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ExxonMobil Analysis Report
Citation preview
Zain KSA Financial Statement Analysis
ACCT501B, Financial Accounting
Ahmad Aldarrak, Ryan Rakestraw, Maria Surina
4/26/2012
Page 1 of 15
Table of Contents 1. BACKGROUND ....................................................................................................................................... 2
2. INDUSTRY ANALYSIS .............................................................................................................................. 3
2.1. Saudi Mobile Industry SWOT analysis ........................................................................................... 3
3. MOBILE OPERATORS ............................................................................................................................. 4
3.1. STC ................................................................................................................................................. 4
3.2. Mobily (Etihad Etisalat) ................................................................................................................. 5
3.3. Zain (Subject company) ................................................................................................................. 5
4. FINANCIAL STATEMENT ANALYSIS ........................................................................................................ 6
4.1. Revenue Analysis .......................................................................................................................... 6
4.2. Expense Analysis ........................................................................................................................... 7
4.2.1. Cost of Sales: ......................................................................................................................... 7
4.2.2. Distribution and Marketing ................................................................................................... 8
4.2.3. Capital Expenditures ............................................................................................................. 8
4.2.4. Depreciation and Amortization ........................................................................................... 10
4.2.5. Financial Charges ................................................................................................................ 10
4.2.6. Selling and General Administration .................................................................................... 10
4.2.7. Zakat and Tax Expenses ...................................................................................................... 10
5. CONCLUSIONS FROM FINANCIAL ANALYSIS ....................................................................................... 10
5.1. Licensing Fees ............................................................................................................................. 10
5.2. Economies of Scale and Scope .................................................................................................... 11
5.3. Marketing Efficiency ................................................................................................................... 11
6. FUTURE OUTLOOK .............................................................................................................................. 12
List of Figures
Figure 1: Saudi Mobile Market Share ........................................................................................................... 2
Figure 2: STC Ownership Composition .......................................................................................................... 5
Figure 3: Monthly ARPU ($US) By Operator ................................................................................................. 7
Figure 4: Customer Acquisition Cost ($US) By Operator .............................................................................. 8
List of Tables
Table 1: Saudi Mobile Market Data .............................................................................................................. 4
Table 2: Operator Financial Comparison (000 SAR) ...................................................................................... 6
Table 3: Operator DuPont Analysis ............................................................................................................... 6
Table 4: Cash Flow from Operations to CAPEX Ratio .................................................................................... 9
Table 5: CAPEX By Operator .......................................................................................................................... 9
Table 6: Sales to PP&E Ratio ......................................................................................................................... 9
Table 7: Current Ratio Analysis ................................................................................................................... 11
Page 2 of 15
1. BACKGROUND
The Kingdom of Saudi Arabia (KSA) began the process of restructuring its telecommunications sector
with the incorporation of the state-run Saudi Telecommunications Company (STC) in 1998.
Responsibility for providing fixed-line and mobile services to the country was shifted from The Ministry
of Post, Telegraph, and Telephone to STC, effectively creating a monopoly. This perfect monopoly
caused comparatively high prices and poor service. Monopolistic structure of the industry meant there
was no incentive to build a telecommunications network outside the metro regions. This, coupled with
the relatively sparse population of the Kingdom, limited the quality and speed of the country’s
telecommunications infrastructure roll-out.
As a result, the Communication and Information Technology Commission (CITC), the regulator of the
Saudi Arabian telecommunications market, was formed in 2001 to promote increased infrastructure
investment. In 2002, CITC issued a second mobile services license, thus allowing Etisalat —a
telecommunication services company based in the United Arab Emirates —to offer mobile services in
the country through its subsidiary company, Mobily, that launched operations in 2005. No additional
mobile licenses were issued until 2007 when Zain (formerly MTC, Kuwait’s state-run telecom) won the
rights to a 25 year license with a bid of $6.1B (USD). Zain KSA launched in 2008 and enrolled 2 million
subscribers within 4 months of launch.
Zain has not been profitable to date, but has been gaining market share (Ref. Figure 1). Both of these
factors can likely be partially attributed to Zain’s lower price strategy. Our goal in this research is to
investigate the reasons behind the losses of Zain and try to figure out how the company can start
generating profits in the rapidly growing telecom industry.
