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Mobile Telecommunication Company Saudi Arabia (Zain) announces the annual financial results for the period ending on 31-12-2017

Element Current year Previous year % Change
Net profit (loss) 12 -979 -
Earning or loss per share, Riyals 0.02 -1.68 -
Gross profit (loss) 4,913 4,401 11.63
Operational profit (loss) 903 -54 -
All figures are in (Millions) Saudi Arabia, Riyals
Element EXPLAINATION
Reasons of annual financial results Net profit of SAR 12 million for the current year; for the first time in company history; compared to a net loss of SAR 979 million in 2016 mainly due to:

- Increase in revenue by SAR 379 million as a result of positive management actions and rising demand for the companys products and service especially data products, reflecting a gross profit margin increase from 64% in previous year to 67% for the current year.

- Decrease in cost of sales by SAR 133 million mainly due to the increase in the data revenue contribution from 34% last year to 52% in 2017 in addition to the reduction in international calls cost.

- Decrease in amortization as a result of the extension of the license by additional 15 years.

- Decrease in distribution and marketing expenses of SAR 181 million reflecting the ongoing cost optimization initiative.
Reclassifications in annual financial results Certain comparatives figures have been reclassified to conform with the presentation in the current period.
Other notes - Revenue reached SAR 7,306 million for the current year compared to SAR 6,927 million in previous year an increase of 5%, where data revenue represents 52% (excluding value added services & SMS)

- Gross profit reached SAR 4,913 million for the current year compared to SAR 4,401 million in previous year an increase of 12%, with gross profit margin reaching 67% compared to 64% in previous year.

- Distribution and marketing expenses reached SAR 2,185 million for the current year compared to SAR 2,366 million in previous year a decrease of 8%. General and administration expenses reached SAR 211 million for the current year compared to SAR 239 million in previous year a decrease of 12%.

- EBITDA reached SAR 2,517 million for the current year compared to SAR 1,795 million in previous year an increase of 40%, with EBITDA margin reaching 34% compared to 26% in previous year, reflecting the improvement in revenue and the management efforts in optimizing the company cost structure.

- Depreciation and amortization expenses reached SAR 1,614 million for the current year compared to SAR 1,850 million in previous a decrease of 13% mainly resulting from the license extension upside.

- Operational profit reached SAR 903 million for the current year compared to operational loss of SAR 54 million in previous year.

- Net profit after zakat and tax reached SAR 12 million for the current year compared to net loss after zakat and tax of SAR 979 million in previous year.

-Total comprehensive income reached SAR 5 million for the current year compared to total comprehensive loss of SAR 975 million in previous year.

- Profit per share reached SAR 0.02 for the current year compared to loss per share of SAR 1.68 in previous year.

- Total shareholders equity (there is no minority interest) reached SAR 3,564 million for the current year compared to SAR 3,559 million in previous year a decrease of 0.4%.

- The accumulated deficit reached SAR 2,263 million for the current year representing 39% of the Company share capital of SAR 5,837 million compared to SAR 2,274 million in previous year representing 39% of the Company share capital.

- In line with the country wide decrease in subscriber numbers, Zain KSA subscriber base decreased by 24%, reaching 8.3 million subscribers for the current year compared to 10.9 million subscribers in previous year.

- During Q4 2017 the Company paid the third installment from the syndicated Murabaha Facility Agreement with a group of local and international banks in the amount of SAR 1,295 million which represents 15% from the loan amount SAR 8,631 million reducing the facility principal amount to SAR 5,960 million. This shows the continuity of the company excellent performance and its ability to meet the financial obligations.

The Capital Market Authority and the Saudi Stock 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.

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