On 2026-08-10 09:39:47 (Saudi Time), Asharqiyah Development Company announced its Interim financial results for the six months ended on June 30, 2026.

Year-on-Year Performance Drivers

For the six-month period ending 30/06/2026, sales/revenue declined 6.509% YoY to SAR 98.01 million (from SAR 104.83 million), primarily driven by a decrease in sales of Sadu Company (a subsidiary) due to price changes. Despite lower revenues, the net loss attributable to shareholders narrowed significantly by 65.262% YoY to SAR 1.85 million (from SAR 5.33 million), as gross profit improved by 62.506% — reflecting a reduction in the cost of sales at a rate exceeding the rate of revenue decline — and operational losses also narrowed by 49.925% YoY, partially offset by increased financing costs.

Quarter-on-Quarter Performance Drivers

QoQ revenue declined 22.34% to SAR 42.84 million (from SAR 55.17 million in the previous quarter), driven by lower sales at subsidiary Sadu Al Arab Company due to price changes and seasonal factors. This revenue contraction caused gross profit to fall 36.74% QoQ to SAR 4.10 million, while operating loss widened sharply to SAR -3.35 million from SAR -0.68 million. Consequently, the company swung to a net loss of SAR -2.12 million in the current quarter compared to a net profit of SAR 0.27 million in the prior quarter, primarily attributable to the decline in sales and the resulting compression in gross profit.

Other Items

Asharqiyah Development Company's external auditor issued a qualified (conservation) opinion on the condensed consolidated interim financial statements for the period ending June 30, 2026. The auditor noted that intangible assets classified as Government Grants carried a net book value of SAR 171.31 million as of March 31, 2026 (unchanged from SAR 171.31 million as of December 31, 2025), and that management engaged an independent expert to assess these assets for impairment. However, because the assumptions used by the independent expert were not in accordance with the requirements of IAS 36 "Impairment of Assets," the auditors stated they were "unable to determine the recoverable amount of these intangible assets, Government Grants, whether an impairment loss should be recognized, or the potential financial impact on the accompanying condensed consolidated interim financial statements." In addition, the auditors drew attention to Note (18), which discloses that on August 2, 2022, the company received a decision from the Ministry of Environment, Water and Agriculture dated June 30, 2022, stipulating that a title deed for the agricultural land grant could not be issued in the company's name, but that the company may utilize the land until Saudi Aramco's actual needs are met; as a result, management was unable to determine a productive lifespan for utilizing the agricultural land. The auditors confirmed that their conclusion was not modified with respect to these matters. Additionally, profits resulting from the change in investment property fair value amounted to SAR 527,054, representing 0.175% of capital.

Original announcement:

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