Figure 1: Saudi Mobile Market Share
Page 3 of 15
2. INDUSTRY ANALYSIS
The Saudi Arabian mobile telecom sector continues to show good growth (Ref. Table 1). Four and a half
million new subscribers were added in 2011 bringing the total mobile subscriber base to 56.1 mm. Saudi
Arabia is one of a handful of countries worldwide, mostly in the Middle East, in which the number of
mobile customers continues to expand despite having a penetration rate which has passed 200%. This is
mostly driven by consumers using multiple short term pre-paid subscription. Despite these gains, this
market is close to saturation; besides, some of these gains have been supported by temporary
subscribers participating in the Hajj (an Islamic pilgrimage to Mecca). Additionally, mobile operators are
facing declining average revenue per user (ARPU), a key industry metric. Overall decline in telecom
ARPU can at least partially be attributed to increased competition from to Zain’s entrance.
2.1. Saudi Mobile Industry SWOT analysis
Strengths:
Strong competition among the three main operators provides reasonably priced mobile access
Advanced high-speed networks (3G/4G/GSM)
Increased foreign investment
Demographic shift towards younger population that demands the latest services and devices
Weaknesses:
Mobile sector close to saturation
Large percentage of pre-paid subscriptions puts downward pressure on revenues
Government involvement remains high (STC is 70% owned by Saudi government)
Opportunities:
Growing demand for high speed data (3G & 4G)
Proliferation of smartphones
Shift from pre-paid phones to post-paid tariffs
Threats:
Increased competition could lead to margin erosion
The Saudi economy is reliant on the price of oil
o Volatility could affect consumer sentiment and lower demand
High unemployment with youth demographic could limit value of data services
Political and social instability
Page 4 of 15
Table 1: Saudi Mobile Market Data
3. MOBILE OPERATORS
3.1. STC
STC is the largest/dominant telecommunications service provider in Saudi Arabia that was established in
1998. The company was owned by government and remained the only provider of all telecom services
in the country until 2004, when the WTO requested that Saudi Arabia liberalize its mobile and fixed-line
telephony market.
STC incorporates a number of subsidiaries, associates and joint ventures – all involved in a variety of
telecommunications services, including mobile, telephone and internet services, data transmission and
leased lines. STC accounts for most of these companies using consolidation method with except for
three firms where STC uses the Equity method. Refer to Figure 2 outlining the list of companies
comprising STC. While STC remains the dominant player in the telecommunication services market
(accounting for 42.3% of the market), its share has been significantly reduced by the two major
competitors, Mobily and Zain. Both firm fight aggressively offering diversified telecom service packages
at lower rates.
It is important to note that while STC is private company the Saudi government controls the company
with 70% of the company’s equity stake. Twenty percent is held by the public and the remaining 10% is
held by various institutional investors (mainly pension funds). The close relationship between STC the
government and the regulating authority, CITC, in particular, suggests that the industry might not be as
competitive or efficient as it could be if all players were fully private firms. For example, CITC can set
price floor, preventing a price war in the industry, thus eliminating market efficiencies.
2009 2010 2011f 2012f 2013f 2014f 2015f 2016f
No of Cellular Mobile Phone
Subscribers ('000) 44,800.0 51,600.0 58,308.0 60,277.0 62,352.0 64,460.0 66,964.0 68,638.0
No of Mobile Phones per 100
inhabitants 167.1 188.0 207.6 210.0 212.7 215.4 219.3 220.4
No of Mobile Phones per 100 1,074.0 1,249.4 1,392.2 1,433.8 1,475.3 1,518.5 1,574.1 1,611.8
No of 3G Phone Subscribers 5,490.0 7,645.0 10,308.0 13,633.0 17,719.0 22,600.0 28,245.0 32,482.0
3G Market As % of Entire Mobile
Market 12.30% 14.80% 17.70% 22.60% 28.40% 35.10% 42.20% 47.30%
Page 5 of 15
Figure 2: STC Ownership Composition
3.2. Mobily (Etihad Etisalat)
Mobily is the second largest mobile operator in Saudi Arabia. It is owned by the Etihad Etisalat
consortium, led by Etisalat of United Arabia Emirates with 27% ownership. Mobily was among the first
independent providers in Saudi Arabia by acquiring a GSM license for $3.26B in August 2004. Later,
Mobily paid another $201M for a 3G license. The company enjoys a 39.6% market share. Year over year,
the company’s profits have increased by 8%, but intense competition in the industry has driven profit
margins down.
