The following factors mainly explain how the net profit of the third quarter of 2023 was achieved:

1. Group total revenues, including gold metal value, were SAR 577.8 million in the third quarter of 2023, an increase of 0.7% compared to SAR 573.9 million in the same quarter of last year. It is worth noting that the Group does not make profits or losses from the value of the sold gold as a metal.

2. Group operating revenues, which better represent revenues of the Group after excluding gold metal value, amounted to SAR 123.3 million in the third quarter of 2023, a decrease of 9.6% compared to SAR 136.4 million in the same quarter of last year due to the translation of revenues of Egypt at a lower exchange rate despite the big increase in sales value in EGP.

In KSA, wholesale operating revenues were 1% higher than the last year while retail operating revenues grew by 2% mainly due to growth in like-for-like stores and the optimization of the stores network by opening new stores in better locations as part of the Group’s plan to optimize and expand its retail network in KSA.

In Egypt, retail operating revenues grew by 27.5% in EGP but declined by 21.0% compared to same quarter of last year after translation to SAR. However, due to increasing sales prices to cope with the EGP devaluation, net profit of Egypt retail increased by 10% compared to the same quarter of last year.

3. Group gross profit of SAR 83.7 million in the third quarter of 2023 was 1.8% slightly lower than the same quarter of last year of SAR 85.2 million due to different foreign exchange prices.

4. Group operating expenses of SAR 57.1 million were 2.7% lower than the same quarter of last year of SAR 58.7 million due to cost control initiatives and positive effects of EGP devaluation.

5. Group operating profit of SAR 26.5 million for the third quarter of 2023 was in line with the same quarter of last year.

6. In July 2023, the Group, through one of its subsidiary, L’azurde Dubai, sold an administrative office with a net book value of SAR 5.3 million to an external buyer for a consideration of SAR 16.4 million. A profit of SAR 10.1 million has been recognized after deducting related expenses, in the third quarter of 2023. This is in line with the group's strategy of focusing on productive assets, reducing costs, and providing the necessary liquidity for expansion.

7. Net profit in the third quarter of 2023 amounted to SAR 24.6 million compared to SAR 9.2 million in the same quarter of last year. The big increase in the net profit includes the profit of SAR 10.1 million from the sales of administrative office in UAE.

8. For the third quarter ended 30 September 2023, the Comprehensive income attributable to shareholders of the Company amounted to SAR 6.6 million compared to Comprehensive income of SAR 2.5 million in the same quarter of last year.

2. Operating revenues of SAR 123.3 million for the third quarter of 2023 were higher than second quarter of 2023 by 6.9% of SAR 115.3 million due to increase in sales prices.

3. Net profit of SAR 24.6 million for the third quarter of 2023 compared to SAR 7.2 million for the second quarter of 2023 mainly due to higher operating profit by SAR 7.8 million and the one-off profit on disposal of an administrative office in UAE.

1. Group total revenues, including gold metal value, were SAR 1,552.0 million in the current period of 2023, a decrease of 3.8% compared to SAR 1,612.5 million in the same period of last year. It is worth noting that the Group does not make profits or losses from the value of the sold gold as a metal.

2. Group operating revenues, which better represent revenues of the Group after excluding gold metal value, amounted to SAR 364.6 million in the current period of 2023, a decrease of 10.0% compared to SAR 405.3 million in the same period of last year due to the translation of revenues of Egypt at a lower exchange rate.

In KSA, wholesale operating revenues were 4.7% higher than last year due to strong sales of L’azurde gold in traditional gold souks.

In KSA, Retail operating revenues were 4.3% higher than last year due to growth in like-for-like sales of the existing stores and the upgrade of the stores network by opening new stores in better locations.

In Egypt, retail operating revenues grew by 39% in EGP terms but lower by 18% compared to last year after translation to SAR. However, due to increasing sales prices to cope with the EGP devaluation, net profit of Egypt retail increased by 16% compared to the same quarter of last year.

3. Group gross profit of SAR 233.6 million in the current period of 2023 was 9.5% lower than the same period of last year of SAR 258.1 million due to lower operating revenues because of the devaluation in EGP, which is expected to be compensated as we continue increasing prices in EGP.

4. Group operating expenses of SAR 163.2 million were 12.5% lower than the same period of last year of SAR 186.6 million due to cost control initiatives and positive effects of EGP devaluation.

5. Group operating profit of SAR 70.4 million for the current period of 2023 was 1.5% slightly lower compared to SAR 71.5 million in the same period of last year due to the reasons mentioned above.

6. Net profit in the current period of 2023 amounted to SAR 43.5 million compared to SAR 31.4 million in the same period of last year, an increase of 38.5%, which includes a one-off profit on disposal of an administrative office in UAE of SAR 10.1 million.

7. The Comprehensive income attributable to shareholders of the Company for the current period amounted to SAR 2.9 million compared to a loss of SAR 10.6 million in the same period of last year.

8. Basic Earnings per Share (“EPS”) was SAR 0.76 in the current period of 2023 compared to SAR 0.55 in the same period of last year.

9. Total Shareholders’ Equity on 30 September 2023 was SAR 374.2 million compared to SAR 427.8 million on 30 September 2022, a decrease of 12.5%, due to payment of dividends, and a negative movement in the Currency Translation Reserve due to unrealized foreign exchange differences on investment in Egypt. It is worth mentioning that the Currency Translation Reserve is a non-cash item that arises on consolidation only and fluctuates with the fluctuation of the foreign exchange rates.

The Company successfully pursued its turnaround plan in 2022/2023 and delivered robust results consistently quarter after quarter. Looking ahead, the Company will continue the major innovations undertaken over the last two years and introduce new upcoming growth drivers. We continuously search for and identify innovations and new initiatives to grow our topline, improve our gross margin and operate with a lower working capital. We offer a diversified portfolio of brands including L’azurde, TOUS and Miss L’ while we consolidate our offering to adapt and win in times of changing consumers’ shopping behaviors. We are also mitigating the short-term downsides of the EGP devaluation by increasing our sales prices in EGP, and by launching new products offering great value to consumers and providing us strong margins.

The strategic drivers for the future success of the Company consist of:

1. Expanding the fast-growing Miss L’ fashion jewelry line to its full potential through our own retail points of sales, e-commerce and 3rd party retailers.

2. Growing our successful L’azurde retail business through new points of sales and a stronger assortment. Especially in KSA, we have a great opportunity to increase the current network of L’azurde retail to a much larger and profitable network, leveraging the very strong brand awareness and 40-year-old legacy. The Company has been successful in finding several promising new retail locations where stores will be opened soon.

3. Optimizing the traditional wholesale business selling jewelry by weight, through more profitable products mix, lower working capital and cost reductions.

4. Leveraging our solid customers’ network in the traditional gold jewelry market to further expand product lines and collections, thereby improving revenues and profits.

5. Scaling our fast-growing e-commerce business through more investments in technology, infrastructure, systems and building a state-of-the-art and experienced digital organization.

6. Expanding the TOUS global franchise business in KSA through stronger assortment, new stores and more investments in marketing.

7. Developing new material growth initiatives across the GCC to leverage the Company’s capabilities in markets other than Egypt.

8. Growing our cash position while continuing to generate positive cash flows and reinforcing our solid banking relationships to support the Company’s transformation initiatives.

For more information, we would like to draw the attention of the shareholders that the Condensed Consolidated Financial Statements for the period ended 30 September 2023 will be available on Company’s website (http://www.lazurde.com) under investors’ relations section.