nadec menu

Investors

The National Agricultural Development Company (NADEC) announces its quarterly financial results for the period ended on 31 March 2019 (3 Months) - 12/05/2019

ELEMENT LISTCURRENT QUARTERSIMILAR QUARTER FOR PREVIOUS YEAR%CHANGEPREVIOUS QUARTER% CHANGE
Sales/Revenue530.47474.0811.894487.528.809
Total Profit (Loss)203.27162.5425.058178.913.622
Profit (Loss) Operational37.5211.66221.783-32.15
Net Profit (Loss) after Zakat and Tax-3.67-5.02-26.892-47.88-92.335
Total Comprehensive Income-3.67-5.02-26.892-28.69-87.208
All figures are in (Millions) Saudi Arabia, Riyals
ELEMENT LISTCURRENT PERIODSIMILAR PERIOD FOR PREVIOUS YEAR%CHANGE
Total Share Holders Equity (after deducting minority equity)1,442.581,420.291.569
Profit (Loss) per Share0.040.06
All figures are in (Millions) Saudi Arabia, Riyals
ELEMENT LISTEXPLANATION
Reason for increase (decrease) in net profit for current quarter compared to the same quarter of the previous yearThe decrease in the Company’s net losses in the current quarter compared to the similar quarter last year by 26.90% is due to:- Revenue: The Company’s sales for the current period increased by 11.89% due to the increase in the demand for the Company’s products during the current period which had a positive effect on the increase in sales of the Company where the sale of dairy and food processing sector grew by 15.20% due to the increase sale of fresh Laban and juice, however, the sale of agricultural sector declined by 22.19%.

-Other income and expenses: The loss generated from other operating activities decreased by 51.94% due to the difference in the occurrence and the value of the other income expenses.

The below elements led the increase in the net losses reported in the current quarter compared to the similar quarter last year as follow:

– Loss in derivatives financial instrument: The unrealized loss represents the net fair value loss of callable inverse rate floater instruments of SAR 22.88 million and net gain on cross currency swaps of SAR 2.12 million which were entered by the Company with various banks during this quarter. The callable inverse rate floater instruments are structured to reduce the floating rate payments for loan amounts, under certain future economic conditions. These instruments have a total notional value of USD 200 million with a maturity of 5 years and are callable by the bank after an initial fixed period of 1 to 1.5 years. While the cross-currency swaps hedge the USD exposure against SAR and AED have a total notional of USD 100 and USD 96 million respectively and maturity of 5 years and 2 years and 9 months respectively.

– Impairment Losses on Trade Receivables: The expected credit loss assessment on trade receivables had negative impact increasing the net loss of the current quarter where the impairment loss for the current quarter is SR 2.82 million compared to SR 2.40 million in the similar quarter last year with an increase of SR 0.42 million and by 17.31%.

– Zakat provision and expenses: Zakat estimated expenses for the current quarter reduced by 9.50% compared to the similar quarter last year.

-Selling and Marketing expenses: Selling and marketing expenses increased in the current quarter compared to the similar quarter last year by 14.46% due to the increase in the sales volume and the increase in spending in marketing activities and promotional expenses.

-General and Administrative expenses: The general and administrative expenses for the current quarter increased by 2.28% compared to the similar quarter last year due to the increase in the professional and consultancy fees that serves the Company needs.

-Finance costs : finance costs and bank facilities increased in the current quarter compared to the similar quarter last year by 25.14% despite the reduction in the total outstanding loans due to the increase in the market borrowing cost rate. All the above elements collectively impacted the gross profit and operating profit as follow:

-Gross profit: Gross profit increased by 25.06% compared to the similar quarter last year, due to the increase in sales by 11.89% and the decrease in the costs of sales percentage from net sales as a result of the increase in operational efficiency and decrease in cost of production. This led to an increase in the gross margin percentage more than the increase in the sales percentage.

-Operating profit: Operating profit increased by 221.78% compared to the similar quarter last year primarily due to the increase in sales volume>

Reason for increase (decrease) in net profit for current quarter compared to the previous quarterThe decrease in Company’s net loss in the current quarter compared to the previous quarter by 92.33% is due to:- Revenue: The Company’s sales increased for the current period by 8.81% compared to the previous quarter due to the increase in demand for the Company’s products, which had a positive effect on the increase in sales of the Company where the sale of dairy and food processing sector grew by 9.42% and the sale of agricultural sector grew by 0.26%.

