ZAIN GROUP FINANCIAL RESULTS · PDF file · 2017-08-222015 2016 2017 F Capex Capex...

Q2 2017

ZAIN GROUP FINANCIALRESULTS

ZAIN GROUP Q2 2017 IR PRESENTATION 1

❖ Mobile Telecommunications Company KSCP “Zain Group” has prepared this presentation to the best of its abilities, however, no warranty or representation, express or implied is made as to the adequacy, correctness, completeness or accuracy of any numbers, statements, opinions, estimates, or other information contained in this presentation.

❖ Certain portions of this document contain “forward-looking statements”, which are based on current expectations and reasonable assumptions, we can however give no assurance they will be achieved.

❖ The information contained in this presentation is subject to change and we disclaim any obligation to update you of any such changes, particularly those pertaining to the forward-looking statements.

❖ Furthermore, it should be noted that there are a myriad potential risks, uncertainties and unforeseen factors that could cause the actual results to differ materially from the forward-looking statements made herein.

❖ Accordingly, this presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for, or otherwise acquire or dispose of, securities in any company within Zain Group.

For further information about Zain Group, or the materials contained within this presentation, please direct your enquiries to our Investor Relations team via email at [email protected] or visit www.zain.com/en/investor-relations/

DISCLAIMER

mailto:[email protected]

http://www.zain.com/en/investor-relations/

ZAIN GROUP OVERVIEW

ZAIN OPERATIONS OVERVIEW

FINANCIAL STATEMENTS

CONTENTS

ZAIN GROUP OVERVIEW


45.2MILLION

ACTIVE CUSTOMERS

12.9MILLION

CUSTOMERSIN IRAQ

4GLONG TERM

EVOLUTION(LTE) NETWORK

IN KUWAIT, SAUDI ARABIA,JORDAN, BAHRAIN, SUDAN &

LEBANON

MORE THAN

6,300EMPLOYEES

MARKETLEADER

IN KUWAIT, IRAQ,REPUBLIC OF SUDAN, JORDAN & LEBANON

$695MILLION

IN EBITDA

12.9MILLION

CUSTOMERSIN REPUBLICOF SUDAN

$1.7BILLION

IN REVENUES

5.5 TBAVERAGE

DAILY DATA VOLUME

1

$270MILLION

IN NETINCOME

41.7%EBITDA MARGINONE OF THE

HIGHEST IN THE REGION

Zain At A GlanceQ2 2017

IRAQOwnership: 76% Revenues: $523 m Customers: 12.9 mPrepaid: 99%

Market Share: 39%

KUWAITOwnership: 100%

Revenues: $549 mCustomers: 2.6 mPrepaid: 69%

Market Share: 37%

BAHRAINOwnership: 55% Revenues: $100 m Customers: 773K Prepaid: 75%

SAUDI ARABIAOwnership: 37.05% Revenues: $1.0 bCustomers: 9.0 mPrepaid: 76%

MOROCCOOwnership: 15.5%

LEBANONOwnership: Management Contract Customers: 2.3 mPrepaid: 86%

JORDANOwnership: 96.52%

Revenues: $241 m

Customers: 4.2 mPrepaid: 82%

Market Share: 36%

SUDANOwnership: 100% Revenues: $213 m Customers: 12.9 mPrepaid: 99%

Market Share: 46%

SOUTH SUDANOwnership: 100%Customers: 552KPrepaid: 99%

* exclusive of Morocco, in which Zain

has a 15.5% ownership in the mobile

operator “INWI”

THE WORLD OF ZAINQ2 2017


ZAIN’S WORLD CATERS TO 45.2 MILLION CUSTOMERS IN 8 COUNTRIES*

148 145

Q2-16 Q2-17

439

344

Q2-16 Q2-17

912860

Q2-16 Q2-17

GROUP FINANCIAL HIGHLIGHTSQ2 2017

CUSTOMERS (000)

48% 40% 4 4

REVENUES (USDm)

EBITDA (USDm) NET INCOME (USDm)

45,198 45,171

Q2-16 Q2-17

-0.1% -6%

-22%

Margin %

-2%

EPS (Cents)

6

272 270

H2-16 H2-17

846

695

H1-16 H1-17

1,8311,669

H1-16 H1-17

GROUP FINANCIAL HIGHLIGHTSH1 2017

CUSTOMERS (000)

