The Net Loss was influenced by a provision of SAR 30 million, allocated to a stock sell-off ahead of the introduction of new and obligatory SASO regulation, which had a significant impact on financial results.

In 2018, the Company recorded losses of SAR 7.2 million in the share of results from associates, compared to a profit of SAR 18.4 million in the previous year.

In line with management’s ongoing program for achieving improved operating efficiencies, general and administrative expenses decreased by SAR 14.9 million, with selling and distribution expenses decreasing by SAR 22 million compared to the previous year.

Expenses were further reduced by an SAR 1.2 million decrease in financing expenses as compared with 2017.

The net loss for 2018 is SAR 196.5 million, representing 12% of the Company’s total assets (SAR 1,634 million.)

It should be noted that the net loss included a SAR 30 million provision allocated to stock sell-off ahead of the introduction of new SASO regulation, which had a significant impact on the net result.

Meanwhile, material optimization gains were made in employee and other costs; receivables; the Company’s debt position; and inventory rationalization. These measures were part of an efficiency program that was introduced as a pilot phase of the Company’s Breakthrough Program.

Material optimization achievements realized during FY18 included: a reduction of SAR 259.5 million in total liabilities; rationalization of inventories by SAR 243 million; reduction of selling and distribution expenses by SAR 22 million; and reduction of general and administrative expenses by SAR 14.9 million.

During FY18, additional optimization results delivered by the Breakthrough Program pilot initiatives included a 20.6% reduction in rent and leasing costs and a 27% reduction in total headcount.

On a full-year basis, total loans were reduced from SAR 789 to SAR 562 as at 31 December 2018; net receivables were reduced from SAR 552.6 to SAR 451.4 as at 31 December 2018; and employee costs were reduced from SAR 137.6 to SAR 111.6 as at 31 December 2018.

General comments:

In 2019, Shaker Group intends to maintain progress toward its turnaround objectives by strengthening its operating model through the Breakthrough Program, built on four pillars for improving performance:

Core Business Turnaround (CBT), which focuses on achieving profitable sales while delivering excellence in cost management;

Talent Upgrade Plan (TUP), which seeks to attract and develop talent at the Company while improving organizational structure and rationalizing headcount;

Performance Infrastructure (PI), which will drive improvements to the processes and architecture of the business, as well as enhancing reporting methods;

Strategic Moves (STR), strengthening relationships with principals and business partners and exploring opportunities beyond core operations, to ensure an unparalleled value proposition to customers.

The Group has identified a major opportunity presented by Tarshid, the Saudi government’s National Energy Services Company, which has been tasked with retrofitting assets owned by public or government entities – among them 2 million street lights, 110,000 government buildings, 35,000 schools, 100,000 mosques and 2,500 hospitals and clinics. Shaker Group believes that it is well-placed to bid for a share of these retrofitting projects.