Nama Chemicals Co. announces its Interim Financial results for the Period Ending on 2025-06-30 ( Six Months )

Reversal of impairment on the Plant, Machinery and Equipment.

Other reasons impacted the financial performance are as follows:

• Revenue decreased by 69% mainly due to a reduction in production

• Cost of sales decreased due to decrease in production

• Decrease in the selling & distribution expense due to the decrease in quantities sold

• Increase in general and admin expenses due to Adjustment of HOP amortization

• Increase in finance charges due to an increase in usage of bank facilities.

• Decrease in other incomes as in Q2 2024 was having zakat reversal and amortization of SIDF grant

Reversal of impairment on the Plant, Machinery and Equipment.

Other reasons impacted the financial performance are as follows:

• Revenue decreased by (58%) mainly due to delays in receiving the Raw Materials and limited financing sources for the working capital and major shut down in plant.

• Cost of sales decreased due to decrease in production

• Decrease in the selling & distribution expense due to the decrease in quantities sold

• Increase in general and admin expenses due to HOP adjustment in Q2.

• Increase finance charges due to new bank loan.

• decrease in zakat expense mainly due to revised calculation in last quarter

• Increase in other incomes compared to the previous quarter is due to an increase in scrap sales

Reversal of impairment on the Plant, Machinery and Equipment.

Other reasons impacted the financial performance are as follows:

• Revenue decreased by (50%) mainly due to delays in receiving the Raw Materials and limited financing sources for the working capital and major shut down in plant.

• Cost of sales decreased due to decrease in production

• Decrease in the selling & distribution expense due to the decrease in quantities sold

• Decrease in general and admin expenses due to SAP support & license fee.

• Increase finance charges due to new bank loan.

• decrease in zakat expense mainly due to revised calculation in last quarter

• Decrease in other incomes as in Q2 2024 was having amortization of SIDF grant

As disclosed in note 5 to the interim condensed consolidated financial statements, the Group has reversed previously recognized impairment loss on property, plant and equipment amounting to SR 208 million in the interim condensed consolidated statement of profit and loss which resulted in the increase in net profit for the three-month and six- month periods ended June 30, 2025 by SR 208 million, an increase in the net book value of property, plant and equipment and retained earnings as of June 30, 2025 by SR 208 million. This reversal was based on the management’s estimation of the fair value less cost of disposal of the property, plant and equipment using fair value as determined by the management’s expert.

As per our assessment, the methodology and underlying assumptions used by the management’s expert in determining the fair value and management’s estimation of fair value less costs of disposal (FVLCD) of property, plant and equipment resulting in the reversal of impairment loss do not provide appropriate basis for the stated reversal. Moreover, the current financial performance of the Group does not support improvements in the recoverable value of property, plant and equipment to support the reversal of the impairment loss of SR 208 million.

Consequently, we believe that the reported net profit for the three-month and six-month periods ended June 30, 2025 and the net book value of property, plant and equipment and retained earnings as of June 30, 2025 are overstated by the amount of impairment loss reversal, as disclosed in these interim condensed consolidated financial statements.

Qualified Conclusion

Based on our review, with the exception of the matter described in Basis of Qualified Conclusion, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial statements for the three-month and six-month periods ended June 30, 20205 have not been prepared, in all material respects, in accordance with IAS 34 as endorsed in the Kingdom of Saudia Arabia.

Material Uncertainty Relating to Going Concern

We draw attention to Note 2.4 of the interim condensed consolidated financial statements which indicate that the Group has incurred gross loss of SR 40 million and SR 64 million for the three-month and six-month periods ended on June 30, 2025, respectively. Also, the Group has incurred operating loss of SR 53 million and SR 93 million for the three-month and six-month periods ended on June 30, 2025, respectively. Further, its negative cashflows from operating activities were SR 8 million for the six-month periods ended on June 30, 2025. The Group’s current liabilities exceeded its current assets by SR 630 million as of June 30, 2025. Additionally, the Group is in breach of SIDF loans’ financial covenants and has defaulted in repaying loans instalments as of June 30, 2025 and December 31, 2024. These conditions, along with other matters as set forth in Note 2.4 indicate the existence of a material uncertainty which may cast significant doubt about the Group’s ability to continue as a going concern. Our conclusion is not modified in respect of this matter.

The accumulated Profit as of June 2025 amounted to 104 million Saudi riyals, which represents 44% of the capital compared to Retained Earning of SAR 5.8 million representing 2.5% of the Capital as of December 31, 2024.