| Element | Current quarter | Similar quarter for previous year | % Change current | Previous quarter | % Change previous |
|---|---|---|---|---|---|
| Net profit (loss) |
-
|
1,612
|
-
|
-
|
94.16
|
| Gross profit (loss) |
1,870
|
3,345
|
-
|
644
|
190.37
|
| Operational profit (loss) |
-
|
1,722
|
-
|
-
|
96.69
|
| Earning or loss per share, Riyals |
-
|
2.09
|
-
|
-
|
-
|
| All figures are in (Millions) Saudi Arabia, Riyals | |||||
| Element | EXPLAINATION |
|---|---|
| Reasons of increase (decrease) for quarter compared with same quarter last year | The reason for the net losses is mainly attributed to the higher increase in depreciation expenses by SAR 250 million; mainly related to (i) catch-up depreciation expenses related to capitalized fixed assets during the quarter (SAR 183 million), (ii) increase in depreciation expenses due to normal course of business (SAR 155 million), and (iii) lesser depreciation expense due to revised useful life of assets implemented effective from January 1st 2015 (SAR 88 million); as well as additional doubtful debt provisions amounting to SAR 133 million, mainly for the non-performing receivables from customers, in addition to the decrease in revenues attributed to the presence of non-recurring data revenue, mainly FTTH capital lease amounting to SAR 1,265 million, in the same quarter of the previous year. |
| Reasons of increase (decrease) for quarter compared with previous quarter | The reason for the reduction in net losses is mainly attributed to the financial impact resulting from one-time adjustments that negatively impacted the net income of the previous quarter. |
| External auditor's report containing reservation | It was stated in the chartered accountant report that: (We draw attention to the following matters: A)Note 2.1 to the accompanying interim consolidated financial statements which describes the basis on which these interim consolidated financial statements have been prepared. As at March 31, 2015, and consistent with the position at December 31, 2014, the Group is not able to meet one of its financial covenants under its long term financing facilities with various lenders and, consequently such long-term loans and notes payable are continued to be classified under current liabilities as at that date. As a result, the Group net current liabilities amounted to Saudi Riyals 15.8 billion at March 31, 2015. These conditions indicate that the Group's ability to meet its obligations as they become due and to continue as a going concern depends on its ability to obtain a reset of the relevant covenant from the lenders. The management of the Group is currently engaged in negotiations with the lenders to obtain a reset of the relevant covenant and are confident that negotiations will be successful. Accordingly, the accompanying interim consolidated financial statements have been prepared under the going concern basis.Note 3 to the accompanying interim consolidated financial statements which describes the arbitration proceedings between the Company and Mobile Telecommunications Company Saudi Arabia (Zain KSA) which commenced during the three-month period ended December 31, 2014 in relation to the recovery of amounts receivable under the Service Agreement signed with Zain KSA on May 6, 2008. B)Note 3 to the accompanying interim consolidated financial statements which describes the arbitration proceedings between the Company and Mobile Telecommunications Company Saudi Arabia (Zain KSA) which commenced during the three-month period ended December 31, 2014 in relation to the recovery of amounts receivable under the Service Agreement signed with Zain KSA on May 6, 2008. C)Note 2.2 to the accompanying interim consolidated financial statements which describes managements reassessment of certain accounting estimates and judgements exercised on certain transactions and balances as at and for the quarter ended March 31, 2015 based on additional information and in the light of specific events and circumstances which impact on the reported results and financial position of the Group. D)Notes 12 and 13 to the accompanying interim consolidated financial statements which outline the impact of certain reclassifications and restatements previously reported in the quarter ended September 30, 2014 as a result of an error in the timing of revenue recognition in respect of a promotional program. These notes contain details of the impact of these adjustments on the comparative figures of the quarter ended March 31, 2015. |
| Reclassifications in quarterly financial results | Certain figures for the comparative period, have been reclassified to conform to the current period presentation |
| Other notes | Deputy CEO Serkan Okandan said: Mobily is committed to two main priorities: firstly we are working to secure and strengthen our customer base, both with consumers and our fast-growing business segment. Secondly we aim to implement operational efficiencies to generate savings across the business. By focusing on these two important areas, we are confident that we can maintain and build on our position as the region most innovative provider of communications services. Q1 2015 vs. Q1 2014: Revenues for Q1 2015 amounted to SAR 3,613 million in comparison to SAR 5,094 million for the same quarter in 2014, representing a decrease of 29%. During Q1 2014, the Company booked SAR 1,265 million for non-recurring data revenue mainly of FTTH capital lease. Excluding that non-recurring FTTH capital lease revenue from Q1 2014 and equipment sales from both quarters, revenues for Q1 2015 would be 3% lower than the same quarter last year. Gross profit for Q1 2015 amounted to SAR 1,870 million in comparison to SAR 3,345 million for the same quarter in 2014, representing a decrease of 44%. Operating Expenses. The Management increased its focus on the optimization of the cost structure during the quarter. The Management believes that positive impacts of the actions being taken will be more visible in the coming quarters. EBITDA for Q1 2015 amounted to SAR 908 million in comparison to SAR 2,485 million for the same quarter in 2014. EBITDA margin for the first quarter is 25% compared to 49% for the same quarter of the previous year. However, by eliminating the effect of the non-recurring data revenue FTTH capital lease amounting to SAR 1,265 million, the adjusted EBITDA margin for the first quarter of the previous year would be 34% Net loss for Q1 2015 amounted to SAR 199 million in comparison to net income of SAR 1,612 million for the same quarter in 2014. The reason for the net losses is mainly attributed to the higher increase in depreciation expenses by SAR 250 million; mainly related to (i) catch-up depreciation expenses related to capitalized fixed assets during the quarter (SAR 183 million), (ii) increase in depreciation expenses due to normal course of business (SAR 155 million), and (iii) lesser depreciation expense due to revised useful life of assets implemented effective from January 1st 2015 (SAR 88 million): as well as additional doubtful debt provisions amounting to SAR 133 million, mainly for the non-performing receivables from customers, in addition to the decrease in revenues attributed to the presence of non-recurring data revenue, mainly FTTH capital lease amounting to SAR 1,265 million, in the same quarter of the previous year. Cash flow from operating activities during the quarter continued to be strong generating SAR 1,166 million cash mainly as a result of efficient working capital management. Capex for Q1 2015 amounted to SAR 1,461 million in comparison to SAR 1,513 million for the same quarter last year. The high capex/revenue ratio of 40% during the quarter was mainly due to capitalization of projects started in 2014 and before. Gross debt as of March 31, 2015 amounted to SAR 16,176 million in comparison to SAR 16,993 million as of December 31, 2014. During the quarter, the Company serviced all its contractual debt obligations, amounting to SAR 872 million principal repayments and SAR 59 million accrued interest payments, to lenders in line with the existing facility agreements. The Company has breached a certain financial covenant under its long term financing facilities with various lenders and, consequently such long-term loans and notes payable have been reclassified under current liabilities as at December 31st 2014. The Company has already engaged in discussions with the lenders to obtain a reset of the relevant covenant and confirmed to the lenders that the Company will continue to service its debt obligations as per the existing financing agreements. These discussions are on-going and are expected to be finalized during the second quarter of 2015. |
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