اعلان الشركة العربية للأنابيب عن النتائج المالية الأولية للفترة المنتهية في 2021-09-30 ( تسعة 

1. Increase in sales for the current period of 2021 by around 21% to reach SR346 million compared to SR 273.8 million for the same period in 2020.

2. Increase in the gross margin for this period of 2021 compared to the same period in 2020, which improved the company's gross profit to reach SR 17.5 million compared to SR 15.8 million for the same period in 2020.

3. During this period in 2021, the flow of the business is within the ordinary -compared to the same period of 2020- which helped the company to deliver orders to customers, which was previously affected by the COVID-19 pandemic

1-As disclosed within Note 5 and Note 18.1 of the accompanying interim condensed financial statements, during 2020, the Company's management, while performing system automation of inventories - goods in transit, identified certain discrepancies. As a result, the management reduced its inventories - goods in transit and recognized adjustment amounting to Saudi Riyal (SR) 105.98 million by increasing the opening accumulated losses of the year ended December 31, 2019. Furthermore, as disclosed within Note 5 and Note 18.2 of the accompanying financial statements, during 2020, the Company's management, while performing physical count of inventories - raw materials, identified certain discrepancies. As a result, the management reduced its inventories - raw materials and recognized adjustment amounting to SR 18.95 million by increasing the opening accumulated losses of the year ended December 31, 2019.

As of the date of approval of these interim condensed financial statements, due to the unavailability of supporting documentation, we are unable to verify if the adjustments amounting to SR 105.98 million and SR 18.95 million relating to inventories for goods in transit and raw materials, respectively, pertains to the opening accumulated losses as of December 31, 2019, or to the subsequent year(s). Accordingly, we are unable to determine whether any impact is required to be recognized within the statement of profit or loss for the period ended September 30, 2020, and in the carrying values of inventories for goods in transit and raw materials as of December 31, 2020 and ultimately accumulated losses of the Company as of December 31, 2019 or December 31, 2020

2- As disclosed within Note 5 of the accompanying financial statements, the management has performed an assessment for the impairment of the Company's inventory - raw material as of December 31, 2020. Based on the results of this assessment, a provision for impairment amounting to SR 58.75 million, is recognized during the year ended December 31, 2020. However, the management had not performed an assessment for the impairment of the Company's inventory - raw material as of December 31, 2019, and has not reflected the resulting impact, if any, in the statement of profit or loss for the period ended September 30, 2020. Accordingly, we are unable to determine whether any adjustment to the allowance for impairment - raw material and accumulated losses of the Company as of

December 31, 2020, and the impairment charge for the period ended September 30, 2020, is necessary.

3- As disclosed within Note 6 of the accompanying financial statements, as of September 30, 2021, the Company's prepayments and other receivables include prepaid others amounting to SR 27.83 million (December 31, 2020: SR 29.40 Million). We have not been provided with the breakdown for this balance, nor have we received the supporting documents for verification of the movement and the closing balances as of September 30, 2021 and December 31, 2020. Accordingly, as of the date of approval of these interim condensed financial statements we were unable to satisfy ourselves through alternate audit procedures in respect of existence, completeness, rights and obligations, and valuation of the prepaid others and consequently whether any impact is required to be recognized within the statements of financial position and profit or loss as of and for the period and year ended September 30, 2021 and December 31, 2020, respectively

Material Uncertainties Related to Going Concern

We draw attention to Note 2.3 to the accompanying interim condensed financial statements, which states that as of September 30, 2021 the accumulated losses represent 84.99% (December 31, 2020: 77.75%) of the Company's share capital, and as of the same date, the Company's current liabilities exceeded its current assets by SR 147.43 million (December 31, 2020: SR 134.11 million) mainly on account of reclassification of loans due to breach of covenants per the banking facilities agreements as of December 31, 2020. These events and conditions indicate a material uncertainty on the Company's ability to continue as a going concern. However, subsequent to the year ended December 31, 2020, the loans have been restructured and various strategic options, including capital restructuring, were considered by the Board of Directors to address the Company's going concern. Among such strategic options, on June 8, 2021, the Company's Board of Directors recommended capital restructuring through absorption of losses through capital reduction from SR 400 million to SR 100 million followed with a rights issue of SR 300 million. The capital restructuring recommendation is subject to the Company's shareholders' and regulatory approvals.

Our conclusion is not qualified in respect of these matters.

QUALIFIED CONCLUSION

Based on our review, with the exception of the matter described in the preceding paragraphs, nothing has come to our attention that causes us to believe that the accompanying interim condensed financial statements are not prepared, in all material respects, in accordance with IAS 34 that is endorsed in the Kingdom of Saudi Arabia.

- The net losses of the nine months of 2021 SR (28.9) million compared to loss of SR (39.1) million for the same period in 2020. The main reason for the losses is that the company increased the inventory provision during this year and is concentrating on selling old stock.

- Accumulated losses as on June 30, 2021 amounted to be SR (340) million which represent 85% of the capital compared to about SR (311) million at the end of year 2020.

- Total equity (there are no minority rights) during the current period reached to SR 177.4 million compared to SR 206.3 million as at the end of 2020.

- Due to production completion of most of the on hand projects, the company took advantage of this period to continue to develop and improve Riyadh and Jubail factories.

- The company is following the procedures and instructions issued by the CMA regarding companies whose shares are listed in the Saudi Stock Exchange, which their accumulated losses amounted to more than 50% of its capital.

-Based the Board of Directors recommendation on 9-6-2021 to reduce and then increase the capital, the company is in the process with the financial adviser (FALCOM Financial Services) to complete the file and submit it to CMA ASAP. Noting that it is subject to the approval of the related official authorities and the approval of the extraordinary general assembly