.
The Group is engaged mainly in providing telecommunication services and related products. The majority of the Group’s revenues, income and assets relate to its operations within the Kingdom. Outside of the Kingdom, the Group operates through its subsidiaries, associates and joint ventures in several countries.
.
Revenue is distributed to an operating segment based on the entity of the Group reporting the revenue. Sales between segments are calculated at normal business transaction prices.
.
The disclosed operating segments exceeded the 75% of total external Group revenue threshold and therefore all other operating segments are combined and disclosed as “Other segments”.
The following is an analysis of the Group’s revenues and results on a segments basis for the year ended December 31:
| Item (Thousands of Riyals) |
2022 |
2021 |
| Revenues (1) |
| stc |
48,776,400 |
45,445,839 |
| Channels (2) |
11,451,268 |
20,629,472 |
| Solutions |
8,805,091 |
7,208,337 |
| stc Kuwait |
4,113,509 |
3,679,666 |
| Tawal |
2,868,172 |
2,846,254 |
| stc Bahrain |
1,790,151 |
1,674,784 |
| stc Bank |
1,040,786 |
833,965 |
| Intigral |
538,058 |
388,707 |
| sirar |
430,288 |
170,307 |
| Specialized |
361,769 |
339,143 |
| Other operating segments (3) |
61,196 |
14,190 |
| Eliminations/adjustments |
(12,805,142) |
(20,222,678) |
| Total revenues |
67,431,546 |
63,007,986 |
| Cost of operations (excluding depreciation, amortization and impairment) |
(42,352,879) |
(40,167,386) |
| Depreciation, amortization and impairment |
(9,990,226) |
(9,712,845) |
| Cost of early retirement program |
(365,727) |
(313,258) |
| Financing income |
602,463 |
377,911 |
| Financing costs |
(696,602) |
(618,956) |
| Net other income (expenses) |
(136,220) |
49,996 |
| Net share in results and impairment of investments in associates and joint ventures |
(1,211,924) |
(778,028) |
| Net other (losses) gains |
189,666 |
789,643 |
| Zakat and income tax |
(1,083,175) |
(1,040,366) |
| Net profit |
12,386,922 |
11,594,697 |
| Net profit attributable to equity holders of stc |
12,170,537 |
11,311,342 |
| Non-controlling interests |
216,385 |
283,355 |
The following is an analysis of the gross profit on a segment basis for the year ended December 31:
|
Item (Thousands of Riyals)
|
2022
|
2021
|
|
stc
|
30,650,068
|
26,664,945
|
|
Channels (2)
|
2,480,001
|
1,587,953
|
|
Solutions
|
2,172,378
|
1,851,658
|
|
stc Kuwait
|
1,974,042
|
1,874,646
|
|
Tawal
|
2,250,720
|
2,236,647
|
|
stc Bahrain
|
825,145
|
813,996
|
|
stc Bank
|
158,195
|
40,920
|
|
Intigral
|
416,431
|
234,014
|
|
sirar
|
129,880
|
78,647
|
|
Specialized
|
203,692
|
128,052
|
|
Other operating segments (3)
|
(2,168)
|
12,869
|
|
Eliminations/adjustments
|
(3,865,129)
|
(1,730,318)
|
|
Gross profit
|
37,393,255
|
33,794,029
|
The following is an analysis of the Group’s assets and liabilities on a segment basis:
|
Item (Thousands of Riyals)
|
31-Dec-22
|
31-Dec-21
|
|
Assets
|
|
stc
|
137,287,162
|
133,034,376
|
|
Channels
|
8,538,854
|
8,146,496
|
|
Solutions
|
10,282,336
|
7,165,112
|
|
stc Kuwait
|
5,210,735
|
5,231,676
|
|
Tawal
|
11,932,999
|
12,635,677
|
|
stc Bahrain
|
6,053,709
|
4,675,802
|
|
stc Bank
|
3,807,596
|
3,210,437
|
|
Intigral
|
970,807
|
754,584
|
|
sirar
|
437,443
|
206,342
|
|
Specialized
|
681,644
|
550,666
|
|
Other operating segments (3)
|
8,548,024
|
7,404,845
|
|
Eliminations/adjustments
|
(56,531,323)
|
(55,236,596)
|
|
Total assets
|
137,219,986
|
127,779,417
|
Liabilities
|
|
stc
|
49,199,031
|
51,024,262
|
|
Channels
|
7,077,118
|
6,603,833
|
|
Solutions
|
7,459,278
|
4,894,543
|
|
stc Kuwait
|
2,246,463
|
2,287,044
|
|
Tawal
|
8,406,669
|
9,205,659
|
|
stc Bahrain
|
4,639,682
|
3,350,758
|
|
stc Bank
|
2,784,891
|
1,586,402
|
|
Intigral
|
995,981
|
836,376
|
|
sirar
|
199,852
|
92,995
|
|
Specialized
|
673,131
|
561,761
|
|
Other operating segments (3)
