YANBU NATIONAL PETRO

2290
End-of-day quote. End-of-day quote  - 11/26
60.1SAR -0.50%

Yanbu National Petrochemical : Interim Condensed Financial Statements (Unaudited) - Period Ended 30 September 2020

10/26/2020 | 03:50am

YANBU NATIONAL PETROCHEMICAL COMPANY (YANSAB) (A SAUDI JOINT STOCK COMPANY)

UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR'S REVIEW REPORT

FOR THE NINE-MONTH PERIOD ENDED 30 SEPTEMBER 2020

YANBU NATIONAL PETROCHEMICAL COMPANY (YANSAB) (A SAUDI JOINT STOCK COMPANY)

UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS

FOR THE NINE-MONTH PERIOD ENDED 30 SEPTEMBER 2020

INDEX

PAGE

Independent Auditor's Review Report

1

Interim Condensed Statement of Financial Position

2

Interim Condensed Statement of Income

3

Interim Condensed Statement of Comprehensive Income

4

Interim Condensed Statement of Changes in Equity

5

Interim Condensed Statement of Cash Flows

6

Notes to the Interim Condensed Financial Statements

7 - 14

Yanbu National Petrochemical Company (YANSAB) - A Saudi Joint Stock Company

INTERIM CONDENSED STATEMENT OF FINANCIAL POSITION

As at 30 September 2020

(All amounts in Saudi Riyals '000 unless otherwise stated)

30 September

31 December

2020

2019

Note

(Unaudited)

(Audited)

ASSETS

NON-CURRENT ASSETS

Property, plant and equipment

11,252,411

11,848,879

Right-of-use assets

4

153,436

170,935

Intangible assets

26,144

27,291

Other non-current assets

154,325

180,599

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────────

TOTAL NON-CURRENT ASSETS

11,586,316

12,227,704

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────────

CURRENT ASSETS

Inventories

674,322

735,943

Trade receivables

1,699,643

1,753,273

Prepayments and other current assets

211,326

166,417

Short-term investments

5

2,468,000

3,050,800

Cash and cash equivalents

19,629

136,270

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────────

TOTAL CURRENT ASSETS

5,072,920

5,842,703

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────────

TOTAL ASSETS

16,659,236

18,070,407

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════════

EQUITY AND LIABILITIES

EQUITY

Share capital

6

5,625,000

5,625,000

Statutory reserve

1,687,500

1,687,500

Actuarial reserve

(52,793)

(7,994)

Retained earnings

7,495,726

8,838,306

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────────

TOTAL EQUITY

14,755,433

16,142,812

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────────

NON-CURRENT LIABILITIES

Lease liabilities

4

130,536

154,186

Employee benefits

7

715,391

620,651

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────────

TOTAL NON-CURRENT LIABILITIES

845,927

774,837

────────

────────

CURRENT LIABILITIES

Lease liabilities - current portion

4

19,141

14,058

Trade payables

498,100

457,346

Accruals and other current liabilities

8

462,116

555,418

Zakat payable

9

78,519

125,936

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────────

TOTAL CURRENT LIABILITIES

1,057,876

1,152,758

────────

────────

TOTAL LIABILITIES

1,903,803

1,927,595

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────────

TOTAL EQUITY AND LIABILITIES

16,659,236

18,070,407

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════════

The attached notes from 1 to 16 form an integral part of these interim condensed financial statements.

