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  • a Saudi Joint Stock Company

    Interim Consolidated Financial Statements for the

    Fourth Quarter 2011

    Interim Consolidated Financial Statements for the

    Three Months and the Year Ended December 31, 2011

    (Unaudited)

  • 1

    Saudi Telecom Company (a Saudi Joint Stock Company)

    Index to the Interim Consolidated Financial Statements for the Three Months and the

    Year Ended December 31, 2011(Unaudited)

    Page

    Independent Auditors` Limited Review Report . 2

    Interim Consolidated Balance Sheet . 3

    Interim Consolidated Statement of Income . 4

    Interim Consolidated Statement of Cash Flows . 5

    Notes to the Interim Consolidated Financial Statements . 6 - 21

  • 2

  • Saudi Telecom Company (a Saudi Joint Stock Company)

    Interim Consolidated Balance Sheet as of December 31, 2011

    (Saudi Riyals in thousands)

    These statements were originally prepared in Arabic and the Arabic version should prevail. 3

    Notes 2011 2010

    ASSETS (Unaudited) (Audited)

    Current assets:

    Cash and cash equivalents 6,588,568 6,050,677

    Short-term investments 2,445,762 385,142

    Accounts receivable, net 9,602,311 8,707,358

    Prepayments and other current assets 4,126,917 3,561,035

    Total current assets 22,763,558 18,704,212

    Non-current assets:

    Investments in equity and other 2,682,441 2,540,494

    Property, plant and equipment, net 55,174,854 55,127,443

    Intangible assets, net 3 29,210,458 31,837,104

    Other non-current assets 2,349,508 2,571,666

    Total non-current assets 89,417,261 92,076,707

    Total assets 112,180,819 110,780,919

    LIABILITIES AND EQUITY

    Current liabilities:

    Accounts payable 6,152,377 7,036,414

    Other credit balances - current 3,524,468 3,508,500

    Accrued expenses 8,594,721 6,058,002

    Deferred revenues current portion 1,857,939 1,568,491

    Murabahas and loans current portion 4 5,929,884 8,446,926

    Total current liabilities 26,059,389 26,618,333

    Non-current liabilities:

    Murabahas and loans non-current portion 4 24,001,053 21,741,130

    Provisions for end of service benefits 3,062,096 2,995,371

    Other credit balances - non-current 5,491,884 5,961,740

    Total non-current liabilities 32,555,033 30,698,241

    Total liabilities 58,614,422 57,316,574

    Equity

    Shareholders equity:

    Authorized, issued and outstanding share capital:

    2,000,000,000 shares, par value SR 10 per share

    20,000,000

    20,000,000

    Statutory reserve 10,000,000 10,000,000

    Retained earnings 19,458,191 16,287,412

    Other reserves (1,323,379) (1,269,415)

    Financial statements translation differences (1,432,459) (22,071)

    Total shareholders equity 46,702,353 44,995,926

    Non-controlling interests 6,864,044 8,468,419

    Total equity 7,3956653, 53,464,345

    Total liabilities and equity 112,180,819 110,780,919

    The accompanying notes from 1 to 18 form an integral part of these interim consolidated financial statements.

    .

  • Saudi Telecom Company (a Saudi Joint Stock Company)

    Interim Consolidated Statement of Income for the Three Months and the Year Ended

    December 31, 2011

    (Saudi Riyals in thousands)

    These statements were originally prepared in Arabic and the Arabic version should prevail. 4

    Note Three Months ended

    December 31,

    Year ended

    December 31,

    2011 2010 2011 2010

    (Unaudited) (Unaudited) (Unaudited) (Audited)

    Revenue from services 15,248,790 13,443,569 56,219,872 51,786,828

    Cost of services 5 (7,313,505) (5,500,540) (24,771,233) (21,464,230)

    Gross Profit 7,935,285 7,943,029 31,448,639 30,322,598

    Operating Expenses

    Selling and marketing expenses 6 (1,909,387) (1,732,924) (7,456,546) (7,083,100)

    General and administrative expenses 7 (1,005,054) (970,592) (3,873,061) (3,618,983)

    Depreciation and amortization 8 (2,207,082) (2,214,182) (8,853,448) (8,642,204)

    Total Operating Expenses (5,121,523) (4,917,698) (20,183,055) (19,344,287)

    Operating Income 2,813,762 3,025,331 11,265,584 10,978,311

    Other Income and Expenses

    Cost of early retirement program (117,032) (291,670) (413,529) (605,559)

    Finance costs (551,549) (284,573) (2,239,005) (1,780,670)

    Commissions and interest 58,689 3,543 471,473 308,727

    Other, net 9 263,804 197,696 (589,103) 2,076,253

    Other income and expenses, net (346,088) (375,004) (2,770,164) (1,249)

