9. Number of Meetings of the Board of Directors :
During the year under review no meeting were held.

C. R. No. 2050055625

King Khalid Street
Tel: +966 13 8334163/ 8334170
Fax: +966 13 8334175
10. Financial Statements:
The Independent Auditor’s report to the shareholders does not

contain any qualification, observation or adverse comment.
11. Auditors:
M/s PKF Al Bassam & Co are the auditors of the Company. They
will continue to be auditors of the Company for the ensuing financial
year.
12. Directors Responsibility Statement:
The Board of Directors of the Company confirms:
a) In the preparation of Annual Accounts, the applicable accounting

standards have been followed along with proper explanation
relating to material departures;
b) The Directors have selected such accounting policies and
applied them consistently and made judgments and estimates
that are reasonable and prudent so as to give a true and fair
view of the state of affairs of the Company at the end of the
financial year and of the profit or loss of the Company for that
period;
c) The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with
the provisions of the local statutes for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
d) The Directors have prepared the Annual Accounts on a going
concern basis;
e) The Directors have devised proper systems to ensure
compliance with the provisions of all applicable laws and that
such systems were adequate and were operating effectively.

C. R. No. 2050055625

King Khalid Street
Tel: +966 13 8334163/ 8334170
Fax: +966 13 8334175
13. Acknowledgement
The Directors acknowledge the invaluable support extended by the

Government authorities in the Kingdom of Saudi Arabia and take
this opportunity to thank them as well as the customers, supply
chain partners, employees, Financial Institutions, Banks and all the
various stakeholders for their continued co-operation and support to
the Company.
For and on behalf of the Board
Name of Director Name of Director

SD Navare K S Balasubramanyam

INDEPENDENT AUDITOR’S REPORT
(1/3)
To the shareholder
(A Single Person Company)
Dammam, Kingdom of Saudi Arabia
Opinion
We have audited the financial statements of L&T Hydrocarbon Saudi Company, a single person company (“the
Company”), which comprise the statement of financial position as at December 31, 2021, the statements of
comprehensive income, changes in shareholder’s deficit and cash flows for the year then ended, and notes to the
financial statements including a summary of significant accounting policies and other explanatory information.
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position
of the Company as at December 31, 2021 and its financial performance and its cash flows for the year then ended
in accordance with International Financial Reporting Standard for Small and Medium sized Entities (IFRS for
SMEs) as 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 (ISAs) as endorsed in the
Kingdom of Saudi Arabia. Our responsibilities under those standards are further described in the “Auditor’s
Responsibilities for the Audit of the Financial Statements” section of our report. We are independent of the
Company in accordance with the professional code of conduct and ethics as endorsed in the Kingdom of Saudi
Arabia that are relevant to our audit of the financial statements and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Material Uncertainty Related to Going Concern
We draw attention to note 2 to the accompanying financial statements which states that the Company’s net
working capital was in deficit by SR 251.6 million as at December 31, 2021 (December 31, 2020: SR 92.2
million). During the year, the Company has incurred a net loss of SR 0.35 million (December 31, 2020: SR 57.7
million) and accumulated losses as at December 31, 2021 amounted to SR 306.2 million (December 31, 2020: SR
305.9 million). The ability of the Company to continue as a going concern is dependent upon the shareholder’s
continued adequate financing and profitable future operations. The shareholder of the Company is therefore
required to resolve to continue the business and provide support to the Company or liquidate the Company. The
shareholder has resolved to provide continued support and adequate financing as and when required. However, till
the date of our audit report, the Company has not submitted a request to Ministry of Commerce (MOC) for the
publication of information as required by MOC. The accompanying financial statements have been prepared on the
assumption that the Company will continue as a going concern and accordingly, do not include any adjustments
that might result should the Company not be able to continue as a going concern.
Responsibilities of Management and Those Charged with Governance for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance
IFRS for SMEs as endorsed in the Kingdom of Saudi Arabia and other standards and pronouncements issued by
SOCPA, the Company’s Article of Association, the applicable requirements of the Companies Regulations and for
such internal controls as management determines are necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic
alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
INDEPENDENT AUDITOR’S REPORT (Continued)
(2/3)
To the shareholder
Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with ISAs as endorsed in the Kingdom of Saudi Arabia will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
As part of an audit in accordance with ISAs as endorsed in the Kingdom of Saudi Arabia, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:
▪ Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations or the override of internal control.
▪ Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control.
▪ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by management.
▪ Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Company's ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the
financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based
on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may
cause the Company to cease to continue as a going concern.
▪ Evaluate the overall presentation, structure and content of the financial statements, including the disclosures
and whether the financial statements represent the underlying transactions and events in a manner that
achieves fair presentation.
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.
INDEPENDENT AUDITOR’S REPORT (Continued)
(3/3)
To the shareholder
Report on Other Legal and Regulatory Requirements

Based on the information that has been made available to us while performing our audit procedures, except for the
matter disclosed in “Material uncertainty related to going concern” paragraph, nothing has come to our attention
that causes us to believe that the Company is not in compliance, in all material respects, with the applicable
requirements of the Regulation for Companies in the Kingdom of Saudi Arabia and the Company’s Articles of
Association in so far as they affect the preparation and presentation of the financial statements.
Al-Bassam & Co.

P.O. Box 4636
Al Khobar 31952
Sulaiman Dhaffir Al Hussain

Certified Public Accountant
License No. 645
Al Khobar
March 27, 2022

24 Shaban 1443H
L&T HYDROCARBON SAUDI COMPANY
(A SINGLE PERSON COMPANY)
STATEMENT OF FINANCIAL POSITION
AS OF DECEMBER 31, 2021
2021 2020
Note SR SR
ASSETS
Current assets
Cash and cash equivalents 5 122,015,209 2,088,292
Trade and retention receivable 6, 19 282,657,865 36,665,722
Due from related parties 18 8,424,890 4,931,290
Prepayments and other assets 7 46,048,983 41,667,773
Revenue recognized in excess of billings 8 26,314,766 88,882,885
Inventories 264,665 -
Total current assets 485,726,378 174,235,962
Non-current assets
Property and equipment 9 10,456,065 7,813,396
Retention receivable – non current 6 35,398,294 -
Total non-current assets 45,854,359 7,813,396
TOTAL ASSETS 531,580,737 182,049,358
LIABILITIES AND SHAREHOLDER’S DEFICIT

