| Element | Current quarter | Similar quarter for previous year | % Change current | Previous quarter | % Change previous |
|---|---|---|---|---|---|
| Net profit (loss) |
-
|
-
|
80.69
|
-
|
86.75
|
| Gross profit (loss) |
29.34
|
16.35
|
79.45
|
-
|
-
|
| Operational profit (loss) |
-
|
-
|
60.98
|
-
|
74.89
|
| Earning or loss per share, Riyals |
-
|
-
|
-
|
-
|
-
|
| All figures are in (Millions) Saudi Arabia, Riyals | |||||
| Element | EXPLAINATION |
|---|---|
| Reasons of increase (decrease) for quarter compared with same quarter last year | higher volume, higher margins, lower operating expenses and finance charges. |
| Reasons of increase (decrease) for quarter compared with previous quarter | higher volume, higher margin due to a favorable product mix and lower operating expenses. |
| External auditor's report containing reservation | i)The Group incurred a net loss of SR 7.94 million for the three-month period ended March 31, 2015 and, as of that date the Group current liabilities exceeded its current assets by SR 646.12 million and it has accumulated losses of SR 375.27 million which represent 49.4% of the share capital. The management has prepared forecasts that predict profitable results for the 2015 financial year and which are dependent on successfully restructuring its loans and operations. The restructuring of loans has not been completely finalized and on April 7, 2015 the Company signed with three of its lenders indicative terms to restructure part of total indebtedness with these three lenders of approximately SR 640 million plus accrued interest and which are still subject to review by the lenders legal counsel and the Company satisfactorily meeting certain new restructuring requirements. The Group has also an overdue loan of approximately SR 99.6 million for which there is no agreement with that lender to restructure that loan and it has also not complied with the covenants relating to loans of SR 112.9 million with another lender, which give rise to defaults relating to certain of the Group borrowings; consequently the related borrowings become repayable on demand which were not reflected in the presentation of these loans as current liabilities in the accompanying interim consolidated financial statements. In expressing our conclusion, we have considered the adequacy of the disclosures made in the interim consolidated financial statements concerning the possible outcome of meeting the new restructuring requirements and of finalizing the restructuring of the Group loan obligations totalling approximately SR 1.2 billion as of March 31, 2015. As indicated in the preceding paragraphs, whilst the Company has been able to secure indicative terms for restructuring part of the Group loans from three of its lenders to restructure part of approximately SR 1.2 billion of the total Group indebtedness subject to the satisfactory conclusion of requirements by the lenders and the Company, the outcome of which is still uncertain, the Company has also another overdue amount for which no agreement has yet been reached with that lender to restructure that loan and nor has it been able to obtain a waiver from another lender for the breach of loan covenant. Even though these factors indicate the existence of uncertainties which may cast doubt on the Group ability to continue as a going concern, the interim consolidated financial statements which have been prepared on a going concern basis, the validity of which depends on successfully restructuring its financial and operational plans do not include any adjustments that would result from a failure to: *Finalise on the signed indicative terms to restructure its loans with three of its lenders. *Agree on a satisfactory restructuring plan with another of its lenders on an overdue loan amount. *Obtain a written waiver from one more of its lenders following a breach of covenant. The interim consolidated financial statements and notes thereto do not disclose the details relating to these facts. ii) Additionally, we were unable to obtain sufficient audit evidence in relation to the recoverability of old unbilled revenues of SR 55.6 million as disclosed in note 5 (Unbilled revenue) Unbilled revenue represents revenue earned but not yet billed up to the period end. These amounts will be billed in the subsequent periods. It also includes an amount of SR 55.6 million (31 March 2014: SR 107.7 million) which is outstanding for more than one year. The management believes that this amount will be invoiced and collected during 2015. and the commercial and financial feasibility of development cost of SR 52 million. Any adjustment to this number would have a consequential impact on the interim consolidated statements of operations, assets, liabilities and the equity. Further, we were unable to obtain management representations relating to the above. Review results: Based on our review, except for the effects of matters described in the observation paragraphs mentioned above, we are not aware of any material modifications that should be made to the interim consolidated financial statements for them to be in conformity with accounting standards generally accepted in the Kingdom of Saudi Arabia. |
| Reclassifications in quarterly financial results | Certain figures for 2014 have been reclassified to conform to the presentation of 2015. |
| Other notes | The following Transactions with related parties recorded in the Financial statements during the three months of the year 2015 are as follows: a-Contract with Xeca, an associate company, amounting to SR 1.65 million for the IT services and SAP implementation. b-Purchase contract for aluminum from an associate company, Midal Cables, amounting to SR 2.54 million. The Company wishes to clarify the following qualifications: a-Due to the nature of certain projects the company has not been able to finalize documentation relating to the achievement of billing milestones, and therefore carried unbilled revenues of SR 50.4 million, which are overdue. The documentation will be finalized in the coming months, and the company expects that these unbilled revenues will be reduced significantly during the second and third quarter 2015. b-The Development costs of SR 52 million, incurred by the company Turkish subsidiary in the development of technology related to extra-high voltage and accessories. These costs have been capitalized and amortized in accordance with International Financial Reporting Standards (IFRS), which are the underlying standards adopted in Turkey. The company Turkish auditors, Deloitte Turkey, have agreed with the current treatment of these costs and have not qualified the company Turkish subsidiary. The reason for the change in the gross profit in the last quarter of the previous year (8.10) million SR to (16.346) million SR in the current quarter due to the (8.2) million SR, which represents shipping expenses have been transferred from item sales expenses and distribution in 2014 to the sales item 2014, therefore, the loss of key processes (40.493) million SR remained the same and has not changed as a result of this reclassification. |
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