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Saudi Arabian Amiantit Co. announces its Interim Financial Results for the Period Ending on 2020-03-31 ( Three Months )

AMIANTIT 2160 -1.07% 37.00 -0.40
Element List Current Quarter Similar quarter for previous year %Change Previous Quarter % Change
Sales/Revenue 162,044 233,033 -30.463 197,448 -17.93
Gross Profit (Loss) -5,874 15,634 - 23,346 -
Operational Profit (Loss) -93,592 -9,934 842.138 5,954 -
Net Profit (Loss) after Zakat and Tax -131,294 -40,366 225.258 -37,388 251.166
Total Comprehensive Income -123,583 -46,633 165.011 -24,031 414.264
All figures are in (Thousands) Saudi Arabia, Riyals
Element List Current Period Similar period for previous year %Change
Total Share Holders Equity (after Deducting Minority Equity) 213,685 636,391 -66.422
Profit (Loss) per Share -3.88 -1.19
All figures are in (Thousands) Saudi Arabia, Riyals
Accumulated Losses Capital Percentage %
-149,588 344,517 -43.42
All figures are in (Thousands) Saudi Arabia, Riyals
Element List Explanation
Increase (Decrease) in Net Profit for Current Quarter Compared to the Same Quarter of the Previous Year is Attributed to a. The results of this quarter reflect continued losses attributable to the decline in sales and also sales prices due to stiff competition for our products combined by higher manufacturing cost, due to lower capacity utilization.

b. The additional provision of SAR 28.5 M taken for expected credit loss on short-term accounts receivable.

c. The additional provision of SAR 30.2 M taken for long-term receivable.

d. The additional retention discounting taken was amounting to SAR. 4.6 M was also booked in this quarter.

e. Loss on foreign currency translation amounting to SR 23.2 M on the sale of Egypt investments.

Increase (Decrease) in Net Profit for Current Quarter Compared to the Previous Quarter is Attributed to The decline of sales from SAR 197.4 M on prior quarter to SAR. 162.0 M in the current quarter, was due to slow progress of on-going projects.

The increase of the net loss from SAR 37.4 M on prior quarter to SAR 131.3 M in the current quarter, was due to the additional provision for expected credit loss on short-term accounts receivable, additional provision on long-term receivable, retention discounting and the loss on foreign currency translation on the sale of Egypt Investments.

Basis of the External Auditor's Opinion Qualified opinion
Modification, Qualification or Emphasis of a Matter as Stated within the External Auditor Opinion Basis for Qualified Conclusion:

As described in note 8 to the interim condensed consolidated financial stetements, the Group’s investment in Amiblu, a joint venture which is accounted for using the equity method, is carried at SR 251.003 million as at March 31, 2020 (December 2019: SR 258.3 million). Included in this amount is a goodwill of SR 37.137 million. The audit opinion in respect of carrying amount of this investment was qualified for the financial year ended December 31, 2019 due to non availability of sufficient and appropriate audit evidence on manageemnt’s assessment of the impairment of Group’s investment in Amiblu. Management’s assessment for impairment was also not available

for the period under our review. Consequently we are unable to complete our review in respect of the measurement of carrying amount of investment in Amiblu. Had we been able to complete our review, matters might have come to our attention indicating that the adjustment might be necessary to the interim condensed consolidated financial statements.

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 interim condensed consolidated financial statements are not prepared, in all material respects, in accordance with International Accounting Standard No. 34 endorsed in the Kingdom of Saudi Arabia.

Emphasis of Matter Paragraph

We would like to draw attention on the following:

a. Note 6 to the accompanying interim condensed financial statements which describes the uncertainty related to the estimation of impairment loss on trade receivables, contract assets and non-current receivables.

b. Note 9.2 to the accompanying interim condensed consolidated financial statements which indicates that the Group is in breach of certain financial covenants in respect of its credit facility agreements with commercial banks. Management of the Group believes that the breach will not affect the maturity profile of its debt or the availability of credit.

c. Material Uncertainty Related to Going Concern

Note 15 to the condensed consolidated financial statements, which indicates that the Group incurred a net loss of SR 135.453 million during the three months period ended March 31, 2020 (March 31, 2019 SR 41.333 million) and its current liabilities exceed current assets by SR 590.089 million (December 31, 2019 SR 467.903 million) as at March 31, 2020. As stated in note 15, these events or conditions along with other matters as set forth in note 15, indicate that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as going concern.

Our conclusion in not modified in respect of the above matters.

Reclassification of Comparison Items The presented figures on the interim condensed consolidated statement of profit or loss and other comprehensive income comparative periods have been adjusted for the reclassification related with the presentation of the net impairment (loss) / gain on financial assets thereby adjusting selling, general and administrative expenses and other expenses, net respectively. These reclassifications have no impact on the net result for the comparative period.

