Savola Group — Earnings Release 2016

Mar 16, 2017

Savola Group announces the annual financial results for the period ending on 31-12-2016

2050 · 16/03/2017 08:58:08 · Announcement #46025 · View on Saudi Exchange

Savola Group announces the annual financial results for the period ending on 31-12-2016

Element	Current year	Previous year	% Change
Net profit (loss)	-451.3	1,791.7	-
Earning or loss per share, Riyals	-0.85	3.36	-
Gross profit (loss)	4,436.4	5,025.4	-11.72
Operational profit (loss)	832.4	1,785.4	-53.38

*All figures are in (Millions) Saudi Arabia, Riyals

Element	EXPLAINATION
Reasons of annual financial results	The Group recorded net loss for the year ended 31 December 2016 compared to the profit achieved in the last year, is mainly attributed to: - non-recurring items recorded in 2016 comprised of impairment of assets and goodwill related to Egypt operations in Savola Foods Company of gross SAR 302mn (net impact to the Group of SAR 245mn), inventory reduction costs in Panda Retail Company of gross SAR 377mn (net impact to the Group of SAR 343mn) and impairment in the Group's non-core investments of SAR 272mn. - lower share of net income from an associate, - capital gain recorded from disposal of Savola Packaging Systems Co. in 2015 (SAR 265mn), - capital gain on sale of land of SAR 38.8mn and gross insurance proceeds of SAR 126.5mn recorded in 2015, - lower gross profit, mainly due to lower margins in Retail sector and one time charge to reduce inventory, - increased financial charges mainly due to currency exchange losses, - higher zakat and income tax, - higher losses from USCE due to higher currency exchange and lower margins, and - increase in operating expenses which is mainly driven by growth in Retail operations. This recorded loss came despite : - positive impact of reduced minority interests and non-recurring net positive impact for the Group of SAR 26 mn for reinstatement of the classification of edible oil subsidiary of Savola Foods Company in Morocco from held for sale.
Reclassifications in annual financial results	Certain comparative figures have been reclassified to conform to this year presentation.
Other notes	The net revenue for the year 2016 reached SAR 25.3 Billion compared to SAR 25.1 Billion for last year representing an increase of 0.8%. The equity attributable to shareholders of the parent company (without minority interest) for the year reached SAR 8.5 Billion compared to SAR 10.6 Billion for the last year representing a decrease of 19.8% During December 2016, as per information provided by IMF combined with other indicators Sudan ceased to be a hyperinflationary economy as of December 31, 2016. Accordingly, the Group has ceased to apply hyper-inflation accounting for Sudan operation as per generally accepted accounting standards in Saudi Arabia. As announced on Tadawul on 29th March 2016, Savola Group (Savola) and other shareholders' of USCE (an indirect subsidiary of Savola) have entered into a Shareholders Agreement with European Bank for Reconstruction and Development (EBRD). Therefore, subsequent to the issuance of new shares and completion of the related legal formalities and government approvals, Savola will account for its investment in USCE on equity basis of accounting. Till such time, in accordance with the generally accepted accounting standards in Saudi Arabia, the assets and liabilities of USCE as of December 31, 2016 have been classified as (held for sale) in the consolidated balance sheet and results of operations of USCE for the year ended December 31, 2016 has been disclosed as (loss from discontinued operation) in the consolidated statement of income. Also the amounts relating to USCE for the year ended December 31, 2015, have been reclassified as (loss from discontinued operations) in the consolidated statement of income. The issuance of new shares and completion of all legal formalities are expected to be completed during Quarter 1 2017 and Group will account for its investment in USCE on equity basis of accounting during Q1 2017. During the last quarter of 2016, the investment in the Group's non-core investment, Intaj Capital Limited (Intaj), has been classified as held for sale, in accordance with generally accepted accounting standards in Saudi Arabia, pursuant to the Groups decision to sell off its interest in Intaj within one-year time. The Group ceases the disposal plans for edible oil business in Morocco and reinstated the classification of amounts in the balance sheet for current and comparative year. We would like to inform the shareholders and investors that the audited consolidated financial statements of the Group for the year ended December 31, 2016 will be uploaded on Savola website after submitting it to the concerned authorities, and can be accessed through the following link: http://www.savola.com/SavolaE/Financial_Reports.php

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