Saudi Cable losses up 132% to SR44.5 mln in Q2‎

The Saudi Cable Co. recorded a net loss after zakat and tax of 44.5 million riyals in the second quarter, compared to a loss of 19 million riyals in the same quarter of last year, an increase of 132%. This came after today’s announcement of the financial results for the period ending 06-2022- 30 (6 months)

The operational loss amounted to 36 million riyals in the second quarter, compared to a loss of 32 million riyals in the same quarter of the previous year, an increase of 14%.

The net loss after zakat and tax in the 6-month period amounted to 82 million riyals, compared to a loss of 55 million riyals in the same period last year, an increase of 48%.

The loss per share in the current period amounted to 2.82 riyals, compared to a loss of 1.53 riyals in the same period last year.

The Group made a net loss of SR 44.5 million in current quarter as compared to the net loss of SR 19.2 million in the same quarter of the previous year and the change in net losses of the current quarter compared with net loss of the same quarter of the previous year are mainly due to following impacts:

• Lower volumes in current quarter as compared to same quarter of previous year.
• Increased expenses in current quarter as compared to same quarter of the previous year.
• Decreased share of profit from associates in current quarter as compared to same quarter of the previous year.
• Decreased other income in current quarter as compared to same quarter of the previous year.

The Group made a net loss of SR 44.5 million in current quarter as compared to the net loss of SR 37.2 million in the previous quarter and the change in net losses of the current quarter compared with net loss of the previous quarter are mainly due to following impacts:

• Lower volumes in current quarter as compared to the previous quarter.
• Increased expenses in current quarter as compared to the previous quarter.
• Decreased share of profit from associates in current quarter as compared to the previous quarter.
• Decreased other income in current quarter as compared to the previous quarter.

The Group made a net loss of SR 81.6 million in current period as compared to the net loss of SR 55.1 million in the same period of the previous year and the change in net losses of the current period compared with net loss of the same period of the previous year are mainly due to following impacts:

• Lower volumes in current period as compared to same period of previous year.
• Increased expenses in current period as compared to same period of the previous year.
• Decreased share of profit from associates in current period as compared to net losses in same period of the previous year.
• Decreased other income in current period as compared to same period of the previous year.

Modification, Qualification or Emphasis of a Matter as Stated within the External Auditor Opinion:

Basis for Disclaimer of Conclusion

• The Group incurred a net loss of SAR 82.4 million for the six-month period ended June 30, 2022, and as of that date, the Group’s accumulated losses have reached SAR 240.1 million, representing 91.52% of the share capital as at June 30, 2022. Further, the Group current liabilities exceeded its current assets by SAR 539.3 million as at June 30, 2022 (as at December 31, 2021: SAR 476.4 million). These events or conditions, along with other matters, indicate a significant doubt about Group’s ability to continue as a going concern and its ability to meet its obligations when it becomes due. The Group’s management is aware of the risks related to going concern but has prepared the interim condensed consolidated financial statements undergoing concern basis.
• As stated in note 17, the Group received assessments from the Zakat, Tax and Customs Authority (ZATCA), claiming additional Zakat liabilities of SAR 234.6 million in respect of the assessment for prior years against which the Group has filed appeals. It is management’s assertion that they have grounds to contest against items included in the assessments raised by ZATCA, that the outcome of the appeals is uncertain at this stage and, therefore, it is not possible to determine the potential Zakat liability. No provision has been made in these interim condensed consolidated financial statements for the items under appeal and for any potential exposure relating to open years not yet assessed by ZATCA. We have not been provided details or basis of certain appeals the assessments, including details of zakat computation and appeals in respect of certain open years for the Company and of certain subsidiaries. We were, therefore, unable to determine whether any adjustments are necessary to the Group’s current or prior years’ / periods’ zakat charges.
• The Group has property, plant and equipment amounted of SAR 264 million as at June 30, 2022 and there are some indicators (i.e. reduction in revenue, gross losses, negative operating cash flows etc.) that the recoverable value of them is less than its book value, we were unable to obtain sufficient evidence regarding the recoverable amount of them as the Group’s management hasn’t provided us with sufficient data related to the recoverable amount of the property, plant and equipment and the extent to recognize any impairment losses the book value of property, plant and equipment as at June 30, 2022. The Group’s management will prepare a future study to determine the recoverable value subsequently after approval date of the interim condensed consolidated financial statements of the Group.
• As stated in note 6, the interim condensed consolidated financial statements include investment in an associate (50% ownership) with a carrying value of SAR 278.5 million and share of results of SAR 4 million as at and for the six-month period ended June 30, 2022. The associate had trade receivables amounting to SAR 54.4 million, out of which the Group’s share is SAR 27.2 million; that are overdue for more than one year, against which management has not recognized any allowance for expected credit losses. Management was unable to provide us with appropriate support to ensure the possibility of recoverability of those trade receivables balances. Consequently, we were unable to determine whether any adjustments to the Group’s share of results of an associate and the carrying value of the investment in an associate were necessary as of and for the six-month period ended June 30, 2022.

Disclaimer of Conclusion

Due to the significance of the matters described in the Basis for disclaimer of conclusion section above, we were unable to obtain sufficient appropriate evidence to form a conclusion on the interim condensed consolidated financial st3atements. Accordingly, we do not express a conclusion on these interim condensed consolidated financial statements.

Other Matter

The financial statements for the year ended December 31, 2021 and the interim condensed consolidated financial statements for the three-month period ended March 31, 2022 were Audited and reviewed by another Auditor who expressed a modified Audit opinion and review conclusion on May 15, 2022 and May 23, 2022 respectively.

Additional Information:

The loss per share during this period amounts to SR 2.82 against loss per share of SR 1.53 for the same period of last year.

Loss per share for the current period was calculated based on the average of 29,001 thousand shares compared to 36,061 thousand shares for the same period of previous year.

In line with IAS 33 Earnings per share, Basic EPS is calculated by dividing profit or loss attributable to ordinary equity holders of the parent entity by the weighted average number of ordinary shares outstanding during the period. As there was a capital reduction that took place as approved in the Extraordinary General Assembly by the shareholders, on February 20, 2022, the weighted average structure changed since then, affecting weighted average number of ordinary shares of six-month period ended June 30, 2022.

The number of shares prior to capital reduction was 36,061 thousand where as the number of shares post capital reduction is 26,231 thousand.

Subsequent events

Subsequent to the date of the interim condensed consolidated statement of financial position, on July 25, 2022, the shareholders of the parent company approved capital reduction amounting to SAR 195.6 million to absorb the accumulated losses as of March 31, 2022.