2

Yanbu National Petrochemical Company (YANSAB) - A Saudi Joint Stock Company

INTERIM CONDENSED STATEMENT OF INCOME (UNAUDITED)

For the three-month and nine-month periods ended 30 September 2020 (All amounts in Saudi Riyals '000 unless otherwise stated)

Three-month period ended

Nine-month period ended

30 September

30 September

Note

2020

2019

2020

2019

Revenue from contracts with customers

1,440,728

1,422,744

3,656,362

4,582,750

Cost of revenue

(1,163,518)

(1,126,690)

(3,042,774)

(3,382,600)

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────────

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────────

GROSS PROFIT

277,210

296,054

613,588

1,200,150

Selling and distribution expenses

(17,919)

(11,463)

(54,218)

(50,616)

General and administrative expenses

(58,249)

(79,209)

(203,054)

(235,690)

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────────

INCOME FROM MAIN OPERATIONS

201,042

205,382

356,316

913,844

Finance income

9,118

17,041

43,112

70,251

Finance costs, net

(6,420)

(6,847)

(18,362)

(20,683)

Other income, net

15,945

23,756

45,822

42,591

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────────

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────────

INCOME BEFORE ZAKAT

219,685

239,332

426,888

1,006,003

Zakat

9

(24,051)

(27,277)

(81,968)

(87,179)

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────────

────────

────────

NET INCOME FOR THE PERIOD

195,634

212,055

344,920

918,824

════════

════════

════════

════════

Earnings per share (EPS)

Weighted average number of ordinary shares ('000)

10

562,500

562,500

562,500

562,500

════════

════════

════════

════════

Basic and diluted earnings per share attributable to

ordinary equity holders of the Company

(Saudi Riyals)

10

0.35

0.38

0.61

1.63

════════

════════

════════

════════

The attached notes from 1 to 16 form an integral part of these interim condensed financial statements.

3

Yanbu National Petrochemical Company (YANSAB) - A Saudi Joint Stock Company

INTERIM CONDENSED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

For the three-month and nine-month periods ended 30 September 2020 (All amounts in Saudi Riyals '000 unless otherwise stated)

Three-month period ended

Nine-month period ended

30 September

30 September

Note

2020

2019

2020

2019

Net income for the period

195,634

212,055

344,920

918,824

Other comprehensive income

Items not to be reclassified to statement of income

in subsequent periods:

Re-measurement loss on defined benefit plans

7

(17,392)

(66,971)

(44,799)

(100,209)

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────────

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────────

TOTAL COMPREHENSIVE INCOME FOR

THE PERIOD

178,242

145,084

300,121

818,615

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════════

════════

════════

The attached notes from 1 to 16 form an integral part of these interim condensed financial statements.

4

Yanbu National Petrochemical Company (YANSAB) - A Saudi Joint Stock Company

INTERIM CONDENSED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

For the nine-month period ended 30 September 2020

(All amounts in Saudi Riyals '000 unless otherwise stated)

Share

Statutory

Actuarial

Retained

capital

reserve

reserve

earnings

Total

Balance as at 1 January 2019

5,625,000

1,687,500

85,286

9,857,909

17,255,695

Net income for the period

-

-

-

918,824

918,824

Other comprehensive loss for the period

-

-

(100,209)

-

(100,209)

Total comprehensive income for the period

-

-

(100,209)

918,824

818,615

Dividends (note 15)

-

-

-

(2,109,375)

(2,109,375)

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─────────

─────────

─────────

─────────

Balance as at 30 September 2019

5,625,000

1,687,500

(14,923)

8,667,358

15,964,935

═════════

═════════

═════════

═════════

═════════

Balance as at 1 January 2020

5,625,000

1,687,500

(7,994)

8,838,306

16,142,812

Net income for the period

-

-

-

344,920

344,920

Other comprehensive loss for the period

-

-

(44,799)

-

(44,799)

Total comprehensive income for the period

-

-

(44,799)

344,920

300,121

Dividends (note 15)

-

-

-

(1,687,500)

(1,687,500)

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─────────

─────────

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─────────

Balance as at 30 September 2020

5,625,000

1,687,500

(52,793)

7,495,726

14,755,433

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The attached notes from 1 to 16 form an integral part of these interim condensed financial statements.

