Further to our previous announcement dated 19th July 2011, on the Interim Consolidated Financial Results for the period ended June 30, 2011 (six months). We would like to clarify that the following are the main reasons for the difference in the companys profitability between the first quarter 2011 and second quarter 2011:
1. Decline in gross profit rate from 15% during Q1-2011 to 5% during Q2-2011 mainly due to fixed costs incurred during the plant shutdown period for turnaround procedures performed on subsidiary companys propylene/polypropylene complex.
2. The SR 0.5 million increase in financial charges during Q2-2011 as compared to Q1-2011 was mainly due to more number of days for the outstanding loans, finance charges for letters of credit and certain other bank charges.
3. The Q1-2011 foreign exchange gain of SR 4.5 million was higher than the Q2-2011 gain of SR 1.2 million mainly due to the volume of transactions and prevailing exchange rate.
4. The fair value of derivatives is market driven and is being determined by a consortium of the subsidiarys bankers. The subsidiary derived a profit of SR 4.0 million in Q1-2011 but incurred a loss of SR 2.8 million in Q2-2011.
The Capital Market Authority and Saudi Exchange take no responsibility for the contents of this disclosure, make no representations as to its accuracy or completeness, and expressly disclaim any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this disclosure, and the issuer accepts full responsibility for the accuracy of the information contained in it and confirms, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts or information the omission of which would make the disclosure misleading, incomplete or inaccurate.