46% 42% 7 7

REVENUES (USDm)

EBITDA (USDm) NET INCOME (USDm)

45,198 45,171

H1-16 H1-17

-0.1% -9%

-18%

Margin %

-1%

EPS (Cents)

7

797

635

508

21%

18%15%

2015 2016 2017 F

Capex Capex / Revenues


CAPEX & CAPEX / REVENUES

F = Forecasted

-20% -20%

Republic of Sudan

49%

Jordan12%

Iraq31%

Bahrain1%

Kuwait3%

Others4%

CAPEX BREAKDOWN

* Group Total Capex (excluding KSA) = USD 143 million

TOTAL CAPEXH1 2017

*Total CAPEX

$143m

Kuwait 5 1%

Iraq 44 8%

Sudan 70 33%

KSA 121 12%

Jordan 17 7%

Bahrain 1 1%

Others 6 N/A

OPCOH1 2017(USDm)

% OF REVENUES


2,604

2,215

729

1,260

H1-16 H1-17

Long Term Short Term


2,299

2,964

1.4

2.1

H1-16 H1-17

Net Debt Net Debt/EBITDA

Net Debt = Total interest bearing debt (excluding letters of guarantee) after deducting cash and cash equivalents


TOTAL DEBT (USDm) NET DEBT & NET DEBT/EBITDA

3,4753,333

+4% +29%

Kuwait6%

Republic of Sudan29%

Jordan9%

S.Sudan1%

KSA20%

Bahrain2%

Iraq28%

Lebanon5%

Republic of Sudan13%

Jordan14%

Kuwait33%

Others3%

Iraq31%

Bahrain6%


Group Customers

45.2m

REVENUE CONTRIBUTION CUSTOMER CONTRIBUTION

Group Revenues

$1.7B


77%

89%

80%

76%

87%

2012 2013 2014 2015 2016

7%

8% 8% 8%7%

2012 2013 2014 2015 2016

50 50

40

3035

2012 2013 2014 2015 2016

685 690

533

388447

2012 2013 2014 2015 2016


ZAIN DIVIDENDS

DIVIDEND PAYOUT RATIO DIVIDEND YIELD (%)

DIVIDEND PER SHARE (Fils) CASH DIVIDEND (USDm)

ZAIN OPERATIONS OVERVIEW


$25ARPU

188%Penetration

1983Year of launch

2.6 mCustomers

100%Ownership

▪ Aggressive market competition in the country

▪ Customer base dropped by 9%

▪ Strong concentration on cost optimization initiatives

▪ Data revenues (excluding SMS & VAS) formed 32% of total revenues

ZAIN38%

OOREEDOO31%

VIVA31%

4GTechnology

100%Coverage

2,189Number of sites

270289

132114

72 74

Q2-16 Q2-17

FINANCIALS (USDm)

Zain37%

Ooredoo32%

Viva31%

MARKET SHARE

ZAIN KUWAIT

39%EBITDA Margin

548 549

264215

144 128

H1-16 H1-17

Revenues EBITDA Net Income


$7ARPU

86%Penetration

2003Year of acquisition

12.9 mCustomers

76%Ownership

ZAIN38%

OOREEDOO31%

VIVA31%

3GTechnology

99%Coverage


266 270

99 93

22 10.4

Q2-16 Q2-17

FINANCIALS (USDm)

Zain39%

Korek 23%Asiacell

38%

MARKET SHARE

ZAIN IRAQ

34%EBITDA Margin

▪ Worsening economic conditions and currency exchange rate

▪ Price war in Jan 2017 and accelerated OTT impact

▪ Customer base jumped by 15% due to higher acquisition in Northern region

▪ Strong focus on cost optimization

536 523

194 179

24 11

H1-16 H1-17



$3ARPU

55%Penetration

12.9 mCustomers

100%Ownership

ZAIN38%

OOREEDOO31%

VIVA31%

4GTechnology

90%Coverage


1,246

1,713

558683

285 288

Q2-16 Q2-17

FINANCIALS (SDGm)