5

Yanbu National Petrochemical Company (YANSAB) - A Saudi Joint Stock Company

INTERIM CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED) For the nine-month period ended 30 September 2020

(All amounts in Saudi Riyals '000 unless otherwise stated)

Nine-month period ended 30 September

Note

2020

2019

OPERATING ACTIVITIES

Income before zakat

426,888

1,006,003

Adjustment to reconcile income before zakat to net cash inflow from

operating activities:

Depreciation of property, plant and equipment and right-of-use assets

863,289

1,018,350

Amortisation of intangible assets

3,431

3,170

Reversal of provision for slow moving and obsolete inventories

(18,137)

-

Provision for employee benefits

42,387

37,167

Loss on disposal of property, plant and equipment

2,176

-

Finance costs

18,362

20,683

Finance income

(43,112)

(70,251)

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────────

1,295,284

2,015,122

Working capital adjustments:

Inventories

79,758

(14,898)

Trade receivables

53,630

301,066

Prepayments and other current assets

(44,909)

38,388

Other non-current assets

26,274

9,143

Trade payables

40,754

(77,383)

Accruals and other current liabilities

(92,771)

(137,554)

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────────

Cash from operations

1,358,020

2,133,884

Finance costs paid

(5,102)

(6,508)

Employees' benefits paid

7

(5,706)

(6,185)

Zakat paid

9

(129,385)

(128,795)

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────────

Net cash flows from operating activities

1,217,827

1,992,396

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────────

INVESTING ACTIVITIES

Short-term investments made

(5,085,800)

(2,037,000)

Proceeds from maturity of short-term investments

5,668,600

2,625,788

Purchase of property, plant and equipment

(250,749)

(500,308)

Purchase of intangible assets

(2,284)

-

Finance income received

43,112

70,128

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────────

Net cash flows from investing activities

372,879

158,608

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────────

FINANCING ACTIVITIES

Payment of principal portion of lease liabilities

(19,316)

(17,101)

Dividends paid

(1,688,031)

(2,112,445)

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────────

Net cash flows used in financing activities

(1,707,347)

(2,129,546)

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────────

(DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS

(116,641)

21,458

Cash and cash equivalents at the beginning of the period

136,270

26,200

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────────

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD

19,629

47,658

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SUPPLEMENTARY NON-CASH INFORMATION

Right-of-use assets and lease liabilities

19,619

171,107

The attached notes from 1 to 16 form an integral part of these interim condensed financial statements.

6

Yanbu National Petrochemical Company (YANSAB) - A Saudi Joint Stock Company

NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

For the nine-month period ended 30 September 2020

(All amounts in Saudi Riyals '000 unless otherwise stated)

1 COMPANY INFORMATION

Yanbu National Petrochemical Company (YANSAB) (the "Company") is a Saudi Joint Stock Company registered in Yanbu, Kingdom of Saudi Arabia under Commercial Registration number 4700009432 dated 14 Muharram 1427H (corresponding to 13 February 2006) in accordance with the Ministerial Resolution No. 49 dated 12 Muharram 1427H (corresponding to 11 February 2006) for the incorporation of the Company. The Company obtained its Industrial Licence number S/1367 on 18 Rajab 1426H (corresponding to 23 August 2005) and is engaged in the manufacturing of petrochemical products in accordance with the Company's by-laws and other Saudi Arabian applicable regulations. The Company commenced commercial operations on 1 March 2010. The registered office of the Company is located at Yanbu, P.O. Box 31396, Yanbu industrial city 41912.

The interim condensed financial statements of the Company for the nine-month period ended 30 September 2020 have been approved by the Board of Directors on 2 Rabi' I 1442H (corresponding to 19 October 2020).

2 BASIS OF PREPARATION

2.1 Statement of compliance

These interim condensed financial statements have been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting" ("IAS 34") endorsed in Kingdom of Saudi Arabia ("KSA").

These interim condensed financial statements do not include all the information and disclosures required in full set of annual financial statements and should therefore be read in conjunction with the Company's annual financial statements for the year ended 31 December 2019. In addition, results for the interim period ended 30 September 2020 are not necessarily indicative of the results that may be expected for the financial year ending 31 December 2020 (refer to note 2.4 below).

