zain group financial results · zain group q3 2017 ir presentation 22 balance sheet unaudited...
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Q3 2017
ZAIN GROUP FINANCIALRESULTS
ZAIN GROUP Q3 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
ZAIN GROUP OVERVIEW
ZAIN OPERATIONS OVERVIEW
FINANCIAL STATEMENTS
CONTENTS
ZAIN GROUP OVERVIEW
ZAIN GROUP Q3 2017 IR PRESENTATION 4
45.3MILLION
ACTIVE CUSTOMERS
13.7MILLION
CUSTOMERSIN IRAQ
4GLONG TERM
EVOLUTION(LTE) NETWORK
IN KUWAIT, SAUDI ARABIA,JORDAN, BAHRAIN, SUDAN &
LEBANON
MORE THAN
6,200EMPLOYEES
MARKETLEADER
IN KUWAIT, IRAQ,REPUBLIC OF SUDAN, JORDAN & LEBANON
$1.04BILLION
IN EBITDA
12.9MILLION
CUSTOMERSIN REPUBLICOF SUDAN
$2.5BILLION
IN REVENUES
6,500 TBAVERAGE
DAILY DATA VOLUME
1
$404MILLION
IN NETINCOME
41.2%EBITDA MARGINONE OF THE
HIGHEST IN THE REGION
Zain At A GlanceQ3 2017
IRAQOwnership: 76% Revenues: $811 m Customers: 13.7 mPrepaid: 99%
Market Share: 40%
KUWAITOwnership: 100%
Revenues: $819 mCustomers: 2.5 mPrepaid: 68%
Market Share: 36%
BAHRAINOwnership: 55% Revenues: $148 m Customers: 726K Prepaid: 75%
SAUDI ARABIAOwnership: 37.05% Revenues: $1.5 bCustomers: 8.3 mPrepaid: 70%
MOROCCOOwnership: 15.5%
LEBANONOwnership: Management Contract Customers: 2.4 mPrepaid: 86%
JORDANOwnership: 96.52%
Revenues: $371 m
Customers: 4.2 mPrepaid: 82%
Market Share: 36%
SUDANOwnership: 100% Revenues: $315 m Customers: 12.9 mPrepaid: 99%
Market Share: 46%
SOUTH SUDANOwnership: 100%Customers: 483KPrepaid: 98%
* exclusive of Morocco, in which Zain
has a 15.5% ownership in the mobile
operator “INWI”
THE WORLD OF ZAINQ3 2017
ZAIN GROUP Q3 2017 IR PRESENTATION 5
ZAIN’S WORLD CATERS TO 45.3 MILLION CUSTOMERS IN 8 COUNTRIES*
141133
Q3-16 Q3-17
448
346
Q3-16 Q3-17
911860
Q3-16 Q3-17
GROUP FINANCIAL HIGHLIGHTSQ3 2017
CUSTOMERS (000)
49% 40% 4 3
REVENUES (USDm)
EBITDA (USDm) NET INCOME (USDm)
45,835 45,278
Q3-16 Q3-17
-1% -6%
-23%
Margin %
-6%
EPS (Cents)
6
413 404
9M-16 9M-17
1,294
1,042
9M-16 9M-17
2,7422,529
9M-16 9M-17
GROUP FINANCIAL HIGHLIGHTS9M 2017
CUSTOMERS (000)
47% 41% 11 10
REVENUES (USDm)
EBITDA (USDm) NET INCOME (USDm)
45,835 45,278
9M-16 9M-17
-1% -8%
-19%
Margin %
-2%
EPS (Cents)
7
797
635
508
21%
18%15%
2015 2016 2017 F
Capex Capex / Revenues
ZAIN GROUP Q3 2017 IR PRESENTATION 8
CAPEX & CAPEX / REVENUES
F = Forecasted
-20% -20%
Republic of Sudan
38%
Jordan12%
Iraq26%
Bahrain1%
Kuwait16% Others
7%
CAPEX BREAKDOWN
* Group Total Capex (excluding KSA) = USD 274 million
TOTAL CAPEX9M 2017
*Total CAPEX
$274m
Kuwait 43 5%
Iraq 71 9%
Sudan 105 33%
KSA 203 13%
Jordan 32 9%
Bahrain 4 3%
Others 19 N/A
OPCO9M 2017(USDm)
% OF REVENUES
ZAIN GROUP Q3 2017 IR PRESENTATION 9
2,516 2,385
745 685
9M-16 9M-17
Long Term Short Term
ZAIN GROUP Q3 2017 IR PRESENTATION 10
2,2932,129
1.41.5
9M-16 9M-17
Net Debt Net Debt/EBITDA
Net Debt = Total interest bearing debt (excluding letters of guarantee) after deducting cash and cash equivalents
GROUP FINANCIAL HIGHLIGHTS9M 2017
TOTAL DEBT (USDm) NET DEBT (USDm) & NET DEBT/EBITDA
3,0703,261
-6% -7%
Kuwait6%
Republic of Sudan29%
Jordan9%
S.Sudan1%
KSA18%
Bahrain2% Iraq
30%
Lebanon5%
Republic of Sudan12%
Jordan15%
Kuwait32%
Others3%
Iraq32%
Bahrain6%
GROUP FINANCIAL HIGHLIGHTS9M 2017