The company fights aggressively with STC, trying to gain market share, but hasn’t been able to establish
a leadership position. Mobily’s strategy focuses on expanding the quality and coverage of its mobile and
fixed broadband networks. Mobily is the leader in deploying new mobile smart phones, promoting the
usage of mobile data services, which will likely drive future revenue growth in the industry. Mobily has
recently entered the WiMax/internet broadband segment after the acquisition of Bayanat Al-Oula,
which expanded the company’s customer pool.
3.3. Zain (Subject company)
Zain is the third mobile phone operator to enter the Saudi Arabian market. It started operating in 2008,
and managed to attract 2 million users in the first 4 months. Since then, the company has been growing
in number of subscribers; now, Zain sits at a 17% market share. Zain of Saudi Arabia (Zain KSA) is a
subsidiary of the Zain of Kuwait. The company operates in multiple countries in the Middle East, and has
Page 6 of 15
a “One Network” brand image where subscribers can enjoy local rates in all the countries that Zain
operates in.
Unlike its profitable parent company in Kuwait, Zain KSA has been generating losses every quarter since
its inception. In addition, the company is burdened with a large debt that was issued to pay the $6.1
billion license fee, and to build the infrastructure needed for the service coverage. With the consecutive
losses, the company is at a risk of defaulting on its interest expenses.
4. FINANCIAL STATEMENT ANALYSIS
To analyze the reasons behind the consecutive losses, and see what the future of Zain will look like we
have compared the three firms on different scales: profitability, efficiency and leverage. In addition, we
examined some strategic steps that Zain can undertake in order to improve its performance.
Table 2: 2011 Operator Financial Comparison (000 SAR)
Table 3: 2011 Operator DuPont Analysis
STC Mobily Zain
Profit Margin 13.88% 25.35% -28.74%
Asset Turnover 49.97% 53.47% 25.05%
Financial Leverage 237.49% 203.94% 622.95%
ROE (book) 16.48% 27.65% -44.84%
4.1. Revenue Analysis
Revenue in the telecom industry is generated from the three prime sources: usage charges, subscription
fees and activation fees. Operators enroll most of their customers in pre-paid plans. While this strategy
allows more control of bad debt (payment default of the mobile users), it significantly reduces the
upside potential for revenues. In addition, operators need to find ways to incentivize their customers to
Revenue and Expense of 2011
Sales
Expenses % of Sales Absolute % of Sales Absolute % of Sales Absolute
Cost of Sales 43.72% (24,333,827) 48.51% (9,727,832) 52.23% (3,498,893)
Distribution and Marketing 13.34% (7,424,448) 5.42% (1,086,069) 29.44% (1,972,132)
General Admin. 6.97% (3,878,940) 8.90% (1,784,031) 4.91% (329,185)
Depreciation and Amortization 15.91% (8,853,844) 10.72% (2,148,963) 25.53% (1,710,328)
Financial Charges 4.02% (2,237,858) 1.06% (213,320) 16.63% (1,113,856)
55,662,079 20,052,254 6,699,060
STC Mobily Zain
Page 7 of 15
spend more on mobile services. This could possibly be achieved by launching promotions such as free
text messages or offering discounted services. Hence, marketing becomes a significant expense for the
operators as it accounts for between 20% and 50% of the total operating expenses.
With pre-paid plans, an operator has less information on its current users because pre-paid subscribers
can terminate their usage easily, contrary to the post-paid (contract) plan. This becomes especially
apparent for the Saudi operators because the usage of phones increase significantly during the Hajjj
pilgrimage that brings high number of temporal users.
The profitability in the industry is a strong function of the Average Revenue per User (ARPU) (See Figure
3). Again, this number is reliable only to a certain extent because none of the mobile operators can track
their user base precisely.
STC remains the most profitable company in the industry with an ARPU of $24.38. We note that STC has
multiple revenue streams where GSM (telecom) accounts for 63% of it. Our analysis adjusted the
revenue numbers to ensure consistent comparison with other telecom companies: Zain and Mobily.
Figure 3: Monthly ARPU ($US) By Operator
4.2. Expense Analysis
One way to investigate the reasons behind Zain’s losses is to compare the expense level across the three
companies. Table 2 shows the main five expenses of the three firms, and the ratios of these expenses to
2011 sales.
4.2.1. Cost of Sales:
The largest expense is attributable to cost of sales, with STC having the lowest ratio at roughly 44%, and
Zain the highest at 52%. The lower ratios of STC and Mobily could possibly be due to economies of scale
$24.38
$32.58
$20.06
STC Mobily Zain
Page 8 of 15
given the size of these firms and the efficiencies that arise from their other services, such as DSL and
other broadband services.