2.2 Basis of measurement

These interim condensed financial statements are prepared under the historical cost convention. For employee and other post- employment benefits, actuarial present value calculations are used.

2.3 Functional and presentation currency

These interim condensed financial statements are presented in Saudi Riyals (SR), which is the functional currency of the Company. All figures are rounded off to nearest thousands (SR '000) unless when otherwise indicated.

2.4 Significant accounting judgements, estimates and assumptions

The preparation of the Company's interim condensed financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. The significant judgments made by management in applying the Company's accounting policies and the methods of computation and the key sources of estimation are the same as those that applied to the financial statements for the year ended 31 December 2019. However, in the view of the current uncertainty due to COVID-19, any future change in the assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amounts of the assets or liabilities affected in the future periods. As the situation is rapidly evolving with future uncertainties, management will continue to assess the impact based on prospective developments (see also note 16).

7

Yanbu National Petrochemical Company (YANSAB) - A Saudi Joint Stock Company

NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (continued)

For the nine-month period ended 30 September 2020

(All amounts in Saudi Riyals '000 unless otherwise stated)

3 CHANGES TO THE COMPANY'S ACCOUNTING POLICIES

The accounting policies and methods of calculation adopted in the preparation of the interim condensed financial statements are consistent with those followed in the preparation of the Company's annual financial statements for the year ended 31 December 2019, except for the adoption of new standards effective as of 1 January 2020. The Company has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.

Several amendments and interpretations apply for the first time in 2020, but do not have an impact on the interim condensed financial statements of the Company. As required by IAS 34, the nature and effect of these changes are disclosed below.

3.1 Amendments to IFRS 3: Definition of a Business

The amendment to IFRS 3 clarifies that to be considered a business, an integrated set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output. Furthermore, it clarified that a business can exist without including all of the inputs and processes needed to create outputs. These amendments had no impact on the interim condensed financial statements of the Company, but may impact future periods should the Company enter into any business combinations.

3.2 Amendments to IAS 1 and IAS 8: Definition of Material

The amendments provide a new definition of material that states "information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity." The amendments clarify that materiality will depend on the nature or magnitude of information, either individually or in combination with other information, in the context of the financial statements. A misstatement of information is material if it could reasonably be expected to influence decisions made by the primary users. These amendments had no impact on the interim condensed financial statements of, nor is there expected to be any future impact to the Company.

4 RIGHT-OF-USE ASSETS AND LEASE LIABILITIES

Set out below, are the carrying amounts of the Company's right-of-use assets and lease liabilities and the movements during the period/year:

Nine-month period ended

Year ended

30 September 2020

31 December 2019

Right-of-use

Lease

Right-of-use

Lease

assets

liabilities

assets

liabilities

At the beginning of the period/year

170,935

168,244

179,331

171,789

Addition

19,619

19,619

11,179

8,807

Adjustment

(18,870)

(18,870)

-

-

Depreciation

(18,248)

-

(19,575)

-

Interest expense

-

5,550

-

10,014

Payments

-

(24,866)

-

(22,366)

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At the end of the period/year

153,436

149,677

170,935

168,244

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5

SHORT-TERM INVESTMENTS

Short-term investments represent Murabaha commodity placements with original maturity exceeding three month and maintained with local and foreign banks. These placements yield finance income at prevailing market rates.

6 SHARE CAPITAL

The Company's authorized, issued and fully paid share capital is SR 5,625 million which is divided into 562.5 million shares of SR 10 par value each. The Company is 51% owned by SABIC, and 49% owned by others or publicly traded.

