| Reasons of increase (decrease) for quarter compared with same quarter last year |
The reason for the decrease in net loss is due to: 1-Decline in direct costs by 68% (SAR 139.4 million) 2- Decline in gross loss by 62% (SAR 7.1 million) 3-Decrease in selling and marketing costs by 38% (SAR 0.53 million) mainly due to decrease in bidding activity. 4-Decrease in G&A by 27% (SAR 2.5 million) mainly due to reduction in manpower costs and resources optimization, resulting from previously announced Leaner Al-Khodari Program. 5-Decrease in financial charges by 20% (SAR 3.9 million. The above was adversely counteracted by: 1- Decline in Revenue by 68% to SAR 61.5 million during the first quarter 2018, compared to SAR 193.9 million in the same quarter of 2017, mainly due to decline in new project awards, significant liquidity challenges facing the contracting industry due to delay in payments, reflected in slower progress on ongoing construction projects. 2-Other income has decreased by 37% (SAR 8.7 million) mainly due to decrease in the refund receipts of the government compensation for the increased 2400 expat levy during the first quarter of 2018, as compared to the same quarter of 2017 3-Increase in Zakat expense by (SAR 0.25 million) |
| External auditor's report containing reservation |
Qualified Report on the Review of Consolidated Financial Statements Basis of qualified conclusion As of March 31, 2018, the contracts in progress were SR 1.37 billion (December 31,2017: SR 1.39 billion) and trade and other receivables were SR 597.2 million (December 31,2017: SR 593 million) out of which SR 1 billion and SR 299 million respectively are outstanding for more than one year. As required by the International Financial Reporting Standards, the management had carried out an exercise to assess the impairment of the said contract assets as of December 31, 2017 but no additional impairment was booked in the annual consolidated financial statements for the year ended December 31, 2017 based on the said exercise. Moreover, the assumptions and information used in the said impairment exercise were very subjective and we were not provided with detailed workings substantiated with proper evidence to support these at the time of our annual audit. The management maintained the same position by not booking impairment in the consolidated condensed interim financial statements for the three months period ended March 31, 2018. In the absence of a proper analysis of impairment of contract assets as of March 31, 2018, we were unable to determine whether any adjustment for impairment was required to be made against these contract assets. Qualified conclusion Based on our review, with the exception of the matter described in the preceding paragraph, nothing has come to our attention that causes us to believe that the accompanying consolidated condensed interim financial statements for the three months period ended March 31, 2018 are not prepared, in all material respects, in accordance with IAS 34, Interim Financial Reporting that is endorsed in the Kingdom of Saudi Arabia. Material uncertainty relating to going concern Without further qualifying our conclusion, we draw attention to Note 2.4 to the consolidated condensed interim financial statements which indicates that the Group has incurred a gross loss of SR 4.3 million (2017: SR 11.4 million) and net loss of SR 12.7 million (2017: SR 17.7 million). During the three months period March 31, 2018, the Groups revenue has been decreased significantly by 68%. As March 31, 2018, the accumulated losses of the Group were SR 27.1 million (2017: SR 14.4 million). As stated in note 2.4, these events or conditions, along with the other matters as set forth therein, indicate that a material uncertainty exists that may cast significant doubt on the Groups ability to continue as a going concern However, the management believes the Group as a going concern based on the mitigation plans mentioned in note 2.4 to these consolidated condensed interim financial statements |
| Other notes |
1-Revenue for the first quarter of 2018 is SAR 61.56 million, compared to SAR 193.97 million in the same quarter of 2017 decreased by 68%. 2-Revenue for the first quarter of 2018 is SAR 61.56 million as compared to the revenue of SAR 86.28 million for the previous quarter with a decrease of 29%. 3-Total comprehensive loss for the current quarter is SAR 12.7 million as compared to the total comprehensive loss of SAR 17.76 million for the similar quarter of the previous year with a decrease of 28%. 4-Total comprehensive loss for the current quarter is SAR 12.7 million as compared to the total comprehensive loss of SAR 30.17 million for the previous quarter with decrease of 58%. 5-Total Equity Attributable to Shareholders as at 31 March 2018 amounted to SAR 626.03 million as compared to SAR 707.92 million as at 31 March 2017, with a decrease of 11.5%. Total non-controlling interests as at 31 March 2018 amounted to SAR 0.547 million as compared to SAR 0.547 million as at 31 March 2017, with an increase of 0.04%. 6-Accumulated losses are SAR 27.14 Million representing 4.86% of capital. 7-New awards for the first quarter of 2018 were (Nil) compared to SAR 53.04 million during the same quarter last year. The contract backlog is SAR 2,502 million at the end of first quarter of 2018 compared to SAR 2,845.4 million for the same quarter of the previous year |
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