Zain46%

Sudani28%

MTN26%

MARKET SHARE

ZAIN SUDAN

38%EBITDA Margin


▪ Impressive YoY growth in local currency SDG terms

➢ Revenues 38%, EBITDA 22% and Net income 14%

▪ Customers grew by 3%, to reach 12.9m

▪ Significant cost optimization savings

▪ Data revenues (excluding SMS & VAS) grew 69% YoY, and formed 15% of total revenues

2,445

3,373

1,0451,276

480 545

H1-16 H1-17



$17ARPU

154%Penetration

9 mCustomers

37%Ownership

ZAIN38%

OOREEDOO31%

VIVA31%

4GTechnology

95%Coverage


473513

99169

(88)

2

Q2-16 Q2-17

FINANCIALS (USDm)

ZAIN KSA

33%EBITDA Margin

▪ The healthy performance was triggered by:

➢ 9% YoY growth in revenues

➢ 59% YoY growth in EBITDA

➢ Recording first-ever half yearly net profit of USD 14 million

▪ Strong focus on cost optimization

▪ License extension impact also contributed to the net income

▪ Data revenues (excluding SMS & VAS) grew by 42% YoY, and formed 50% of total revenues


9561,043

218346

(154)

14

H1-16 H1-17



$9ARPU

142%Penetration

2003Year of launch

4.2 mCustomers

96.52%Ownership

ZAIN38%

OOREEDOO31%

VIVA31%

4GTechnology

100%Coverage


121 122

59 57

26 23

Q2-16 Q2-17

FINANCIALS (USDm)

Zain36%

Orange32%

Umniah32%

MARKET SHARE

ZAIN JORDAN

48%EBITDA Margin

▪ Higher data and interconnect revenues

▪ Customer base increased by 3% YoY


238 241

115 116

50 48

H1-16 H1-17



$15ARPU

215%Penetration

2003Year of launch

773KCustomers

55%Ownership

ZAIN38%

OOREEDOO31%

VIVA31%

4GTechnology

100%Coverage

499Number of sites

43

51

16 15

2 3

Q2-16 Q2-17

FINANCIALS (USDm)

ZAIN BAHRAIN

30%EBITDA Margin

▪ Customer base decreased by 12% YoY


86

100

32 30

5 4

H1-16 H1-17



83%Penetration


2.3 mCustomers

MCOwnership

ZAIN38%

OOREEDOO31%

VIVA31%

4GTechnology

99%Coverage


touch54%

Alfa46%

MARKET SHARE

TOUCHManagement Contract

▪ Zain operates in Lebanon under a management contract since June 2004, when it was rebranded to mtc-touch, and subsequently to “touch”


Unaudited Audited Unaudited

30-Jun-17 31-Dec-16 30-Jun-16

Assets KD ‘000

Current assets

Cash and bank balances 154,849 208,752 311,739

Trade and other receivables 479,533 450,386 437,672

Inventories 19,313 16,418 15,317

Investment securities at fair value through profit or

loss996 964 992

654,691 676,520 765,720

Non-current assets

Investment securities available for sale 18,315 22,134 24,590

Investments in associates and joint ventures 190,162 190,396 199,932

Dues from associates 397,306 381,661 363,256

Other assets 15,044 15,598 15,485

Property and equipment 753,911 798,156 887,922

Intangible assets and goodwill 959,173 1,007,237 1,152,711

2,333,911 2,415,182 2,643,896

Total Assets 2,988,602 3,091,702 3,409,616

Unaudited Audited Unaudited

30-Jun-17 31-Dec-16 30-Jun-16

Liabilities and Equity KD ‘000

Current liabilities

Trade and other payables 564,662 570,920 718,480

Due to banks 381,402 219,154 219,738

946,064 790,074 938,218

Non-current liabilities

Due to banks 670,209 830,193 785,146

Other non-current liabilities 36,436 48,953 38,572

706,645 879,146 823,718

Equity

Attributable to the Company’s

shareholders

Share capital 432,706 432,706 432,706

Share premium 1,707,164 1,707,164 1,707,164

Treasury shares (567,834) (567,834) (567,834)

Legal reserve 216,353 216,353 216,353

Foreign currency translation reserve (1,131,206) (1,100,094) (773,181)

Treasury shares reserve 1,967 1,967 1,967

Investment fair valuation reserve 4,068 3,484 994

Hedge reserve (320) (120) (525)

