Saudi Telecom Co. — Earnings Release 2014

Feb 19, 2014

Saudi Telecom announces the annual consolidated financial results for the period ending on 31-12-2013.

7010 · 19/02/2014 16:45:50 · Announcement #33339 · View on Saudi Exchange

Saudi Telecom announces the annual consolidated financial results for the period ending on 31-12-2013.

Element	Current year	Previous year	% Change
Net profit (loss)	9,897	7,276	36.02
Earning or loss per share, Riyals	4.95	3.64	-
Gross profit (loss)	27,413	25,262	8.51
Operational profit (loss)	10,989	9,746	12.75

*All figures are in (Millions) Saudi Arabia, Riyals

Element	EXPLAINATION
Reasons of annual financial results	The Net Profit for the FULL YEAR 2013 increased by SR 2,621 (36%) compared to the previous year this increase is attributed to the following: (1)The SR 1,243m (13%) increase in operating profit compared to the previous year, as a result to the SR 860m increase in revenue from services (2%) compared to the previous year, and the decline of SR 1,292m in cost of services (7%) compared to the previous year. This increase in operating profit materialized despite the increase in operating expenses during 2013 due to the booking of one time, none recurring and none cash charge of SR 1,104m resulting from fair valuation of STC investments in Asia (Aircel and Axis) during the first half of 2013. (2)The decrease in losses from investments accounted for under equity method by SR 1,063m compared to the previous year, as a result of STC group not consolidating the results of Aircel group, STC group conducted a review of its investments in BGSM group (joint venture), including the manner in which this investment is being managed and how joint control has been effectively exercised. As a result of such review, STC signed an amendment to the BGSM shareholders agreement with other shareholders of BGSM Group on 31 December 2013 with respect to certain operational matters of the Aircel Group. Consequently it has been concluded that STC group shall stop to account for the investment in Aircel Group using the equity method effective from the second quarter 2013. This has resulted in STC group reversing its share of losses from Aircel Group for the period from 1 April 2013 to 30 September 2013 amounting to SR 795m. Also, Axis (Investment held for sale) not consolidated starting from the 2nd quarter of 2013 as compared to the previous year. (3)The increase of other income in (other Income & Expenses) by SR 752m compared to the previous year, mainly due to accruing of revenue from the projects resulting from the Universal Service Fund related to Authority of Communications and Information Technology, and revenues from devices sales and Mega projects. (4)The SR 534m decline in Finance cost compared to the previous year. (5)Included in the twelve months results is a none cash charge of SR 1,122m million on account to FX losses mainly from depreciation of Turkish Lira from operations in turkey during the year.
Reclassifications in annual financial results	STC started reporting the results of its associates using Equity Method as prescribed by the accounting standards from 1 January 2013 (as against proportionate consolidation method used previously). All figures for the full year 2012 have been shown as per the equity method in order to be aligned and consistent with the new presentation method.

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