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Etihad Atheeb Telecommunication Co. (GO) announces its Interim Financial Results for the Period Ending on 2018-12-31 (Nine Months )

Element ListCurrent QuarterSimilar quarter for previous year%ChangePrevious Quarter% Change
Sales/Revenue 103.9110.79-6.218108.81-4.512
Gross Profit (Loss) 40.2417.07135.73530.6831.16
Operational Profit (Loss) -9.11-28.03-67.499-9.8-7.04
Net Profit (Loss) after Zakat and Tax -12.71-32.9-61.367-13.67-7.022
Total Comprehensive Income -----
All figures are in (Millions) Saudi Arabia, Riyals
Element ListCurrent PeriodSimilar period for previous year%Change
Sales/Revenue 317.39373.26-14.968
Gross Profit (Loss) 103.3564.8659.343
Operational Profit (Loss) -36.68.44-
Net Profit (Loss) after Zakat and Tax -48.24-7.29561.728
Total Comprehensive Income ---
Total Share Holders Equity (after Deducting Minority Equity) 226.21283.95-20.334
Profit (Loss) per Share -1.02-0.15
All figures are in (Millions) Saudi Arabia, Riyals
Accumulated LossesCapitalPercentage %
246.29472.552.12
All figures are in (Millions) Saudi Arabia, Riyals
Element ListExplanation
Increase (Decrease) in Net Profit for Current Quarter Compared to the Same Quarter of the Previous Year is Attributed to The decrease in net loss is due to decrease in cost of services, decrease in selling and marketing expenses, and decrease in general and administration expenses. In spite of decrease in other income.
Increase (Decrease) in Net Profit for Current Quarter Compared to the Previous Quarter is Attributed to The decrease in net loss is due to decrease in cost of services and decrease in general and administration expenses. In spite of decrease in other income.
Increase (Decrease) in Net Profit for Current Period Compared to the Similar Period of the Previous Year is Attributed to The increase in net loss is due to decrease in operating revenue and decrease in other income. In spite of decrease in cost of services, decrease in selling and marketing expenses and decrease in general and administration expenses.
Basis of the External Auditor's Opinion Disclaimer of Conclusion
Modification, Qualification or Emphasis of a Matter as Stated within the External Auditor Opinion Introduction

We have reviewed the accompanying condensed interim statement of financial position of ETIHAD ATHEEB TELECOMMUNICATION COMPANY (the "Company ") as at 31 December 2018, and the related condensed interim statement of profit or loss and other comprehensive income for the three and nine-month periods ended 31 December 2018, and the condensed interim statements of changes in equity and cash flows for the nine-month period then ended, and a summary of significant accounting policies and other explanatory notes .Management is responsible for the preparation and presentation of these condensed interim financial statements in accordance with International Accounting Standard (34) “Interim Financial Reporting” that is endorsed in the Kingdom of Saudi Arabia. Our responsibility is to express a conclusion on these condensed interim financial statements based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements 2410, “Review of interim financial information performed by the independent auditor of the entity”, that is endorsed in the Kingdom of Saudi Arabia. However, because of the significance of the matters described in the Basis for Disclaimer of Conclusion section of our report, we were not able to express a review conclusion on these condensed interim financial statements.

Basis for disclaimer of Conclusion

The Company’s condensed interim financial statements as at and for the period ended 31 December 2018 have been prepared on a going concern basis of accounting. However, we were unable to conclude whether the use of the going concern assumption basis of accounting to prepare these condensed interim financial statements is appropriate, due to the following factors:

(a) As disclosed in Note 2 of the condensed interim financial statements, the Company’s current liabilities exceed its current assets by SAR 577 million as at 31 December 2018, and for the period then ended the Company incurred a net loss of SAR 48.25 million.