Retained earnings 517,242 571,503 473,994

1,180,140 1,265,129 1,491,638

Non-controlling interests 155,753 157,353 156,042

Total equity 1,335,893 1,422,482 1,647,680

Total Liabilities and Equity 2,988,602 3,091,702 3,409,616

BALANCE SHEET


Six months

ended

30-Jun

2017 2016

Earnings per share Fils

Basic 21 21

INCOME STATEMENT

Six months ended

30-Jun

2017 2016

KD’000

Revenue 508,070 551,884

Cost of sales (143,708) (133,644)

Gross profit 364,362 418,240

Operating and administrative expenses (148,543) (162,048)

Depreciation and amortization (97,322) (109,990)

Provision for impairment – trade and other receivables (4,178) (1,376)

Operating profit 114,319 144,826

Interest income 11,737 3,633

Investment income 427 (1,636)

Share of results of associates and joint ventures 1,045 (18,455)

Other (expense)/income (2,162) 3,900

Finance costs (19,847) (15,625)

Provision for impairment loss on property and equipment (21,292) -

Loss from currency revaluation (12,482) (17,265)

Net monetary gain 24,019 -

Profit before contribution to KFAS, NLST, ZAKAT, income taxes

and Board of Directors' remuneration95,764 99,378

Contribution to Kuwait foundation for

Advancement of Sciences (620) (469)

National Labour Support Tax and Zakat (3,382) (3,723)

Income tax expenses (7,696) (10,298)

Board of Directors’ remuneration (138) (138)

Profit for the period 83,928 84,750

Attributable to:

Shareholders of the Company 82,286 81,964

Non-controlling interests 1,642 2,786

83,928 84,750


CASH FLOW STATEMENT

Six months ended

30-Jun

2017 2016

KD’000

Cash flows from operating activities

Profit for the period before income tax 91,624 95,048

Adjustments for:

Depreciation and amortization 97,322 109,990

Interest income (11,737) (3,633)

Investment income (427) 1,636

Share of loss of associates and joint ventures (1,045) 18,455

Provision for impairment loss on property and equipment 21,292 -

Finance costs 19,847 15,625

Loss on currency revaluation 12,482 17,265

Net monetary gain (24,019) -

Operating profit before working capital changes 205,339 254,386

Increase in trade and other receivables (49,752) (31,516)

(Increase)/decrease in inventories (2,889) 12,511

Decrease in trade and other payables (4,906) (87,062)

Cash generated from operations 147,792 148,319

Paid to Kuwait Foundation for Advancement of Sciences (250) (500)

National Labour Support Tax and Zakat paid (5,049) (2,599)

Income tax paid (9,325) (14,698)

Net cash from operating activities 133,168 130,522

Six months ended

30-Jun

2017 2016

KD’000

Cash flows from investing activities

Deposits maturing after three months and bank balances

blocked(7,418) 61

Net cash outflow on acquisition of non-controlling interest/a

subsidiary- (26)

Purchase of investments (3,963) (668)

Proceeds from sale of investments 8,068 3,009

Acquisition of property and equipment (net) (42,378) (56,973)

Acquisition of intangible assets (net) (7,650) (26,416)

Interest received 12,359 3,573

Dividend received 246 701

Net cash used in investing activities (40,736) (76,739)

Cash flows from financing activities

Proceeds from bank borrowings 219,824 100,764

Repayment of bank borrowings (208,768) (55,669)

Loan to an associate (5,776) (14,592)

Dividends paid to Company’s shareholders (134,319) (115,938)

Dividends paid to minority shareholders of subsidiaries (1,718) (1,908)

Finance costs paid (20,850) (11,534)

Net cash used in financing activities (151,607) (98,877)

Net decrease in cash and cash equivalents (59,175) (45,094)

Effect of foreign currency translation (2,146) (2,905)

Cash and cash equivalents at beginning of period 177,150 228,266

Cash and cash equivalents at end of period 115,829 180,267


Website : zain.com

Email : [email protected]

Note: Mobile Penetration rates are sourced from WCIS as of June 2017

THANK YOU

ZAIN GROUP FINANCIAL RESULTS · PDF file · 2017-08-222015 2016 2017 F Capex Capex...

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