Alujain Corp. — Annual Report 2021

Mar 1, 2021

Alujain Holding Corp. announces its Annual Financial Results for the Period Ending on 2020-12-31

2170 · 01/03/2021 08:17:50 · Announcement #62059 · View on Saudi Exchange

Alujain Holding Corp. announces its Annual Financial Results for the Period Ending on 2020-12-31

Element List	Current Year	Previous Year	%Change
Sales/Revenue	14.38	23.73	-39.401
Gross Profit (Loss)	1.34	5.7	-76.491
Operational Profit (Loss)	209.96	204.74	2.549
Net Profit (Loss) after Zakat and Tax	207.29	191.16	8.437
Total Comprehensive Income	212.4	174.19	21.935
Total Share Holders Equity (after Deducting Minority Equity)	1,690.77	1,478.37	14.367
Profit (Loss) per Share	3	2.76
All figures are in (Millions) Saudi Arabia, Riyals

Element List

Explanation

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

The increase in net profit is mainly due to increasing Alujain’s share from its associate’s net profit, National Petrochemical Industries Co., "NATPET", by SR19.76 million, (Alujain Holding Corp. owns 57.4% of NATPET shares), In addition to decrease in zakat provision by SR12.76 million during current year as compared to last year, as provision for last year includes additional differences issued by the General Authority for Zakat and Income for the years from 2003 to 2016. Although, G&A increased during current year mainly due to certain non-recurring items.

NATPET's net profit increase is due to:

1) NATPET received the remaining part of final settlement for insurance amounted SR330 million, and it was recorded in other profits during current year.

2) Resumption of operations and production after completion rebuilding work of NATPET, which has stopped working since the fire accident that occurred during the last quarter of 2018. Statement of the type of external auditor's report Unmodified opinion Modification, Qualification or Emphasis of a Matter as Stated within the External Auditor Opinion Emphasis of Matters

We draw attention to the following:

As explained in Note (9) of the accompanying consolidated financial statements, end of 2019, established four companies , Mna Company, Developed Fawasel Chemical Company, Abraj Altaj Plastic Industrial Company and Professional Afaq Company (“the four companies”) without paid their capital as of 2019, and in Jan 1 ,2020 NATPET company signed contract with a combined value of SR 559 million so that the four companies can purchase shares in Alujain Holding Corporation and pay off the loan on December 31, 2025. Through first quarter for their 2020, NATPET company gave up its full shares in these four companies in stages, and the management of NATPET believes that the process of assigning ownership of these four companies is illegal, and legal procedures have begun to restore its ownership and control over these four companies. Accordingly, the financial statements of these four companies were not consolidated within the consolidated financial statements of NATPET company for the year ending on December 31, 2020. In addition, NATPET company obtained a legal opinion that supports its position and confirms its ability to recover the value of the loan by the due date, and our opinion has not been amended based on this matter

As explained in Note (9) and Note (30) to the accompanying consolidated financial statements which describes that NATPET invested in Alujain Holding Corporation shares and the fair value of those shares as of December 31, 2019 amounted to about SR 223 million (7.435 million shares). At the beginning of March 2020, NATPET sold all these shares. On March 10, 2020, a court ruling was issued against NATPET and any of its subsidiaries, whether owned directly or indirectly, restricting the rights of shares owned by NATPET Company in the Alujain Holding Corporation until ownership is corrected and moving properly through activating the regular role of the General Assembly of NATPET, according to the Regulations for Companies. Management, after consulting with legal counsel, believes that this ruling includes restricting the rights of these shares transferred by NATPET to others as long as the transfer of shares is in a fictitious and unrealistic manner. Our opinion is not further modified in respect of this matter.

As explained in Note (9) to the accompanying consolidated financial statements which describes that a court ruling was issued at the end of 2019 revoking the NATPET General Assembly’s decision regarding dividends amounting SR 107 million related to year ended December 31, 2018. The General Assembly of NATPET was held on May 31, 2020, and approved a dividend of SR 107 million for the year ended December 31, 2019. Our opinion is not further modified in respect of this matter. Reclassification of Comparison Items Certain reclassification were made in comparative numbers to conform to the current period. Additional Information NATPET results (For 4th quarter 2020):

1. NATPET and its subsidiaries reported sales of SR434 Million during 4th quarter 2020 (an increase of 12% as compared to sales of 3rd quarter 2020).

2. NATPET and its subsidiaries operational profit is SR110 Million during 4th quarter 2020 as compared to SR52 Million during 3rd quarter 2020 and net profit of SR105 Million during 4th quarter 2020 as compared to SR42 Million during 3rd quarter 2020

3. The operational performance of NATPET plant and its subsidiaries continued to improve during 4th quarter 2020, as production rates maintained close to factory’s nameplate capacity, and more than 110K tons of polypropylene and its specialized compounds were sold with an increase of 6% as compared to 3rd quarter 2020.

4. Average prices of NATPET and its subsidiaries' products increased during 4th quarter 2020 by more than 6% as compared to 3rd quarter 2020, as a result of improved demand and product prices.

5. The main reason for the increase in NATPET net profit during 4th quarter 2020 is increase in volume and prices of products, and decrease in costs, while continuing to implement programs to improve operational efficiency and reduce fixed costs. On the other hand, the feedstock price increased during 4th quarter 2020, by about 20% as compared to 3rd quarter 2020.

NATPET results (2020):

1. NATPET and its subsidiaries companies reported total sales of SR1,207 Million for current year, with no significant production or operational profits during previous year (due to fire and reconstruction).

2. NATPET and its subsidiaries net profit of SR412 Million for current year as compared to SR377 Million for previous year (an increase of 9.3%).

3. NATPET earnings per share for current year is SR3.85 per share as compared to SR3.52 per share for previous year.

4. NATPET retained earnings as at end of current year is SR1,590 Million, as compared to SR1,327 Million for previous year with an increase of 20%.

5. Total shareholders' equity of NATPET at the end of current year is SR2,830 Million as compared to SR2,523 Million at the end of previous year. Alujain's share (57.4%) of shareholders' equity of NATPET at the end of current year is SR1,624 Million as compared to SR1,448 Million at the end of previous year.

6. NATPET has paid off all long-term loans during 2020, leaving only loans of its subsidiaries amounting to SR48 Million by the end of 2020, with exception of current portion of long-term loans.

7. The operational performance of NATPET plant and its subsidiaries continued to improve during 2nd half of 2020, with about 210K tons of polypropylene and its specialized compounds were produced during 2nd half of 2020, with a total production of approximately 340K tons during the year 2020.

8. Average prices of NATPET and its subsidiaries' products decreased during 2020 by 16% as compared to average prices for the year 2019 (mainly due to the Corona pandemic), and in contrast, the feedstock price decreased during 2020 by about 15% as compared to 2019.

9. It should be noted that cost of insurance for NATPET's business had increased by about 38 Million for 2020 as a result of the fire incident which occurred during 2018, and it is expected to reduce this cost significantly during 2021 and next few years, after taking all precautionary measures to reduce operational risks, and raise Standards and quality of safety procedures compliance in the plant.

10. It is expected that relative improvement of NATPET business will continue through the adaption of integrated programs to increase operational efficiency, which will positively impact the business performance of NATPET and Alujain Holding Corp. in the future.

The Capital Market Authority and Saudi Exchange take no responsibility for the contents of this disclosure, make no representations as to its accuracy or completeness, and expressly disclaim any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this disclosure, and the issuer accepts full responsibility for the accuracy of the information contained in it and confirms, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts or information the omission of which would make the disclosure misleading, incomplete or inaccurate.