Friday, 29 March 2024

Saudi Electricity Profits Rise to SR7.4 bln during the 3Q by 235%

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The Saudi Electricity Company recorded a net profit after zakat and tax of SR7.38 billion during the third quarter, compared to SR2.2 billion during the same quarter of the previous year, an increase of 235.3%.

This came after Saudi Electricity Co. announced on Sunday its interim consolidated condensed financial results for the period ending on 30-09-2021 (Nine Months).

The operational profit amounted to SR7.99 billion during the third quarter, compared to SR3.37 during the same quarter of the previous year, an increase of 137.23 percent.

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The gross profit amounted to SR8.8 billion during the third quarter, compared to SR3.3 billion during the same quarter of the previous year, a growth of 163.47%.

The net profit after zakat and tax during the current period amounted to SR14.89 billion, compared to losses of SR1.1 billion during the same period of the previous year.

Profits per share during the current period amounted to SR2.2, compared to losses of SR0.27 during the same period of the previous year.

The increase in net profit in the current quarter compared to the same prior year quarter is mainly attributable to implementing the regulatory and financial reforms approved for the electricity sector in November 2020, as per which: 1)

the government fee was cancelled as of January 1, 2021, this as opposed to the same prior year quarter included a government fee costs of SAR 4.96 billion

2) adopting a Regulatory Asset Based (RAB) Model to regulate the company’s revenue, effective from the fiscal year 2021, and accordingly the balancing account estimated amount is being recognized by the company on a quarterly basis, this has mainly driven a higher other operating revenue in the current quarter and

3) lower finance costs on income statement due to lower overall debt levels following the conversion of the government loans as part of the Mudaraba Instrument signed in November 2020, this has been partly offset by lower other income due to decrease in government grants amortization and higher accounts receivable provisions reflecting higher revenue base retained by the company after the government fee cancellation.

These are in addition to growth in electricity sales, electricity connection revenue and transmission system revenue, which were partly offset by increase in the costs of purchased power, operations and maintenance and depreciation as well as a one-off expense due to fuel dues settlement in the current quarter.

The increase in net profit in the current quarter compared to the previous quarter of the current year is mainly due to sales seasonality.

Achieving a net profit in the current period compared to a net loss in the same prior period is mainly attributable to implementing the regulatory and financial reforms approved for the electricity sector in November 2020, as per which:

 1) the government fee was cancelled as of January 1, 2021, this as opposed to the same prior year period included a government fee costs of SAR 11.86 billion

2) adopting a Regulatory Asset Based (RAB) Model to regulate the company’s revenue, effective from the fiscal year 2021, and accordingly the balancing account estimated amount is being recognized by the company on a quarterly basis, this has mainly driven a higher other operating revenue in the current period and

3) lower finance costs on the income statement due to lower overall debt levels following the conversion of the government loans as part of the Mudarabah Instrument signed in November 2020, this has been partly offset by lower other income due to decrease in government grants amortization and higher accounts receivable provisions reflecting higher revenue base retained by the company after the government fee cancellation.

These are in addition to a 6.8% growth in electricity sales mainly due to demand recovery from Covid-19 pandemic impact on the same prior year period, higher electricity connection revenue and transmission system revenue, which were partly offset by increase in the costs of purchased power, operations and maintenance and depreciation in the current period.

Certain comparative figures have been reclassified to conform to the presentation in the current periods.

Net profit attributable to common shares for the nine months ended 30 September 2021 after deducting profit attributable to Mudarabah Instrument of SR 5,730 million amounted to 9,166 million compared to a net loss of SR 1,109 million for the same prior year period, accordingly basic and diluted earnings per share the nine months ended 30 September 2021 arrived at SR 2.20 compared to a loss of SR 0.27 for the same prior year period.

The company points out that improved profitability improves its financial ability to inject the required priority investments to boost reliability and efficiency in the electricity system, including enhancing the power transmission grid reliability, so as to raise the generation efficiency, and enable the production of electricity from the renewable energy sources.

This is with the objective of achieving the target energy mix for electricity production. Furthermore, the aims include enhancing and automating the distribution grid. All these contribute to achieving the aspired goals in raising the quality and reliability of the electrical service provided to the end consumer.

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