Omissions and misstatements to the previously published financial statements as at December 31, 2018 were discovered after the results of comparative period i.e. Jan-March 31, 2019 had been authorized. These relates to the calculation of the expected credit loss and impact of acquisition of a non-controlling interest without change on control by one of the Company's Associates and the correction of accounting error on the reversal of a general provision against an international cash generating units. These omissions and misstatements were retrospectively adjusted by restating comparative financial information in the financial statements for year ended December 31, 2019. These events leading to the restatement were described in note 39 of the financial statements for the year ended December 31, 2019. The prior period adjustment to the comparative information contained in statement of changes of equity amounting to SAR 13.4 Million represents the restatement of opening equity as at January 1, 2019 recognized at year ended December 31, 2019 as result of above events. Further, management has identified in the first quarter 2020 that previously recorded provision for employee's share option of SR 14.0 Million was overstated and the provision should have been reversed in prior periods. The identified error has been corrected in these interim condensed consolidated financial statements and the opening equity balance of 2019 has been restated accordingly.

Additional Information A. Earnings per Share:

The loss per share for the current period ending March 31, 2020 was SAR (3.88), calculated by dividing the net loss attributable to shareholders of the company of SAR 131.3 million on the weight average number of outstanding shares 33,874,317, and for the comparative period ending March 31, 2019 SAR (1.19), calculated by dividing the net loss attributable to shareholders of the company of SAR 40.4 million on the weight average number of outstanding shares 33,874,317.

With respect to calculating the earnings per share (loss), the earnings per share (loss) has been calculated in accordance with “International Accounting Standard 33 (IAS 33): Earnings per share.”, Which requires that the number of ordinary shares outstanding before the event be adjusted proportionally to the number of ordinary shares The list is as if the event occurred at the beginning of the earliest displayed period (i.e. comparative figures) and, accordingly,

the earnings per share (loss) was calculated by dividing the profit (loss) for the period as if the reduction was made on January 1, 2018, and accordingly the number of issued shares is calculated 34,451,700 shares according to the new capital, minus the number of shares held on the Employee Ownership Program, which amounts to 577,383.

B. Comprehensive Income and net profit (loss) excluding non-controlling interests

With regards to the company’s announcement on the current period ending March 31, 2020 financial result, the Company would like to clarify that the total comprehensive income and net profit (loss) after zakat and tax for the current and previous year, excludes non-controlling interests. Accordingly, the total comprehensive income and net profit (loss) after zakat and tax for the corresponding period in the previous year announcement differed.

C. Accumulated Losses reaching 43.4% of Share Capital

The Group came to know on 29/05/2020 about its accumulated losses have reached 43.4% of its share capital. The total accumulated losses reached SAR 149.6 million as of 29 May 2020, which represents 43.4% of the current share capital.

The main reasons for the accumulated losses reaching this regulatory limit relate to:

1. The results of this quarter reflect continued losses attributable to the decline in sales and also sales prices due to stiff competition for our products combined by higher manufacturing cost, due to lower capacity utilization.

2. The additional provision of SAR 28.5 M taken for expected credit loss on short-term accounts receivable.

3. The additional provision of SAR 30.2 M taken for long-term receivable.

4. The additional retention discounting taken was amounting to SAR. 4.6 M was also booked in this quarter.

5. Loss on foreign currency translation amounting to SR 23.2 M on the sale of Egypt investments.

same are given under point number 9.

The procedures that the company will follow for these losses.

Bring back cash liquidity to the company by following measures:

Aggressive collection campaigns to collect the long outstanding receivables and also the current receivables.

Debts restricting through financial advisers.

Sales and Lease back of the Land.

Rights Issue

Sale of Non -core Entities

Getting a General-Purpose Working Capital Facility

Production and Sales Boost

As most of the companies have enough orders in hand and also lots of orders in pipeline the above initiatives will help the company to get working capital, consequently, will enable us to finance the Raw materials and utility payments on timely basis. This will enhance the production thus better capacity utilization and that will result in improved margins. This will help company to clear its back log and look for new orders in the market and beat the competition with more effective sales prices.

The increased liquidity and higher volumes will help company in buying raw materials and more competitive rates.

Cost Reduction

Also, company will continue its efforts in improving the production efficiency with higher yields in less rejections with stringent in process QC checks and vibrant production procedures.

On the other company is also taking measures in reducing the administrative and operational costs the optimal use of its resources.

Applied procedures and instructions

procedures and instructions Applicable on Companies Listed in Saudi Capital Market Whose Accumulated Losses Reach 20% or more out of the Capital thereof will be applied.

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