Saudi Telecom Co. — Interim / Quarterly Report 2015

Jan 20, 2016

SAUDI TELECOM COMPANY ANNOUNCES THE INTERIM CONSOLIDATED FINANCIAL RESULTS FOR THE PERIOD ENDING ON 31-12-2015 (TWELVE MONTHS).

7010 · 20/01/2016 17:53:57 · Announcement #40921 · View on Saudi Exchange

SAUDI TELECOM COMPANY ANNOUNCES THE INTERIM CONSOLIDATED FINANCIAL RESULTS FOR THE PERIOD ENDING ON 31-12-2015 (TWELVE MONTHS).

Element	Current quarter	Similar quarter for previous year	% Change current	Previous quarter	% Change previous
Net profit (loss)	1,950	2,442	-	2,322	-
Gross profit (loss)	8,011	7,301	9.72	7,624	5.08
Operational profit (loss)	2,554	2,384	7.13	3,038	-
All figures are in (Millions) Saudi Arabia, Riyals

Element	Current period	Similar period for previous year	% Change
Net profit (loss)	9,335	10,959	-
Gross profit (loss)	30,343	28,156	7.77
Operational profit (loss)	11,936	11,632	2.61
Earning or loss per share, Riyals	4.67	5.48	-
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 4th quarter decreased by SR 492m compared to the comparable quarter in the previous year, mainly due to the following: (1) The SR 687m increase in cost of services, and the SR 540m increase in operating expenses as a result to the SR 1,398m increase in revenue during the quarter compared to the comparable period last year. (2) The SR 634m decrease in Other income and expenses, net during the 4th quarter compared to the comparable period last year, mainly due to the following: a) The booking of SR 136m related to the early retirement program during the 4th quarter, which did not exist during the same period last year. b) The booking SR 24m Losses from investments accounted for under equity method during the 4th quarter compared to losses of SR 164m for the same period last year, and this is attributed mainly to the fluctuation in Turkish Lira against the US Dollar during the 4th quarter compared to the same period last year. c) The SR 18m increase in finance cost during the 4th quarter compared to the same period last year . d) The SR 673m decrease in Other income and expenses other, net compared to the same period last year, and the main reason is attributed to the following: * The SR 88m decrease in Miscellaneous revenue compared to the same period last year. * The booking of SR 80m losses on sale/disposal of property, plant and equipment during the 4th quarter compared to gains of SR 450m for the compared period last year. These gains booked during the 4th quarter of 2014 includes among other items an amount of SR 595m gains resulting from the compensation for the company land and buildings erected thereon which is located in Al Faisaliah area in Riyadh (as announced previously). * The SR 55m decrease in Miscellaneous expenses during the 4th quarter compared to the same period last year. (3) The SR 19m increase in the provision for Zakat and Tax during the 4th 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 12 months period decreased by SR 1,625m compared to the previous year, mainly due to the following: (1) The SR 2,823m increase in cost of services, and the SR 1,883m increase in operating expenses during the 12 months period compared to the previous year, as a result to the SR 5,011m increase in revenue during the 12 months period compared to last year. (2) The SR 1,905m decrease in Other income and expenses, net during the 12 months period compared to last year, mainly due to the following: a) The booking of SR 406m related to the early retirement program during the 12 months period , which did not exist last year. b) The SR 118m increase in Losses from investments accounted for under equity method during the 12 months period compared to last year, and this is attributed mainly to the significant depreciation of the Turkish Lira against the US Dollar during the 12 months period compared last year. c) The SR 57m increase in commissions compared to last year. d) The SR 1,435m decrease in Other income and expenses other, net compared to last year, and the main reason is attributed to the following: * The SR 111m decrease in Miscellaneous revenue compared to last year. * The booking of SR 360m losses on sale/disposal of property, plant and equipment during the 12 months period compared to gains of SR 403m for last year. These gains booked during 2014 includes among other items an amount of SR 595m gains resulting from the compensation for the company land and buildings erected thereon which is located in Al Faisaliah area in Riyadh (as announced previously). * The SR 560m increase in Miscellaneous expenses during the 12 months period compared to last year, which includes an amount of SR 395m two-month salary expenses (one-off) booked during the 1st quarter of 2015, which was made as a gesture to follow the initiative of the Honorable Royal Decree (as previously announced). (3) The SR 78m decrease in the provision for Zakat and Tax during 12 months period compared to the same period last year.