|
3,337,055
|
2,496,219
|
|
Eliminations/adjustments
|
(25,824,757)
|
(26,546,414)
|
|
Total liabilities
|
61,194,394
|
56,393,438
|
Following are the additions to Property and equipment and Intangible
assets with goodwill (Notes 10 and 12) based on the segments for the
year ended 31 December:
| Additions to Non-current Assets |
| Item (Thousands of Riyals) |
2022 |
2021 |
|
stc
|
6,751,241
|
6,524,157
|
|
Channels
|
169,779
|
128,715
|
|
Solutions
|
112,434
|
154,949
|
|
stc Kuwait
|
305,080
|
463,067
|
|
Tawal
|
994,686
|
800,470
|
|
stc Bahrain
|
684,391
|
174,039
|
|
stc Bank
|
62,226
|
77,907
|
|
Intigral
|
285,786
|
250,425
|
|
sirar
|
1,555
|
10,421
|
|
Specialized
|
13,620
|
27,952
|
|
Other operating segments (3)
|
217,034
|
223,754
|
|
Total
|
9,597,832
|
8,835,856
|
1.
Segment revenue reported above represents revenue generated from external and internal customers. There were SAR 13,066 million for the year ended 31 December 2022 (2021: SAR 20,421 million) inter-segment sales and adjustments (between the Group’s Companies) which were eliminated at consolidation.
2.
During 2022, stc entered into a new framework agreement with Channels where the Company is assigning Channels as its agent for the sale of specific products and services. This supersedes their previous framework agreement whereby Channels was acting as a principal having control over the specified products and services. This resulted into Channels recording its revenues at net basis instead of gross basis which resulted into the decrease of segmental revenues from Channels. Channel’s 2021 revenues would have been SAR 10,190 million had this new agreement (i.e. Channels as an agent) been effective in 2021.
3.
Other operating segments include: Aqalat, RSS, stc Gulf Investment Holding, stc GCC Cable Systems W.L.L., Company Innovation Fund Investment Company and Digital Centers for Data and Telecommunications, Internet of Things Information Technology Company, and General Cloud Computing Company for Information Technology (For more details, see note 6 in the annual financial statements).
For the purpose of monitoring the performance of segments, assets/liabilities are allocated to segments and no assets and liabilities are used mutually between segments.
Summary of the Group’s assets, liabilities, and results for the past five fiscal years:
|
Statement (Thousands of Riyals)
|
2018 Consolidated Revised
|
2019 Consolidated Revised
|
2020 Consolidated Revised
|
2021* Consolidated Revised
|
2022 Consolidated
|
|
Income statement:
|
|
Revenues activity
|
51,963,243
|
54,367,531
|
58,953,318
|
63,007,986
|
67,431,546
|
|
Costs of activity revenues
|
(21,490,161)
|
(21,976,306)
|
(24,998,923)
|
(29,213,957)
|
(30,038,291)
|
|
Total profit of the activity
|
30,473,082
|
32,391,225
|
33,954,395
|
33,794,029
|
37,393,255
|
|
Operating expenses
|
(18,227,857)
|
(19,910,832)
|
(21,223,270)
|
(20,666,274)
|
(22,304,814)
|
|
Profit from operating activity
|
12,245,225
|
12,480,393
|
12,731,125
|
13,127,755
|
15,088,441
|
|
Other revenues and expenses - net
|
(417,060)
|
(793,418)
|
(375,482)
|
(492,692)
|
(1,618,344)
|
|
Zakat, taxes, and non-controlling interests
|
(1,048,394)
|
(1,022,309)
|
(1,360,768)
|
(1,323,721)
|
(1,299,560)
|
|
Net profit attributable to stc’s shareholders
|
10,779,771
|
10,664,666
|
10,994,875
|
11,311,342
|
12,170,537
|
|
Other comprehensive income:
|
|
Net profit including non-controlling interests
|
11,080,498
|
10,924,831
|
11,185,197
|
11,594,697
|
12,386,922
|
|
Total items that may not be reclassified subsequently to the consolidated statement of profit or loss
|
126,957
|
(710,054)
|
(562,514)
|
317,616
|
818,534
|
|
Total items that may be reclassified subsequently to the consolidated statement of profit or loss
|
(257,320)
|
212,050
|
31,430
|
99,789
|
(174,583)
|
|
Total (comprehensive loss)/other comprehensive income
