Jabal Omar Records Net Loss of SR270 mln during the 3Q, an increase of 14%

Jabal Omar Development Company recorded a net loss after zakat and tax of 270 million riyals during the third quarter, compared to losses of 236.95 million riyals during the same quarter of the previous year, an increase of 13.96%.

This came after Jabal Omar Development Co. announced on Thursday its interim financial results for the period ending on 2021-09-30 (nine months)

The operational loss amounted to SR57.99 million during the third quarter, compared to losses of SR208.5 million during the same quarter of the previous year, a decrease of 72.18%.

The total loss amounted to SR64.86 million during the third quarter, compared to losses of SR67.16 million during the same quarter of the previous year, a decrease of 3.42%.

The net loss after zakat and tax during the current period amounted to SR344.77 million, compared to losses of SR917.78 million during the same period of the previous year, a decrease of 62.43%.

The loss per share during the current period amounted to SR0.37, compared to SR0.99 during the same period of the previous year.

The reason of the increase in the net loss during the current quarter compared to the same quarter of the last year, according to the company, is due to the increase in financial charges expenses in current quarter compared to same quarter of last year due to exemption of financial charges owed to Alinma Makkah Real Estate Fund in the comparative quarter and Zakat provision booked during the current quarter.

The reason of the increase in the net loss during the current quarter compared to the previous period of the current year is the decrease in other income compare to previous quarter due to gain recognized in previous quarter on sale of plot of land in Jabal Omar project which was announced on Tadawul on 13 December 2020 and zakat provision booked during the current quarter.

The reason of decrease in the net loss during the current period compared to similar period last year is mainly due to the increase in other income compare to similar period last year due to gain recognized on sale of plot of land in Jabal Omar project which was announced on Tadawul on 13 December 2020.

The net carrying value of property, plant and equipment, investment properties and properties for development and sale (“the Assets”) as reported in these financial statements (refer notes 6, 5 and 10) amounts to SR 17,857 million, SR 5,025 million and SR 1,478 million, respectively as of 30 September 2021. In view of substantial reduction in cash generated from the Group’s hotels and commercial area operations and interruption in development of the Group’s projects due to outbreak of COVID-19, the Group’s management performed an impairment assessment (including using an external valuer) of the Assets as at 30 September 2021 to determine the recoverable amount, being the higher of fair value less costs to sell and value in use. It was management’s assessment that no additional impairment provision is required. While performing the review procedures, we sought to review the judgment, assumptions and estimates by the Group’s management such as determination of appropriate valuation methodologies and key estimates and assumptions used. However, for these Assets comprising property, plant and equipment and investment properties with net carrying values of SR 7,612 million and SR 1,534 million respectively as at 30 September 2021, we have requested but not been provided with the appropriate rationale and/or basis used in the determination of valuation methodologies, future margins and terminal values. Consequently, we were unable to determine whether any impairment provision would be required against these Assets as at 30 September 2021.

Except for the adjustments to the interim condensed consolidated financial statements that we might have become aware of had it not been for the situation described above, based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34 as endorsed in the Kingdom of Saudi Arabia.

“We draw attention to note 1 to the interim condensed consolidated financial statements, which indicates that the Group incurred a loss of SR 345 million and negative operating cash flows amounting to SR 596 million during the nine-month period ended 30 September 2021. ” the company said.

In addition, the Group’s current liabilities exceeded its current assets by SR 5,793 million and the Group had accumulated losses amounting to SR 2,473 million as at 30 September 2021. These conditions, along with other matters set forth in note 1, indicate the existence of a material uncertainty that may cast significant doubt about the Group’s ability to continue as a going concern. Our conclusion is not modified in respect of this matter., it explained.

The accumulated losses as at 30 September 2021 amounted to SR2,473 million, equivalent to 26.6% of the Company’s capital.

The company will implement the procedures and instructions issued by the Capital Market Authority regarding companies whose shares are listed in the Saudi Stock Exchange, whose accumulated losses amounted to more than 20% of their capital.