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. |
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