-Selling and Marketing expenses: Selling and marketing expenses decreased slightly in the current quarter compared to the previous quarter by 1.08% due the lower spending on marketing activities and promotions in the current quarter.

-General and Administrative expenses: The general and administrative expenses for the current quarter decreased by 13.40% compared to the previous quarter due to the decrease in the professional and consultancy fees in the current quarter compared to the previous quarter.

– Impairment losses on Agricultural Sector Assets: The impairment loss on agricultural sector assets resulted in net loss in the previous quarter, however it has positively impacted the result of the current quarter in reducing the depreciation expense.

The below elements led to generate a net loss in the current quarter compared to the previous quarter as follow:

– Loss in derivatives financial instrument: The unrealized loss represents the net fair value loss of callable inverse rate floater instruments of SAR 22.88 million and net gain on cross currency swaps of SAR 2.12 million which were entered by the Company with various banks during this quarter. The callable inverse rate floater instruments are structured to reduce the floating rate payments for loan amounts, under certain future economic conditions. These instruments have a total notional value of USD 200 million with a maturity of 5 years and are callable by the bank after an initial fixed period of 1 to 1.5 years. While the cross-currency swaps hedge the USD exposure against SAR and AED have a total notional of USD 100 and USD 96 million respectively and maturity of 5 years and 2 years and 9 months respectively.

– Zakat provision and expenses: Zakat estimated expenses increased in the current quarter compared to the previous quarter as the Company obtained the final Zakat declaration in the previous quarter which was in the favor of the Company and resulted in a reduction in Zakat expenses in the previous quarter.

– Impairment Losses on Trade Receivables: The expected credit loss assessment of trade receivables for the current quarter increased by SAR 1.37 million where the expected credit loss reached SAR 2.82 million this quarter compared to SAR 1.45 million in the previous quarter with an increase of 94.48%, which led to generate a net losses in the current quarter.

-Other income and expenses: The loss resulted from other operating activities increased in the current quarter compared to the previous quarter as a result of recognizing part of the deferred income in the previous quarter as part of the government grants.

-Finance costs: Finance costs increased in the current quarter compared to the previous quarter by 13.47% despite the reduction in the loans outstanding due to the increase in the market borrowing cost.

All the above elements collectively impacted the gross profit and operating profit as follow:

-Gross Profit: Gross profit increased in the current quarter compared to the previous quarter by 13.63%, due to the increase in sales volume by 8.81% and the decrease in the depreciation expense realized due to the impairment in fixed assets in the previous quarter which resulted in lower cost of sales which positively impacted the current quarter net loss.

-Operating profit: Operating profit of the current quarter increased compared to the previous quarter due to the increase in sales volume, the decrease in general and administrative expenses, the decrease in depreciation expenses and the decrease in selling and marketing expenses.

Type of the external auditor’s opinionUnmodified opinion
Reclassifications in quarter financial resultThe comparatives interim condensed financial statements have been reclassified in accordance with the accounting policies adopted in the preparation, presentation and classification of the items and elements and notes to the interim condensed financial statements prepared in accordance with the International Financial Reporting Standards adopted in the Kingdom of Saudi Arabia and endorsed by the Saudi Organization for Certified Public Accountants. The Company has adopted IFRS (16) for the first time that resulted in a change in accounting policies. For further information, refer to Notes 4.1.1 in the notes to the interim condensed financial statements for the period ended 31 March 2019.
Additional Information1. Sales / Revenue of the current quarter is SAR 530.47 million compared to SAR 474.08 million for the similar quarter last year with an increase of 11.89%.2. Gross profit of the current quarter is SAR 203.27 million compared to SAR 162.54 million for the similar quarter last year with an increase of 25.06%.

3. Operating income of the current quarter is SAR 37.52 million compared to SAR 11.66 million for the similar quarter last year with an increase of 221.67%.

4. Net losses after Zakat of the current quarter is SAR (3.67) million compared to a loss of SAR (5.02) million for the similar quarter last year with a decrease of 26.90%.

5. The total loss in the comprehensive income statement for the current quarter reached SAR (3.67) Million compared to SAR (5.02) Million similar quarter last year with a decrease of 26.90%.

6. The loss per share for the current quarter is SAR (0.04) compared to loss per share of SAR (0.06) for the similar quarter last year with a decrease in loss by 33.33%.

7. The shareholders’ equity till the end of the current quarter is SAR 1.44 Billion compared to SAR 1.42 Billion for the similar quarter last year with a decrease of 1.57%

8. The reported earnings per share is calculated based on 84.7 million shares.