Fawaz Abdulaziz Alhokair Co. announces its Annual Financial Results for the Period Ending on 2021-03-31
| Element List | Current Year | Previous Year | %Change | ||
|---|---|---|---|---|---|
| Sales/Revenue | 4,233.5 | 5,341.8 | -20.747 | ||
| Gross Profit (Loss) | -88.5 | 407.8 | - | ||
| Operational Profit (Loss) | -689 | -132.5 | 420 | ||
| Net Profit (Loss) after Zakat and Tax | -1,110.3 | -681.2 | 62.991 | ||
| Total Comprehensive Income | -1,078.5 | -681.8 | 58.184 | ||
| Total Share Holders Equity (after Deducting Minority Equity) | 451.6 | 1,529.7 | -70.477 | ||
| Profit (Loss) per Share | -5.2 | -3.13 | |||
| All figures are in (Millions) Saudi Arabia, Riyals | |||||
| Element List | Explanation |
|---|---|
| The reason of the increase (decrease) in the net profit during the current year compared to the last year is | Consolidated Net Profit decreased to book a Net Loss of SAR 1,110.3 |
million in FY2021, compared to a Net Loss of SAR 681.2 million in the previous year, mainly driven by the net impact of the following:
• Revenue: Decreased by 20.8% in FY2021, the equivalent of SAR 1,109.3 million, compared to FY2020. The decrease reflected the negative effects of lockdowns and movement restrictions in response to the Covid-19 pandemic across Saudi Arabia and all international markets in which the Company operates. In the Kingdom, all stores were completely shut from 15 March to 26 April 2020. Thereafter, fashion stores opened gradually with additional restrictions while F&B stores continued to operate at a limited capacity during the entire year with intermittent closures at other times. Major international markets operated the entire year at limited working hours. The Company’s forgone revenue in Q1 FY21, because of the lockdowns, is estimated at SAR 1,200 million. The decrease was also driven by the termination and closure of non-performing stores and weak brands during the period.
• Gross Loss: A Gross Loss of SAR 88.5 million was incurred in FY2021 compared to a Gross Profit of SAR 407.8 million in the prior year. The decrease in profitability resulted from subdued top-line performance in the first half of the year due to store closures and reduced footfall relating to Covid-19 containment measures, along with the VAT increase from 5% to 15%. Alhokair, along with its partners, absorbed part of the VAT hike which increased the cost of revenue for certain brands. Gross profitability for the year was further affected by Alhokair’s recognition of SAR 460.9 million in provisions against terminal inventory stock, against ageing stock, and provisions reflecting accumulated inventory shrinkage. During FY2021, the Company performed a physical count of actual inventory, which covered c.95% of stores at the close of FY2021.
• Selling, General and Administrative Expenses (SG&A): Increased by 24.1%, the equivalent of SAR 86.0 million, to SAR 442.3 million in FY2021 reflecting a low base effect in the comparable period.
• Depreciation and Amortization Expense: Remained stable to SAR 298.7 million in FY2021. The slight increase of 1.1%, the equivalent of SAR 3.2 million, was due to the consolidation of the IUC business and opening of new stores, which was partially offset by store closures.
• Other Operating Income: Increased by 15.6%, or the equivalent of SAR 33.9 million, to SAR 251.2 million compared with FY2020 as the Company booked nonrecurring rental discounts following the successful negotiation of improved lease terms with its landlords.
• Impairments: Alhokair booked in FY2021 one-off impairments of SAR 18.5 million related to certain doubtful assets and of SAR 17.4 million related to a subsidiary in Kingdom of Bahrain.
• Net Finance Cost: Decreased by 21.4%, or the equivalent of SAR 96.6 million, to SAR 355.0 million in FY2021, due to decreased interest expense compared to same period last year following the debt restructuring settling of one-time upfront fees.
• Zakat and Income Tax Expense: Decreased by 3.3% in FY2021, the equivalent of SAR 1.6 million, compared to FY2020.
Consolidated like-for-like (LFL) revenue growth for FY2021 came at -29%. However, LFL revenue growth in second half of the year has been witnessing gradual improvement as COVID related restrictions eased with a reported LFL revenue growth of 6% in H2 FY2021 versus 43% for H1 FY2021.
Saudi retail revenues for FY2021 were down 27% in LFL terms. FY2021 LFL growth decline excluding Makkah and Madinah was 23% as these two areas reported 52% LFL growth decline on ongoing limited religious tourism Management continues to target a return to LFL growth in the low single digits over the near term.
EBITDA recorded a loss of SAR 390.3 million, versus an EBITDA profit of SAR 163.0 million in FY20. Based on adjusted gross profit (excluding one-off inventory related provisions of SAR 460.9 million charged during the year ) and after excluding one-off VAT provisions, adjusted EBITDA was SAR 109.6 million. Alhokair’s adjusted EBITDA margin was 2.6%, versus 10.7% in the previous year.
Based on adjusted EBITDA Alhokair’s and after excluding one-off Zakat provisions, adjusted net loss narrowed to SAR 607.9 million.
Inventory balances booked SAR 1,257.2 million for FY2021, marking a significant decline of 24.1% from SAR 1,655.6 million in FY2020. This decrease follows a physical count of actual inventory that had covered c.95% of stores at the close of FY2021 and the consequent recognition of accumulated shrinkage in line with active supply chain management. Alhokair’s restructuring efforts towards optimal inventory levels is nearing completion with an inventory turnover target of 16 weeks average.
Accumulated losses for FY2021 amounted to SAR 1,037,812,790 representing 49.4% of the Company’s share capital of SAR 2,100,000,000 compared to accumulated losses of SAR 112,249,813 for FY2020, which represented 5.3% of the Company’s share capital. The main cause for the accumulated losses is attributable to the closure of Alhokair’s retail units in response to the Covid-19 pandemic and associated loss of revenue. Accumulated losses were further driven by the booking of inventory-related provisions during the period. The Board of Directors had approved on Tuesday 17 Shaʻban 1442H corresponding to 30 March 2021 the use of the entire statutory reserve amounting to SAR 205,816,329 to offset part of the Company's accumulated losses.
Procedures and instructions applicable to companies listed on the Saudi Stock Exchange whose accumulated losses reach 35% or more of the capital thereof will be applied. Further options are currently being reviewed by management and the Board to rectify this position and major developments will be announced in a timely manner.
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.