Group Customers
45.3m
REVENUE CONTRIBUTION CUSTOMER CONTRIBUTION
Group Revenues
$2.5B
ZAIN GROUP Q3 2017 IR PRESENTATION 11
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 GROUP Q3 2017 IR PRESENTATION 12
ZAIN DIVIDENDS
DIVIDEND PAYOUT RATIO DIVIDEND YIELD (%)
DIVIDEND PER SHARE (Fils) CASH DIVIDEND (USDm)
ZAIN OPERATIONS OVERVIEW
ZAIN GROUP Q3 2017 IR PRESENTATION 14
$25ARPU
170%Penetration
1983Year of launch
2.5 mCustomers
100%Ownership
▪ Healthy Q3 performance:
➢ Revenues are up 6% and Net Income up 10%
▪ Customer base stood at 2.5 million
▪ Strong concentration on cost optimization initiatives
▪ Data revenues (excluding SMS & VAS) formed 32% of total revenues
ZAIN38%
OOREEDOO31%
VIVA31%
4GTechnology
100%Coverage
2,200Number of sites
255270
129114
71 78
Q3-16 Q3-17
FINANCIALS (USDm)
Zain36%
Ooredoo33%
Viva31%
MARKET SHARE
ZAIN KUWAIT
40%EBITDA Margin
803 819
393329
215 206
9M-16 9M-17
Revenues EBITDA Net Income
ZAIN GROUP Q3 2017 IR PRESENTATION 15
$7ARPU
87%Penetration
2003Year of acquisition
13.7 mCustomers
76%Ownership
ZAIN38%
OOREEDOO31%
VIVA31%
3GTechnology
99%Coverage
4,448Number of sites
268288
90 102
5 13
Q3-16 Q3-17
FINANCIALS (USDm)
Zain40%
Korek 22%Asiacell
38%
MARKET SHARE
ZAIN IRAQ
35%EBITDA Margin
▪ Solid Q3 performance, supported by strong acquisition in the Northern region:
➢ Revenues, EBITDA and Net Income are up by8%, 13% and 174% respectively
▪ Customer base jumped by 16% to reach 13.7 million
▪ Strong focus on cost optimization
804 811
284 281
29 24
9M-16 9M-17
Revenues EBITDA Net Income
ZAIN GROUP Q3 2017 IR PRESENTATION 16
$3ARPU
55%Penetration
12.9 mCustomers
100%Ownership
ZAIN38%
OOREEDOO31%
VIVA31%
4GTechnology
90%Coverage
2,519Number of sites
1,273
1,815
527
771
165291
Q3-16 Q3-17
FINANCIALS (SDGm)
Zain46%
Sudani28%
MTN26%
MARKET SHARE
ZAIN SUDAN
39%EBITDA Margin
2006Year of acquisition
▪ Impressive YoY growth in local currency SDG terms
➢ Revenues 40%, EBITDA 30% and Net income 29%
▪ Customers grew by 4%, to reach 12.9 million
▪ 61% currency devaluation effected the financial results in USD terms
▪ Significant cost optimization savings
▪ Data revenues (excluding SMS & VAS) grew 63% YoY, and formed 15% of total revenues
3,718
5,188
1,5722,047
646 836
9M-16 9M-17
Revenues EBITDA Net Income
ZAIN GROUP Q3 2017 IR PRESENTATION 17
$18ARPU
114%Penetration
8.3 mCustomers
37%Ownership
ZAIN38%
OOREEDOO31%
VIVA31%
4GTechnology
96%Coverage
8,216Number of sites
451494
130168
(71)
1
Q3-16 Q3-17
FINANCIALS (USDm)
ZAIN KSA
33%EBITDA Margin
▪ The operator achieved its 3rd consecutive quarterly net profit:
➢ YoY 9% growth in revenues
➢ YoY 48% growth in EBITDA
➢ Reporting first-ever 9 Months net profit of USD 15 million
▪ License extension impact also contributed to the net income
▪ Strong cost optimization program in place
▪ Data revenues (excluding SMS & VAS) grew by 42% YoY, and formed 50% of total revenues
2008Year of acquisition
1,4071,536
348514
(225)
15
9M-16 9M-17
Revenues EBITDA Net Income
ZAIN GROUP Q3 2017 IR PRESENTATION 18
$9ARPU
135%Penetration
2003Year of launch
4.2 mCustomers
96.52%Ownership
ZAIN38%
OOREEDOO31%
VIVA31%
4GTechnology
100%Coverage
2,808Number of sites
126 130
64 59
29 24
Q3-16 Q3-17
FINANCIALS (USDm)
Zain36%
Orange32%