Current liabilities
Accounts payable and other liabilities 10 234,715,504 202,190,591
Due to related parties 18 63,295,474 47,589,956
Derivative financial liability 11 8,732,311 344,068
Loan from a related party – current portion 12 122,585,520 16,337,624
Billing in excess of revenue recognized 13 307,950,482 -
Total current liabilities 737,279,291 266,462,239
Non-current liabilities
Advance from customers - non current 10 16,549,354 -
Loan from a related party 12 86,507,843 190,171,403
End of service indemnities 14 2,573,563 2,848,409
Total non-current liabilities 105,630,760 193,019,812
TOTAL LIABILITIES 842,910,051 459,482,051
Shareholder’s deficit
Share capital 1 1,000,000 1,000,000
Statutory reserve 15 7,280 7,280
Other reserve (6,123,830) 27,422,695
Accumulated losses (306,212,764) (305,862,668)
Total shareholder’s deficit (311,329,314) (277,432,693)
TOTAL LIABILITIES AND SHAREHOLDER’S
DEFICIT 531,580,737 182,049,358
The accompanying notes form an integral part of these financial statements.

-4-
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31, 2021
2021 2020
Note SR SR
Revenue 19 313,479,072 356,072,064

Cost of revenue 18 (339,719,319) (440,222,250)
Costs recharged to affiliates 18 23,209,411 24,243,961
Gross loss (3,030,836) (59,906,225)
General and administrative expenses 18,20 (835,198) (755,406)

Operating loss (3,866,034) (60,661,631)
Finance charges 12,18 (2,555,390) (4,700,458)

Other income, net 18,21 7,952,668 7,868,021
Net profit / (loss) before income tax 1,531,244 (57,494,068)
Income tax 17 (1,881,340) (224,360)

NET LOSS FOR THE YEAR (350,096) (57,718,428)
OTHER COMPREHENSIVE (LOSS) /

INCOME:
Items that will be reclassified to profit or loss

Change in fair value of derivative instruments (33,546,525) 27,422,695
TOTAL COMPREHENSIVE LOSS FOR THE

YEAR
` (33,896,621) (30,295,733)

-5-
STATEMENT OF CHANGES IN SHAREHOLDER’S DEFICIT
(Accumulated losses)
Other Contribution
Statutory reserves towards losses
Share capital reserve Balance (Note 16) Net Total
SR SR SR SR SR SR SR
January 1, 2020 1,000,000 7,280 - (249,697,240) 1,553,000 (248,144,240) (247,136,960)
Net loss for the year - - - (57,718,428) - (57,718,428) (57,718,428)

Other comprehensive income
for the year - - 27,422,695 - - - 27,422,695
December 31, 2020 1,000,000 7,280 27,422,695 (307,415,668) 1,553,000 (305,862,668) (277,432,693)
January 1, 2021 1,000,000 7,280 27,422,695 (307,415,668) 1,553,000 (305,862,668) (277,432,693)
Net loss for the year - - - (350,096) - (350,096) (350,096)

Other comprehensive loss for
the year - - (33,546,525) - - - (33,546,525)
December 31, 2021 1,000,000 7,280 (6,123,830) (307,765,764) 1,553,000 (306,212,764) (311,329,314)

-6-
STATEMENT OF CASH FLOWS
2021 2020
SR SR
OPERATING ACTIVITIES
Net loss for the year (350,096) (57,718,428)
Adjustments for:
Depreciation 3,236,439 3,019,333
Provision for income tax 1,881,340 224,360
Provision for end of service indemnities 843,442 1,637,413
Gain on utilization and cancellation of hedge instrument, net (1,376,209) -
Gain on sale of property and equipment - (10,083)
Finance charges 2,555,390 4,700,458
Changes in operating assets and liabilities:
Trade and retention receivable (281,390,437) 1,358,099
Due from related parties (3,493,600) (3,683,080)
Prepayments and other assets (28,377,470) 12,835,497
Revenue recognized in excess of billings 62,568,119 (67,193,793)
Inventories (264,665) 2,504,181
Accounts payable and other liabilities 45,091,726 23,336,526
Due to related parties 15,705,518 5,226,755
Billings in excess of revenue recognized 307,950,482 -
Cash generated from / (used in) operations 124,579,979 (73,762,762)
End of service indemnities paid (1,118,288) (3,039,534)
Income tax paid (454,189) (858,898)
Net cash generated from / (used in) operating activities 123,007,502 (77,661,194)
INVESTING ACTIVITIES
Additions to property and equipment (5,880,775) (6,554,472)
Proceeds from sale of property and equipment 1,667 14,429
Proceeds from hedge instruments, net 214,187 3,770,503
Movement of term deposits - 93,750,000
Net cash (used in) / generated from investing activities (5,664,921) 90,980,460
FINANCING ACTIVITIES
Movement in loan from a related party, net 2,584,336 (89,824,163)
Net cash generated from / (used in) financing activities 2,584,336 (89,824,163)
Net change in cash and cash equivalents 119,926,917 (76,504,897)

Cash and cash equivalents, January 1 2,088,292 78,593,189
CASH AND CASH EQUIVALENTS, DECEMBER 31 122,015,209 2,088,292
Non-cash transactions:
Other receivable - 23,996,260

Derivative financial liability - 344,068

-7-
NOTES TO THE FINANCIAL STATEMENTS
1. ORGANIZATION AND ACTIVITIES

L&T Hydrocarbon Saudi Company (“the Company”) is a single person company registered on 23 Jumada II,
1428H (July 8, 2007) under commercial registration number 2050055625. The share capital of the Company,
amounting to SR 1 million, is divided into 1,000 shares of SR 1,000 each.
The shareholding of the Company as of year end is as follows:
2021 2020
Name Incorporated in % %
L&T Hydrocarbon Engineering Limited India 100 100
The assets, liabilities and results of below branches are included in the accompanying financial statements.
The Company operates branches at the following locations:
Branch Branch Name CR Number Date
Al Khobar Branch of L&T Hydrocarbon Saudi 2051227120 3/12/1440H

