Financial Review
CFO Review
The company has a strong financial position and a sustainable capital structure that enables it to finance its growth plans
The pursuit of financial sustainability represents one of the financial sustainability is an enabling strategic pillar for a successful delivery of the corporate strategy. 2023 marked another year of investing in the future, our strategic investments in capital projects grew to 41.6 BSAR, representing 52% growth compared to last year. These projects will contribute to enhancing the company’s future growth. These investments focus on meeting the growing demand for electricity service, improving its quality and reliability, building smart grids, and provide electricity transmission and distribution grids in order to further boost electricity generation efficiency levels distribution sectors to increase the efficiency of electricity generation and achieve the targeted optimal energy mix for electricity production, aligning with the goals of the Kingdom’s Vision 2030. Additionally, our ongoing objective is to leverage the company’s expertise and asset base to provide additional growth opportunities from new unregulated businesses. These include fiber optics, sustainable energy services, project development and management, providing infrastructure for electric vehicles, and others.
Mr. Abdulaziz bin Abdulrahman AlMuhaiza
Chief Financial Officer
The pursuit of financial sustainability represents one of the financial sustainability is an enabling strategic pillar for a successful delivery of the corporate strategy. 2023 marked another year of investing in the future, our strategic investments in capital projects grew to 41.6 BSAR, representing 52% growth compared to last year. These projects will contribute to enhancing the company’s future growth. These investments focus on meeting the growing demand for electricity service, improving its quality and reliability, building smart grids, and provide electricity transmission and distribution grids in order to further boost electricity generation efficiency levels distribution sectors to increase the efficiency of electricity generation and achieve the targeted optimal energy mix for electricity production, aligning with the goals of the Kingdom’s Vision 2030. Additionally, our ongoing objective is to leverage the company’s expertise and asset base to provide additional growth opportunities from new unregulated businesses. These include fiber optics, sustainable energy services, project development and management, providing infrastructure for electric vehicles, and others.
Our financial and financing strategy relies on a set of core principles that support our strong credit rating, tied to the sovereign rating of the Kingdom. This approach ensures access to a diverse range of financing sources, instruments, along with domestic and international financial markets, while also maintaining sufficient liquidity to meet investment, operational, and short-term financing needs. Considering this, the company always seeks to build and develop long-term relationships with financing partners across various categories, alongside optimizing cash flows from operational activities to meet operational and investment expenditure requirements and strengthen the company’s financial position.
By the end of 2023, total assets amounted to 500.8 billion SAR, compared to 479.5 billion SAR, representing a growth rate of 4.4%. Equity amounted to 256.3 billion SAR, while net debt stood at approximately 109.3 billion SAR. Consequently, the company enjoys a strong financial position and a sustainable capital structure enabling it to finance its growth plans. During 2023, the company successfully concluded several high-profile financing transactions in financial markets, totaling 34.1 billion SAR (equivalent to 9.1 billion US dollars), through various financing, including conventional and green Sukuk related to environmental, social, and governance practices, as well as joint domestic and international financing, export credit agencies, supporting continued investment in the company’s future growth. The company maintained a strong investment-grade credit rating, equivalent to the Kingdom’s sovereign credit rating by both Moody’s and Standard & Poor’s rating agencies, with an A1 rating and positive outlook from Moody’s, an A rating with a stable outlook from Standard & Poor’s, and an A rating with a stable outlook from Fitch. these ratings are considered one of the highest credit ratings for companies in the Kingdom.
We are witnessing sustainable growth in demand for electricity, reflecting demographic and economic growth in the Kingdom under Vision 2030. Electricity consumption grew by 5% in 2023 compared to the previous year, with the company extending electricity services to more than 346 thousands new customers. Additionally, the transmission system customers’ loads were higher and the backup capacity charges were increased. while the company continued to grow its subscriber base for Dawiyat company FTTH services and expand its product offerings. These factors combined, in addition to new revenue from development projects to construct substations and transmission lines for the company’s customers. contributed to a 4.5% increase in operating revenues in 2023 compared to the previous year, reaching 75.33 billion SAR compared to 72.079 billion SAR in 2022. Net profit in 2023 amounted to 10.249 billion SAR compared to 15.135 billion SAR in the previous year, reflecting a decrease of 32.3%, primarily attributed to increased operating and maintenance expenses due to business and asset growth, increased loads, and increased maintenance programs, as well as higher financing costs and recording of non-recurring expenses. These factors were partially offset by higher operating revenues and a decrease in the provision for accounts receivable due to improved collection processes.