|
(130,363)
|
(498,004)
|
(531,084)
|
417,405
|
643,951
|
|
Total comprehensive income
|
10,950,135
|
10,426,827
|
10,654,113
|
12,012,102
|
13,030,873
|
|
Total comprehensive income attributable to stc’s shareholders
|
10,651,283
|
10,163,477
|
10,478,455
|
11,717,489
|
12,840,311
|
|
Total comprehensive income attributable to non-controlling interests
|
298,852
|
263,350
|
175,658
|
294,613
|
190,562
|
|
Statement of financial position:
|
|
Current assets (A)
|
46,029,525
|
44,841,492
|
45,858,916
|
51,468,074
|
60,933,209
|
|
Fixed and intangible assets
|
51,480,528
|
54,992,030
|
58,314,031
|
57,939,836
|
58,420,288
|
|
Other non-current assets
|
11,860,541
|
18,492,734
|
17,799,153
|
18,371,507
|
17,866,489
|
|
Total assets
|
109,370,594
|
118,326,256
|
121,972,100
|
127,779,417
|
137,219,986
|
|
Current liabilities (B)
|
29,457,055
|
32,606,772
|
32,891,183
|
33,560,552
|
36,400,164
|
|
Long-term loans
|
3,965,479
|
8,923,476
|
8,637,605
|
7,846,606
|
10,213,750
|
|
Other non-current liabilities
|
9,286,462
|
13,740,962
|
15,176,297
|
14,986,280
|
14,580,480
|
|
Total liabilities
|
42,708,996
|
55,271,210
|
56,705,085
|
56,393,438
|
61,194,394
|
|
Paid capital
|
20,000,000
|
20,000,000
|
20,000,000
|
20,000,000
|
50,000,000
|
|
Reserves, retained earnings and treasury shares
|
45,513,684
|
41,762,594
|
43,945,782
|
49,270,505
|
23,499,525
|
|
Equity attributable to shareholders of stc
|
65,513,684
|
61,762,594
|
63,945,782
|
69,270,505
|
73,499,525
|
|
Non-controlling interests
|
1,147,914
|
1,292,452
|
1,321,233
|
2,115,474
|
2,526,067
|
|
Total equity
|
66,661,598
|
63,055,046
|
65,267,015
|
71,385,979
|
76,025,592
|
|
Total liabilities and equity
|
109,370,594
|
118,326,256
|
121,972,100
|
127,779,417
|
137,219,986
|
|
Working capital (A-B)
|
16,572,470
|
12,234,720
|
12,967,733
|
17,907,522
|
24,533,045
|
|
Cash flow statement:
|
|
Net operating cash flow
|
19,132,416
|
9,920,626
|
28,324,705
|
11,220,155
|
26,354,390
|
|
Net investment cash flow
|
(5,027,028)
|
(1,977,126)
|
(17,429,177)
|
(1,714,583)
|
(8,578,939)
|
|
Net financing cash flow
|
(8,516,962)
|
(8,067,645)
|
(9,919,218)
|
(10,235,177)
|
(8,255,503)
|
|
Net cash flow
|
5,588,426
|
(124,145)
|
976,310
|
(729,605)
|
9,519,948
|
|
Cash and cash equivalents at the beginning of the year
|
2,567,044
|
8,153,865
|
8,031,010
|
9,004,286
|
8,281,301
|
|
Impact of foreign currency exchange differences
|
(1,605)
|
1,290
|
(3,034)
|
6,620
|
(6,856)
|
|
Cash and cash equivalents at the end of the year
|
8,153,865
|
8,031,010
|
9,004,286
|
8,281,301
|
17,794,393
|
*Certain comparative figures for the year ended December 31, 2021, were reclassified to conform with the classification used in the financial statements for the year ended December 31, 2022.
Geographical analysis of standard service revenues at the Group’s level:
During the year 2022, the Group achieved total revenues of SAR 67,431,546 thousand. Foreign investments at the Group’s level accounted for 10% of this total. The following table shows their geographical distribution:
| Revenues inside the Kingdom of Saudi Arabia (Thousands of Riyals) |
Revenues outside the Kingdom of Saudi Arabia (Thousands of Riyals) |
Total |
| 60,929,840 |
6,501,706 |
67,431,546 |
As for the local distribution of revenues, a geographical analysis of the stc’s revenues is not available at the local level due to the nature of the sector's work, because the revenue generated by the customer is not linked to one region, where the customer's account is established in a region and the calls that the customer is billed with have occurred in several Regions, according to its presence inside the Kingdom, and with regard to international calls and international roaming made by the customer, it cannot be linked to any region because it takes place outside the geographical borders of the Kingdom.