Al Jubail L&T Hydrocarbon Saudi Integrated Manufacturing Factory 2055126198 3/12/1440H
Al Jubail Branch of L&T Hydrocarbon Saudi Manufacturing 2055127213 5/5/1441H
The principal activities of the Company are execution of contracts of contracting works including electro-
mechanical, construction and civil works in oil, gas, electrical power, water and airport projects, cement,
maintenance and cleaning of petroleum facilities.
The Company’s principal place of business is in Khobar, Kingdom of Saudi Arabia.
2. GOING CONCERN
The Company’s net working capital was in deficit by SR 251.6 million as at December 31, 2021 (December 31,
2020: SR 92.2 million). During the year, the Company has incurred losses of SR 0.35 million (December 31,
2020: SR 57.7 million) and accumulated losses of the Company as at December 31, 2021 amounted to SR 306.2
million (December 31, 2020: SR 305.9 million). The ability of the Company to continue as a going concern is
dependent upon the shareholders’ continued adequate financing and profitable future operations. The
shareholders of the Company are therefore required to resolve to continue the business and provide support to
the Company or liquidate the Company. The shareholders have resolved to provide continued support and
adequate financing as and when required. However, till the date of approval of these financial statements, the
Company has not submitted a request to Ministry of Commerce (MOC) for the publication of information as
required by MOC. These financial statements have been prepared on the assumption that the Company will
continue as a going concern.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Statement of compliance
These financial statements have been prepared in accordance with International Financial Reporting Standard
for Small and Medium sized Entities (“IFRS for SMEs”) as endorsed in the Kingdom of Saudi Arabia and
other standards and pronouncements that are issued by the Saudi Organization for Chartered and professional
Accountants ("SOCPA").
-8-
NOTES TO THE FINANCIAL STATEMENTS (Continued)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Accounting convention
These financial statements have been prepared under historical cost convention using the accrual basis of
accounting except where IFRS for SMEs requires other basis of accounting as mentioned in notes to these
financial statements.
The preparation of financial statements in conformity with the IFRS for SMEs requires the use of certain
critical accounting estimates. It also requires management to exercise its judgement in the process of applying
the accounting policies. Areas involving a higher degree of judgement or complexity, or areas where
assumptions and estimation are significant to the financial statements are noted in Note 22.
The following is a summary of significant accounting policies applied by the Company:
Cash and cash equivalents
Cash and cash equivalents include cash on hand and deposits held with the bank, all of which have original
maturities of three months or less and are available for use by the Company unless otherwise stated. In the
statement of financial position, based on nature of Company’s facility, bank overdraft, if any, is presented
under line item borrowings.
Deposits
Short-term deposits comprise of time deposits with banks with maturity periods of more than three months
and less than one year from the date of acquisition on initial recognition. Deposits placed for more than one
year from the date of placement are classified as long term deposits. Subsequently, long term deposits are
classified to current portion of long term deposits when maturity period falls within less than 1 year of the
balance sheet date.
Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability
or equity instrument of another entity.
Financial instruments are initially measured at the transaction price (this includes transaction cost except in
the initial measurement of financial assets and liabilities that will be measured at fair value through profit or
loss). If, however the arrangement constitutes a financing transaction it is then measured at the present value
of the future payments, discounted at a market related interest rate.
Trade, retention and other receivables
Most transactions are made on the basis of normal credit terms, and the receivables do not bear interest.
Where credit is extended beyond normal credit terms, receivables are measured at amortised cost using the
effective interest method. At the end of each reporting period, the carrying amounts of receivables are
reviewed to determine whether there is any objective evidence that the amounts are not recoverable. If so, an
impairment loss is recognised immediately in statement of comprehensive income. If the arrangement
constitutes a financing transaction it is then measured at the present value of the future payments, discounted
at a market related interest rate.
Trade Payables
Trade payables are obligations on the basis of normal credit terms and do not bear interest.
Derivative financial instruments and hedging activities
The Company has adopted IAS 39 for the purpose of accounting for derivative financial instruments and its
hedging activities as allowed by Section 11 of IFRS for SMEs.
A hedging relationship qualifies for hedge accounting if all of the following conditions are met:
a) At the inception of the hedge there is formal designation and documentation of the hedging relationship
and the Company’s risk management objective and strategy for undertaking the hedge. That documentation
shall include identification of the hedging instrument, the hedged item or transaction, the nature of the risk
being hedged and how the entity will assess the hedging instrument’s effectiveness in offsetting the exposure
to changes in the hedged item’s fair value or cash flows attributable to the hedged risk.
-9-

Derivative financial instruments and hedging activities (continued)
b) The hedge is expected to be highly effective in achieving offsetting changes in fair value or cash flows
attributable to the hedged risk, consistently with the originally documented risk management strategy for that
particular hedging relationship.
c) For cash flow hedges, a forecast transaction that is the subject of the hedge must be highly probable and
must present an exposure to variations in cash flows that could ultimately affect profit or loss.
d) The effectiveness of the hedge can be reliably measured, i.e the fair value or cash flows of the hedged item
that are attributable to the hedged risk and the fair value of the hedging instrument can be reliably measured.
e) The hedge is assessed on an ongoing basis and determined actually to have been highly effective
throughout the financial reporting periods for which the hedge was designated.
Derivatives are initially recognised at fair value on the date that a derivative contract is entered into, and are
subsequently remeasured at their fair value at each reporting date. The method of recognising the resulting
gain or loss depends on whether the derivative is designated as a hedging instrument and, if so, the nature of
the item being hedged. The Company uses foreign currency forward exchange contracts to limit its exposure
to foreign exchange risk on highly probable forecast foreign currency sales transactions. The Company
designates these derivatives as hedges – that is, a hedge of foreign exchange risk associated with highly
probable forecast sales transactions.
The Company designates and documents, at the inception of a hedging transaction, the hedging relationship
so that the risk being hedged, the hedged item and the hedging instrument are clearly identified and the risk in
the hedged item is the risk being hedged with the hedging instrument. Hedge accounting is only applied when
the Company expects the derivative financial instrument to be highly effective in offsetting the designated
hedged foreign currency risk associated with the hedged item.
The full fair value of a hedging derivative is classified as a non-current asset or liability where the remaining
maturity of the hedged item is more than 12 months, and as a current asset or liability where the remaining
maturity of the hedged item is less than 12 months.
The effective portion of changes in the fair value of derivatives that are designated and qualify as hedges is
recognised in other comprehensive income. The gain or loss relating to the ineffective hedge is recognized
immediately in profit or loss. If the cumulative change in the hedging instrument exceeds the change in the
hedged item (referred to as an ‘over-hedge’), ineffectiveness will be recognised. If the cumulative change in
the hedging instrument is less than the change in the hedged item (referred to as an ‘under-hedge’), no
ineffectiveness will be recognised.
When a foreign currency forward exchange contract expires or is sold, or when a hedge no longer meets the
criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and
is recognised when the forecast transaction ultimately affects profit or loss. When a forecast transaction is no
longer expected to occur, the cumulative gain or loss that was recognised in other comprehensive income is
immediately transferred to profit or loss. The replacement or rollover of a hedging instrument into another
hedging instrument is not an expiration or termination if such replacement or rollover is part of the
Company’s documented hedging strategy.
The financial instruments are derecognised if the terms are substantially changed. For this purpose, the terms
are substantially different if the discounted present value of the cash flows under the new terms, including any
fees paid net of any fees received and discounted using the original effective interest rate, is at least 10 per
cent different from the discounted present value of the remaining cash flows of the original financial liability.
- 10 -