(b) The Company’s condensed interim statement of financial position includes non-financial assets amounting to SAR 1,000 million as at 31 December 2018. There was a significant change in the market whereby the Communication and information Technology Commission (“industry regulator”) awarded a unified telecommunications concession to mobile telecommunications network operators. However, the industry regulator did not award the Unified License to the Company. Management has carried out an impairment assessment in accordance with the IAS 36 “Impairment of assets”, and has determined that the recoverable amounts of the aforementioned assets exceed their carrying amounts as at 31 December 2018 and hence no impairment loss has been recognized. Management’s impairment assessment is highly dependent on a number of subjective judgements and assumptions about future business performance. Certain assumptions made by management in the impairment review are key judgements, including deferral of payments to key suppliers, cash flows, overall long-term growth rates and discount rate. The impairment review includes the assumption that the Company will successfully raise fresh equity, either from existing shareholders or potential investors and will acquire ongoing financial and technical support from its key suppliers to implement the business plan. However, as of the date of approval of the condensed interim financial statements, a binding agreement has not been signed with any potential investor nor with the key suppliers, confirming their continued financial and technical support, including acceptance of deferment of payments. Moreover, the business plan is highly sensitive to changes in the revenue and the operating cost growth rates and any reasonably possible change in these assumptions could lead to the erosion of headroom in the impairment of assessment.

REPORT ON REVIEW OF CONDENSED INTERIM FINANCIAL STATEMENTS (CONTINUED)

(c) The Company has an overdue balance owed to its key supplier amounting to SAR 662 million as at 31 December 2018. The Company has conducted the key supplier with the intention of entering into an agreement to restructure the repayments of the amounts owed to them. The discussions with the key supplier are still ongoing.

The condensed interim financial statements have been prepared using the going concern assumption basis of accounting as the Board of Directors are of the view that the Company will be able to successfully complete the restructuring of the repayment terms of the key supplier as discussed in Note 2 of the condensed interim financial statements. However, we are unable to conclude whether the use of going concern assumption basis of accounting to prepare these condensed interim financial statements is appropriate as the outcome of the restructuring has yet to be satisfactorily concluded at the date of these condensed interim financial statements and is inherently uncertain. If the going concern basis of accounting is not appropriate and the condensed interim financial statements were presented on a realization basis, the carrying value of assets and liabilities may be materially different from that currently recorded in the condensed interim Statements of financial Position. If the Company is unable to continue in operational existence for the foreseeable future, the Company may be unable to discharge its liabilities in the normal course of the business and adjustments may have to be made to reflect the situation that assets may need to be realized other than in the normal course of the business and at amounts which could differ significantly from the amounts at which they are currently recorded in the condensed interim statement of financial position. In addition, the Company may have to reclassify its non-current assets and non-current liabilities a

Reclassification of Comparison Items The financial statements of the current quarter have been prepared in accordance with the International Financial Reporting Standards adopted in Kingdom of Saudi Arabia and Other accredited by the Saudi Organization for Certified Public Accountants. The financial statements for the comparative quarter have been represented, reclassified and categorized in accordance with the accounting policies applied in the presentation, classification and classification of the financial statements for the current quarter.
Additional Information Shareholders Equity

The accumulated losses of SAR 246.29 million as of 30 December 2018 represents 52.13% of the Company’s share capital.

Noting that subsequent to 31 December 2018, the Board of Directors of the Company recommended to reduce the Company’s share capital by SAR 121.97 million, in their meeting held on 27 March 2019, in order to comply with Article 150 and 224 of the new Companies’ Regulation. The aforesaid reduction has been approved in the extra ordinary general meeting of shareholders held on 24 April 2019. Accordingly, the Company’s share capital has been reduced to SAR 350.53 million and the accumulated losses reduced below 50% of the share capital.

In this regard the company will apply the Procedures and Instructions related to listed Companies with accumulated losses reaching 20% or more of their share capital. Issued by the Board of the Capital Market Authority Resolution number 4-48-2013 Dated 15/1/1435H Corresponding to 18/11/2013G and amended by CMA Board Resolution number 1-77-2018 Dated 5/11/1439H Corresponding to 18/7/2018G.

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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