Umniah32%
MARKET SHARE
ZAIN JORDAN
47%EBITDA Margin
▪ Higher data and interconnect revenues
▪ Customer base reached 4.2 million, up by 1% YoY
▪ Data revenues (excluding SMS & VAS) grew by 14% YoY, and formed 37% of total revenues
363 371
179 174
79 72
9M-16 9M-17
Revenues EBITDA Net Income
ZAIN GROUP Q3 2017 IR PRESENTATION 19
$15ARPU
226%Penetration
2003Year of launch
726KCustomers
55%Ownership
ZAIN38%
OOREEDOO31%
VIVA31%
4GTechnology
100%Coverage
504Number of sites
46 48
17 15
3 4
Q3-16 Q3-17
FINANCIALS (USDm)
ZAIN BAHRAIN
30%EBITDA Margin
▪ YOY Q3 2017 revenues and net income increased by 3% and 12% respectively
▪ Data revenues (excluding SMS & VAS) grew by 29% YoY, and formed 44% of total revenues
132148
49 45
8 7
9M-16 9M-17
Revenues EBITDA Net Income
ZAIN GROUP Q3 2017 IR PRESENTATION 20
83%Penetration
2004Year of acquisition
2.4 mCustomers
MCOwnership
ZAIN38%
OOREEDOO31%
VIVA31%
4GTechnology
99%Coverage
1,315Number of sites
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”
FINANCIAL STATEMENTS
ZAIN GROUP Q3 2017 IR PRESENTATION 22
BALANCE SHEET
Unaudited Audited Unaudited
30-Sep-17 31-Dec-16 30-Sep-16
KD ‘000
Assets
Current assets
Cash and bank balances 283,932 208,752 291,445
Trade and other receivables 491,095 450,386 450,952
Inventories 24,536 16,418 15,316
Investment securities at fair value through profit
or loss989 964 985
Non-current assets held for sale 7,656 - -
808,208 676,520 758,698
Non-current assets
Investment securities available for sale 17,110 22,134 22,851
Investments in associates and joint ventures 189,877 190,396 191,408
Due from associates 407,265 381,661 375,043
Other assets 15,081 15,598 15,386
Property and equipment 747,589 798,156 909,389
Intangible assets and goodwill 935,096 1,007,237 1,124,539
2,312,018 2,415,182 2,638,616
Total Assets 3,120,226 3,091,702 3,397,314
Unaudited Audited Unaudited
30-Sep-17 31-Dec-16 30-Sep-16
KD ‘000
Liabilities and Equity
Current liabilities
Trade and other payables 555,432 570,920 698,757
Due to banks 206,608 219,154 224,400
762,040 790,074 923,157
Non-current liabilities
Due to banks 719,576 830,193 757,213
Other non-current liabilities 29,230 48,953 39,212
748,806 879,146 796,425
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)
Legal reserve 216,353 216,353 216,353
Foreign currency translation reserve (1,152,322) (1,100,094) (786,452)
Treasury shares reserve - 1,967 1,967
Investment fair valuation reserve 4,237 3,484 982
Hedge reserve (247) (120) (553)
Retained earnings 244,552 571,503 516,503
1,452,443 1,265,129 1,520,836
Non-controlling interests 156,937 157,353 156,896
Total equity 1,609,380 1,422,482 1,677,732
Total Liabilities and Equity 3,120,226 3,091,702 3,397,314
Nine months ended
30-Sep
2017 2016
Earnings per share Fils
Basic 31 32
INCOME STATEMENT
Nine months ended
30-Sep
2017 2016
KD’000
Revenue 767,431 826,410
Cost of sales (214,147) (200,733)
Gross profit 553,284 625,677
Operating and administrative expenses (230,577) (232,787)
Depreciation and amortization (141,849) (164,966)
Provision for impairment – trade and other receivables (6,571) (2,976)
Operating profit 174,287 224,948
Interest income 18,057 4,965
Investment income 502 (1,741)
