We draw attention to note (2) of the condensed consolidated financial statements which indicate that the Group accumulated losses have reached SAR 482.5 million, representing 723% of the share capital as of September 30, 2024, (as of December 31, 2023: SAR 525.6 million, representing 788%). Further, the Group current liabilities exceeded its current assets by SAR 894.7 million as of September 30, 2024, (as of December 31, 2023: SAR 845 million). These conditions, along with other matters, cast 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 a 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 and shareholders voting on the process of Financial Restructuring Procedure (FRP). These elements are future events and hence contain material uncertainty as to the outcome. Our conclusion is not modified in respect of this matter.

Emphasis of Matter

We draw your attention to note 1(c) to the interim condensed 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 the view that the decision of the Court of Appeal will not be different from the original decision issued by the 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.

In this respect the Board of Directors of the Group decided on Shabaan 22, 1445H, corresponding to March 3, 2024, to exit of its investments in Turkey, by disposing of them by sale or in any other way as permitted by Turkish law. As these companies did not achieve the desired returns and continued to achieve losses during the past years despite the solutions and treatments carried out by successive administrations to no avail and strengthening the opinion of local and international legal advisors to support the exiting decision. Our conclusion is not modified in respect of this matter.