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Savola Group announces the interim financial results for the period ending on 31-12-2017 (Twelve Months)

Element Current quarter Similar quarter for previous year % Change current Previous quarter % Change previous
Net profit (loss) -37.5 -915.7 95.9 829 -
Gross profit (loss) 1,152 915.9 25.78 1,041.7 10.59
Operational profit (loss) 88.8 -678.7 - 280.2 -68.31
All figures are in (Millions) Saudi Arabia, Riyals
Element Current period Similar period for previous year % Change
Net profit (loss) 1,025.6 -363.3 -
Gross profit (loss) 4,386 4,704.4 -6.77
Operational profit (loss) 800.5 472.6 69.38
Earning or loss per share, Riyals 1.92 -0.68 -
All figures are in (Millions) Saudi Arabia, Riyals
Element EXPLAINATION
Reasons of increase (decrease) for quarter compared with same quarter last year The decrease in the Group net loss for 4th Quarter 2017 compared to the same quarter last year is mainly attributed to the following:
- higher gross profit margin;
- higher share of profit from associates;
- lower operating expenses;
- lower impairment loss;
- lower net finance cost; and
- Lower zakat and tax.

Higher gross profit, mainly due to higher margins in
Retail sector.

Lower financial charges, due to lower currency exchange losses.

Impairment loss recorded in current quarter reduced to SAR 222 million as compared to SAR 573.8 million in the corresponding quarter last year and represents impairment of goodwill relating to Geant Operations in Panda Retail Company, where the net impact to the Group amounts to SAR 202 million.

Reduction in other operating expenses, mainly due to decrease in selling and distribution expenses in Food and Retail sector. Decrease in the administrative expenses also contributed to the overall reduction in the other operating expenses.

Reduction in the share of loss of minority.
Reasons of increase (decrease) for period compared with same period last year Increase in the Group net income for the period ended 31 December 2017 compared to the same period last year is mainly attributed to:

- Gain on disposal of 2% ownership interest in Almarai; as announced earlier on Tadawul;

- Non-recurring net positive impact for the Group of SAR 62 million from gain on disposal of leasehold rights by Panda Retail Company, of its Hyper Panda store in Dubai Festival City Mall, UAE;
- Non-recurring net positive impact for the Group of SAR 30 million due to recognition of dilution gain net of option cost, upon deconsolidation of United Sugar Company Egypt, considered as an associate effective March 28, 2017, after issuance of shares to EBRD as announced earlier on Tadawul;
- Reduced losses from USCE;
- Higher share of profit from associates despite of an increase in the share of loss from an associate;
- Lower impairment loss;
- Lower operating expenses;
- Lower net finance cost; and
- Lower zakat and tax.

This increase in net income is despite of:
- Lower gross profit mainly due to Foods sector, whereas the sales decline is attributed to both Food and Retail sectors; and
- Higher share of minority.
Reasons of increase (decrease) for quarter compared with previous quarter The Group recorded net loss for the quarter ended 31 December 2017 compared to the previous quarter net income for the period ended 30 September 2017 is due to:

- Lower share of profit from associates;
- Gain on disposal of 2% ownership interest in Almarai recorded in Q3 2017;
- Higher impairment loss;
- Higher net finance cost; and
- Lower share of minority.

This increase in net loss is despite:
- higher gross profit, mainly due to higher sales and margins in Retail sector;
- decrease in operating expenses; and
- Lower zakat and tax.

Impairment loss of SAR 222 million recorded in current quarter represents impairment of goodwill relating to Geant Operations in Panda Retail Company, where the net impact to the Group amounts to SAR 202 million.

Increase in net finance cost is mainly attributed to the higher currency exchange losses during the current quarter as compared to the previous quarter.
Reclassifications in quarterly financial results Items, elements and notes of the comparatives Condensed Consolidated Interim Financial Statements have been redisplayed, regrouped and reclassified to meet with the applied accounting policies for the current period, which have been prepared according to the International Financial Reporting Standards (IFRS) that are endorsed in the Kingdom of Saudi Arabia. For more information, please see the note 21 (Explanation of transition to IFRSs) in the Condensed Consolidated Interim Financial Statements for the year ended December 31, 2017 and December 31, 2016
Other notes The Comprehensive Loss for the 4th quarter, attributable to Shareholders of the Company, reached SAR 423.56 million, as compared to the corresponding quarter of the last year of SAR 1.54 billion Comprehensive loss, a decrease of 72.5% as compared to the previous quarter comprehensive income of SAR 780.6 million, a decrease of 154.3%

The Comprehensive Income for the period, attributable to Shareholders of the Company, for the (twelve- months) ended 31 December 2017 amounted to SAR 567.5 million, as compared to the corresponding period comprehensive loss of SAR 1.34 billion of the last year, an increase of 142.3%.

The net revenues for Q4 2017 reached SAR 5.8 billion compared to SAR 6.8 billion for the same quarter of last year, a decline of 14.7% whereas the net revenues for the twelve-month period of 2017 reached SAR 23.8 billion compared to SAR 26.3 billion for the same period of last year representing a decrease of 9.5%.

The equity attributable to shareholders of the parent Company (without minority interest) for the period reached SAR 8.8 billion compared to SAR 8.2 billion for the same period of last year representing an increase of 7.3%

The Group would like to announce that it will not pay quarterly dividends during the year 2018.

We would like to inform the investors that the condensed consolidated interim financial statements of the Group for the period ended December 31, 2017 will be uploaded on Savola website after submitting it to the concerned authorities, and can be accessed through the following link:

http://www.savola.com/SavolaE/Financial_Reports.php

The Capital Market Authority and the Saudi Stock 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.

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