8

Yanbu National Petrochemical Company (YANSAB) - A Saudi Joint Stock Company

NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (continued)

For the nine-month period ended 30 September 2020

(All amounts in Saudi Riyals '000 unless otherwise stated)

7

EMPLOYEE BENEFITS

30 September

31 December

2020

2019

Defined benefits obligation (note 7.1)

686,998

594,260

Others

28,393

26,391

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────────

715,391

620,651

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7.1

Defined benefits obligation

The following table represents the movement of the defined benefits obligation:

Nine-month

period ended

Year ended

30 September

31 December

2020

2019

Defined benefits obligation at beginning of the period/year

594,260

451,054

Current service cost

39,950

42,685

Interest cost on defined benefits obligation

13,260

17,306

Actuarial loss on the obligation

44,799

93,280

Payments during the period/year

(5,706)

(6,351)

Transferred in/(out), net

435

(3,714)

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────────

Defined benefits obligation at the end of the period/year

686,998

594,260

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════════

Net defined benefit expense:

Three-month period ended

Nine-month period ended

30 September

30 September

2020

2019

2020

2019

Current service cost

13,241

10,536

39,950

31,990

Interest cost on defined benefits obligation

4,420

4,718

13,260

14,224

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────────

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────────

Net defined benefits expense

17,661

15,254

53,210

46,214

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════════

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════════

Significant assumptions used in determining defined benefits obligation for the Company are shown below:

30 September

31 December

2020

2019

Discount rate

2.4%

3.1%

Salary increase rate - Executives

4.5%

4.5%

Salary increase rate - Non-Executives

6.0%

6.0%

Medical inflation rate

Note (a) below

Note (a) below

Average retirement age

58

58

  1. As at 30 September 2020 and 31 December 2019: 9% per annum in 2020 decreasing to 5% per annum in 2024 and 5% per annum onwards.

9

Yanbu National Petrochemical Company (YANSAB) - A Saudi Joint Stock Company

NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (continued)

For the nine-month period ended 30 September 2020

(All amounts in Saudi Riyals '000 unless otherwise stated)

8

ACCRUALS AND OTHER CURRENT LIABILITIES

30 September

31 December

2020

2019

Accrued liabilities

371,384

434,633

Amounts due to related parties

75,381

104,903

Dividend payable

15,351

15,882

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────────

462,116

555,418

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════════

9

ZAKAT

The movement in the zakat provision during the period/year is as follows:

Nine-month

period ended

Year ended

30 September

31 December

2020

2019

At the beginning of the period/year

125,936

119,271

Provided during the period/year

81,968

135,460

Paid during the period/year

(129,385)

(128,795)

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────────

At the end of the period/year

78,519

125,936

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════════

The Company has filed its zakat returns with the General Authority of Zakat and Tax ("GAZT") and received the zakat certificates up to 31 December 2019. The Company has settled the zakat dues and cleared its zakat assessments with GAZT up to the year ended 31 December 2015. The GAZT raised assessment with additional withholding tax liability on dividend paid to non-resident shareholders amounting to SR 10.1 million for the years 2016 to 2019 and the Company paid the amount during the period ended 30 September 2020.

The final assessments of 2016 to 2019 have not yet been raised by the GAZT.

10

EARNINGS PER SHARE

The earnings per share calculation is given below:

Three-month period ended

Nine-month period ended

30 September

30 September

2020

2019

2020

2019

Net income for the period (SR '000)

195,634

212,055

344,920

918,824

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════════

════════

════════

Weighted average number of ordinary shares

('000)

562,500

562,500

562,500

562,500

════════

════════

════════

════════

Earnings per share (Saudi Riyals) - Basic and

diluted

0.35

0.38

0.61

1.63

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════════

════════

════════

There has been no item of dilution affecting the weighted average number of ordinary shares.

