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The National Agricultural Development Company (NADEC) announces its annual financial results for the year ended 31 December 2018 (12 Months) - 31/03/2019

ELEMENT LISTCURRENT YEARPREVIOUS YEAR%CHANGE
Sales/Revenue2,0962,0323.149
Total Profit (Loss)775.08731.086.018
Profit (Loss) Operational72.2797.62-25.968
Net Profit (Loss) after Zakat and Tax1.7439.94-95.643
Total Comprehensive Income20.9433.92-38.266
Total Share Holders Equity (after deducting minority equity)1,4461,4251.473
Profit (Loss) per Share0.020.47
All figures are in (Millions) Saudi Arabia, Riyals
ELEMENT LISTEXPLANATION
Reason for increase (decrease) in net profit for current year compared to last year– Revenue: The Company’s sales for the current year increased by 3.15% due to the increase in demand for the Company’s dairy products during the current year which had a positive effect on sales of the Company where the sale of dairy and food processing sector grew by 1.71% and the sale of agricultural sector grew by 16.41%.-Gross Profit: Gross profit increased by 6.02% as a result of the increase in sales as well as the increase in operational efficiency and decrease in cost of production, which resulted in increase in gross profit percentage as compared to last year more than the increase in sales percentage.

– Selling and Marketing expenses: Decreased this year compared to the last year by 4.14% as a result of enhanced operational efficiency.

The decrease in net profit of the current year compared to the last year by 95.64% is due to:

– Impairment losses on Agricultural sector assets: The Company reduced the carrying value of the Agriculture sector assets as a result of ban on forage cultivation which reduced the net profit for the current year by SR 52.67 million.

– General and Administrative expenses: The general and administrative expenses for the current year increased by 18.83% compared to last year due to increase in the professional and consultancy fees needed by the company.

– Impairment losses on Trade receivables: The expected credit loss assessment of trade receivables resulted in impairment loss of SR 6.68 million with an increase of SR 6.15 million compared to last year, where the expected credit loss impact was SR 0.53 million.

– Other income and expenses: Other income and expenses decreased by 92.55% mainly due to the one-off gain recognized during last year by selling equity investment (Taseel).

– Operating profit: The operating profit for the current year decreased by 25.97% mainly due to the impairment losses on agricultural sector assets and the increase in the general and administrative expense due to the increase in the consultation expenses.

– Finance costs: The finance cost for the current year increased by 12.82% compared to last year despite the decrease in existing loan balances outstanding at the end of the current year. This is mainly due to a general increase in cost of borrowing in the market as compared to last year.

– Zakat provision and expenses: Zakat expenses for the current year increased as compared to last year due to the fact that last year the Company obtained final zakat declaration which was having positive impact and reduced the zakat expenses last year. However, during current year the zakat provision and expenses increased which negatively impacted the net profit.

Type of the external auditor’s opinionUnmodified opinion
Reclassifications in annual financial resultsThe comparatives financial statements have been represented, regrouped and reclassified to meet with the applied accounting policies for the current year. These financial statements are presented in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standard Board and Saudi Organization for Certified Public Accountants. For more clarification, please refer to note No. 2 (Statement of Compliance) in the Financial Statements for the year ended 31st December 2018.
Additional Information1- The total comprehensive income for the current year amounted to SR20.94 million as compared to SR33.92 million during last year with a decrease of 38.27%.2- The net profit for the current year is SR 1.74 million as compared to SR 39.94 million during last year with a decrease of 95.64%.

3- The revenue of the current year amounted to SR 2,096 million as compared to SR 2,032 million during last year with an increase of 3.15%.

4- The gross profit for the current year amounted to SR 775.08 million as compared to SR 731.08 million during last year with an increase of 6.02%.

5- The operating profit for the current year amounted to SR 72.27 million as compared to SR 97.62 million during last year with a decrease of 25.97%.

6- The Shareholders’ equity as at the end of the current year (no minority equity) as of 31 December 2018 is SR 1,446 million as compared to SR 1,425 million as at the end of last year with an increase of 1.46%.

7- The reported earnings per share for the current year is SR 0.02 per share as compared to SR 0.47 per share for the last year.