Mobile Telecommunication Company Saudi Arabia (Zain) announces its interim Financial results for the period ending on 2019-06-30 ( Six Months )

14 July 2019 08:12 AM

ZAIN KSA 7030 0.14% 13.82 0.02

Element List	Current Quarter	Similar quarter for previous year	%Change	Previous Quarter	% Change
Sales/Revenue	2,057	1,846	11.43	2,093	-1.72
Total Profit (Loss)	1,524	1,162	31.153	1,480	2.972
Profit (Loss) Operational	374	179	108.938	382	-2.094
Net Profit (Loss) after Zakat and Tax	130	-38	-	129	0.775
Total Comprehensive Income	85	-54	-	62	37.096
All figures are in (Millions) Saudi Arabia, Riyals

Element List	Current Period	Similar period for previous year	%Change
Sales/Revenue	4,150	3,532	17.497
Total Profit (Loss)	3,004	2,279	31.812
Profit (Loss) Operational	756	323	134.055
Net Profit (Loss) after Zakat and Tax	260	-115	-
Total Comprehensive Income	148	-129	-
Total Share Holders Equity (after deducting minority equity)	3,867	3,565	8.471
Profit (Loss) per Share	0.445	-0.197
All figures are in (Millions) Saudi Arabia, Riyals

	Accumulated Losses	Capital	Percentage %
	1,834	5,837	31.4

Element List	Explanation
Reason for increase (decrease) in net profit for current quarter compared to the same quarter of the previous year	Zain KSA continues to record net profit for four quarters in a row. The company reported net profit of SAR 130 million in Q2 2019 compared to a net loss of SAR 38 million in Q2 2018. This was achieved mainly from the increase in revenues by 11% amounting SAR 210 million generated from increasing demand for the company’s products and services as well from the decrease in CITC royalty fees from 15% to 10% and from the release of certain provision from the settlement signed with MOF, MCIT and CITC. Furthermore, due to the same reasons mentioned above, the Q2 2019 period witnessed a SAR 362 million gross profit increase to reach SAR 1,524 million gross profit compared to SAR 1,162 million in Q2 2018. This increase in gross profit was partially offset by an increase in operating and administrative expenses (excluding the reclassification of IFRS 16 amounting SAR 122 million) mainly due to the additional spend in technology and marketing. Depreciation and amortization increased by SAR 134 million while finance charges increased by SAR 29 million mainly due to the adoption of IFRS 16. EBITDA significantly improved to reach SAR 944 million; representing 46% of revenue; compared to SAR 615 million; representing 33% of revenue; for the same quarter of the previous year. Accordingly, EBIT has improved as well to reach SAR 374 million compared to SAR 179 million for the same quarter of the previous year.
Reason for increase (decrease) in net profit for current quarter compared to the previous quarter	The company achieved the KPI’s target given by CITC in connection with the agreement signed between Zain KSA and MOF, MCIT and CITC; therefore, the company released the related provision in this quarter with a net impact of SAR 129 million, compared to SAR 107 million to the previous quarter. The net profit stabilized and stood at SAR 130 million despite the decrease in revenue by 1.75% due to Ramadan season. This was compensated by a decrease in cost of revenue; hence, the gross profit improved by SAR 43 million. Operating and administrative expenses increased by SAR 31 million due to the additional spend in technology and marketing. This increase negatively affected EBITDA by SAR 11 million.
Reason for increase (decrease) in net profit for current period compared to the similar period of the previous year	Zain KSA recorded the highest first six-month (H1) revenue in its history where it reached SAR 4,150 million compared with SAR 3,532 million for the first six-month of 2018. This 17.5% increase amounting SAR 618 million reflects the increasing demand for the companies’ products and services. This increase in revenue coupled with the decrease in CITC royalty fees resulted in an increase in gross profit by SAR 725 million whereby gross profit stood at SAR 3,004 million representing 72% of revenue. This has led to an increase in EBITDA to reach SAR 1,899 million in H1 2019 representing 46% of revenue compared to SAR 1,186 million in H1 2018 that represented 34% of revenue. This EBITDA amount took into consideration the reclassification of IFRS 16 amounting SAR 246 million from operating and administrative expenses to depreciation and amortization and finance charges. Depreciation and amortization increased by SAR 279 million while finance charges increased by SAR 80 million mainly from the adoption of IFRS 16. All the above have led to a historical record net profit of SAR 260 million in H1 2019 compared to a net loss of SAR 115 million in H1 2018 reflecting an improvement of circa SAR 374 million.
Type of the external auditor's opinion	Unmodified opinion
Reclassifications in quarter financial result	Certain comparatives figures have been reclassified to conform with the presentation in the current period.
Additional Information	The accumulated deficit decreased to reach SAR 1,834 million as at 30 June 2019, representing 31.4% of the company’s share capital of SAR 5,837 million. This is an improvement when compared to the accumulated deficit of SAR 1,964 million as at 31 March 2019, which represented 33.6% of the company’s share capital. This decrease is due to the net profit recorded in this quarter. Total capex investment for the first six-month of 2019 is SAR 1,065 million. During the second quarter of 2019, the company finalized the Universal Service Fund project granted from the government; generating additional income of SAR 8 million During the second quarter of 2019, the company made an early voluntary payment for the Senior Murabaha financing agreement amounting SAR 300 million that portrays the company’s solid cashflow generation; bringing the total repayment to SAR 1,425 million in the past nine months.

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