Saudi Cables records losses of SAR 585 mln by end of 2022, increase of 202%

The Saudi Cable Company recorded losses after zakat and tax of SAR 585 million during the year 2022, compared to a loss of SAR 194 million in the year 2021, an increase of 202%. This came after today’s announcement of the annual financial results ending on December 31, 2022.

The operating loss amounted to SAR 235 million during the year ending in 2022, compared to a loss of SAR 144 million in the year 2021, an increase of 63%.

The loss per share in the current year amounted to SAR 25.04, compared to a loss of SAR 5.39 in the previous year.

The reason for the decrease is that the company was facing a liquidity issue as a result of judicial enforcement orders filed against it by creditors and lenders, and during the period it was unable to use its bank accounts and was unable to execute and produce on hand orders that obtained from the market.

The Company draw attention to Note 1 of the consolidated financial statements which indicates that the Group incurred a net loss of SAR 585 million for the year ended December 31, 2022 (2021: SAR 193.7 million), and the Group’s accumulated losses have reached SAR 543.3 million (As at December 31, 2021: SAR 256.7 million), representing 814.2% (2021: 71.2%) of the Group’s share capital. Further, the Group current liabilities exceeded its current assets by SAR 974.5 million as at December 31, 2022 (2021: SAR 476.4 million).

Furthermore, on May 11, 2022, The Saudi Stock Exchange “Tadawul” announced to continue suspension of trading of Saudi Cable Company share in the market as per the rules on the offer of Securities until the Company announces that the matters included in the independent auditor’s report on the consolidated financial statements for the year ended December 31, 2021, are remediated. These conditions, along with other matters, cast a significant doubt about the Group’s ability to continue as a going concern and its ability to meet its obligations when it becomes due.

In this respect the management has prepared five years forecast which exhibits net profit from year 2025, the plan includes certain assumptions in respect of cash injection via rights issue, revenue growth based on pipeline orders and quotations, creditors voting due in January 2024 to convert part of debt to equity in the process of Financial Restructuring Procedure (FRP). These elements are future events and hence contain material uncertainty as to the outcome. Our opinion is not modified in respect of this matter.

The Company draw your attention to Note 30 (b) to the consolidated financial statements where it shows that the Group has a court in Turkey issued a verdict in favor of Mass Kablo Yatırım ve Tic. A.Ş for a case filed by the minority shareholders of its subsidiary. An appeal against the verdict has been presented by said minority shareholders. However, based on a legal opinion obtained from an independent counsel which is of view that the decision of Court of Appeal will not be different from the original decision issued by court of first instance. In addition, the Group assessed and recorded a contingent liability amounting to SAR 52.5 million. Further the group has taken full provision on net assets of Mass Kablo Yatırım ve Tic. A.Ş. Our opinion is not modified in respect of this matter.

The Company said that the consolidated financial statements of the Group for the year ended December 31, 2021, were audited by another auditor who expressed a disclaimer of opinion on those consolidated financial statements on May 15, 2022, for a reason of scope limitation due to insufficient evidence related to the ability of the Group to continue its operations in the future, Zakat provision, recoverable amount of property, plant, and equipment, and the allowance of expected credit losses for trade receivables balances related to associate company.

The management has prepared five years forecast which exhibits net profit from year 2025, the plan includes certain assumptions in respect of cash injection via rights issue, revenue growth based on pipeline orders and quotations, creditors voting due in January 2024 to convert part of debt to equity in the process of Financial Restructuring Procedure (FRP). These elements are future events and hence contain material uncertainty as to the outcome. Our opinion is not modified in respect of this matter.