| Element List | Explanation |
|---|---|
| Introduction | Reference to the company’s announcement on the Tadawul website dated 04-25-1445 AH corresponding to 11-09-2023 AD, related to Al-Moammar Information Systems Company’s announcement of the preliminary financial results for the period ending on 09-30-2023 (nine months) |
| Date of Posting the Previous Announcement of Development on Tadawul's Website | 2023-11-09 Corresponding to 1445-04-25 |
| Hyperlink to the Previous Announcement | Click Here |
| Change on the Development | The company would like to clarify the following matters regarding the financial results for the period ending on 09-30-2023 (nine months): |
Reference:
• Net income for the third quarter of 2023, before calculating the provision for expected credit losses, amounted to 23.9 million Saudi riyals, compared to 26.6 million Saudi riyals in the same quarter of the previous year, and compared to 46.25 million Saudi riyals for the second quarter of 2023.
• Net income for the 9-month period in 2023, before calculating the provision for expected credit losses, amounted to 116.5 million Saudi riyals, compared to 50.65 million Saudi riyals in the same period of the previous year. This compares to 92.63 million Saudi riyals for a 6-month period of the same current year.
• The 130% growth in net income before ECL provisions for the nine-month period is a testament to the company's strong growth in revenues, expansion and diversification of its operations.
Saudi riyals in the current quarter.
Explanation of the concept of expected credit losses (ECL):
• The concept of expected credit losses (ECL) means that companies are required to consider how current and future economic conditions will affect the amount of loss. Which includes both contract assets and balances of commercial receivables related to government sectors, entities owned by the government, and the private sector.
• Expected credit loss (ECL) is a weighted estimate of credit losses over the expected life of a financial instrument. These allowances are based on the probability of loss derived from historical information for the company.
• Expected credit losses (ECL) are not an incurred loss/write-off amount, and do not negatively impact a company's cash flow.
Explanation of the origins of the contract and trade receivables:
• Revenue is recognized based on customer acceptance of deliverables in line with the contractual agreement. The Company recognizes revenues by applying criteria consistent with International Financial Reporting Standard (IFRS) - 15.
• Provisions are recorded in the financial statements taking into account the principle of caution. The concept of prudence refers to a critical principle used in accounting to ensure that income and assets/liabilities respectively are not overstated or understated in financial statements.
• Based on an analysis of the last ten years of the company’s total revenues, the company was able to collect receivables at an excellent rate due to the quality of the financial customer base.
Clarification of the External Auditor’s reservation regarding expected credit losses (ECL)
• The company contracted with one of the four largest international accounting firms to reconsider the current expected credit loss model.
• The company shared the updated form with the external auditor on November 9, 2023.
• The External Auditor needs more time to review and conclude the suitability of the updated ECL model, and we expect to receive their feedback soon.
Brief highlights:
• As for the company’s main business in the field of information systems integration, the company obtained a large number of contracts with an approximate total of 1.9 billion Saudi riyals for the current year (55% growth compared to 2022). Current year’s collections from trade receivables amounted to 1.56 billion Saudi riyals (21% growth compared to 2022), while invoices that resulted in a reduction in contract assets amounted to 737 million Saudi riyals (12% growth compared to 2022)
• The company expects continued improvement in collections as well as improvement in billing in the fourth quarter of 2023.
• The company also has a current backlog of approximately SAR 2.7 billion.
• The company expects more new contracts in the fourth quarter of 2023.
• The company expects continued growth in the company’s business, after God’s grace, with the expected continued growth in spending in the information technology sector in the Kingdom, as well as recent initiatives, including data center work, health information technology initiatives, and financial technology (MIS Pay), MIS Connect (which will add to the current portfolio of business Integration of information systems and supports growth in the company's overall operations, based on available data unless there are fundamental changes.
• In line with the Company's management policy, the purpose of this explanatory announcement is to provide the Company's shareholders with as much information and clarity as possible in relation to this and all other matters relating to the Company.
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.