Impairment of financial assets
The Company assesses on annual basis whether there is objective evidence that a financial asset or group of
financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses
are incurred only if there is objective evidence of impairment as a result of one or more events that occurred
after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the
estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
Evidence of impairment may include indications that the debtors or a group of debtors is experiencing
significant financial difficulty, default or delinquency in interest or principal payments, the probability that
they will enter bankruptcy or other financial reorganization, and where observable data indicate that there is a
measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions
that correlate with defaults.
For certain categories of financial assets, such as accounts receivables, an allowance for impairment of
accounts receivable is established when there is a significant doubt that the Company will not be able to
collect any of the amounts due according to the original terms of the invoice. Such allowances for doubtful
receivables are charged to the statement of comprehensive income. When an accounts receivable is
uncollectible, it is written-off against allowance for doubtful receivable. Any subsequent recoveries of
amounts previously written off are credited in the statement of comprehensive income.
Inventory
Inventory comprised of construction material and is stated at the lower of cost (weighted average) or net
realizable value.
Property and equipment

Property and equipment are tangible items that:
• Are held for use in the production or supply of goods and services, for rental to others or for administrative
purposes and;
• Are expected to be used during more than one period.
Items of property and equipment are initially recognized at cost. Cost include all costs incurred to bring the
assets to the condition necessary for it to be capable of operating in the manner intended by management.
Items of property and equipment are measured at cost less accumulated depreciation and any accumulated
impairment loss.
Depreciation is charged so as to allocate the cost of assets less their residual values over their estimated useful
lives, using straight-line method. The estimated useful lives of the principal classes of assets are as follows:
Years
Machinery and equipment 10
Vehicles 4
Furniture and fixtures and office equipment 3- 10
Portable cabins 5
If there is an indication that there has been a significant change in depreciation rate, useful life or residual
value of an asset, the depreciation is revised prospectively to reflect the new expectations.
Gain or losses on disposals are included in statement of comprehensive income.
- 11 -

Capital work-in-progress
Assets in the course of construction or development are capitalized in the capital work-in-progress (“CWIP”)
account. The asset under construction or development is transferred to the appropriate category in property,
plant and equipment or intangible assets (depending on the nature of the project), once the asset is in a location
and / or condition necessary for it to be capable of operating in the manner intended by management. The cost of
an item of capital work in progress comprises its purchase price, construction / development cost and any other
directly attributable to the construction or acquisition of an item of CWIP intended by management. Costs
associated with testing the items of CWIP (prior to its being available for use) are capitalized net of proceeds
from the sale of any production during the testing period. Capital work-in-progress is not depreciated or
amortized.
Impairment
On annual basis, the Company reviews the carrying amounts of its non-current assets to determine whether there
is any indication that those assets have suffered an 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 (if any). Where it is not
possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable
amount of the cash-generating unit to which the asset belongs.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount,
the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. Impairment
losses are recognized as an expense immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is
increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not
exceed the carrying amount that would have been determined had no impairment loss been recognized for the
asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized as income
immediately.
Statutory reserve
In accordance with Regulations for Companies in Saudi Arabia, the Company is required to establish a
statutory reserve by appropriation of 10% of net income until the reserve equals 30% of the share capital. This
reserve is not available for dividend distribution.
Revenue recognition
Revenue on long-term contracts, where the outcome can be estimated reliably, is recognized under the
percentage of completion method by reference to the stage of completion of the contract activity.
The stage of completion is measured by calculating the proportion that costs incurred to date bear to the
estimated total costs of a contract prepared and approved by the technical estimation department of the
Company. When the current estimate of total contract costs and revenues indicate a loss, provision is made
for the entire loss on the contract irrespective of the amount of work done. When the outcome of a contract
cannot be estimated reliably, revenue is recognized only to the extent of contract costs incurred that is
probable will be recoverable and contract costs are recognized as an expense in the period in which they are
incurred.
Revenue recognized in excess of billings included in the current assets represents the costs incurred plus
recognized profits (less recognized losses) that exceed the progress billings as of the balance sheet date. These
amounts of revenue will be billed in the subsequent period. Billings in excess of revenue recognized included
in current liabilities represent the progress billings that exceed costs incurred plus recognized profit (less
recognized losses) to date.
- 12 -

General and administrative expenses
General and administrative expenses include direct and indirect costs not specifically part of cost of revenue
as required under IFRS for SMEs. Allocations between general and administrative expenses and cost of
revenue, when required, are made on a consistent basis.
Foreign currency translation

Foreign currency transactions are translated into Saudi Riyals at the rates of exchange prevailing at the time
of the transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date
are translated at the exchange rates prevailing at that date. Gains and losses from settlement and translation of
foreign currency transactions are included in the statement of comprehensive income.
Provisions
Provisions are recognized when the Company has:
• a present legal or constructive obligation as a result of a past event;

