The Saudi Capital Market Authority proposes broader disclosures in annual reports

The Saudi Capital Market Authority has proposed a project to develop disclosure requirements in the annual reports of listed companies, aiming to raise the level of financial and operational analysis, and explain fundamental changes in results, financial position and liquidity, instead of simply presenting data and numbers.

On Wednesday, the Authority called on those interested and participants in the financial market to submit their views on the project within 30 days, ending on November 20, in preparation for studying the comments and adopting the final version. The project proposes to collect disclosure requirements related to financial and operational performance and organize them within a separate section in the Board of Directors’ annual report entitled “Discussion and Analysis of Financial and Operational Performance and Financial Position,” while adding requirements to enhance the comprehensiveness and quality of information, and facilitate its comparison between companies and different financial periods.

Under the proposal, companies must analyze their performance and business results during the fiscal year, explain the reasons and drivers of fundamental changes, in addition to reviewing their financial position, liquidity, solvency, and capital resources compared to the previous year. The requirements also include analysis of key performance indicators, financial and non-financial, whenever they are of relative importance, including profitability margins, return on capital or equity, revenue and profit growth rates, and operational efficiency indicators, according to the nature of the company’s activity.

The proposed disclosure extends to the fundamental trends, factors and uncertainties that are expected to affect the company’s business, results and financial position in the future, allowing investors to have a broader understanding of the factors affecting performance and a better assessment of opportunities and risks.

The project proposes to apply the requirements mandatorily to all companies listed on the main market (TASI), starting with the first Board of Directors report issued after approval of the new regulatory provisions. As for companies listed on the parallel market “Nomu”, the requirements will initially be applied in an indicative manner, and will become mandatory starting from the first annual report of the Board of Directors issued in the year following the year of adoption of the provisions.

Nigerian billionaire Aliko Dangote revealed on Wednesday that his company had acquired a 25 percent stake in a Kenyan pipeline company dedicated to transporting petroleum products. Last month, businessman Dangote laid the foundation stone for an oil refinery project with a production capacity of 700,000 barrels per day in the port of Lamu, Kenya.

Dangote announced this deal during the Financial Times Africa Summit held in London. In a speech on Tuesday, Kenyan President William Ruto said that private investors had bought a 25 percent stake in the national oil pipeline network from government entities.

On Wednesday, the Australian company Woodside Energy lowered the upper limit of its annual production expectations, after reducing the volume of expected production from the Beaumont ammonia plant in Texas. On the other hand, the rise in oil and gas prices contributed to achieving revenues for the third quarter that exceeded estimates.

The company now expects its annual production to range between 174 and 181 million barrels of oil equivalent, down from its previous forecast of between 174 and 185 million barrels of oil equivalent. The company's shares fell by more than 1 percent during early trading.

Woodside explained that the reduction in production expectations came as a result of the decline in expected quantities from the Beaumont ammonia plant, the narrow timetable for the start of liquefied natural gas production from the Scarborough project, in addition to the decrease in production from the Ukha floating production, storage and offloading unit. The company recorded revenues of $4.28 billion during the three months ending September 30, exceeding estimates of $4.11 billion.