During the quarter, capital expenditure and external investments1 amounted to SAR 32.8 billion ($8.7 billion) and SAR 9.9 billion ($2.6 billion), respectively. In March 2023, the company made a third partial prepayment of the deferred consideration related to the acquisition of SABIC for an amount of SAR 59.0 billion ($15.7 billion). This resulted in a decrease in total loans and cash and cash equivalents, and a profit of SAR4.6 billion ($1.2 billion) during the quarter.
In addition, in May Aramco made a final prepayment of SAR 16.7 billion ($4.5 billion) to fully reduce the remaining outstanding amount of the debt securities, resulting in full settlement of the deferred consideration related to the SABIC acquisition. In line with the company's growth ambition and advancing its liquids-to-chemicals strategy, Aramco signed definitive agreements to acquire a 10% stake in Rongsheng Petrochemical Company Limited (Rongsheng Petrochemical) for approx. SAR 13.5 billion ($3.6 billion). At the 7th edition of the In-Kingdom Total Value Add (iktva) Forum and Exhibition in January, Aramco signed over 100 agreements and Memoranda of Understanding (MoU) worth SAR 27.0 billion ($7.2 billion) to help with promoting a diverse, sustainable and globally competitive industrial ecosystem.
In March 2023, Aramco made a third partial prepayment of SAR 59.0 billion ($15.7 billion) of the deferred consideration related to the SABIC acquisition. The outstanding amounts of the borrowing costs related to the promissory note payable between 2024 and 2028, together with SAR 18.4 billion ($4.9 billion), have also been fully reduced. In January 2023, Aramco received a payment of SAR 15.6 billion ($4.2 billion) related to the financing agreement with the Jazan Integrated Gasification and Power Company (JIGPC).
The remaining amount of SAR 2.0 billion (USD 0.5 billion) is expected to be received by the end of the year.
Glossary
Disclaimer
- General information
- Basis of preparation and other significant accounting policies
- Fair value estimation continued
- Property, plant and equipment
- Income taxes and zakat (a) Kingdom income tax rates
- Income taxes and zakat continued
- Other reserves
- Revenue
- Non-cash investing and financing activities
- Commitments Capital commitments
- Contingencies
- Related party transactions and balances (a) Transactions
- Investments in affiliates
- Events after the reporting period Repayment of deferred consideration to PIF
We have reviewed the accompanying condensed consolidated balance sheet of Saudi Arabian Oil Company and its subsidiaries as at March 31, 2023 and the related condensed consolidated statements of income, comprehensive income, changes in equity and cash flows for the three-month period then ended and other explanatory notes notes (the “condensed consolidated interim financial report”). Management is responsible for the preparation and presentation of this condensed consolidated interim financial report in accordance with International Accounting Standard 34, 'Interim Financial Reporting', which is endorsed in the Kingdom of Saudi Arabia. Our responsibility is to express a conclusion on these condensed consolidated interim financial reports based on our review.
We conducted our review in accordance with International Standard on Review Engagements 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity', endorsed in the Kingdom of Saudi Arabia. In connection with the IPO, the Government, which was the sole owner of the Company's shares at that time, sold a total of 3.45 billion ordinary shares, or 1.73% of the Company's share capital. On 13 February 2022, the Government transferred 4% of the company's issued shares to the Public Investment Fund ("PIF"), the sovereign wealth fund of the Kingdom.
Subsequently, on 16 April 2023, the government announced the transfer of 4% of the company's issued shares to the Saudi Arabian Investment Company ("Sanabil Investments"), a wholly owned subsidiary of PIF. The condensed consolidated interim report of the Company and its subsidiaries (collectively “Saudi Aramco”) was approved by the Board of Directors on May 8, 2023. The results for the interim periods are unaudited and include all necessary adjustments for a fair presentation of the results for the periods presented.
Management believes that the fair values of Saudi Aramco's financial assets and liabilities measured and recognized at amortized cost do not differ materially from their carrying amounts at the end of the reporting period. There were no changes made to any of the valuation techniques and valuation processes applied at 31 December 2022 and changes in unobservable inputs are not expected to materially affect the fair values. All other activities are subject to an income tax rate of 50%, in accordance with the Saudi Arabian Income Tax Law of 2004 and its amendments (the "Tax Law"). The 20% income tax rate applicable to the Company's downstream activities, which came into force on 1 January 2020, is conditional on the Company separating its downstream activities under the control of one or more separate wholly-owned subsidiaries before 31 December 2024, otherwise the Company's downstream activities will be retroactively taxed at 50%. The Company expects to transfer all its downstream activities to a separate legal entity or entities within the specified period. In addition, according to the tax law, shares held directly or indirectly in listed companies on the Saudi stock exchange by taxpayers involved in oil and hydrocarbon activities are exempt from the application of corporate income tax. As a result, the company's ownership interests in such companies are subject to zakat. All amounts in millions of Saudi Riyals unless otherwise stated. Income tax and zakat continued. The reconciliation of taxation at the Kingdom's statutory rates with consolidated taxation and zakat expenditure is as follows:. b) Income tax and zakat expenditure. c) Income tax and zakat obligation towards the Government.
On January 19, 2023, the Company received SAR 15,563 in respect of the second part of the financing agreement with the Jazan Integrated Gasification and Power Company (“JIGPC”), a joint venture of Saudi Aramco. It requires recognition of the assets acquired and liabilities assumed at fair value from the acquisition date. Saudi Aramco engaged an independent appraiser to determine the fair value of the assets and liabilities of VGP Holdings LLC as part of the purchase price allocation process.
Saudi Aramco's share of the capital contribution is SAR 4,685, of which no amount has been withdrawn as of March 31, 2023. The dividend per share of SAR 0.30 reflects the effect of the bonus share issue approved on May 8, 2023, as described above down. On May 8, 2023, after receiving the necessary approvals from the competent authorities, the Extraordinary General Assembly (“EGA”) approved the increase of the Company's share capital by SAR 15,000 and the proportional increase in the number of issued ordinary shares of the Company by 22 .billion without face value.
Accordingly, earnings per share for the three-month periods ended March 31, 2023 and 2022 have been calculated by retroactively adjusting the weighted average number of shares outstanding to reflect the effect of the issuance of the aforementioned bonus shares.