• it is probable that an outflow of economic resources will be required to settle the obligation in the future;
and
• the amount can be reliably estimated.
If the effect of the time value of money are material, provisions are discounted using a current rate that
reflects current market assessments of the time value of money and the risks specific to the liability.
Where there are a number of similar obligations, (e.g. product warranties, similar contracts or other
provisions) the likelihood that an outflow will be required in settlement is determined by considering the class
of obligations as a whole. A provision is recognized even if the likelihood of an outflow with respect to any
one item included in the same class of obligations may be small. Provisions are measured at the present value
of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current
market assessments of the time value of money and the risks specific to the obligation. The increase in the
provision due to passage of time is recognized as interest expense.
End-of-service indemnities
(a) Short term employee benefits
The cost of short-term employee benefits, (those payable within 12 months after the service is rendered, such
as leave pay and air ticket etc.) are recognised in statement of comprehensive income in the period in which
the service is rendered and are not discounted.
(b) End of Service indemnities
The liability recognized in statement of financial position in respect of end of service indemnities provision at
the reporting date is the present value of defined benefit obligation minus fair value of plan assets, if any. End
of service indemnities is determined using the projected unit credit method unless it requires undue cost and
effort, with actuarial valuations being carried out at the end of each reporting period.
Actuarial gains or losses are charged or credited to statement of comprehensive income in the period in which
they arise. Past service costs are recognised immediately in statement of comprehensive income. Gains or
losses on the curtailment or settlement of a defined benefit plan are recognised in statement of comprehensive
income when the company is demonstrably committed to curtailment or settlement.
Income tax
The Company is subject to the Regulations of the Zakat, Tax and Customs Authority (“ZATCA”) in the
Kingdom of Saudi Arabia. Income tax is provided on an accruals basis. Income tax is computed on the
foreign shareholder’s share in the adjusted net income. Income tax is charged to statement of comprehensive
income. Any difference in the estimate is recorded when the final assessment is approved, at which time the
provision is cleared.
- 13 -
Deferred tax
Deferred tax is recognized on all taxable temporary differences at the marginal tax rate for the year where these
differences arise and reversed at the marginal rate of tax where these differences will reverse. Deferred tax assets
are recognized for deductible temporary differences to the extent that it is probable that taxable profits will be
available.
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and
rewards of ownership of the leased asset to the lessee. All other leases are classified as operating leases.
(a) Finance lease - lessee

Initial recognition
Rights to assets held under finance leases are recognised as assets at the fair value of the leased property (or,
if lower, the present value of minimum lease payments) at the inception of the lease. The corresponding
liability to the lessor is included in the statement of financial position as a finance lease obligation.
Subsequent measurement
Lease payments are apportioned between finance charges and reduction of the lease obligation at the implicit
rate of interest in the lease. Finance charges are charged to statement of comprehensive income for the period.
Assets held under finance leases are included in property and equipment, and depreciated and assessed for
impairment losses in the same way as owned assets.
(b) Operating lease – lessee

Rentals payable under operating leases are charged to statement of comprehensive income on a straight-line
basis over the term of the relevant lease.
Interest in joint operations

A joint arrangement is an arrangement of which two or more parties have joint control.
Joint control is the contractually agreed sharing of control of an arrangement, which exists only when
decisions about the relevant activities require the unanimous consent of those sharing control.
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have
rights to the assets and obligations for the liabilities relating to the arrangement.
The Company recognizes in these financial statements the assets, liabilities, income and expenses it has
within the joint operation by combining these with the equivalent items in the financial statements on a line-
by-line basis.
- 14 -
4. JOINTLY CONTROLLED OPERATIONS

On September 15, 2019 (16 Muharram, 1441H), the Company and Subsea Seven Saudi Ltd.
(Formerly EMAS Saudi Arabia Ltd.), a Saudi limited liability company entered into a Consortium Agreement
to perform design, engineering, procurement, construction, installation and inspection of off shore oil
facilities developed. The Company’s share in the Consortium is 61.3%.
The members of the consortium have agreed to execute the contract which involves supply of materials and
services to the Consortium project and value of such supply of materials and services are allocated between
the members as 61.3% to L&T Hydrocarbon Saudi and 38.7% to Subsea Seven Saudi Ltd and the respective
consortium members have recognized their share of revenue based on their actual provision of the supply and
service during the relevant year. During the year the company has recognized a revenue of SR 166.5 million
(2020: SR 45.2 million) based on percentage of completion method on its share of contract from the
consortium.
A summary of financial position as of December 31, 2021 and 2020 and results of operations of the
Consortium are as follows.
Financial Position 2021 2020
SR SR
ASSETS
Current assets
Cash and cash equivalents 3,596 4,059
Account receivable 233,516,152 -
Advance to members 102,191,813 175,774,540
Other current assets 28,500 28,500
Total current assets 335,740,061 175,807,099
Non-current assets
Retention receivable 50,560,199 -
Total non-current assets 50,560,199 -
TOTAL ASSETS 386,300,260 175,807,099
LIABILITIES AND MEMBER’S ACCOUNT

Current liabilities
Advance from a customer 102,191,813 175,774,540
Payable to members 233,519,748 4,059
Accrued expenses and other liabilities 28,500 28,500
Total current liabilities 335,740,061 175,807,099
Non-current liabilities
Payable to members – non current 50,560,199 -
Total non-current liabilities 50,560,199 -
Total liabilities 386,300,260 175,807,099
Member’s account
Members’ account balance - -
TOTAL LIABILITIES AND MEMBER’S ACCOUNT 386,300,260 175,807,099
- 15 -
4. JOINTLY CONTROLLED OPERATIONS (Continued)
Results of operations:
2021 2020
SR SR
Amount billed to customers 735,827,268 -

Amount billed by consortium members (735,827,268) -
Gross loss - -
General and administrative expenses 28,963 (1,820,408)

Other income, net (28,963) 1,820,408
NET LOSS FOR THE YEAR - -
The Company’s share of loss from the Joint Operations - -
5. CASH AND CASH EQUIVALENTS

2021 2020
SR SR
Cash at banks 122,006,330 2,066,771
Cash in hand 8,879 21,521
122,015,209 2,088,292
As of December 31, 2021 cash at banks includes short term deposits with banks amounting to SR 119.75
million (2020: SR nil).
6. TRADE AND RETENTION RECEIVABLE

2021 2020
SR SR
Trade receivables (note 18 (e)) 278,472,326 36,665,722
Retention receivable 39,583,833 -
Gross receivables 318,056,159 36,665,722
Less: retention receivable – non current (35,398,294) -
Net receivables 282,657,865 36,665,722
7. PREPAYMENTS AND OTHER ASSETS

