Saudi Telecom Co. — Interim / Quarterly Report 2015

Jul 29, 2015

Saudi Telecom announces the interim consolidated financial results for the period ending on 30-06-2015 (Six Months).

7010 · 29/07/2015 15:56:24 · Announcement #39391 · View on Saudi Exchange

Saudi Telecom announces the interim consolidated financial results for the period ending on 30-06-2015 (Six Months).

Element	Current quarter	Similar quarter for previous year	% Change current	Previous quarter	% Change previous
Net profit (loss)	2,558	2,803	-	2,504	2.16
Gross profit (loss)	7,164	7,024	1.99	7,544	-
Operational profit (loss)	2,963	2,961	0.07	3,380	-
All figures are in (Millions) Saudi Arabia, Riyals

Element	Current period	Similar period for previous year	% Change
Net profit (loss)	5,062	5,194	-
Gross profit (loss)	14,708	13,235	11.13
Operational profit (loss)	6,343	5,627	12.72
Earning or loss per share, Riyals	2.53	2.6	-
All figures are in (Millions) Saudi Arabia, Riyals

Element	EXPLAINATION
Reasons of increase (decrease) for quarter compared with same quarter last year	The net profit for the 2nd quarter decreased by SR 245m (8.7%) compared to the comparable quarter in the previous year (despite the SR 141m increase in gross profit during the quarter as a result to the revenue increase from services compared to the comparable period last year) mainly due to the following: (1) The SR 139m increase in operating expenses (3.4%) during the 2nd quarter compared to the comparable quarter in the previous year, mainly due to the following: a- The SR 107m (7.2%) decrease in selling & marketing expenses during the 2nd quarter compared to the same period last year. b- The SR 135m (15.7%) increase in general & administrative expenses during the 2nd quarter compared to the same period last year. c- The SR 111m (6.5%) increase in depreciation and amortization during the 2nd quarter compared to the same period last year. (2) The SR 153m decrease in (Other income and expenses) during the 2nd quarter compared to the comparable period last year, mainly due to the following: a-The booking of SR 112m related to the early retirement program during the 2nd quarter, which did not exist during the same period last year b-The SR 34m (83%) decrease in (Gains from investments accounted for under equity method) during the 2nd quarter compared to the same period last year (3) The SR 66m Increase in the provision for Zakat & Tax during the 2nd quarter compared to the same period last year
Reasons of increase (decrease) for period compared with same period last year	The net profit for the 1st half decreased by SR 132m (2.54%) compared to the same period in the previous year (despite the SR 1,473m increase in gross profit during the 1st half as a result to the revenue increase from services compared to the comparable period last year) mainly due to the following: (1) The SR 757m increase in operating expenses (9.95%) during the 1st half compared to the same period in the previous year, mainly due to the following: a-The SR 279m (10.36%) increase in selling & marketing expenses compared to the same period last year. b-The SR 211m (13.46%) increase in general & administrative expenses compared to the same period last year. c-The SR 267m (7.97%) increase in depreciation and amortization compared to the same period last year. (2) The SR 836m decrease in (Other income and expenses) during the 1st half compared to the same period last year, mainly due to the following: a-The booking of SR 112m related to the early retirement program during the 2nd quarter, which did not exist during the same period last year b-The SR 72m (108%) increase in (Losses from investments accounted for under equity method) compared to the same period last year c-The SR 49m increase in commissions compared to the same period last year d-The SR 697m decrease in (Other income and expenses; other, net) compared to the same period last year, and the main reason is attributed to the following: i. The SR 142m increase in (losses on sale/disposal of property, plant and equipment) during the 1st half of 2015 compared to the same period last year ii. The booking of SR 395m two-months salary expenses (one-off) during the 1st quarter which was made as a gesture to follow the initiative of the Honorable Royal Decree (as previously announced) (3) The SR 56m decrease in the provision for Zakat & Tax during 1st half compared to the same period last year
