Middle East Healthcare Co. announces its Annual Financial results for the period ending on 2024-12-31

Revenues for the year 2024 increased by 8.66% to SAR 2,882.82 million compared to SAR 2,653.17 million in the previous year 2023 due to the following:

1. Increase in the number of inpatients and outpatients following the increase in the Group’s bed and clinics operational capacities compared to the previous period
2. Increased business from MOH, insurance and cash clients

The increase in net profit for the current year compared to last year is due to:

1. Increase in revenue due to increase in number of inpatients, outpatients and surgeries.
2. Increase in efficiency (beds and clinics utilization) of the facilities
3. Capital gain of SAR 19.6 million due to sale of land in Riyadh.
4. Zakat assessments for the years 2015 to 2020 have been recognized in year 2023 which is re-stated (note 38). The Company entered into an agreement for instalment plan to settle the Zakat and withholding tax differences for the years 2015 to 2020 (note 24) over 12 years on 48 instalments. The Company measured the liability at fair value, discounted to net present value using 6.25% discounting factor. Accordingly, SR 45.45 million is recognized as income in current year 2024.
5. In accordance with IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors, the omission has been classified as a prior period error and loss recognized (note 38). In Current Fair value gain on derivative financial instruments recognized by SR 2.27 million (last year SR 7.85 million)

Unmodified opinion

N/A

N/A

During prior years, Zakat, Tax and Customs Authority (ZATCA) issued Zakat and withholding tax assessment claiming additional Zakat and withholding tax liabilities in respect of the years from 2015 to 2018 with a final exposure of SR 123 million, and Zakat assessment for the years 2019 to 2020 with a final exposure of SR 68 million against which a provision of SR 20 million recorded on the year ended 31 December 2023. Final rulings from the Appellate Committee for Tax, and Customs Violations and Disputes (ACTVD) were issued in December 2023 for the years 2015 to 2018 and in February 2024 for the years 2019 and 2020. The Group filed a plea for reconsideration against the decisions taken by ACTVD, which is still under study.

However, based on management’s assessment and in accordance with the Group’s accounting policy and requirements of IAS 8, it was determined that a provision should have been recognized during the year ended 31 December 2023, for an additional amount of SAR 171 million to cover the total additional claims for the aforementioned years, This recognition reflects the reassessment of the likelihood of an economic outflow in light of developments in the plea process, as per management assessment this determination reflects a conservative approach given the increased probability of an economic outflow related to these claims to provide transparency and comparability of the financial information.

During the preparation of the consolidated financial statements for the year ended 31 December 2024, management conducted a comprehensive review of the fair value measurement of the Company’s interest rate swap (IRS) agreements. This review identified that the fair value of these financial instruments had not been recognized in the financial statements for the years ended 31 December 2023 and 31 December 2022, as required under IFRS 9 “Financial instruments”.

In accordance with IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors, the omission has been classified as a prior period error. Consequently, the comparative financial statements for the years ended 31 December 2023 and 31 December 2022 have been restated to reflect the fair value of the IRS swap agreements appropriately.