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Al Hassan Ghazi Ibrahim Shaker Co. announces its Interim Financial Results for the Period Ending on 2020-03-31 ( Three Months )

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Element List Current Quarter Similar quarter for previous year %Change Previous Quarter % Change
Sales/Revenue 220,975 197,333 11.98 184,116 20.019
Gross Profit (Loss) 49,362 33,023 49.477 35,288 39.883
Operational Profit (Loss) -3,894 -19,599 -80.131 -6,857 -43.211
Net Profit (Loss) after Zakat and Tax -3,305 -28,740 -88.5 -5,526 -40.191
Total Comprehensive Income -3,531 -27,740 -87.271 -6,636 -46.79
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) 640,414 668,855 -4.252
Profit (Loss) per Share -0.02 -0.43
All figures are in (Thousands) Saudi Arabia, Riyals
Accumulated Losses Capital Percentage %
148,641 630,000 23.6
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 Year-on-year, the first quarter net, operating, and gross profit improved for the following reasons:

1) 12% increase in sales

2) Share of associate profits improved by SAR 4.8 million as compared to the same period in the previous year

3) Gross profit of SAR 49.3 million improved by 49.5% on Q1 2019

Increase (Decrease) in Net Profit for Current Quarter Compared to the Previous Quarter is Attributed to Quarterly net and operating losses decreased, while gross profit improved, for the following reasons:

1) Increase in sales by 20.0%

2) Share of associate profits in Q1 2020 was SAR 9.0 million, improving by SAR 8.9 million from a nominal profit of SAR 0.09 million in Q4 2019

3) Gross profit of SAR 49.3 million improved by 39.9% on Q4 2019

Basis of the External Auditor's Opinion Unmodified opinion
Reclassification of Comparison Items The comparative figures of the 2019 Condensed Consolidated Interim Financial Statements have been reclassified to meet the current year’s classification according to the International Financial Reporting Standards (IFRS), which are endorsed in the Kingdom of Saudi Arabia
Additional Information First-quarter revenue of SAR 220.975 million grew by 12.0% year-on-year.

Gross profit of SAR 49.4 million in Q1 improved by 49.5% year-on-year. The Group recorded a Q1 net loss reduction of 88.5% year-on-year to SAR 3.3 million, with an operating profit of SAR 3.9 million.

Operating and other expenses increased by 26.4% due to increase in G&A expenses, increase in impairment loss on receivables and reduction in other income.

The accumulated losses to capital ratio increased to 23.6% from 23.3% in the previous quarter, mainly driven by liquidation of stock and impairment losses on receivables as per IFRS requirements. In this instance, the CMA’s rules and regulations for listed companies with total accumulated losses of 20% or more of capital will be applied. It should be noted that the Company’s statutory reserves are greater than the accumulated losses. Therefore, total equity is in excess of paid up capital by SAR 2.5 million.

The Group’s reduction in losses is attributed to the success of its Breakthrough Program transformation strategy, which was introduced in 2019. Highlights for the quarter include:

• Sales revenue in Saudi Arabia continued to achieve positive growth momentum, with a 14.6% increase compared to Q1 2019 and 24.5% increase compared to Q1 2018. Growth was achieved across all business lines (ACs, Home Appliances and Others)

• Employee costs in Saudi Arabia were further optimized, decreasing by 7.4% compared to Q1 2019

• Performance Management System rolled-out and now operating across the business

• Extension of dealer agreements with key principals

• Joint collaboration with principals on strategic initiatives

Outlook for 2020

Having launched its e-commerce platform in 2019, the Group will build on the offer provided by its extensive portfolio of international Home Appliance brands, taking advantage of emerging retail channels that will better serve customers while achieving efficiencies across the sales and distribution process.

Long-term growth avenues include the Saudi Energy Efficiency Center’s (SEEC) high-efficiency AC units initiative, which is supportive of revenues with the Company having secured a competitive share of the program. Further opportunity is provided by the development of the Saudi housing strategy, and private sector support initiatives, which reflect positively on marketing opportunities. The Group is exploiting its market share of the Multi V product range to bid for projects throughout the year.

An attractive opportunity is presented by Tarshid, the Saudi government’s National Energy Services Company, which is 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 is bidding for a healthy portion of these projects.

Covid-19 impact and response

The Board has continued to assess the effect of the Covid-19 pandemic and put in place contingency plans to mitigate its impact. A number of the Group’s dealers had to temporarily close showrooms and stores in line with government measures to prevent the spread of the virus, but the financial implications for future periods cannot yet be determined. Some of the Group’s projects also faced delays as a result of a complete curfew across the Kingdom. Management is working closely with the relevant authorities to identify the availability of support packages, is actively managing down fixed and variable costs, and shoring up working capital to maintain operations at optimal capacity. Further updates regarding material developments in relation to Covid-19 will be provided by the Company, as required.

Attached Documents   
Shaker Group narrowsQ1 losses; Improved sales and cost optimization reduce net loss by 88.5%

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