1320 · 31/10/2019 09:12:51 · Announcement #56564 · View on Saudi Exchange

Saudi Steel Pipe Co. announces its Interim Financial Results for the Period Ending on 2019-09-30 ( Nine Months )

Element ListCurrent QuarterSimilar quarter for previous year%ChangePrevious Quarter% Change
Sales/Revenue 157.8126.4824.762161.85-2.502
Gross Profit (Loss) 0.13-11.82-0.88-85.227
Operational Profit (Loss) -12.24-23.64-48.223-9.627.5
Net Profit (Loss) after Zakat and Tax -14.12-24.15-41.532-10.1738.839
Total Comprehensive Income -14.12-24.15-41.532-10.1738.839
All figures are in (Millions) Saudi Arabia, Riyals
Element ListCurrent PeriodSimilar period for previous year%Change
Sales/Revenue 514.96459.9111.969
Gross Profit (Loss) 13.544.54198.237
Operational Profit (Loss) -19.23-30.01-35.921
Net Profit (Loss) after Zakat and Tax -23.96-66.01-63.702
Total Comprehensive Income -23.96-66.01-63.702
Total Share Holders Equity (after Deducting Minority Equity) 535.48663.4-19.282
Profit (Loss) per Share -0.47-1.29
All figures are in (Millions) Saudi Arabia, Riyals
Accumulated LossesCapitalPercentage %
-23.965104.7
All figures are in (Millions) Saudi Arabia, Riyals
Element ListExplanation
Increase (Decrease) in Net Profit for Current Quarter Compared to the Same Quarter of the Previous Year is Attributed to The net loss of SR 14.12 million in Q3 2019, as compared to a net loss of SR 24.15 million in Q3 2018 is due to the following main reasons:

(a) Gross profit increased to SR 0.13 million in Q3 2019, due to higher sales volume and change in sales mix, compared to gross loss of SR 11.82 million in Q3 2018.

(b) Reversal of impairment for receivables amounting to SR 0.54 million in current quarter compared to a charge of SR 0.21 million in Q3 2018.

(c) Zakat and income tax charge for current quarter amounting to SR 0.04 million, compared to SR 0.49 million in Q3 2018.

These favorable movements were partially offset by:

(a) Other expenses in the current quarter reaching to SR 1.59 million compared to other expenses of SR 0.08 million in Q3 2018.

(b) Decrease in share of profit in an associate company (Global Pipe Company) during current quarter amounting to SR1.31 million compared to SR 2.48 million in Q3 2018.

(c) Increase in finance charges amounting to SR 3.16 million for current quarter compared to SR 2.51 million in Q3 2018.Increase (Decrease) in Net Profit for Current Quarter Compared to the Previous Quarter is Attributed to The net loss of SR 14.12 million in Q3 2019, as compared to a net loss of SR 10.17 million in Q2 2019 is due to the following main reasons:

(a) Other expenses in the current quarter reaching to SR 1.59 million compared to other income of SR 1.40 million in Q2 2019.

(b) Increase in finance charges for current quarter reaching to SR 3.16 million compared to SR 2.38 million in Q2 2019.

(c) Decrease in gross profit in the current quarter reaching to SR 0.13 million compared to SR 0.88 million in Q2 2019 mainly due to lower sales volume and sales margins, despite a lower gross loss in a subsidiary company (TSM Arabia) during the current quarter.

(d) Increase in selling, marketing and distribution expenses in the current quarter reaching to SR 3.60 million compared to SR 2.94 million in Q2 2019.

(e) Decrease in share of profit in an associate company (Global Pipe Company) during current quarter amounting to SR 1.31 million compared to SR 1.75 million for the previous quarter.

These unfavorable movements were partially offset by:

(a) Reversal of impairment for receivables amounting to SR 0.54 million compared to a charge for the previous quarter of SR 0.59 million.

(b) Decrease in administrative expenses in the current quarter reaching to SR 7.71 million compared to SR 8.35 million for the previous quarter.Increase (Decrease) in Net Profit for Current Period Compared to the Similar Period of the Previous Year is Attributed to The net loss of SR 23.96 million in current period compared to a net loss of SR 66.01 million in similar period of year 2018 is due to the following main reasons:

(a) Non-recurring property, plant and equipment impairment charge of SR 21 million recognized during previous period.

(b) Share of profit in an associate company (Global Pipe Company) for current period amounting to SR 6.12 million compared to SR 5.54 million a share of loss for similar period of 2018.

(c) Increase in gross profit in the current period reaching to SR 13.54 million, mainly due to change in sales mix, compared to a gross profit of SR 4.54 million during same period last year, despite a higher gross loss in a subsidiary company (TSM Arabia) during current period of SR 7.3 million compared to SR 5.1 million during similar period of 2018 mainly due to project cost overruns.

(d) Decrease in selling, marketing and distribution expenses in the current period reaching to SR 10.28 million compared to SR 12.29 million during similar period of 2018.

(e) Decrease in zakat and income tax charges for current period amounting to SR 0.13 million, compared to SR 1.80 million during similar period of 2018.

(f) Reversal of impairment for receivables amounting to SR 0.57 million compared to a charge for the same period last year of SR 0.45 million.

These favorable movements were partially offset by:

(a) Increase in finance charges for current period reaching to SR 10.72 million compared to SR 7.66 million during similar period of 2018.

(b) Increase in administrative expenses in the current period reaching to SR 23.16 million compared to SR 22.27 million during similar period of 2018.Basis of the External Auditor's Opinion Emphasis of Matter paragraphModification, Qualification or Emphasis of a Matter as Stated within the External Auditor Opinion Without qualifying our conclusion, we draw attention to note 2 to the accompanying condensed consolidated interim financial statements, which states the accumulated losses of Titanium and Steel Manufacturing Arabia (the subsidiary- TSM) as at September 30, 2019 have exceeded its share capital by SR 135.4 million. The Board of Directors of the Group has passed a resolution to provide financial support to enable TSM Arabia to meet its financial obligations. 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 still 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.Reclassification of Comparison Items Items, elements and notes of the comparatives in the financial statements have been restated, regrouped and reclassified, as applicable, to be consistent with the presentation and accounting policies adopted for the current period.Additional Information From January 1, 2019, the Company has adopted IFRS 16 for Leases with no material impact on the results of its interim financial statements.

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