Saudi Telecom Co. — Interim / Quarterly Report 2015

Apr 20, 2015

Saudi Telecom announces the interim consolidated financial results for the period ending on 31-03-2015 (Three Months)

7010 · 20/04/2015 08:07:43 · Announcement #38248 · View on Saudi Exchange

Saudi Telecom announces the interim consolidated financial results for the period ending on 31-03-2015 (Three Months)

Element	Current quarter	Similar quarter for previous year	% Change current	Previous quarter	% Change previous
Net profit (loss)	2,504	2,391	4.73	2,442	2.54
Gross profit (loss)	7,544	6,211	21.46	7,301	3.33
Operational profit (loss)	3,380	2,666	26.78	2,384	41.78
Earning or loss per share, Riyals	1.25	1.2	-	-	-
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 1st quarter increased by SR 113m (4.7%) compared to the comparable quarter in the previous year mainly due to the following: (1) The SR 1,333 m increase in gross profit (21.5%) during the 1st quarter compared to the comparable quarter in the previous year as a result to the 16% increase in revenues from services during the quarter compared to the comparable quarter in the previous year (2) The SR 619m increase in operating expenses (17.5%) during the 1st quarter compared to the comparable quarter in the previous year, mainly due to the following: - The SR 387m (32%) increase in selling & marketing expenses during the 1st quarter compared to the same period last year. - The SR 76m (11%) increase in general & administrative expenses during the 1st quarter compared to the same period last year. - The SR 156m (10%) increase in depreciation and amortization during the 1st quarter compared to the same period last year. (3) The SR 683m decrease in (Other income and expenses, net) during the 1st quarter compared to the comparable period last year, mainly due to the following: - The SR 38m (35%) increase in (losses from investments accounted for under equity method) during the 1st quarter compared to the same period last year - The SR 612m increase in (miscellaneous expenses) included in (Other Income & Expenses; Other, net) during the 1st quarter compared to the same period last year, mainly due to the booking of SR 395m two-months salary expenses (one-off) paid to Saudi employees which was made as a gesture to follow the initiative of the Honorable Royal Decree (as previously announced), also as results of booking losses on sale/disposal of property, plant and equipment SR 136m. (4) The SR 123m decrease in the provision for Zakat & Tax during the 1st quarter compared to the same period last year.
Reasons of increase (decrease) for quarter compared with previous quarter	The Net Profit for the 1st quarter increased by SR 61m (2.5%) compared to the immediate prior quarter due to: (1)The SR 243 m increase in gross profit (3.3%) during the 1st quarter compared to the immediate prior quarter as a result to the 5.3% increase in revenues from services during the 1st quarter compared to the immediate prior quarter (2)The SR 752m decrease in operating expenses (15.3%) during the 1st quarter compared to the immediate prior quarter, mainly due to the following: a. The comparable numbers for Q4, 2014 include a one-time, non-recurring and non-cash charge of SR 399m provisions from impairment related to STC investments in Oger tel ltd. resulting from Cell C (one of Oger tel ltd. Subsidiaries) b. The SR 121m decrease in selling & marketing expenses during the 1st quarter compared to the immediate prior quarter c. The SR 196m decrease in general & administrative expenses during the 1st quarter compared to the immediate prior quarter (1)The SR 883m decrease in (Other income and expenses, net) during the 1st quarter compared to the immediate prior quarter, due to the SR 461m increase in (miscellaneous expenses) included in (Other Income & Expenses; Other, net) during the 1st quarter compared to the immediate prior quarter, the main reason is attributed to the booking of SR 395 m two-months salary expenses (one-off) paid to Saudi employees which was made as a gesture to follow the initiative of the Honorable Royal Decree (as previously announced), and also the booking of SR 136m (losses on sale/disposal of property, plant and equipment) during the 1st quarter compared to SR 450m (Gains on sale/disposal of property, plant and equipment) in the immediate prior quarter which includes the compensation amount for the company land and buildings erected thereon (SR 595m) which is located in Al Faisaliah area in Riyadh.
Reclassifications in quarterly financial results	Certain comparatives figures for the period ending at 31 march 2014 have been reclassified to conform with the presentation used for the period ending at 31 march 2015.
Other notes	Revenue from services for the 1st quarter amounted to SR 12,473 million compared to SR 10,783 million for the corresponding period last year, an increase of 15.7 %. Earnings before interest, taxes, zakat, depreciation and amortization (EBITDA) for the 1st quarter amounted to SR 5,160 million compared to SR 4,290 million for the corresponding quarter last year, an increase of 20.3%. Commenting on the results, STC Group chairman, Mr. Abdulaziz Alsugair, stated: (The strong financial results achieved for the 1st quarter 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 increased 15.7% compared to the comparable period last year and net profit increased 4.7% compared to the comparable period last year. We will continue focusing on customer satisfaction as part of STC strategy, by deploying cutting-edge technological resources, and investing in technology & innovative solutions across fixed, mobile and data products. The aim is to provide a robust quality infrastructure that support solutions and services exceeding the current customer needs. Such efforts place STC at the forefront of the regional Telecoms, who are laying the infrastructure for the knowledge economy.) With regards to international operations, the 1st quarter witnessed revenue growth of 8% in the controlled international subsidiaries compared to same period last year. Domestically, the 1st quarter witnessed revenue growth of 16% 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 8% increase in mobile working lines during the 1st quarter 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 1st quarter witnessed continuous 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 1st quarter, FTTH Customer base increased 21% compared to the same period last year, and 7.5% compared to the immediate previous quarter. Enterprise business unit overall revenues increased 12% during the 1st quarter compared to the same period last year, driven by the increase in Business sector data services revenues.

The Capital Market Authority and Saudi Exchange take no responsibility for the contents of this disclosure, make no representations as to its accuracy or completeness, and expressly disclaim any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this disclosure, and the issuer accepts full responsibility for the accuracy of the information contained in it and confirms, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts or information the omission of which would make the disclosure misleading, incomplete or inaccurate.