Dur Hospitality reports SR4.6 mln losses in Q2, up 22%‎

Dur Hospitality Co. recorded a net loss after zakat and tax of 4.6 million riyals during the second quarter, compared to a loss of 3.7 million riyals in the same quarter of last year, an increase of 22%. This came after today’s announcement of the preliminary financial results for the period ending in 2022-06 -30 (six months)

The operational profit amounted to 8 million riyals in the second quarter, compared to 4 million riyals in the same quarter of the previous year, a growth of 122%.

The net profit after zakat and tax in the 6-month period amounted to 8.22 million riyals, compared to a loss of 2 million riyals in the same period last year.

The total shareholders’ equity “without minority rights” amounted to 1.63 billion riyals in the current period, compared to 1.6 million riyals in the same period last year, an increase of 0.34%.

Profits per share in the current period amounted to 0.08 riyals, compared to a loss of 0.02 riyals in the same period last year.

The company achieved an operating profit of 8.7 million riyals during the current quarter, which is an increase of 4.8 million riyals or 121.5% over the same quarter of the previous year, due to the improvement in the revenues of the company’s various segments.

The reason for the increase in net loss for the current quarter compared to the same quarter of the previous year is due to the increase in financing burdens due to the increase in interest rates during this quarter.

The reason for incurring losses in the current quarter compared to achieving a profit for the previous quarter is due to the impact on the revenues of some of the company’s hotels because of the decrease in demand from the business sectors due to the seasonal nature of operations of some of the company’s hotels, in addition to the high financing burdens due to the higher interest rates during this quarter.

The increase in net profit during the current period compared to the same period of the previous year amounting to 10 million riyals, and the increase in operating profit amounting to 29.9 million riyals is due to the improvement in the company’s revenues during the current period compared to the same period due to the gradual return to the business sector, lifting of health restrictions, lifting of the suspension of Umrah and the improvement of the Hajj season, despite the current period being affected by the high financing burden due to the higher interest rates in addition to the decrease in other revenues.

As stated in note (22.C) to the interim condensed consolidated financial statements, the Company is disputing the validity of two Interest Rate Swap derivative agreements (“the agreements”) with a local financial institution. During 2020, the Company filed a lawsuit (“the Lawsuit”) against the financial institution before the Committee for the Resolution of Securities Disputes (“the CRSD”). On 14 February 2022, the CRSD has issued its final decision for lack of jurisdiction of an authority and clarified that this lawsuit is subject to the Committee of Banking and Financial Disputes and Violations. On 10 March 2022, The Company filed a new lawsuit before the Committee of Banking and Financial Disputes and Violations to revoke the agreements. The new lawsuit is still at the preliminary stage at the Committee of Banking and Financial Disputes and Violations and the potential outcome cannot be reasonably estimated at this stage. Had these agreements been accounted for in the interim condensed consolidated financial statements, the net income for the three and six months periods ended 30 June 2022 would be higher by SR 9.2 million and SR 28.75 million respectively (for the three and six months periods ended 30 June 2021: net income would be lower by SR 1.67 million and higher by SR 7 million respectively), the net equity as of 30 June 2022 would be lower by SR 37.9 million (the net equity as of 31 December 2021 and 1 January 2021 would be lower by SR 66.7 million SR 83.1 million, respectively). Our audit opinion for the year ended 31 December 2021 and our review conclusion for the prior period ended 30 June 2021 have been qualified on the same matter.