March 29, 2025 - The increase in sales/revenues during the current quarter compared to the same quarter of the previous year is primarily driven by a substantial rise in shrimp sales, reaching SAR 12.3 million in Q4 2024 from SAR 5.2 million in Q4 2023, reflecting approximately 137% growth. This growth was fueled by stronger local demand, product availability, and improved pricing. Additionally, the real estate segment saw a slight revenue increase of 5% compared to the same quarter of the previous year, while fruit sales rose by 64% from SAR 393,497 to SAR 646,898.
The rise in net loss during the current quarter compared to the same quarter of the previous year is attributed to multiple non-recurring and unfavorable financial factors. The Company recorded an impairment loss of SAR 4.2 million on property, plant, and equipment this quarter. Additionally, a provision of SAR 66.9 million was recognized for the guarantee obligation of Al-Reef Sugar Co., up from SAR 33.9 million (restated) in the same quarter last year. The share of results from associates also dropped significantly to SAR 1.2 million from SAR 5.4 million in the corresponding quarter of the prior year. These factors outweighed a 951% increase in gross profit, driven by higher shrimp sales and improved cost control.
It is important to note that the Company applies Fair Value measurement for its biological assets under IAS 41. The low gross profit and operating loss in Q4 are mainly due to shrimp sales originating solely from the previous period's harvest, which was valued at fair value at the time of harvesting, meaning profits were recognized in 2023 and the first half of 2024.
The decrease in sales/revenues during the current quarter compared to the previous quarter is due to the seasonal nature of the business. Shrimp sales dropped by 32%, from SAR 18.2 million in Q3 2024 to SAR 12.3 million in Q4 2024, due to lower harvest volumes as shrimp remained in the growth phase. However, fruit sales saw a significant rise from SAR 107,708 in Q3 2024 to SAR 646,898 in Q4 2024, supported by increased coffee sales by a subsidiary. The real estate revenue remained stable during the quarter.
The rise in net loss during the current quarter compared to the previous quarter is primarily due to one-time provisions and asset write-downs in Q4 2024. The Company recorded an impairment loss of SAR 4.2 million on property, plant, and equipment this quarter. Additionally, a provision of SAR 66.9 million was recognized for the guarantee obligation of Al-Reef Sugar Co., significantly affecting financial results.
Zakat expense rose sharply from SAR 2,223,429 in Q3 to SAR 5,594,409 in Q4, mainly due to the execution of long-pending Zakat cases from 2014 to 2020 and additional assessments for 2021 and 2022.
The increase in sales/revenues for the current year compared to the previous year is primarily due to growth in the aquaculture segment. Shrimp sales grew by 22% to SAR 59.1 million, up from SAR 48.9 million last year, driven by stronger local market demand despite a 30% drop in export sales (SAR 7.1 million to SAR 5.0 million) due to geopolitical and economic challenges in key export markets.
The fruit segment remained relatively stable, with a slight 9% decline in sales to SAR 8.0 million from SAR 8.7 million in the prior year, impacted by extreme weather conditions that affected yield.
The real estate segment experienced an 8% revenue decline, totaling SAR 11.7 million compared to SAR 12.6 million last year. This decrease is attributed to renovation activities during the year, temporarily affecting rental income.
The decline in net profit for the current year compared to the previous year is primarily due to several unfavorable factors that negatively impacted profitability.
The cost of revenue increased from SAR 57.3 million in 2023 to SAR 80.7 million in 2024, mainly due to operational disruptions in the shrimp business during the first half of the year. Additionally, the Company recorded fair value losses on biological assets amounting to SAR 30.3 million in 2024, compared to fair value gains of SAR 11.9 million in the previous year, reflecting lower shrimp biomass yield and valuation.
The Company also recorded an impairment loss of SAR 4.2 million on property, plant, and equipment.
A provision of SAR 66.9 million was recognized for the guarantee obligation of Al-Reef Sugar Co., compared to a restated amount of SAR 33.9 million in the prior year.
The share of results from associates declined to SAR 1.2 million in 2024, from SAR 5.4 million in 2023. The Company also incurred a net loss of SAR 13.7 million from discontinued operations due to the closure of the water factory, compared to SAR 1.4 million last year.
Zakat expense significantly increased from SAR 3,272,354 in 2023 to SAR 8,873,229 in 2024, primarily due to the execution of long-pending cases related to 2014–2020 and additional assessments for 2021–2022.
As a result, the Company reported a net loss of SAR 153.3 million for the year ended December 31, 2024, compared to a net loss of SAR 32.3 million in the previous year.
Emphasis of Matters
We draw attention to Note (12-4) of the consolidated financial statements, which outlines management’s observation of a SAR 32,079,795 decrease in the value of the group’s biological assets during the three-month period ended March 31, 2024, primarily due to a significant reduction in shrimp biomass. Our opinion remains unmodified in this regard.
Material Uncertainty Related to Going Concern
We draw attention to Note (5.1) of the consolidated financial statements, which states that the total comprehensive loss for the year ended December 31, 2024, amounted to SAR 164 million (December 31, 2023: SAR 39.5 million). As of December 31, 2024, the accumulated losses totaled SAR 133.3 million, and current liabilities exceeded total current assets by SAR 126.5 million. These conditions indicate material uncertainty about the Group’s ability to continue as a going concern. The consolidated financial statements have been prepared on a going concern basis.
Our opinion remains unmodified in this regard.
Reclassification of Comparison Items
Certain figures from the comparative period have been reclassified to align with the current period’s presentation.
It is also important to note that, in accordance with IFRS 5 – Non-current Assets Held for Sale and Discontinued Operations, following the closure of the water factory, the assets were reclassified as "held for sale." Consequently, operations have been categorized into continuing and discontinued operations per IFRS 5 requirements for financial statement disclosure.