Alujain profit leaps 682% to SR1.6bln in 2021

Alujain Holding Corp. announced that its profit after zakat and tax jumped 682.6% to SR 1.622 billion in 2021 from SR 207.29 million.

The company’s operational profit rose 59.3% to SR 334.5 million compared to SR 209.9 million.

Gross profit also soared 9% to SR 119.1 million last year from SR 1.34 million in the year before, while profit per share jumped to SR 24.41 compared to SR 3 in 2020.

Higher net profit was soured by:

1. Increase in Alujain Holding Corp’s share in the net profit of the subsidiary, National Petrochemical Industries Company (NATPET), due to an increase in production and sales quantities and improvement in selling prices as compared to the previous year.
2. Increasing the ownership percentage of Alujain Holding Corp. in NATPET capital 57.40% to 75.37%, by purchasing additional shares in several deals, with a total percentage of 17.97% during the 3rd and 4th quarters of 2021.
3. As required by the applicable International Financial Reporting Standards (IFRS) on business combinations, NATPET business value/assets were re-measured, by an independent approved evaluator, to bring them to fair value instead of cost method, this resulted in a gain of SR 1,352 million as “Gain on re-measurement at fair value”.

Emphasis of Matters

We draw attention to the following:

1- As explained in Note (9) of the accompanying consolidated financial statements, which indicates that in June 2021 National Petrochemical Industrial Company (“NATPET”) (Subsidiary Company) completed all procedures related to the transfer of ownership of Menna Company, Fawasel Advanced Petrochemical Company, Al-Taj Towers for Plastic Industries Company, and Afaq professional Chemical Company (“the four Companies”) as per the directives of the competent authories and became a 100% owner of these four companies. Accordingly, the investment in the four entities has been included in the consolidated financial statements of the Group for the year ended 31 December 2021. Our opinion has not been amended based on this matter.

2- As explained in Note (18) of the accompanying consolidated financial statements, which indicates that the treasury shares amounting to SR 627 million have been issued a court decision on March 8, 2020 restricting the rights of shares owned by NATPET and any subsidiary company directly or indirectly related to NATPET in these shares of “Alujain Holding Company” until the ownership and transfer are properly corrected, by activating the role of the General Assembly of NATPET. Our opinion has not been amended based on this matter.

3- Note (9) to the accompanying consolidated financial statements, which describes the effects of fire in NATPET production facilities. Our opinion has not been amended based on this matter.

Additional Information:

On November 11, 2021, Alujain fulfilled all requirements to establish control over NATPET in accordance with the accounting standards which was previously announced on 30-1-2022 on Saudi Stock Exchange (Tadawul). On establishing control, Alujain started to consolidate NATPET financial statements, and accordingly the comparative figures are way above as compared to previous year.

As explained above IFRS 3.43, (Business combination with no consideration transferred), as there is no increase in the percentage of the Alujain’s ownership in Natpet on that date, NATPET business value/assets were re-measured, by an independent approved evaluator, to bring them to fair value, which resulted in “Gain on re-measurement at fair value” and a goodwill of SR 1,553 million is recorded as an asset in the statement of financial position.

After consolidating the financial statements with NATPET, Alujain’s 19,860 million shares, owned by NATPET subsidiaries were classified as treasury shares in accordance with the applicable accounting standards. The ownership of these shares will be finalized in coordination with the stakeholders and the regulatory authorities as soon as possible and in a manner that does not cause any harm to the company’s shareholders.

The gross profit (SR 119.09 million) includes NATPET gross profit starting from the date of control till end of the year. The Operational Profit for the year 2021 amounted to SR 334 million after excluding the gain of re-measurement at fair value due to control.

The Earnings per Share (EPS) based on the Profit attributable to the Shareholders of the Company for the twelve months ended 31 December 2021 and the comparable period last year, reached SAR 24.9 and SAR 3.0 respectively.

Diluted EPS for 2021 and 2020 is 23.9 and 3.0 respectively. Diluted EPS is calculated by dividing the Net Profit for the period attributable to the Shareholders of the Company for the period by the number of issued Shares. Diluted EPS takes into account the Profit attributable to weighted average treasury stock.

NATPET results (For 4th quarter 2021):

1. NATPET’s sales were SR 610 million during 4th quarter 2021 (an increase of 45% as compared to 3rd quarter 2021 sales).
2. NATPET’s operation profit is SR 120 million during 4th quarter 2021 as compared to SR 95 million during 3rd quarter 2021 and net profit of SR138 million during 4th quarter 2021 as compared to SR 90 million during 3rd quarter 2021
3. The production rates maintained close to factory’s nameplate capacity during 4th quarter 2021, and more than 105K tons of polypropylene and its specialized compounds were sold with an increase of 35% as compared to 3rd quarter 2021.
4. Average prices of NATPET and its subsidiaries’ products increased during 4th quarter 2021 by 7% as compared to 3rd quarter 2021. This is due to the improvement in seasonal demand and the increase in product prices.

NATPET results (2021):

1. NATPET’s sales for the current year is SR 2,008 million with an increase of 71% as compared to the last year, the increase is mainly due to the increase in production and sales quantities and the improvement in selling prices of products compared to the previous year.
2. NATPET’s net profit for the current year is SR 519 million as compared to SR 412 million for previous year, with an increase of 26%. Noting that the profits of the previous year included compensation from the insurance company amounted SR 330 million
3. NATPET’s earnings per share for current year is SR 4.85 per share as compared to SR 3.85 per share for the previous year.
4. NATPET’s retained earnings for current year is SR1,846 million, as compared to SR 1,590 million for last year.
5. Total shareholders’ equity of NATPET at the end of current year is SR 3,584 million as compared to SR 2,830 million at the end of last year.