Share of results of associates and joint ventures 1,067 (26,578)
Other (expense)/income (5,765) 2,021
Finance costs (30,596) (23,911)
Provision for impairment loss on property and equipment (21,292) -
Loss from currency revaluation (18,500) (29,021)
Net monetary gain 25,506 -
Profit before contribution to KFAS, NLST, ZAKAT, 143,266 150,683
income taxes and Board of Directors' remuneration
Contribution to Kuwait foundation for
Advancement of Sciences (881) (744)
National Labour Support Tax and Zakat (4,904) (5,615)
Income tax expenses (11,558) (15,798)
Board of Directors’ remuneration (206) (206)
Profit for the period 125,717 128,320
Attributable to:
Shareholders of the Company 122,450 124,474
Non-controlling interests 3,267 3,846
125,717 128,320
ZAIN GROUP Q3 2017 IR PRESENTATION 23
ZAIN GROUP Q3 2017 IR PRESENTATION 24
CASH FLOW STATEMENT
Nine months ended
30-Sep
2017 2016
KD’000
Cash flows from operating activities
Profit for the period before income tax 137,275 144,118
Adjustments for:
Depreciation and amortization 141,849 164,966
Interest income (18,057) (4,965)
Investment income (502) 1,741
Share of loss of associates and joint ventures (1,067) 26,578
Provision for impairment loss on property and equipment 21,292 -
Finance costs 30,596 23,911
Loss on currency revaluation 18,500 29,021
Net monetary gain (25,506) -
Operating profit before working capital changes 304,380 385,370
Increase in trade and other receivables (81,837) (42,586)
(Increase)/decrease in inventories (8,400) 12,001
Decrease in trade and other payables (12,707) (94,342)
Cash generated from operations 201,436 260,443
Paid to Kuwait Foundation for Advancement of Sciences (250) (500)
National Labour Support Tax and Zakat paid (7,427) (4,441)
Income tax paid (11,838) (18,316)
Net cash from operating activities 181,921 237,186
Nine months ended
30-Sep
2017 2016
KD’000
Cash flows from investing activities
Deposits maturing after three months and bank balances
blocked(6,382) 2,913
Net cash outflow on acquisition of non-controlling interests - (26)
Purchase of investments (4,129) (670)
Proceeds from sale of investments 9,360 3,009
Acquisition of property and equipment (net) (82,254) (118,355)
Acquisition of intangible assets (net) (11,357) (35,186)
Interest received 18,613 4,214
Dividend received 246 703
Net cash used in investing activities (75,903) (143,398)
Cash flows from financing activities
Proceeds from bank borrowings 228,986 138,907
Repayment of bank borrowings (340,424) (115,648)
Loan to an associate (10,178) (26,954)
Dividends paid to Company’s shareholders (136,324) (117,020)
Dividends paid to minority shareholders of subsidiaries (1,718) (15,059)
Finance costs paid (29,251) (18,045)
Proceeds from sale of treasury shares 255,172 -
Net cash used in financing activities (33,737) (153,819)
Net increase/(decrease) in cash and cash equivalents 72,281 (60,031)
Effect of foreign currency translation (3,483) (5,410)
Cash and cash equivalents at beginning of period 177,150 228,266
Cash and cash equivalents at end of period 245,948 162,825
FINANCIAL STATEMENTS
Website : zain.com
Email : [email protected]
Note: Mobile Penetration rates are sourced from WCIS as of Sep-17
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