| Element List | Current Year | Previous Year | %Change | ||
|---|---|---|---|---|---|
| Sales/Revenue | 646.2 | 696.42 | -7.211 | ||
| Total Profit (Loss) | -2.07 | 93.44 | - | ||
| Profit (Loss) Operational | -51.06 | 45.47 | - | ||
| Net Profit (Loss) after Zakat and Tax | -168.66 | 19.09 | - | ||
| Total Comprehensive Income | -169.97 | 18.06 | - | ||
| Total Share Holders Equity (after deducting minority equity) | 559.44 | 729.85 | -23.348 | ||
| Profit (Loss) per Share | -3.34 | 0.38 | |||
| All figures are in (Millions) Saudi Arabia, Riyals | |||||
| Element List | Explanation |
|---|---|
| Reason for increase (decrease) in net profit for current year compared to last year | The reason for net loss for the year 2018 compared with the net income for the year 2017 is due to: |
a) Net loss amounting to SR 83.14 million incurred by subsidiary company (TSM Arabia) which includes impairment loss of SR 51.99 million in based on an evaluation study performed by an independent consultant.
b) Impairment loss of SR 21 million in bending unit based on an evaluation study performed by an independent consultant.
c) Providing for a provision amounting to SR 30 million to account for expected credit loss (under IFRS 9) for financial guarantee provided on behalf of an investee company (Polysilicon Technology Company).
d) Decline in the financial performance of associate company (Global Pipe Company) compared to previous year. The SSP share in associate company is net loss of SAR 0.25 million for the year 2018 compared to net income of 11.32 million for the year 2017.
e) Additional provision for slow moving inventories amounting to SR 7.8 million compared to last year and recording write-down loss of inventories amounting to SR 1.5 million despite net reversal of provision for warranty on project sales amounting to SR 0.9 million.
f) Decrease in project deliveries for pipes due to delay in raw material deliveries.
g) Increase in raw material prices resulting in lower margins
Without qualifying our opinion, we draw attention to the following;
1- Note 2 to the accompanying consolidated financial statements; where the accumulated losses of TSM Arabia (the subsidiary) as at December 31, 2018 have exceeded its share capital by SR 117.92 million. The Board of Directors of the Group has passed a resolution to continue TSM Arabia's business and to provide sufficient financial support to enable TSM Arabia to meet its financial obligations as and when they fall due. 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.
2- Note 2 and Note 4.4 (b) to the accompanying consolidated financial statements; where management has considered the continuous losses of TSM Arabia (the subsidiary) as an indication of impairment for its assets. Accordingly, management has appointed an independent consultant for conducting an impairment study for the subsidiary. This study has resulted in an impairment of an amount of SR 51.99 million which has been charged to the Group’s consolidated statement of profit or loss and other comprehensive income in the current year. The impairment study was based on various assumptions made by management on the outcome of future events, including significant increase in utilization, growth and revenues. The achievement of the results included in the study is highly dependent on the realization of these assumptions. Management is confident that these assumptions will be realized in the future.
The reason for the difference of SR 2 million between the net loss as per annual audited financial results compared to the fourth quarter 2018 interim annual results is due to the additional provisions incurred for obsolete inventory of TSM Arabia.
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