ALAKARIA Losses Increase to SR29.4 mln during 1Q, Increase of 539%

The Saudi Real Estate Company (ALAKARIA) revealed an increase in net losses after zakat and tax in the first quarter to SR29.4 million, compared to losses of SR4.6 million in the same quarter of last year, an increase of 539.13%

This came after ALAKARIA announcement on Tuesday about the preliminary financial results for the period ending on 31.03.2022 (three months).

The operational profit in the first quarter amounted to SR3 million, compared to a loss of SR2.9 million in the same quarter of the previous year.

The gross income in the first quarter amounted to SR67.4 million, compared to SR49.1 million in the same quarter of the previous year, an increase of 37.3%.

The total shareholders’ equity “without minority rights” in the 3-month period amounted to SR2.9 billion, compared to SR2.8 billion in the same period last year, a growth of 2.7%.

The loss per share in the 3-month period was SR0.12, compared to SR0.02 in the same period last year.

The reason of the increase (decrease) in the net profit during the current quarter compared to the same quarter of the last year is:

“The reason for the increase in Net loss during the current quarter as compared to the same quarter of the previous year:

1- 17.4M Finance Cost Increased mainly due to stop capitalization in Al Widyan Project as the project activities stopped, as the land was located inside the development area which is under the studying of development purposes by Government.

2- Increase in General & Administrative Expenses compared to the same quarter of the previous year by SR5.8 million as a result of the expansion of the activity of subsidiaries.

3- Increased Sales & Marketing Expenses by (SR6.6) million mainly in ECL and Advertisement campaign Al Akaria Park (Real Estate Project)

4- Decrease in Net other Income

5- Increase zakat provision by SR7.3 million “

The reason of the increase (decrease) in the net profit during the current quarter compared to the previous period of the current year is:

“The reason for net losses during the current quarter compared to net profit in the previous quarter is due to:

1- Decrease in revenues and not recording any land sales during this quarter.

2- 2-Increased Sales & Marketing Expenses by (SR3.8) million mainly in ECL and Advertisement campaign Al Akaria Park (Real Estate Project)

3- 3- Reversal of SR50 million in the previous quarter related to the Limitless case.”

We draw attention to note (3-a) to the interim condensed consolidated financial statements for the period ended 31 March 2022, as stated therein, certain land parcels owned by the Company are currently not available for use or development due to various reasons, of which certain reasons relate to the areas where these lands are located and other related to the fact that they are under study from specialized committees to resolve these matters.

The management is currently communicating with the related government agencies and committees to address these reasons to allow the use of these lands. The impact on the net realizable value of these lands is still uncertain and depends on the final results of the study by the assigned committees. The carrying value of these lands amounted to SR 417 million as at 31 March 2022.

We further draw attention to note (3-b) to the interim condensed consolidated financial statements. As stated therein, during the period; it has come to management’s attention that the land which was designated for the Al Widyan project is located within an area that is currently under study by the relevant government agencies with the aim of developing it, which may result into a fundamental change to the original project’s plan and may impact the land’s realizable value. The effect of the extent of this study remains uncertain and is dependent on future development by the relevant government agencies’ plan.

The carrying value of the land and capital work-in-progress amounted to SR 2,168 million and SR 856 million respectively as at 31 March 2022.

Comparative figures have been re-classified to confirm to the current presentation