Highlights of the Group’s operating results in 2022 compared to 2021:
| Statement (Thousands of Riyals) |
2022 Consolidated |
2021 Consolidated |
Difference |
% |
|
Income statement:
|
| Revenues |
67,431,546 |
63,007,986 |
4,423,560 |
7.02% |
| Cost of revenues |
(30,038,291) |
(29,213,957) |
(824,334) |
2.82% |
| Total profit |
37,393,255 |
33,794,029 |
3,599,226 |
10.65% |
| Total operating expenses |
(22,304,814) |
(20,666,274) |
(1,638,540) |
7.93% |
| Operating profit |
15,088,441 |
13,127,755 |
1,960,686 |
14.94% |
| Other income and expenses |
(1,618,344) |
(492,692) |
(1,125,652) |
228.47% |
| Zakat and income tax |
(1,083,175) |
(1,040,366) |
(42,809) |
4.11% |
| Net income |
12,386,922 |
11,594,697 |
792,225 |
6.83% |
| Net income attributable to stc’s shareholders |
12,170,537 |
11,311,342 |
859,195 |
7.60% |
| Net income attributable to non-controlling interests |
216,385 |
283,355 |
(66,970) |
(23.63%) |
The increase in the net profit of the year 2022 by SAR 860 million compared to the previous year is mainly due to the following reasons:
- The increase in revenues by SAR 4,424m that was offset by a slight increase in cost of revenues by SAR 824m due to reversal of contingent liability provision in an amount of SAR 1,079m which had a positive impact on cost of revenues, and led to an increase in gross profit by SAR 3,599m.
On the other side:
- Operating expenses increased by SAR 1,639m, mainly due to the increase in general & administration expenses by SAR 837m, selling and marketing expenses by SAR 524m and depreciation and amortization expenses by SAR 277m.
- Total other expenses increased by SAR 1,126m, mainly due to:
1.
Recording an impairment provision related to BGSM investment in an amount of SAR (1,259m) during this year as compared to SAR (177m) in 2021, due to decline in fair value as a result of the decline in market conditions and quoted share prices of key underlying investment in the Malaysian market, which led to the re-evaluation of this investment based on these factors.
2.
The increase in finance cost by SAR 78m that was offset by the increase in finance income by SAR 225m.
3.
The increase in cost of early retirement program by SAR 52m.
- Zakat and income tax expense increased by SAR 43m
The Group’s loans are as follows:
| Statement (Millions of Riyals) |
2022 Consolidated |
2021 Consolidated |
| Short-term Murabaha |
79 |
1,454 |
| Long-term Murabaha |
3,525 |
1,160 |
| Total Murabaha |
3,604 |
2,614 |
| Sukuk |
6,675 |
6,673 |
| Mudarabha |
14 |
17 |
| Others |
198 |
- |
| Total |
10,491 |
9,304 |
Sukuk details are as follows:
stc issued a sukuk program with a maximum of SAR 5,000 million. The first tranche of SAR 2,000 million was issued on June 2014 for a period of ten years under the established program. At the General Assembly meeting on 19 Shaaban of 1440H (corresponding to 24 April, 2019), stc approved the establishment of an international sukuk program either directly or through special purpose vehicle (SPV), which to be established and used to issue primary or secondary sukuk in one or several parts or one or several stages, or through a series of issuances in US dollars, not exceeding the total amount of USD 5,000 million for the total value of the sukuk issuances and parts of sukuk program referred to below at any time. Accordingly, the Saudi Telecom Sukuk Company Limited during the second quarter of 2019 (a company established for the purpose of issuing sukuk under the sukuk program referred to above in US dollar) issued first tranche of the sukuk program amounting to USD 1,250 million (which is equivalent to SAR 4,688 million) for 10 years. This program is an international sukuk in US dollar, with a total number of 6,250 sukuk and a nominal value of USD 200 thousand per sukuk having an annual return of 3.89% and a maturity of ten years.
|
Issuance
|
Issuance date
|
Issuance category
|
Total value of issuance
|
Interest rate
|
Due date
|
|
National stc Sukuk
|
June 2014
|
SAR 1 million
|
SAR 2 billion
|
3-month SAIBOR + 0.7%
|
June 2024
|
|
International stc Sukuk
|
May 2019
|
USD 200,000
|
SAR 4,688 million
|
3.89%
|
May 2029
|
