NADEC records a net profit of SR3.2 million during the 3Q

The National Agricultural Development Company (NADEC) recorded a net profit after zakat and tax of SR3.2 million during the third quarter, compared to losses of SR45 million riyals during the same quarter of the previous year.

This came after the Company announced on Thursday its financial results for the period ended 30 September 2021 (Nine Months)

The gross profit amounted to SR178 million during the third quarter, compared to SR183 million during the same quarter of the previous year, a decrease of 2.4%.

The operational profit amounted to SR13 million during the third quarter, compared to losses of SR35 million during the same quarter of the previous year.

The net loss after zakat and tax during the current period amounted to SR8 million, compared to a profit of SR105 million during the same period of the previous year.

The loss per share during the current period amounted to SR0.08, compared to a profit of SR1.03 during the same period of the previous year.

The reasons for the Company’s net profit of SAR 3.21 million in the current quarter compared to net loss of SAR 44.89 million for the similar quarter last year:

Impairment of Property, Plant and Equipment:

During the similar quarter last year, the Company assessed the Value in Use (VIU) of the assets related to Sudan project, which showed a decline in the value of the assets amounting to SR 43.89 million and this resulted in an impairment loss which was charged to the Statement of Profit and Loss but no such items in the current quarter.

Revenue:

The Company’s revenue for the current quarter increased by 0.72% compared to the similar quarter last year. This was mainly on the account of increased Sales of dairy and food processing sector by 1.70% partially offset by a decrease in the sales of the agricultural sector by 14.27%.

Selling and marketing expenses:

Selling and marketing expenses decreased in the current quarter compared to the similar quarter last year by 11.87% mainly on the account of lower spending on marketing and promotional activities.

Impairment losses on trade receivables:

The Impairment losses on trade receivables were decreased by SR 1.2 million during the current quarter when compared to the similar quarter of last year.

Despite the changes in preceding elements that positively impacted the net profit of the Company in the current quarter, there are other elements that negatively impacted the net profit of the current quarter as follows:

Cost of sales:

Cost of sales percentage on revenue was increased during the current quarter by 0.97% compared to the similar quarter last year mainly on the account of the increase in the animal feeding costs.

General and Administrative expenses:

General and administrative expenses increased in the current quarter by 2.41% compared to the similar quarter last year mainly on the account of increase in professional consultancy charges for new projects and Information Technology expenses. This increase was partially offset by a reduction in employee cost.

Other expenses & income (net):

Other expenses increased in the current quarter by SR 8.09 million compared to the similar quarter last year mainly on the account of increase losses on the sales of biological assets due to higher cow culling.

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

Gross profit:

Gross profit of the current quarter decreased by 2.43% compared to the similar quarter last year, due to the increase in the costs of sales percentage over the net revenue by 0.97% due to the increase in animal feed costs.

Operating profit:

Operating profit of the current quarter increased by SR 48.29 million compared to the similar quarter last year primarily due to the increase in sales, decrease in selling & marketing expenses and no impairment losses on Sudan project during current quarter.

The reason for the Company’s net profit of SR 3.21 million in the current quarter compared to net loss of SR 17.35 million for the previous quarter:

Revenue:

The Company’s revenue for the current quarter increased by 10.09% compared to the previous quarter. This was mainly on the account of increase in Sales of dairy and food processing sector by 7.38% and increase in the sales of agricultural sector by 102.42%.

Selling and marketing expenses:

Selling and marketing expenses decreased in the current quarter compared to the previous quarter by 2.71% due to reduction in employees cost partially offset by an increase in the distribution costs.

Other expenses & income (net):

Other expenses decreased in the current quarter by SR 7.00 million compared to the previous quarter mainly on the account of decrease in foreign exchange losses. During the previous quarter, the company recognized foreign exchange losses for currency devaluation of Sudanese Pound no such items in current quarter.

On the other hand, the below elements had a negative impact on the net profit of the current quarter compared to the previous quarter:

Cost of sales:

Cost of sales percentage on revenue was increased during the current quarter by 0.53% compared to the previous quarter mainly on the account of the increase in the animal feeding costs.

General and Administrative expenses:

General and administrative expenses increased in the current quarter by 16.17% compared to the previous quarter mainly on the account of increase in professional consultancy charges for new projects.

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

Gross profit:

Gross profit increased in the current quarter compared to the previous quarter by 8.19% due to the increase in sales by 10.09%

Operating profit:

Operating profit of the current quarter increased as compared to the previous quarter by SAR 20.26 million due to the increase in sales, reduction in selling & marketing expenses and other expenses.