    Net Income before Zakat, Tax and

    Non-controlling interests

    2,467,674

    2,650,327

    8,495,420

    10,977,062

    Provision for Zakat (26,355) (31,466) (118,002) (118,208)

    Provision for Tax (107,054) (213,523) (566,641) (820,171)

    Net Income before Non-controlling

    interests

    2,334,265

    2,405,338

    7,810,777

    10,038,683 Non-controlling interests (56,109) (119,831) (140,654) (602,361)

    Net Income 2,278,156 2,285,507 7,670,123 9,436,322

    Basic earnings per share on Operating

    Income (in Saudi Riyals)

    1.41

    1.51

    5.63

    5.49

    losses per share on Other Operations

    (Other income and expenses) (in Saudi

    Riyals)

    (0.17)

    (0.19)

    (1.39)

    -

    Basic earnings per share on Net Income

    (in Saudi Riyals)

    1.14

    1.14

    3.84

    4.72

    The accompanying notes from 1 to 18 form an integral part of these interim consolidated financial statements.

  • Saudi Telecom Company (a Saudi Joint Stock Company)

    Interim Consolidated Statement of Cash Flows for the Year Ended December 31, 2011

    (Saudi Riyals in thousands)

    These statements were originally prepared in Arabic and the Arabic version should prevail. 5

    2011 2010 (Unaudited) (Audited) CASH FLOWS FROM OPERATING ACTIVITIES Net Income before zakat, tax and non-controlling interests 8,495,420 10,977,062

    Adjustments to reconcile net income to net cash provided by operating

    activities:

    Depreciation and amortization 8,853,448 8,642,204

    Doubtful debts expense 1,366,973 1,586,519

    Earnings from investments accounted for under the equity method (171,273) (82,538)

    Commissions and interest (471,473) (308,727)

    Finance costs 2,239,005 1,780,670

    Losses / (Gains) on foreign currency exchange fluctuations 1,105,323 (359,318)

    End of service benefits 381,675 401,147

    (Gains) on sale/disposal of property, plant and equipment (97,950) (941,096)

    Changes in:

    Accounts receivable (2,261,926) (1,596,159)

    Short-term Investments (2,060,620) 86,444

    Prepayments and other current assets (569,877) (580,716)

    Other non-current assets 222,158 (138,936)

    Accounts payable (884,035) 2,035,459

    Other credit balances (1,026,404) 774,488

    Accrued expenses 2,536,719 (39,354)

    Deferred revenues 210,885 (594,143)

    Zakat paid (61,754) (110,434)

    Taxes paid by subsidiaries (726,805) (97,980)

    End of service benefits paid (314,950) (249,645)

    Net cash provided by operating activities 16,764,539 21,184,947

    CASH FLOWS FROM INVESTING ACTIVITIES

    Capital expenditures (7,820,159) (11,353,073)

    Intangible assets, net (1,330,285) (3,836,016)

    Investments in equity and other (29,326) (74,970)

    Proceeds from commissions and interest 475,468 348,680

    Proceeds from sale of property, plant and equipment 474,239 1,739,965

    Net cash used in investing activities (8,230,063) (13,175,414)

    CASH FLOWS FROM FINANCING ACTIVITIES

    Dividends paid (4,432,134) (6,108,787)

    Murabahas and loans, net (257,119) (1,844,154)

    Finance costs paid (1,702,957) (1,386,289)

    Non-controlling interests (1, 604,375) (329,704)

    Net cash used in financing activities (7,996,585) (9,668,934)

    NET INCREASE / (DECREASE) IN CASH AND CASH

    EQUIVALENTS

    537,891

    (1,659,401)

    CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE

    YEAR

    6,050,677

    7,710,078

    CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 6,588,568 6,050,677

    Non-cash items:

    Financial statements translation adjustments (1,410,388) 794,194

    Other reserves

    (53,965) (1,269,415)

    The accompanying notes from 1 to 18 form an integral part of these interim consolidated financial statements.

  • Saudi Telecom Company (a Saudi Joint Stock Company)

    Notes to the Interim Consolidated Financial Statements for the Three Months and the

    Year Ended December 31, 2011 (Unaudited)

    These statements were originally prepared in Arabic and the Arabic version should prevail. 6

    1 GENERAL Saudi Telecom Company (the Company) was established as a Saudi Joint Stock Company pursuant

    to Royal Decree No. M/35, dated 24 Dhul Hijja 1418 H (April 21, 1998) which authorized the transfer

    of the telegraph and telephone division of the Ministry of Post, Telegraph and Telephone (MoPTT)

    (hereinafter referred to as Telecom Division) with its various components and technical and

    administrative facilities to the Company, and

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