Sahara International Petrochemical Co. announces its Annual Financial Results for the Period Ending on 2019-12-31
Tuesday, March 24, 2020
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Sales/Revenue 5,439.7 5,035.8 8.02
Gross Profit (Loss) 1,635.2 1,634.8 0.024
Operational Profit (Loss) 906.3 1,095.8 -17.293
Net Profit (Loss) after Zakat and Tax 299.5 583 -48.627
Total Comprehensive Income 255.5 580.4 -55.978
Total Share Holders Equity (after Deducting Minority Equity) 13,342.1 5,918.9 125.415
Profit (Loss) per Share 0.52 1.59
All figures are in (Millions) Saudi Arabia, Riyals
Increase (Decrease) in Net Profit for Current Year Compared to Last Year is Attributed to Reason for the decrease in net profit of Sipchem for the current year as compared to the previous year is lower Sales Revenue as a result of lower selling prices for most of Sipchem’s products and lower production in Poly-Butylene Terephthalate, Vinyl Acetate Monomer and Carbon Monoxide plants due to shutdowns as previously announced on Tadawul.



Further, Sipchem recorded an impairment loss of approximately SR 454 million in 2019 financial results which relates to International Diol Company and Poly-Butylene Terephthalate and the Tool Manufacturing Factory (TMF) plants


This decrease is despite the increased sales volumes of Methanol, as a result of the Methanol Plant Energy Efficiency and Performance Enhancement Project, and relatively lower average price of certain feedstocks and despite profit contribution of seven months from Sahara Petrochemicals Company following the merger.

Basis of the External Auditor's Opinion Unmodified opinion
Modification, Qualification or Emphasis of a Matter as Stated within the External Auditor Opinion None
Reclassification of Comparison Items Certain comparative figures have been reclassified to comply with the current period presentation of the financial statements
Additional Information Impact of Merger with Sahara Petrochemicals Company:


On 11 Ramadan 1440H corresponding to 16 May 2019G, Sipchem acquired 100% shares and voting interests in Sahara Petrochemicals Company ("Sahara") and obtained control of Sahara. Sahara has investments in various industrial projects which is manufactured in the Kingdom of Saudi Arabia and the petrochemical products are sold across Middle East, Europe, Asia and America. Taking control of Sahara enables the Group to increase its overall market share and experience reduction in costs through economies of scale.


In order to comply with IFRS 3 – Business Combinations, assets and liabilities of Sahara have been re-measured at their fair value on the date of acquisition.


As the business combination was legally completed on 16 May 2019, Sahara Petrochemicals Company financials can only be combined from the date of the business combination as per IFRS. Further, for the purpose of consolidation, Sahara financials were combined with effect from 1 June 2019. Management considers that the impact of the transactions from 16 May 2019 to 31 May 2019 is not material to the consolidated financial statements. For all remaining reporting periods in 2019, Sipchem will continue to consolidate Sahara from 1 June 2019.


Sahara contributed revenues of SR 911.5 million and net profit of SR 120.4 million for the period from June to December 2019 (period of 7 months) to the Group.


If the acquisition had occurred on 1 January 2019, management estimates that Sahara would have contributed revenues of SR 1,512.4 million and net profit of SR 307.9 million to the Group. Therefore, the total consolidated revenue of the Group would have been SR 6,040.6 million and consolidated net profit attributable to shareholders of Sipchem would have been SR 487.0 million.


In determining these amounts, management has assumed that the fair value adjustments that arose on the date of acquisition would have been the same if the acquisition had occurred on 1 January 2019. Therefore, these amounts have been calculated using the results of Sahara and of its affiliates and adjusted for the additional depreciation that would have been charged assuming the fair value adjustments to property, plant and equipment had applied from 1 January 2019.


Further, the business combination has resulted in SR 600.9 million of goodwill. Goodwill represents the excess of consideration over the net fair value of the acquired assets and liabilities. The goodwill recognized in this transaction largely consists of the acquired workforce and expected synergies resulting from the business combination. Synergies will result from building on the competitive advantages and complimentary capabilities of Sahara and Sipchem to provide benefits commercially, operationally and functionally and from driving efficiency and productivity of the closely situated industrial asset portfolios of each of Sahara and Sipchem in Jubail.


IFRS 16:

The Company has adopted IFRS 16 - Leases effective January 1, 2019. Consequently, the accounting treatment of certain operating leases has changed, and right-of-use assets and corresponding lease liabilities have been recognized in Group’s Consolidated Interim Statement of Financial Position. The impact on Group’s Net Profit is not material.


Profit Per Share:

The profit per share has been calculated for the period ending 31 December 2019 on the basis of weighted average number of shares (580,555,555) after the company capital increase which was approved by the Extraordinary General Assembly’s 16/05/2019 for the purpose of acquiring all the shares of the shareholders of Sahara Petrochemicals Company.