Saudi Cable Co. announces the interim financial results for the period ending on 30-06-2017 (Six Months)
| Element | Current quarter | Similar quarter for previous year | % Change current | Previous quarter | % Change previous |
|---|---|---|---|---|---|
| Net profit (loss) | 39.38 | -18.21 | - | -23.65 | - |
| Gross profit (loss) | 10.05 | 36.9 | -72.76 | 11.84 | -15.12 |
| Operational profit (loss) | -26.91 | -11.71 | -129.8 | -22.05 | -22.04 |
| All figures are in (Millions) Saudi Arabia, Riyals | |||||
| Element | Current period | Similar period for previous year | % Change |
|---|---|---|---|
| Net profit (loss) | 15.72 | -85.96 | - |
| Gross profit (loss) | 21.89 | 14.03 | 56.02 |
| Operational profit (loss) | -48.96 | -80.86 | 39.45 |
| Earning or loss per share, Riyals | 0.22 | -1.13 | - |
| All figures are in (Millions) Saudi Arabia, Riyals | |||
| Element | EXPLAINATION |
|---|---|
| Reasons of increase (decrease) for quarter compared with same quarter last year | The reasons for net profit of current quarter compared with the net loss of similar quarter of last year, are mainly due to the following items included in the statement of comprehensive income: A-A waive off of loans totaling SR 77 million from one of the restructuring banks in other income. B-Reduced volumes, lower margins and reduced share of profit from associates impacted negatively. |
| Reasons of increase (decrease) for period compared with same period last year | The reasons for net profit of current period compared with the net loss of similar period of last year, are mainly due to the following items included in the statement of comprehensive income: A-A waive off of loans totaling SR 77 million from one of the restructuring banks in other income. B-Recovery of doubtful debts which were provided for in prior periods. C-Reduced share of profit from associates. |
| Reasons of increase (decrease) for quarter compared with previous quarter | The reason for net profit during the current quarter compared with the net loss of previous quarter of the current year is mainly due to absence of loan waiver of SR 77 million in last quarter and share of profit from associates has been reduced in current quarter. |
| External auditor's report containing reservation | Observations resulting in qualified review conclusion A-On February 23, 2016, the Groups debt amounted to SR 793 million repayable over next seven years under a Restructuring Agreement with its four major lenders (Participating Banks), subject to the fulfilment of conditions, including repayment terms of SR 84 million during 2016 and an amount of SR 224 million by 31 December 2017, mainly through the issuance of equity shares (see Note 10). These factors indicate the existence of material uncertainties that casts significant doubts on the Groups ability to continue as going concern. However, if the equity shares issuance is not possible by June 30, 2018, the Group may adopt means to generate sufficient cash, including the sale of an equity shares in an associate to meet its commitment towards the Participating Banks. In this regard, on August 22, 2017, in accordance with a shareholders agreement between Saudi Cables Company and Zayani Investment Company (the Second Shareholder), the Company formally expressed its interest in selling its shares in Medal Cables Company and the second shareholder has the option of accepting the offer by November 22, 2017.During October 2017, the Participating Banks in the restructuring alliance confirmed the provision of continuous support in the event of non-payment by the Group unintentionally due to unforeseen circumstances, as stated and more: If the issue of the rights issue is delayed and the Group is unable to generate sufficient cash to settle the outstanding amounts on June 30, 2018, the Participating Banks will review the current repayment terms and defer the obligations for a sufficient period to ensure that the Groups operations do not cease. The Group shall be exempted from any breach of debt contracts resulting from such delay. The Groups ability to operate in accordance with the concept of continuity depends on the success of the above events. Although the Group has an internal plan to support the Groups ability to achieve its operational objectives, to provide sufficient resources to continue the businesses in the near future, to meet its debt obligations and to meet its working capital requirements and financial liabilities when and when they are due. B-We were unable to obtain sufficient appropriate evidence in respect of the recoverability of unbilled revenues amounted to SR 14.61 million as of June 30, 2017 (December 31, 2016: SR 28.66 million) that is overdue for more than one year. This relates to one of the subsidiaries and represents revenue earned but not yet billed at June 30, 2017. C-We were unable to obtain sufficient appropriate evidence in respect of the recoverability of development costs amounting to SR 18.27 million as of June 30, 2017, in the absence of commercial and financial feasibility of specialized cables and its accessories (December 31, 2016: SR 20.68 million).Qualified review conclusion Based on our review, except for the effects of the matters described in the paragraphs mentioned above, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated interim financial information were not prepared fairly, in all material respects, in accordance with IAS 34 and IFRS 1 accepted in the Kingdom of Saudi Arabia. Emphasis of matter In accordance with the Board of Directors' decision issued on June 4, 2017, Saudi Cables Company has amortized the accumulated losses by SR 355.89 million by reducing the Company capital. Accordingly, the Company new capital has reached to SR 404 million. |
