Arabian Centres Co. announces its Interim Financial Results for the Period Ending on 30-06-2021 (Three Months)
| Element List | Current Quarter | Similar quarter for previous year | %Change | Previous Quarter | % Change |
|---|---|---|---|---|---|
| Sales/Revenue | 510.7 | 475.9 | 7.312 | 446.2 | 14.455 |
| Gross Profit (Loss) | 285.7 | 298.7 | -4.352 | 220.8 | 29.393 |
| Operational Profit (Loss) | 214.5 | 267.4 | -19.783 | 139.4 | 53.873 |
| Net Profit (Loss) after Zakat and Tax | 126.3 | 153.1 | -17.504 | 127 | -0.551 |
| Total Comprehensive Income | 126.5 | 176.2 | -28.206 | 129.4 | -2.241 |
| All figures are in (Millions) Saudi Arabia, Riyals | |||||
| Element List | Current Period | Similar period for previous year | %Change |
|---|---|---|---|
| Total Share Holders Equity (after Deducting Minority Equity) | 5,822.7 | 6,160.4 | -5.481 |
| Profit (Loss) per Share | 0.27 | 0.32 | |
| All figures are in (Millions) Saudi Arabia, Riyals | |||
| Element List | Explanation |
|---|---|
| The reason of the increase (decrease) in the net profit during the current quarter compared to the same quarter of the last year is | Net Profit decreased by 17.5% to SAR 126.3 million in Q1-FY22 compared to |
SAR 153.1 million one year previously, driven mainly by the following:
• Lower gross profitability on account of higher cost of revenue, reflecting a low base effect stemming from the partial closures implemented at the Company’s centres during Q1-FY21. The normalization of activity at ACC’s centres was reflected in an increase to utility expenses in Q1-FY22, as well as increases to security, cleaning, and maintenance expenses during the period. In Q1-FY22, ACC’s cost of revenue returned to pre-COVID-19 levels. Gross profit was further impacted by an increase in depreciation expenses on investment properties and right-of-use assets as Arabian Centres continued to ramp up operations at recently launched assets including the extension to its Nakheel Mall Riyadh, U-Walk Riyadh, and Nakheel Mall Dammam.
• Lower other income in Q1-FY22 compared to Q1-FY21, during which ACC had booked SAR 35.3 million in nonrecurring discounts received from the Company’s landlords to mitigate the impact of COVID-related centre closures.
• An increase in general and administrative expenses driven mainly by an increase in employee salaries and benefits during the period. It is worth noting that noting that the comparable period of the previous year included government support for employee salaries under the SANED program. Growth in general and administrative expenses was additionally driven by the continued ramp-up of operations at recently launched assets (Nakheel Mall Dammam, U-Walk Riyadh and the extension at Nakheel Mall Riyadh).
While the above-mentioned factors impacted net profitability for the period, it is worth highlighting that the ramp up in activity across ACC’s malls is driving a recovery in the following items:
• An increase in revenue which grew by 7.3% y-o-y in Q1-FY21 to SAR 510.7 million. The growth reflects a decline in average rental discounts, an increase in occupancy rates, and strong year-on-year growth in footfall across the Company’s centres. Revenue growth was further driven by a ramp-up of operations at recently launched centres, including U-Walk Riyadh, Nakheel Mall Dammam, and the extension to Nakheel Mall in Riyadh. ACC recorded a weighted average discount rate of 9.8% (SAR 50.8 million) for Q1-FY22, down from the 12.5% (SAR 63.0 million) booked one year previously. The Company recognized SAR 49.6 million in nonrecurring, COVID-related discounts during Q1-FY22. Quarterly COVID-related discount disbursals have been on a continuous decline, indicating the ongoing recovery in commercial activity following the government-mandated closure of shopping centres during Q4-FY20 and Q1-FY21. Visitor footfall at the Company’s centres recorded 18.7 million during Q1-FY22, up by 164.1% from the 7.1 million visitors recorded for Q1-FY21. The period between April and June (Q1) is a traditional peak in retail activity in Saudi Arabia and coincides with peak annual footfall. Meanwhile, market conditions continue to steadily improve, with Saudi Arabia’s economy growing for the first time since the onset of the COVID-19 pandemic in the second quarter of 2021, fueled by 10.1% growth in the non-oil sector.
• Higher recurring EBITDA, which normalizes for the effects of nonrecurring items, recorded SAR 420.9 million during Q1-FY22, an increase of 2.6% y-o-y, reflecting the Company’s operational strength.
• Higher recurring net profit of SAR 197.4 million for Q1-FY22, up by 16.6% y-o-y and yielding a recurring net profit margin of 38.7% against the 35.6% booked one year previously.
• Higher gross profitability on account of higher revenues, reflecting a quarter-on-quarter reduction in nonrecurring COVID-19-related rental discounts, an increase in media sales, and seasonal effects, with peak annual footfall typically occurring between the months of April and June.
• A decrease in general and administrative expenses driven mainly by a decrease in employee salaries and benefits during Q1-FY22 compared with Q4-FY21. Visitor footfall at the Company’s centres recorded 18.7 million during Q1-FY22, up by 12.-% from the 16.7 million visitors recorded for Q4-FY21. Market conditions continue to steadily improve, with Saudi Arabia’s economy growing for the first time since the onset of the COVID-19 pandemic in the second quarter of 2021, fueled by 10.1% growth in the non-oil sector.
• An increase in Zakat expense to SAR 2.5 million in Q1-FY22, reversing a Zakat credit of SAR 25.4 million recorded in Q4-FY21.
It is worth noting that visitor footfall at ACC’s centres recorded 18.7 million during Q1-FY22, up 12.0% from the 16.7 million visits recorded during Q4-FY21. Growth in footfall was driven by a strong improvement in market conditions, as Saudi Arabia’s economy grew for the first time since the onset of the COVID-19 pandemic in the second quarter of 2021, fueled by 10.1% growth in the non-oil sector.
• In Q1-FY22, Arabian Centres completed the issuance of USD 650 million in international Sukuk, the Company’s second such offering. The Sukuk hold a maturity of 5.5 years, and proceeds were used to settle outstanding debt. The issuance was two times oversubscribed, received ratings of Ba2 and BB+ (EXP) from Moody’s and Fitch, respectively, and drew heavy international interest.
• In Q2-FY22, following on the success of the previous quarter’s offering, Arabian Centres completed the issuance of USD 225 million in international Sukuk. The Sukuk were consolidated and form part of the same series as the USD 650 million issuance completed in Q1-FY22. The offering was three times oversubscribed, leading the Company to increase the initial issuance size from USD 150 million to USD 225 million. The Sukuk hold a maturity of 5.5 years and the re-offer price was approximately one percentage point below the pricing on the Q1-FY22 offering. Total current outstanding Sukuk stood at USD 1.375 billion following the re-offer completed on 28 July 2021.
For more information regarding Arabian Centres financial and operational results for Q1-FY22, please see the Earnings Press Release accompanying this disclosure. The release also includes comments from the CEO and the date and time of the analyst call.
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.