2021 2020
SR SR
Advance to suppliers 45,321,552 8,355,644
Advance for employees visa 569,266 826,000
VAT receivable - 3,767,275
Other receivable (note 7.1) - 23,996,260
Others 158,165 4,722,594
46,048,983 41,667,773
7.1 This represented amount receivable from bank on cancellation of derivative instrument in the year ended
December 31, 2020.
- 16 -
8. REVENUE RECOGNIZED IN EXCESS OF BILLINGS

2021 2020
SR SR
Value of work performed 73,741,544 1,530,940,144
Less: progress billings (47,426,778) (1,441,724,412)
Less: loss recognized - (332,847)
26,314,766 88,882,885
9. PROPERTY AND EQUIPMENT

Furniture
Machinery and fixtures Capital
and and office Portable work in
equipment Vehicles equipment cabins progress Total
SR SR SR SR SR SR
Cost
January 1, 2021 1,907,729 64,800 9,279,948 2,345,515 286,244 13,884,236
Additions 97,901 - 680,191 - 5,102,683 5,880,775
Disposals - - (3,750) - - (3,750)
Transfers from CWIP - - 144,850 - (144,850) -
December 31, 2021 2,005,630 64,800 10,101,239 2,345,515 5,244,077 19,761,261
Depreciation
January 1, 2021 210,478 2,700 3,529,140 2,328,522 - 6,070,840
Charge for the year 428,960 10,800 2,779,686 16,993 - 3,236,439
Disposals - - (2,083) - - (2,083)
December 31, 2021 639,438 13,500 6,306,743 2,345,515 - 9,305,196
Net book value

December 31, 2021 1,366,192 51,300 3,794,496 - 5,244,077 10,456,065
December 31, 2020 1,697,251 62,100 5,750,808 16,993 286,244 7,813,396
10. ACCOUNTS PAYABLE AND OTHER LIABILITIES

2021 2020
SR SR
Advance from customers (note 10.1) 79,358,270 107,793,750
VAT Payable 64,928,030 -
Accounts payable – trade 43,809,584 68,395,339
Contract and other accruals 42,242,467 22,658,107
Employee benefits accruals 2,950,002 3,343,395
Provision for income tax (note 17) 1,427,151 -
234,715,504 202,190,591
10.1 As at December 31, 2021, advance from customers balance is SR 95.9 million out of which SR 16.5 million
is non-current portion.
- 17 -
11. DERIVATIVE FINANCIAL LIABILITY

As at December 31, 2021 the derivative financial liability recognized by the Company amounts to SR
8,732,311 (December 31, 2020: 344,068). The notional principal amount of the outstanding foreign currency
forward rate contracts as at December 31, 2021 is Euro 119,284,061 (December 31, 2020: 66,280,000).
The hedged highly probable forecast purchase transactions denominated in Euros are expected to occur at
various dates during the next 12 months. Gains and losses recognised in the hedging reserve in equity on
forward foreign exchange contracts as of December 31, 2021 will be recognised in profit or loss in the period
or periods during which the hedged forecast purchases take place.
The fair value of derivative financial instruments that are not traded in an active market is determined by
using valuation techniques. The Company uses its judgement to select a variety of methods and make
assumptions that are mainly based on market conditions existing at each reporting date. The Company has
used discounted cash flow analysis to fair value such derivative financial instruments. The main assumptions
used in the calculation of the fair value are the discount rate of 4% (2020: 4%) and the year-end Euro/Dollar
six-month forward foreign exchange rate are 1.18963 and 1.23970.
12. LOAN FROM A RELATED PARTY
The Company obtained a loan from L&T Hydrocarbon Engineering Limited India at commercial rate. The
loan is to be repaid in installments with the latest payment due on April 8, 2023 and the last payment due on
April 8, 2024. Further, the Company reserves the right to repay the same prior to maturity date by giving 3
days’ notice. Interest accrued on this loan is classified as a current liability.
13. BILLINGS IN EXCESS OF REVENUE RECOGNIZED

2021 2020
SR SR
Progress billings 2,077,346,341 -
Less: Value of work performed (1,770,677,672) -
Loss recognized 1,281,813 -
307,950,482 -
14. END OF SERVICE INDEMNITIES

2021 2020
SR SR
January 1 2,848,409 4,250,530
Provision for the year 879,145 1,369,142
Actuarial adjustment for the year (35,703) 268,271
Payments made during the year (1,118,288) (3,039,534)
December 31 2,573,563 2,848,409
15. STATUTORY RESERVE

No appropriation has been made during 2021 and 2020 as the Company has accumulated losses as of
December 31, 2021 and 2020.
- 18 -
16. CONTRIBUTION FROM A SHAREHOLDER

This represents contribution from a shareholder of the Company made in 2009 amounting to SR 3.5 million to
finance the operations of the Company and to absorb the losses. In 2010, the shareholder of the Company
contributed an additional amount of SR 2.712 million. These contributions are interest free and have no set
repayment schedule. The Company has no obligation to repay this contribution. In the year 2018, the
Company repaid the contribution to its shareholder amounting to SR 4.659 million.
17. INCOME TAX
As the Company is 100% owned by a foreign shareholder as at the year ended December 31, 2021 and 2020,
no zakat charge for the year.
Provision for income tax is calculated based on net taxable income for the year (adjusted taxable income less
adjustment of accumulated losses).
2021 2020
SR SR
Net profit / (loss) for the year 1,531,244 (57,494,068)
17.1 Income Tax
Movement in provision for income tax is as follows:
2021 2020
SR SR
January 1 - 634,538
Provision for the year 1,427,151 -
Payments made during the year (454,189) (858,898)
Under provision for the prior year 454,189 224,360
December 31 1,427,151 -
17.2 Deferred Tax
The deferred tax effect of all the temporary differences, after considering the tax losses available for future
adjustments, is a contingent asset. No deferred tax asset has been recognized in the financial statements due to
uncertainty of future results.
17.3 Assessment status
The Company has filed income tax return for the year 2020 and has obtained required certificate for 2020. The
Company is in process of filing return for 2021.
During the year the Company received income tax assessments for the years from 2017 to 2019 amounting to
SR 454,189 and the Company has paid during the year.
In 2018, the Company has received assessments from Zakat, Tax and Customs Authority (ZATCA) for the
years from 2007 to 2016 with additional aggregate liabilities of SR. 21.63 million (Withholding tax and delay
fines: SR. 21.63 million). The Company has filed an objection with General Secretarial of Tax committee
(GSTC) against this assessment. The management of the Company believes that the final outcome of these
objections will be in the favour of the Company and accordingly, considers that the current provision
maintained by the Company is adequate under the circumstances.
18. RELATED PARTY TRANSACTIONS AND BALANCES
Related parties represent shareholder, directors, companies related to the shareholder (“affiliates”) and key
management personnel and the entities controlled, jointly controlled or significantly influenced by such
parties.
Name Relationship
Larsen & Toubro group of companies Shareholder / Affiliates
- 19 -
18. RELATED PARTY TRANSACTIONS AND BALANCES (Continued)