| Reclassifications in quarterly financial results | Reclassification The Group may choose to reclassify a non derivative trading financial asset out of the held for trading category if the financial asset is no longer held for the purpose of selling it in the near term.Financial assets other than loans and receivables are permitted to be reclassified out of the held for trading category only in rare circumstances arising from a single event that is unusual and highly unlikely to recur in the near term. In addition, the Group may choose to reclassify financial assets that would meet the definition of loans and receivables out of the held for trading or available-for-sale categories if the Group has the intention and ability to hold these financial assets for the foreseeable future or until maturity at the date of reclassification.Reclassifications are made at fair value as of the reclassification date. Fair value becomes the new cost or amortised cost as applicable, and no reversals of fair value gains or losses recorded before reclassification date are subsequently made.Effective interest rates for financial assets reclassified to loans and receivables and held-to-maturity categories are determined at the reclassification date.Further increases in estimates of cash flows adjust effective interest rates prospectively. |
| Other notes | The profit per share during the six months amounts to SR 0.22 as against loss of SR 0.11 for the same period of last year, the method of calculation is as follows: In line with IAS 33 Earnings per share, Basic EPS is calculated by dividing profit or loss attributable to ordinary equity holders of the parent entity by the weighted average number of ordinary shares outstanding during the period. As there was a capital reduction that took place as approved on June 4, 2017, the weighted average structure changed since then, impacting weighted average number of ordinary shares of both second quarter and six month period ended June 30, 2017. The old number of shares prior to capital reduction was 76.0 million where as the number of shares post capital reduction was 40.4 million. For the second quarter, the new reduced number of shares was for 26 days (June 4, 2017 to June 30, 2017) out of the total 91 days in the period (65 days from April 1, 2017 with old number of shares). Weighted average number of shares outstanding during the second quarter calculates to 65.8 million. For the six month period, the new reduced number of shares was for 26 days (June 4, 2017 to June 30, 2017) out of the total 181 days in the period (155 days from January 1, 2017 with old number of shares). Weighted average number of shares outstanding during the six month period calculates to 70.9 million. On May 1, 2017, the Board of Directors recommended to reduce the share capital of the Company by absorption of accumulated losses of the Company up to SR 355.89 million. The Capital Market Authority (CMA) has authorized such reduction on May 8, 2017, which was approved by the shareholders in their extra ordinary general meeting held on June 4, 2017.The company reached a debt reduction agreement with one of those lenders to whom a loan of SR141.9 million was outstanding. Under this agreement, the company made an immediate payment of SR 51 million including SR 11 million as a refundable Guarantee against an outstanding loan and an issued letter of guarantee. Subsequently, the lender waived off an amount of SR77 million from the outstanding loan Revenue and Equity variances are as follows: A-Total revenue during the second quarter amounts to SR 351.41 million as against total revenue of SR 474.84 million for the same quarter of last year, a decrease of 25.99% and, against total revenue of SR 340.19 million for the previous quarter, an increase of 3.30% B-Total revenue during the six months amounts to SR 691.60 million as against total revenue of SR 861.51 million for the same period of last year, a decrease of 19.72% C-Total comprehensive income attributable to the owners of the company during the current quarter amounts to SR 39.38 million against a loss of SR 18.21 million for the same quarter of last year, and compared to a loss of SR 23.65 million for the previous quarter. D-Equity attributable to shareholders (Before Non-controlling Interest) reached SAR 311.09 million as at June, 30th 2017 compared to 299.63 million as at December, 31st 2016, which represents an increase of 3.82% and, 438.12 million as at June, 30th 2016, which represents a decrease of 28.99% F-Accumulated losses have reached to SR 79.50 million as at June, 30th 2017 which is 19.67% against SR 301.69 million as at (June 30, 2016:) which is 39.70% of the share capital. Transactions carried out with related parties during the six months of the year 2017 are as follows: A-Contract with Xeca, an associate company, amounting to SR 0.25 million for the cost to cover legal expenses. B-Purchase contract for aluminum from an associate company, Midal Cables, amounting to SR 5.73 million. C-Shared Expenses at cost, paid to Xenel, amounting to SR 3,150, which are expenses incurred by Xenel on behalf of Saudi Cable Company, pertaining to fees for business expenses. |
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