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Saudi Steel Pipe Co. announces its interim Financial results for the period ending on 2019-06-30 ( Six Months )

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Element List Current Quarter Similar quarter for previous year %Change Previous Quarter % Change
Sales/Revenue 161.85 156.29 3.557 195.31 -17.131
Total Profit (Loss) 0.88 -0.43 - 12.53 -92.976
Profit (Loss) Operational -9.6 -12.92 -25.696 2.61 -
Net Profit (Loss) after Zakat and Tax -10.17 -36.83 -72.386 0.32 -
Total Comprehensive Income -10.17 -36.83 -72.386 0.32 -
All figures are in (Millions) Saudi Arabia, Riyals
Element List Current Period Similar period for previous year %Change
Sales/Revenue 357.16 333.43 7.116
Total Profit (Loss) 13.41 16.37 -18.081
Profit (Loss) Operational -6.99 -6.38 9.561
Net Profit (Loss) after Zakat and Tax -9.84 -41.86 -76.493
Total Comprehensive Income -9.84 -41.86 -76.493
Total Share Holders Equity (after deducting minority equity) 549.6 687.55 -20.063
Profit (Loss) per Share -0.19 -0.82
All figures are in (Millions) Saudi Arabia, Riyals
Accumulated Losses Capital Percentage %
9.84 510 1.93
Element List Explanation
Reason for increase (decrease) in net profit for current quarter compared to the same quarter of the previous year The net loss of SR 10.17 million in Q2 2019, as compared to a net loss of SR 36.83 million in Q2 2018 is due to the following main reasons:

(a) Non-recurring fixed assets impairment charges of SR 21 million accounted for in Q2 2018.

(b) Decrease in selling, marketing and distribution expenses in the current quarter amounting SR 2.94 million compared to SR 4.49 million in Q2 2018.

(c) Other income in the current quarter reaching SR 1.40 million compared to other expenses of SR 0.39 million in Q2 2018.

(d) Increase in share of profit from associate company (Global Pipe Company) in the current quarter reaching SR 1.74 million compared to SR 0.19 million in Q2 2018.

(e) Increase in gross profit in the current quarter reaching SR 0.84 million compared to a gross loss of SR 0.43 million in Q2 2018.

Reason for increase (decrease) in net profit for current quarter compared to the previous quarter The net loss of SR 10.17 million in Q2 2019, as compared to a net profit of SR 0.32 million in Q1 2019 is due to the following main reasons:

(a) Decrease in gross profit in the current quarter reaching SR 0.84 million compared to SR 12.53 million in Q1 2019 mainly due to lower sales volume, change in product mix and cost overruns at TSM Arabia (a subsidiary).

(b) Increase in administrative expenses reaching SR 8.35 million in the current quarter compared to SR 7.10 million in Q1 2019.

(c) Impairment charges for trade receivable of SR 0.59 million in current quarter compared to a reversal of SR 0.63 million in Q1 2019.

(d) Decrease in share of profit in Global Pipe Company (associate) during current quarter amounting to SR 1.74 million compared to SR 3.06 million for the previous quarter.

Reason for increase (decrease) in net profit for current period compared to the similar period of the previous year The net loss of SR 9.84 million in current period, as compared to a net loss of SR 41.86 million in H1 2018 is due to the following main reasons:

(a) Non-recurring fixed assets impairment charges of SR 21 million accounted for in H1 2018.

(b) Share of profit in an associate company (Global Pipe Company) for current period amounting to SR 4.81 million compared to a share of loss for H1 2018 of SR 8.02 million.

(c) Decrease in selling, marketing and distribution expenses in the current period reaching SR 6.67 million compared to SR 8.38 million in H1 2018.

(d) Increase in other income reaching SR 1.68 million in the current period compared to SR 0.54 million in H1 2018.

(e) Decrease in zakat and income tax charges for current period amounting to SR 0.09 million, compared to SR 1.31 million in H1 2018.

These favorable movements were partially offset with a decrease in gross profit during current period reaching SR 13.41 million compared to SR 16.37 million in H1 2018 mainly due to change in product mix and cost overruns at TSM Arabia.

Type of the external auditor's opinion Emphasis of Matter paragraph
External auditor's report containing reservation Without qualifying our conclusion, we draw attention to note 2 to the accompanying condensed consolidated interim financial statements, which states the accumulated losses of TSM Arabia (the subsidiary) as at June 30, 2019 have exceeded its share capital by SR 130.04 million. The Board of Directors of the Group has passed a resolution to provide financial support to enable TSM Arabia to meet its financial obligations. Accordingly, the subsidiary’s financial statements were prepared on a going concern basis. Additionally, the subsidiary was in breach of its loan facilities financial covenants. The management of the subsidiary is in the process of taking the necessary remedial actions to resolve the breach including obtaining the required waiver documents. Accordingly, the loans are continued to be classified as per their original terms of payment.
Reclassifications in quarter financial result Items, elements and notes of the comparatives in the financial statements have been restated, regrouped and reclassified, as applicable, to be consistent with the presentation and accounting policies adopted for the current period.
Additional Information From January 1, 2019, the Company has adopted IFRS 16 for Leases with no material impact on the results of its interim financial statements.

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