a) The significant transactions and the related amounts are as follows:
2021 2020
SR SR
Employee cost charged by related parties 16,556,605 21,110,964
Sale of material and services 14,242,890 12,525,572
Purchase of material and services 12,578,834 3,549,032
Employee cost recharge to a related party 10,723,255 8,710,448
Parent company guarantee charges 8,213,679 8,441,415
Rent charged to a related party 4,619,398 2,428,874
Assets purchased from a related party 4,148,153 1,491,032
Overheads charged to affiliated companies 3,942,712 2,263,114
Equipment hire charges income 3,064,109 300,673
Interest on loan from a related party 2,555,390 4,700,458
Overheads charged by affiliated companies 1,115,835 2,556,539
Other costs reimbursement from related parties 1,002,991 6,870,932
Equipment hire charges expense 288,476 1,323,919
Assets sale to a related party 1,667 -
Loan repaid to a related party- net - 93,722,347
b) Remuneration of key management personnel is as following:
2021 2020
SR SR
Short term benefits 919,100 1,059,147
Long term benefits 34,693 37,159
c) Due from related parties as of year end are comprised of the following:
2021 2020
SR SR
Larsen & Toubro Arabia LLC 4,202,275 -
Larsen & Toubro Limited (Saudi Branch) 2,339,396 3,071,589
L&T Valves Arabia Manufacturing Limited 1,883,219 -
Larsen & Toubro Valves Limited - 1,569,736
Larsen & Toubro Hydrocarbon International FZE - 255,293
Larsen & Toubro Saudi Arabia LLC - 34,672
8,424,890 4,931,290
d) Due to related parties as of year end are comprised of the following:
2021 2020
SR SR
L&T Hydrocarbon Engineering Limited 53,898,299 45,083,604
Larsen & Toubro Valves Limited 5,941,780 -
L&T Heavy Engineering LLC 3,316,547 1,293,243
Larsen & Toubro Limited 91,536 39
L&T Modular Fabrication Yard LLC 45,167 -
Larsen & Toubro Electromech LLC 2,145 -
Larsen & Toubro Arabia LLC - 1,213,070
63,295,474 47,589,956
e) Trade receivables includes a balance receivable from Larsen & Toubro Limited (Saudi Branch), a related
party amounting to SR 7.01 million as at December 31, 2021 (December 31, 2020: Nil).
- 20 -
19. TRANSACTIONS WITH MAJOR CUSTOMERS

Contract revenue from two major customers accounted for approximately 53% of total revenues in 2021
(2020: 99.99%). Accounts receivable as of December 31, 2021 accounted for approximately 87% from both
of these customers (2020: 100% from one customer).
20. GENERAL AND ADMINISTRATIVE EXPENSES
2021 2020
SR SR
Professional fees 835,198 755,406
835,198 755,406
21. OTHER INCOME

2021 2020
SR SR
Scrap sales 4,620,109 5,854,481
Gain on utilization and cancellation of hedge instrument, net 1,376,209 -
Construction of warehouse 1,175,000 -
HRDF refund 638,639 -
Interest income 51,642 1,370,782
Others 91,069 642,758
7,952,668 7,868,021
22. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION

UNCERTAINTY
In the application of the Company’s accounting policies, which are described in note 3, the Directors are
required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities
that are not readily apparent from other sources. The estimates and associated assumptions are based on
historical experience and other factors that are considered to be relevant. Actual results may differ from these
estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognized in the period in which the estimate is revised if, the revision affects only that period,
or in the period of the revision and future periods if the revision affects both current and future periods.
- 21 -

UNCERTAINTY (Continued)
Critical judgments in applying the Company’s accounting policies
The following are the critical judgments, apart from those involving estimations described below, that the
management have made in the process of applying the Company’s accounting policies and have the most
significant effect on the amounts recognized in the financial statements.
Allowances for trade receivable, retention receivable and revenue recognised in excess of billings
Management has estimated the recoverability of trade receivable, retention receivable and revenue recognised
in excess of billings and has considered the allowance required. Management has estimated the allowance for
trade receivable, retention receivable and revenue recognised in excess of billings on the basis of prior
experience and the current economic environment on the recovery of long outstanding trade receivable,
retention receivable and revenue recognised in excess of billings.
Estimating the amount of the allowance requires significant judgment and the use of estimates related to the
amount and timing of estimated losses based on historical loss experience, current disputes, consideration of
current economic trends and conditions and contractor/employer-specific factors, all of which may be
susceptible to significant change. An allowance is charged to operations based on management’s periodic
evaluation of the factors previously mentioned, as well as other pertinent factors. To the extent actual
outcomes differ from management estimates, additional allowance for doubtful debts or reversal of excess
provisions could be made that could adversely or positively affect earnings or the financial position in future
periods.
Useful lives of property, plant and equipment and intangible assets
As described in note 3, the Company estimates the useful lives of property and equipment at the inception of
their availability to use or when the indicators exist of significant change.
Provision for income tax

