Tabuk Agricultural losses decline 26% to SR17.4 mln in Q2‎

Tabuk Agricultural Development Co. revealed that the net loss after zakat and tax in the second quarter decreased to 17.4 million riyals, compared to a loss of 23.6 million riyals in the same quarter of last year, at a rate of 26.2%. This came after today’s announcement of the preliminary financial results for the period ending in 2022.06-30 (six months).

The operational loss amounted to 14.2 million riyals in the second quarter, compared to a loss of 22.8 million riyals in the same quarter of the previous year, a decrease of 37.6%.

The net profit after zakat and tax in the 6-month period amounted to 27.5 million riyals, compared to 25 million riyals in the same period last year, an increase of 10.2%.

The total shareholders’ equity “without minority rights” amounted to 268.7 million riyals in the current period, compared to 342.8 million riyals in the same period last year, a decrease of 21.3%, while loss per share in the current period amounted to 0.73 riyals, compared to a loss of 0.9 riyals in the same period last year.

The reason for the decrease in net losses is due to the increase in the gross profit as a result of the decrease in the cost of revenues and the decrease in general and administrative expenses, despite the decrease in sales, increase in selling and distribution expenses, decrease in the value of biological assets, increase in the expected credit losses provision, decrease in other revenues and increase in Zakat expense.

The reason for the increase in net losses is due to an increase in selling and distribution expenses, a decrease in the value of biological assets, an increase in expected credit losses provision, a decrease in other income and an increase in Zakat expense, despite the increase in gross profit as a result of the increase in revenues, decrease in general and administrative expenses, and a decrease in the company’s share of investment losses in an associate.

The reason for the increase in net losses is due to a decrease in rental income, an increase in selling and distribution expenses, an increase in general and administrative expenses, a decrease in the value of biological assets, an increase in the expected credit losses provision, an increase in the company’s share of losses from investments in an associate, an increase in zakat expense and a decrease in the zakat refund, despite the increase in gross profit due to the decrease in the cost of revenues and the increase in other revenues.

Modification, Qualification or Emphasis of a Matter as Stated within the External Auditor Opinion:

BASIS OF QUALIFIED CONCLUSION

As explained in note (7) to the interim condensed consolidated financial statements, related to investment in associate companies through equity method, we didn’t provided with the signed financial statements of Eastern Asia company in accordance with international financial reporting standard that are endorsed in the kingdom of Saudi Arabia for the year end 31 December 2021 and for the period end 30 June 2022, including the interim condensed consolidated statement of profit or loss and other comprehensive income, changes in shareholders equity and cash flows, hence we were unable to determine whether there were any adjustments that might have been necessary to the consolidated statement of financial position as at 31 December 2021, and as at 30 June 2022 and for both the consolidated statement of profit or loss, other comprehensive income and change in shareholders equity for the three and six month periods ended 30 June 2022.

Emphasis of matter

¬¬As indicated in note (5) to the interim condensed consolidated financial statements, the group financial statements includes the financial statement of Massadr Agricultural Feed Mill Ltd Company “Subsidiary Company”, in which the statutory procedures to transfer ownership of assets and all operation activities to the Massadr Agricultural Feed Mill Ltd Company, in accordance with the signed agreement between the establishment owner (one of the partners) and Massadr Agricultural Feed Mill Ltd Company have not been completed and our conclusion is not modified in respect of this matter, which total assets of Massadr Agricultural Feed Mill Ltd company included in these interim condensed consolidated financial statements amount to SAR 37.7 million, and total liabilities amount to SAR 47.9 million, revenue amount to SAR 1.2 million, and total expenses amount to SAR 4.2 million.

Additional Information:

OTHER MATER

The consolidated financial statement of Tabuk Agricultural Development Company for the year ended 31 December 2021 and the interim condensed consolidated financial statements for the three-month and six-month periods ended 30 June 2021, were audited and reviewed by another auditor who expressed an qualified opinion dated 3 Ramadan 1443H corresponding to 4 April 2022G and unqualified conclusion dated 14 Moharam 1443H corresponding to 23 August 2021G, accordance with international financial reporting standard that are endorsed in the kingdom of Saudi Arabia.

Following is the basis of qualified opinion on the consolidated financial statements for the year ended 31 December 2021:

We didn’t obtain the financial statements of Eastern Asia Company for Agricultural investment, As a result of this matters, we were unable to determine whether any adjustments might have been found necessary to include in the consolidated statement of financial position as at 31 December 2021 and the consolidated financial statements for the year ended on 31 December 2021, including consolidated statement of profit or loss and other comprehensive income, and consolidated statement of changes in equity and consolidated statement of cash flows.

OTHER STATUTORY AND REGULATORY REQUIREMENTS

The consolidated financial statement for year ended 31 December 2021 have not been approved by shareholders to date, which is a violation of the company’s law.

Earnings per share

The calculation of basic earnings per share has been based on the distributable earnings attributable to shareholders of ordinary shares and the weighted average number of ordinary shares outstanding at the date of the financial statements amounting to 39,176,700 shares.

The basic loss per share resulted from period losses amounted to SAR (0.73), compared to an amount of SAR (0.90) for the same period of the previous comparative year.

Important and subsequent events

During July 2022, the General Assembly of Rakhaa for Agricultural Investment and Development (Associate Company) have met and the shareholders agreed to transfer the balance of the Saudi Industrial Development Fund loan to the shareholders without any financial returns and be in Egyptian pounds. Based on the recommendation of the Associate Company’s board of directors on 20 March 2022, and approval is under process regarding Assembly resolution from the competent authorities in the Arab Republic of Egypt.

The value of the accumulated losses as on 30 / 06 / 2022 GD amounted to 125.06 million Saudi riyals, which is equivalent to 31.9 % of the company’s capital of 391.767 million Saudi riyals, and the date of attaining these losses was 30 / 06 / 2022 GD, where the main reasons for these losses are the decrease in revenues, impairment of properties & equipment related to a subsidiary, increase in Value-Add Tax (VAT) reassessment, charging cost of issuing for shareholders equity instruments to retained losses, an increase in general & administrative expenses and the increase in selling & distribution expenses.

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 20% or more and less than 35% of their capital.