Saudi Arabian Amiantit Co. announces the interim financial results for the period ending on 31-03-2018 (Three Months)
| Element | Current quarter | Similar quarter for previous year | % Change current | Previous quarter | % Change previous |
|---|---|---|---|---|---|
| Net profit (loss) | -38,793 | -44,634 | 13.09 | -37,252 | -4.14 |
| Gross profit (loss) | 28,271 | 23,344 | 21.11 | 50,854 | -44.41 |
| Operational profit (loss) | -377 | -3,005 | 87.45 | 10,325 | - |
| Earning or loss per share, Riyals | -0.35 | -0.4 | - | - | - |
| All figures are in (Thousands) Saudi Arabia, Riyals | |||||
| Element | EXPLAINATION |
|---|---|
| Reasons of increase (decrease) for quarter compared with same quarter last year | a. The results of this quarter reflect continued losses attributable to the continued heavy decline of domestic sales for the Saudi Arabian subsidiaries resulting from the postponement and sometimes downsizing or cancellation of projects in the domestic market. Indeed, sales of the group in the GCC have decreased from SAR 195.7 million over the first quarter of 2017 to SAR 178.5 million over the current quarter, i.e. a decrease of 8.8%. In addition, 53.2% of the losses of this quarter are attributable to one-time charges and losses of international operations affected by seasonality of sales during the winter season in Europe and state holidays. b. Lower sales prices observed on the market as a consequence of the situation explained in (a) above. |
| Reasons of increase (decrease) for quarter compared with previous quarter | a. The results of this quarter reflect continued losses attributable to the continued heavy decline of domestic sales for the Saudi Arabian subsidiaries resulting from the postponement and sometimes downsizing or cancellation of projects in the domestic market. Indeed, sales of the group in the GCC have decreased from SAR 184.5 million over the fourth quarter of 2017 to SAR 178.5 million over the current quarter, i.e. a decrease of 3.3%. b. Lower sales prices observed on the market as a consequence of the situation explained in (a) above. |
| External auditor's report containing reservation | Without qualifying their opinion on the financial statements of the group, the independent auditors’ report draws attention to the following matters: i. Note 8 to the accompanying interim condensed consolidated financial statements which describes the dispute over the Group’s ownership of a parcel of industrial land in Jeddah. ii. Note 7 to the accompanying interim condensed consolidated financial statements which indicates that these interim condensed consolidated financial statements put the Group in breach of some of the financial covenants stated in the credit facility agreements with commercial banks. Management of the Group believes. |
| Other notes | 1. Sales during the current quarter amounted to SAR 203.8 million compared to SAR 210.1 million of the same quarter last year, representing a decrease of SAR 6.3 million or 3.0%. 2. Gross Profit during the current quarter amounted to SAR 28.3 million compared to SAR 23.3 million of the same quarter last year, representing an increase of SAR 5.0 million or 21.5%. 3. Operational loss during the current quarter amounted to a loss of SAR 377 thousand compared to a loss of SAR 3.0 million of the same quarter last year, representing a decrease in losses of SAR 2.6 million. 4. Net losses after Zakat & Taxes during the current quarter amounted to a net loss of SAR 38.8 million compared a loss of SAR 44.6 million of the same quarter last year, representing a decrease of SAR 5.8 million, and compared to a loss of SAR 37.3 million of the prior quarter, representing an increase of SAR 1.5 million. 5. Total comprehensive income during the current quarter amounted to a loss of SAR 21.3 million compared to loss of SAR 33.6 million for the same quarter of last year, representing a decrease of SAR 12.3 million, and compared to a loss of SAR 34.9 million for the previous quarter, representing a decrease of SAR 13.4 million. 6. Losses per share amounted to SAR (0.35) during the current period, compared to losses per share of SAR (0.40) for the same period last year. 7. Total shareholders’ equity (net of minority interest) during the current period amounted to SAR 935.1 million compared to SAR 966.9 million for the same period last year representing a decreased of SAR 31.8 million or 3.3%. 8. Total accumulated deficit at the end of the current quarter was SAR (267.7) million representing 23.2% of the share capital. Accumulated losses reaching above 20% of share capital: On April 19th, 2018, Saudi Arabian Amiantit Co. announced that its accumulated losses have reached the 20% threshold set for listed joint-stock companies in Saudi Arabia. The total accumulated losses reached 269,313 million as of 31 March, 2018, which represents 23.32% of the share capital. The main reasons for the accumulated losses reaching this regulatory limit relate to, the continuation of the decline or the slowdown in the infrastructure projects in the Kingdom during the last two years 2016 and 2017. In addition, the company incurred significant costs related to the restructuring of one of its associates in Europe after the merger of its pipeline operations and technology with a European partner (Hobas) and the establishment of a new joint venture, of which the group holds 50% equity share. Management is currently working to activate its plans to reduce the accumulated losses through some initiatives since 2016 to date, by reducing administrative and operational costs, restructuring of the group loans, increase efficiency of production through the development of methods for the optimal use of industrial materials and equipment, and administrative & organizational procedures changes expected to improve the business. In addition, the company announces that it will implement and comply with the rules and regulations related to companies listed in the Kingdom, whose accumulated losses reached 20% or more of share capital Adoption of IFRS 9: As prescribed by International Financial Reporting Standards (IFRS), the group have commenced the adoption of IFRS 9 requirements for the determination of the required loss provision for its financial assets and liabilities. As a result of this adoption, the group determined the need to increase the accounts receivable provision for bad debt by SAR 10.6 million. This increase in the provision was necessary in light of the requirements set by IFRS 9 to reflect anticipated future credit losses for receivables balances. This adjustment of the receivable provision is reflected on the beginning balance of retained earnings as of January 1, 2018. |
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