The reasons for the Company’s net loss of SR 7.7 million in the current period compared to net profit of SR 104.92 million for the similar period last year:

Grant Income:

During the similar period last year, the Company received a letter from Ministry of Environment, Water and Agriculture granting the ownership for the revived area of land in Hail, Wadi Al Dawasir and Al Jouf. Net gain of SR 111.81 million was recognized in the statement of profit and loss under other income and expenses (net) on account of differential land received as compared to the land already accounted in books but no such item in the current period.

Revenue:

The Company’s revenue for the current period decreased by 5.09% compared to the similar period last year. Sales of dairy and food processing sector declined by 2.61% and the sale of agricultural sector declined by 42.15% mainly on the account of VAT rate changes in July 2020.

Cost of sales:

Cost of sales percentage on revenue was increased during the current period by 3.02% compared to the similar period last year mainly on the account of increased direct material costs due to cancelation of government subsidy on certain items of animal feeds.

General and Administrative expenses:

General and administrative expenses increased in the current period by 3.96% compared to the similar period last year mainly on the account of increase in professional consultancy charges for new projects and Information Technology expenses. This increase was partially offset by a reduction in the employee costs.

Despite the changes in preceding elements that negatively impacted the net profit of the Company in the current period, there are other elements that positively impacted the net profit of the current period as follows:

Impairment of Property, Plant and Equipment:

During the similar period last year, the Company assessed the Value in Use (VIU) of the assets related to Sudan project, which showed a decline in the value of the assets amounting to SR 43.89 million and this resulted in impairment loss which was charged in the Statement of Profit and Loss but no such items in the current period.

Selling and marketing expenses:

Selling and marketing expenses decreased in the current period compared to the similar period last year by 13.13% mainly on the account of lower spending on marketing and promotional activities.

Impairment losses on trade receivables:

The Impairment losses on trade receivables were decreased by SR 5.01 million during the current period when compared to similar period last year.

Finance costs:

Finance costs decreased in the current period compared to the similar period last year by 27.58% due to the decrease in the interest rates and the reduction in the loans and borrowings compared to the similar period last year.

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

Gross profit:

Gross profit decreased in the current period compared to the similar period last year by 13.53%, due to the increase in the costs of sales percentage over the net revenue by 3.02% as a result of the cancelation by the government of subsidies on certain animal feed items.

Operating profit:

Operating profit of the current period decreased compared to the similar period last year by SR 121.57 million due to increase in cost of sales percentage over revenue, increase in general and administration expenses, reduction in revenue, absence of grant income for land during current period.

1-The net profit and comprehensive income for the current quarter reached SR 3.21 million compared to net loss and comprehensive loss of SR 44.89 million for the similar quarter last year.

2-The net loss and comprehensive loss for the current period reached SR 7.77 million compared to net profit and comprehensive income of SR 104.92 million for the similar period last year with a decrease of 107.41%.

3-The net profit and comprehensive income for the current quarter reached SAR 3.21 million compared to net loss and comprehensive loss of SR 17.35 million for the previous quarter.

4-Total revenue for the current quarter reached SR 591.44 million compared to SR 587.23 million for the similar quarter last year with an increase of 0.72%.

5-Total revenue for the current period reached SR 1,665.09 million compared to SR 1,754.44 million for the similar period last year with a decrease of 5.09%.

6-Total revenue for the current quarter reached SR 591.44 million compared to SR 537.23 million for the previous quarter with an increase of 10.09%.

7-The gross profit for the current quarter reached SR 178.42 million compared to SR 182.87 million for the similar quarter last year with a decrease of 2.43%.

8-The gross profit for the current period reached SR 516.23 million compared to SR 596.97 million for the similar period last year with a decrease of 13.53%.

9-The gross profit of the current quarter reached SR 178.42 million compared to SR 164.92 million for the previous quarter with an increase of 8.19%

10-The operating profit for the current quarter reached SR 13.21 million compared to operating loss of SR 35.08 million for the similar quarter last year.

11-The operating profit for the current period reached SR 21.56 million compared to SR 143.13 million for the similar period last year with a decrease of 84.94%.

12-The operating profit of the current quarter reached SR 13.21 million compared to operating loss of SR 7.04 million for the previous quarter.

13-The shareholders’ equity as of 30 September 2021 (no minority equity) was SR 1,470.51 million compared to SR. 1,478.28 million as of 31 December 2020 with a decrease of 0.53%

14-The shareholders’ equity as of 30 September 2021 (no minority equity) was SR 1,470.51 million compared to SR 1,545.54 million as of 30 September 2020 with a decrease of 4.85%

15-The loss per share for the current period was SR 0.08 compared to earnings per share of SR 1.03 for the similar period last year.