Reasons of increase (decrease) for quarter compared with previous quarter	The net profit for the 4th quarter decreased by SR 372m compared to the immediate prior quarter, mainly due to the following: (1) The SR 35m decrease in cost of services, and the SR 870m increase in operating expenses during the 4th quarter compared to the immediate prior quarter, as a result to the SR 351m increase in revenue during the 4th quarter compared to the immediate prior quarter. (2) The SR 130m improvement in Other income and expenses, net during the 4th quarter compared to the immediate prior quarter, mainly due to the following: a) The SR 23m decrease in the early retirement program cost during the 4th quarter compared to the immediate prior quarter. b) The booking of SR 24m Losses from investments accounted for under equity method during the 4th quarter compared to losses of SR 217m for the immediate prior quarter, and this is attributed mainly to the fluctuation in Turkish Lira against the US Dollar during the 4th quarter compared to the immediate prior quarter. c) The SR 37m decrease in finance cost during the 4th quarter compared to the immediate prior quarter. d) The SR 41m decrease in commissions compared to the immediate prior quarter. e) The SR 82m decrease in Other income and expenses; other, net compared to the immediate prior quarter. (3) The SR 26m increase in the provision for Zakat and Tax during the 4th quarter compared to the previous quarter.
Reclassifications in quarterly financial results	Certain comparatives figures for the period ending at 31 December 2014 have been reclassified to conform with the presentation used for the period ending at 31 December 2015.
Other notes	Revenue from services for the 4th quarter amounted to SR 13,246 million compared to SR 11,848 million for the corresponding period last year, an increase of 12 %, and for the 12 months revenues amounted to SR 50,837 million compared to SR 45,826 million compared to the previous year, an increase of 11 %. Earnings before interest, taxes, zakat, depreciation and amortization (EBITDA) for the 4th quarter amounted to SR 4,459 million compared to SR 4,201 million for the corresponding quarter last year, an increase of 6.1%, and for the 12 months EBITDA amounted to SR 19,370 million compared to SR 18,661 million for the corresponding period last year, an increase of 3.8%. Commenting on the results, STC Group CEO, Dr. Khaled H. Biyari, stated: The 11% increase in Consolidated revenue and the 3.8% increase in EBITDA for the 12 months period compared to last year, confirms that STC strategy is working well. While, the decline in Net Profit for the 12 months period is mainly attributed to STC continued investments in programs that will have positive outcomes in the near future, such as Early retirement program and the disposal of old assets. Also, due to the FX losses (none operating and none cash) related to the significant depreciation of the Turkish Lira against the US Dollar during the 12 months period compared to the same period last year, and the two month salary expenses (one off) booked during the 1st quarter of 2015, which was made as a gesture to follow the initiative of the Honorable Royal Decree. In addition, Dr. Biyari, emphasized STC role in leading the knowledge based economy by developing platforms and solutions that contributes to increase productivity and improve institutions efficiencies allowing speedy introduction of high quality services. With regards to international operations, the 12 months period witnessed revenue growth of 8% in the controlled international subsidiaries compared to last year and this is attributed mainly to the continued growth in controlled subsidiaries customer base and market shares. Domestically, the 12 months period witnessed revenue growth of 9% from domestic operations compared to last year, as a result to the growth in all sectors revenues. STC continues with the introduction of innovative mobile 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 4% increase in mobile working lines during the 4th quarter compared to the same period last year. This is underpinned by the Company customer centric approach and its efforts to enhance the overall customers experience. Also, the 4th 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 4th quarter, FTTH Customer base increased 30% compared to the same period last year, and 10% compared to the immediate previous quarter. In addition, Fixed broadband customer base increased 21% compared to the same period last year, and 4% compared to the immediate previous quarter. Enterprise business unit overall revenues increased approximately 16% during the 4th quarter compared to the same period last year, driven mainly by the 20% increase in Business sector data services revenues compared to same period last year.

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