10

Yanbu National Petrochemical Company (YANSAB) - A Saudi Joint Stock Company

NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (continued)

For the nine-month period ended 30 September 2020

(All amounts in Saudi Riyals '000 unless otherwise stated)

11 FAIR VALUE MEASUREMENT

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

  • In the principal market for the asset or liability; or
  • In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible by the Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non- financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All financial instruments for which fair value is recognised or disclosed are categorised within the fair value hierarchy, based on the lowest level input that is significant to the fair value measurement as a whole, as follows:

  • Level 1: quoted (unadjusted) market prices in active markets for identical assets or liabilities.
  • Level 2: valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
  • Level 3: valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

If the inputs used to measure the fair value of an asset or liability falls into different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest input level that is significant to the entire measurement.

The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred. There were no transfers among the levels during the period.

The management assessed that the fair value of cash and cash equivalents, short-term investments, trade and other receivables and trade payables approximate their carrying amounts largely due to the short-term maturities of these instruments.

11

Yanbu National Petrochemical Company (YANSAB) - A Saudi Joint Stock Company

NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (continued)

For the nine-month period ended 30 September 2020

(All amounts in Saudi Riyals '000 unless otherwise stated)

12 RELATED PARTY TRANSACTIONS AND BALANCES

Related parties represent the shareholders, directors and key management personnel of the Company, and entities controlled, jointly controlled or significantly influenced by such parties. Pricing policies and terms of these transactions are approved by the Company's management. Following is the list of related party transactions and balances of the Company:

Transactions

Related party

Nature of transactions

Three-month period ended

Nine-month period ended

Balance as at

30 September

30 September

30 September

30 September

30 September

31 December

2020

2019

2020

2019

2020

2019

  1. Amounts due from related parties

Saudi Basic Industries Corporation

Sale of products

1,440,728

1,422,744

3,656,362

4,582,750

1,696,708

1,739,869

(SABIC) - (Parent)

Advances for purchase of materials,

product sales and other transactions

600

13,079

33,777

18,928

98,961

65,184

Long term advance for logistics

-

-

-

-

7,500

7,500

Other related parties

Exchange of products

1,597

7,713

20,204

7,784

598

11,286

Others

-

5,167

-

-

-

4,845

────────

────────

───────

───────

────────

────────

1,442,925

1,448,703

3,710,343

4,609,462

1,803,767

1,828,684

════════

════════

═══════

═══════

════════

════════

b) Amounts due to related parties

Saudi Basic Industries Corporation

Payments on behalf of the Company

(SABIC) - (Parent)

and other services rendered by the

Parent

441,958

508,362

1,855,918

1,576,588

222,848

282,015

Research and technology fees

20,234

28,455

73,127

91,655

10,371

69,270

Saudi Aramco (Ultimate Parent) and

Procurement of feedstock and

its subsidiaries (from 16 June 2020)

others

76,192

-

142,978

-

293,629

-

Arabian Industrial Fibers Company

(IBN RUSHD) (a related party)

Propane Tolling Agreement

68,813

79,487

114,238

205,841

68,814

91,754

Other related parties

Storage services and others

9,589

22,273

1,390

176,272

1,875

26,486

────────

────────

───────

───────

────────

────────

616,786

638,577

2,187,651

2,050,356

597,537

469,525

════════

════════

═══════

═══════

════════

════════

12

Yanbu National Petrochemical Company (YANSAB) - A Saudi Joint Stock Company

NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (continued)

For the nine-month period ended 30 September 2020

(All amounts in Saudi Riyals '000 unless otherwise stated)

12 RELATED PARTY TRANSACTIONS AND BALANCES (continued)

Key management compensation

Compensation for key management is as follows:

Three-month period ended

Nine-month period ended

30 September

30 September

2020

2019

2020

2019

Salaries and other benefits

1,301

1,255

5,279

4,866

Post-employment benefits

217

210

1,228

621

───────

───────

───────

───────

1,518

1,465

6,507

5,487

═════════

═════════

═════════

═════════

Significant transactions with related parties were as follows:

  1. The Company has a service level agreement with SABIC (Shared Services Organization - SSO) for the provision of accounting, warehousing, human resources, information technology (ERP/SAP), transporting and arranging for delivery of materials related to the Company's spare parts, engineering, procurement and related services and other general services to the Company. The Company has also logistic service agreement with SABIC.
  2. Advances to SABIC represent the amounts paid by the Company according to shared service agreement to finance the purchase of the Company's materials and services.
  3. Almost all the Company's products are sold to SABIC ("the Marketer") under marketing and off‑take agreements.

