Savola Group — Interim / Quarterly Report 2016

Apr 20, 2016

Savola Group announces the interim financial results for the period ending on 31-03-2016 (Three Months)

2050 · 20/04/2016 08:46:21 · Announcement #42232 · View on Saudi Exchange

Savola Group announces the interim financial results for the period ending on 31-03-2016 (Three Months)

Element	Current quarter	Similar quarter for previous year	% Change current	Previous quarter	% Change previous
Net profit (loss)	92.9	470.5	-	515.3	-
Gross profit (loss)	1,223.1	1,159.2	5.51	1,305.7	-
Operational profit (loss)	285.5	370.5	-	404.7	-
Earning or loss per share, Riyals	0.17	0.88	-	-	-
All figures are in (Millions) Saudi Arabia, Riyals

Element	EXPLAINATION
Reasons of increase (decrease) for quarter compared with same quarter last year	The decrease in the Group net income for 1st Quarter 2016 compared to same quarter last year is attributed mainly due to the capital gain recorded by the Group amounting to SAR 265.2 million resulting from the disposal of the Group entire shares in Savola Packaging Systems Company in Q1 2015. Gross Profit increase is mainly due to growth in sales in Retail sector. Increase in operating expenses is mainly due to opening of new stores and marketing activities in the Retail sector and share of loss from one associate, which is not expected to reoccur which resulted in lower operating profits for Q1 2016 compared with same quarter last year. Furthermore, increased financial charges due to currency exchange losses, reduced share of minority interest and higher losses in United Sugar Company of Egypt (USCE) mainly due to currency exchange also impacted the Group profit, despite lower tax in overseas subsidiaries.
Reasons of increase (decrease) for quarter compared with previous quarter	The decrease in the Groups profit for the 1st Quarter 2016 compared to the 4th Quarter 2015 is mainly due to the recording excess of insurance claim over cost written-off and gain on sale of land by the Group in the 4th Quarter 2015. Gross Profit and Operating profits have declined due to lower sales compared to the previous quarter, resulting from the seasonal impact experienced every year during the 4th Quarter, in addition to lower share of income from associates. The net profit has declined due to the higher financial and currency exchange losses, increased Zakat and Tax, and higher loss from USCE as compared to the previous quarter despite reduced operating expenses and minority interest. In the 4th Quarter 2015 interim un-audited consolidated financial statements the Group classified excess of insurance claim amount over cost written-off as part of operating income. However, based on the clarification received from SOCPA this amount is now being classified as part of non-operating income in the 4th Quarter, 2015 comparative results.
Reclassifications in quarterly financial results	Certain comparative figures have been reclassified to conform to this quarter presentation.
Other notes	As announced on Tadawul on 29th March 2016, Savola Group (Savola) and other shareholders' of United Sugar Company - Egypt (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 March 31, 2016 have been classified as (held for sale) in the interim consolidated balance sheet and results of operations of USCE for the three-month period ended March 31, 2016 has been disclosed as (loss from discontinued operations) in the interim consolidated income statement. Also the amounts relating to USCE for the three-month period ended March 31, 2015, have also been reclassified as (loss from discontinued operations) in the interim consolidated income statement. Eng. Rayan Mohammed Fayez - Group CEO, highlighted that the aggressive expansion in Retail Sector which resulted in higher operating expense, in addition to lower consumer spending, together with the devaluation of Egyptian Pound has impacted the Group's results negatively. Efforts are underway to mitigate that impact, we pray to God Almighty to help us in achieving our long term goals.

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