Reasons of increase (decrease) for quarter compared with previous quarter	The net profit for the 2nd quarter increased by SR 55m (2.19%) compared to the immediate prior quarter (despite the SR 380m decrease in gross profit during the 2nd quarter compared to the immediate prior quarter) mainly due to the following: (1) The SR 37m increase in operating expenses (0.87%) compared to the immediate prior quarter (2) The SR 459m increase & improvement in (Other income and expenses) during the 2nd quarter compared to the immediate prior quarter (despite the booking of SR 112m related to the early retirement program during the 2nd quarter, which did not exist in the immediate prior quarter), mainly due to the following: a- The SR 152m increase in (Gains / Losses from investments accounted for under equity method) to reach gains of SR 7m during the 2nd quarter compared to losses of SR 145m during the immediate prior quarter b- The SR 24m increase in commissions compared to the immediate prior quarter c- The SR 392m increase & Improvement in (Other income and expenses; other, net) compared to the immediate prior quarter, and the main reason is attributed to the decrease in miscellaneous expenses during the 2nd quarter compared to the immediate prior quarter, due to the booking of SR 395m two-months salary expenses (one-off) during the 1st quarter which was made as a gesture to follow the initiative of the Honorable Royal Decree (as previously announced)
Reclassifications in quarterly financial results	Certain comparatives figures for the period ending at 30 June 2014 have been reclassified to conform with the presentation used for the period ending at 30 June 2015.
Other notes	Revenue from services for the 1st half amounted to SR 24,696 m compared to SR 22,505 m for the corresponding period last year, an increase of 9.7 %, and for the 2nd quarter revenue from services reached 12,222m, an increase of 4.26% compared to same period last year. Earnings before interest, taxes, zakat, depreciation and amortization (EBITDA) for the 2nd quarter amounted to SR 4,793 m compared to SR 4,680 m for the corresponding period last year, an increase of 2.4%, and for the 1st half, EBITDA amounted to SR 9,953 m compared to SR 8,970 m for the corresponding period last year, an increase of 11%. Commenting on the results, STC Group CEO, Dr. Khaled H. Biyari, stated: (The financial results achieved for the 1st half of 2015, reflects the efforts being made to constantly evolve, improve and develop the company strategy and operations both domestically and internationally. Revenues from services for the 1st half increased 9.7% compared to the comparable period last year and operating profit for the same period increased 12.7% compared to the comparable period last year. Therefore, we assure that STC will continue to invest in both, its national human resources and infrastructure in order to reach the highest levels of customer satisfaction and enrich our customers experience. Within this frame, STC will continue to invest positively, especially in cutting-edge technology and broadband which will allow us to develop new services for our individual, residential and business customers. This will support STC strategic role in achieving sustainable growth, enabling government institutions and private sector transformation to the national knowledge-based economy, which requires strong infrastructure, high reliability through our communication networks, data centers, and business applications. Eventually, this will open the door for numerous new opportunities for growth and create new sources for income.) With regards to international operations, the 1st half 0f 2015 witnessed revenue growth of 7.1% in the controlled international subsidiaries compared to same period last year, and this is attributed mainly to the continued growth in controlled subsidiaries customer base and market shares. Domestically, the 1st half witnessed revenue growth of 11% from domestic operations compared to same period last year. As STC continues with the introduction of innovative services and customized offers with the appropriate smart phones that encourages mobile usage for both post-paid and pre-paid (SAWA) customers, which resulted in 5% increase in mobile working lines during the 2nd quarter compared to the same period last year, and an increase of 1% compared to the immediate previous quarter. This is underpinned by the Company customer-centric approach and its efforts to enhance the overall customers experience. Also, the 2nd quarter witnessed continuous strong growth in data traffic over the 4G network. This is mainly attributed to the company continuous deployment of the 4G network and the availability of the smart phones that support 4G technology. STC continues with the deployment of the fiber optic network for both business and residential. During the 2nd quarter, FTTH Customer base during the 2nd quarter increased 15% compared to the same period last year, and 8% compared to the immediate previous quarter. Enterprise business unit overall revenues increased approximately 17% during the 2nd quarter compared to the same period last year, driven by the 28% increase in Business sector data services revenues compared to same period last year.

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