Terms and conditions of transactions with related parties

Outstanding balances at the period ended 30 September 2020 are unsecured, interest free and settled in cash. There have been no guarantees provided or received for any related party receivables or payables. For the period ended 30 September 2020, the Company has not recorded any impairment of receivables relating to amounts owed by related parties. This assessment is undertaken each financial year by examining the financial position of the related parties and the market in which the related party operates.

13 SEGMENT INFORMATION

The Company's President and Board of Directors monitor the results of the Company's operations for the purpose of making decisions about resource allocation and performance assessment. They are collectively the chief operating decision makers (CODM) for the Company. The CODM review the results of the Company as a whole, as they believe that decision making cannot be done effectively in isolation for single products of the Company due to complex nature of the business, integrated facility where multiple products including downstream product movement are simultaneous and the nature of the products market. Hence, the whole Company is treated as a single operating segment, the results and financial position of which has been presented already.

The key evaluation criteria for segment performance is the net profit and this is evaluated and measured consistently throughout the accounting period. The non-current assets of the Company are based in Kingdom of Saudi Arabia and petrochemical products sales by the Company are made primarily to its parent company which is also based in Kingdom of Saudi Arabia.

14 COMMITMENTS AND CONTINGENCIES

As at 30 September 2020, the Company has commitments of SR 339 million (31 December 2019: SR 339 million) relating to capital expenditures.

The Company's bankers have issued, on its behalf, bank guarantees amounting to SR 0.4 million in the normal course of business as at 30 September 2020 (31 December 2019: SR 0.5 million).

13

Yanbu National Petrochemical Company (YANSAB) - A Saudi Joint Stock Company

NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (continued)

For the nine-month period ended 30 September 2020

(All amounts in Saudi Riyals '000 unless otherwise stated)

15 APPROPRIATION OF NET INCOME

On 15 March 2020, the General Assembly approved a distribution of cash dividend amounting SR 984.37 million (SR 1.75 per share) for the second half of the year 2019 which represents 17.5% of the nominal value of the shares. The total dividends for the year ended 31 December 2019 was SR 1,968.74 million (SR 3.50 per share).

On 11 May 2020, the Board of Directors announced the distribution of SR 703.13 million as cash dividends (SR 1.25 per share) for the first half of the year 2020 which represents 12.5% of the nominal value of the shares. The date of eligibility for this dividend distribution was to shareholders listed on the Tadawul (Saudi Stock Exchange) by the end of trading on 9 July 2020.

16 IMPACT OF COVID-19

The outbreak of novel coronavirus ("COVID-19") since early 2020, its spread across mainland China and then globally caused disruptions to businesses and economic activity globally including the Kingdom of Saudi Arabia and the declaration of this pandemic by the World Health Organization necessitated the Company's management to revisit its significant judgments in applying the Company's accounting policies and the methods of computation and the key sources of estimation applied to the annual financial statements for the year ended 31 December 2019.

During the period ended 30 September 2020, management has assessed the overall impact on the Company's operations and business aspects, and considered factors like effects on supply chain, impact of decreased oil prices, operating rates of its plants and lost volume, additional cost in supply chain, margin squeeze, and product demand. Based on this assessment, no significant adjustments were required in the interim condensed financial statements for the period ended 30 September 2020. However, in view of the ongoing uncertainty, any future change in the assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amounts of the assets and/or liabilities in future periods. As the situation is rapidly evolving with future uncertainties, management will continue to assess the impact based on prospective developments.

14

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Yanbu National Petrochemical Company SJSC published this content on 21 October 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 October 2020 08:49:02 UTC

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