Management has assessed the income tax position having regard to the local zakat and income tax legislation,
decrees issued periodically and conventions. Interpretation of such legislation, decrees, and conventions is not
always clear and entails completion of assessment by ZATCA.
Construction cost estimates
The Company uses internal quantity surveyors together with project managers to estimate the costs to
complete for construction contracts. Factors such as changes in material prices, labor costs, defects liability
costs and other costs are included in the construction cost estimates based on best estimates.
Revenue on construction contracts
The Company uses the percentage-of-completion method in accounting for its construction contract revenue.
Use of the percentage-of-completion method requires the Company to estimate the proportion of work
performed as a proportion of contract costs incurred for work performed to date to the estimated total contract
costs. Management considers that this is the most appropriate measure of determining the percentage-of-
completion to arrive at the profit to be recognized for the year and to defer profits in excess of the overall
estimated contract margin. Since project costs can vary from initial estimates, the reliance on the total project
cost estimate represents an uncertainty inherent in the revenue recognition process. Individual project budgets
are reviewed regularly with project leaders to ensure that cost estimates are based upon up to date and as
accurate information as possible, and take into account any relevant historic performance experience.
Furthermore, all completed projects are reviewed to ensure that all relevant costs have been recorded/accrued
at the time of project completion in the relevant period and that no further costs will be incurred in addition to
the above costs.
- 22 -

UNCERTAINTY (Continued)
Critical judgments in applying the Company’s accounting policies (continued)
Contract variations are recognized as revenues to the extent that it is probable that they will result in revenue
which can be reliably measured, which requires the exercise of judgment by management based on prior
experience, application of contract terms and relationship with the contract owners.
Claims are recorded as revenue when negotiations have reached to an advance stage such that it is probable,
the customer will accept the claim and amount can be measured reliably, which requires the exercise of
judgment by management based on prior experience.
23. OPERATING LEASE ARRANGEMENTS

2021 2020
SR SR
Payments under operating leases recognized as an expense during
the year 14,678,290 7,649,192
Operating lease payments represent rentals payable by the Company for lands, head office building and
equipment for a term of 1 - 3 years.
As of year-end, the Company has commitments for minimum lease payments under non-cancelable operating
lease as follows:
2021 2020
SR SR
Within one year 4,524,200 4,524,200
Later than one year but within five years - 4,524,200
4,524,200 9,048,400
24. CONTRACT OBLIGATIONS
In the ordinary course of business, the Company enters into contracts which may provide for assessment of
damage for non-performance or delay in completion. At the year-end, the Company was working on a
number of on-going contracts which will be completed within the scheduled time table stipulated in the
contracts.
25. CONTINGENCIES AND COMMITMENTS
As of December 31, the Company had the following contingencies:

2021 2020
SR SR
Bank guarantees 1,722,892,452 255,087,898
Letters of credit 87,354,316 73,925,971
- 23 -
26. FINANCIAL INSTRUMENTS
2021 2020
SR SR
Financial assets
Cash and cash equivalents 122,015,209 2,088,292
Trade and retention receivable 318,056,159 36,665,722
Due from related parties 8,424,890 4,931,290
Other receivables 158,165 28,718,854
Revenue recognized in excess of billings 26,314,766 88,882,885
474,969,189 161,287,043
Financial liabilities
Accounts payable and other liabilities 89,002,053 94,396,841
Due to related parties 63,295,474 47,589,956
Derivative financial liability 8,732,311 344,068
Loan from a related party 209,093,363 206,509,027
370,123,201 348,839,892
The fair values of the Company’s financial assets and liabilities approximate their carrying amounts.
27. COMPARITIVE FIGURES

Certain figures for the year 2020 have been reclassified to conform the presentation of the current year.
28. APPROVAL OF THE FINANCIAL STATEMENTS
The financial statements were authorized for issuance by board of directors on March 27, 2022 corresponding
to 24 Shaban 1443H.
- 24 -

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Hydrocarbon Saudi

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C. R. No.

L&T Hydrocarbon Saudi Company

The Directors have pleasure in presenting the Independent Auditor’s report

1. FINANCIAL RESULTS/FINANCIAL HIGHLIGHTS:

2. Capital & Finance:

As at December 31, 2021, the gross fixed and intangible assets

A wholly owned subsidiary of L&T Hydrocarbon Engineering Limited

L&T Hydrocarbon Saudi Company

5. State of Company Affairs / Business Prospects:

The profit before tax from continuing operations including extraordinary

7. Risk Management Policy:

The Company has formulated a risk management policy and has in

8. Details of Directors and Key Managerial Personnel

9. Number of Meetings of the Board of Directors :

During the year under review no meeting were held.

A wholly owned subsidiary of L&T Hydrocarbon Engineering Limited

L&T Hydrocarbon Saudi Company

10. Financial Statements:

The Independent Auditor’s report to the shareholders does not

12. Directors Responsibility Statement:

The Board of Directors of the Company confirms:

a) In the preparation of Annual Accounts, the applicable accounting

A wholly owned subsidiary of L&T Hydrocarbon Engineering Limited

L&T Hydrocarbon Saudi Company

The Directors acknowledge the invaluable support extended by the

For and on behalf of the Board

Name of Director Name of Director

A wholly owned subsidiary of L&T Hydrocarbon Engineering Limited

Auditor’s Responsibilities for the Audit of the Financial Statements

Report on Other Legal and Regulatory Requirements

Al-Bassam & Co.

Sulaiman Dhaffir Al Hussain

March 27, 2022

LIABILITIES AND SHAREHOLDER’S DEFICIT

The accompanying notes form an integral part of these financial statements.

Revenue 19 313,479,072 356,072,064

General and administrative expenses 18,20 (835,198) (755,406)

Finance charges 12,18 (2,555,390) (4,700,458)

Income tax 17 (1,881,340) (224,360)

OTHER COMPREHENSIVE (LOSS) /

Items that will be reclassified to profit or loss

TOTAL COMPREHENSIVE LOSS FOR THE

The accompanying notes form an integral part of these financial statements.

January 1, 2020 1,000,000 7,280 - (249,697,240) 1,553,000 (248,144,240) (247,136,960)

Net loss for the year - - - (57,718,428) - (57,718,428) (57,718,428)

January 1, 2021 1,000,000 7,280 27,422,695 (307,415,668) 1,553,000 (305,862,668) (277,432,693)

Net loss for the year - - - (350,096) - (350,096) (350,096)

The accompanying notes form an integral part of these financial statements.

Net change in cash and cash equivalents 119,926,917 (76,504,897)

Other receivable - 23,996,260

The accompanying notes form an integral part of these financial statements.

1. ORGANIZATION AND ACTIVITIES

Branch Branch Name CR Number Date

Al Khobar Branch of L&T Hydrocarbon Saudi 2051227120 3/12/1440H

The Company’s principal place of business is in Khobar, Kingdom of Saudi Arabia.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Property and equipment