4.2.2. Distribution and Marketing
Distribution and marketing expenses are significant across all three companies. In this category, Mobily
is the most efficient is this respect as distribution and marketing accounts for only 5.4% of revenue. STC
has a higher ratio at 13.3%, while Zain is much higher at almost 30%. Looking mainly at Zain and Mobily
as they are more focused on the mobile phone segment, which makes a significant differenc. Even in
absolute numbers, Zain spent almost twice what Mobily spent in 2011 (which amounts to roughly a
billion Saudi Riyals). The footnotes don’t detail the breakup of the expense very well for Mobily. Yet,
Zain’s expenses are well above Mobily’s numbers in advertising, promotions and sales commissions.
Although the company is by far the least efficient marketer in terms of revenue generated, Zain is
reasonably efficient in terms of customer acquisition cost, as shown in Figure 4.
Figure 4: Customer Acquisition Cost ($US) By Operator
From the chart above we can see that STC was the least efficient one, which might not be surprising
given the overall state-owned mentality of the STC. Yet, Zain managed to spend 20% more than its
major rival, Mobily. This suggests that either Zain is beyond its maximum return in terms of dollars of
advertising over increase in sales; or it should review its marketing strategy all together, and perhaps
investigate how Mobily spends its advertising dollars.
4.2.3. Capital Expenditures
Consistent with the industry trend, all firms are constantly looking for ways to expand the capacities of
their mobile broadband network; increase efficiency and meet the growing demand for internet
services, data transfer and storage. In fact, competition in the industry is driven to a major extent by
technological performance and innovation. The magnitude of capital expenditures in this industry
suggests that only few big players can in fact remain profitable.
$461.53
$219.63 $262.95
STC Mobily Zain
Page 9 of 15
The recent announcement of the LTE launch (mobile technology which is sometimes referred to as 4G)
was made by the three major operators in the market within days of each other in September 2011. This
demonstrates the importance of innovation for this industry.
One way to assess industry’s ability to acquire long-term assets or invest in infrastructure would be to
compare the ratio of Cash Flow from Operating Activities to Capital Expenditure. It becomes apparent
that Zain’s current operations do not cover its capital expenditures. These are mainly financed through
issuance of long-term debt
Table 4: Cash Flow from Operations to CAPEX Ratio
STC Mobily Zain
CFO/Capital Expenditures 2.24 1.81 0.12
In absolute terms, STC spent twice that of what Mobily spent and ten times what Zain spent.
Investment in telecommunications infrastructure and equipment represents 75% of the total PP&E
account. This proportion is consistent among the three operators.
Table 5: CAPEX By Operator
STC Mobily Zain
Capital Expenditures (SAR) -$7,837,438 -$3,700,297 -$712,601
Capital Expenditures (USD) $2,090 $987 $190
(in '000,000)
Clearly, STC has the largest amount of investment capital available for its expansion. At the same time
we should note that Zain utilizes its PP&E the best with each dollar in PP&E generating $1.65 in sales.
Table 6: Sales to PP&E Ratio
STC Mobily Zain
Sales / PP&E 1.010 1.222 1.650
Page 10 of 15
4.2.4. Depreciation and Amortization
The depreciation expense includes depreciation of tangible assets (such as PP&E) and amortization of
intangible assets (such as GMS license). Although Zain’s depreciation expense was only 1.7 billion riyals,
compared to 2.1 billion and 8.9 billion riyals for Mobily and STC respectively, Zain’s expense as a
percentage of sales is much higher than that of the other two firms. We confirmed that all three
companies depreciate their telecommunication equipment (PP&E contribution to depreciation) using
useful lives of between 7 and 8 years. However, Zain’s depreciation is much higher due to the high
underlying book value of its GMS license, which accounts for more than 50% of the depreciation
expense for Zain and only 23% for Mobily. STC does not report its amortization for intangible assets.
4.2.5. Financial Charges
This is a very critical expense as it amounts to 16% of Zain’s revenue, compared to only 4% and 1% for
STC and Mobily. Due to the high debt that Zain had to incur to finance its license, Zain is paying more
than a billion Saudi Riyals every year on interest expenses. With a very minimal tax rate (around 1%),
there is virtually no tax shield advantage from this debt.
4.2.6. Selling and General Administration
General administration expenses for all three firms are below 10%. Zain has lower spending in this
category, which might be partially due to lower bonuses and profit sharing as a result of the losses.
4.2.7. Zakat and Tax Expenses
Zakat is simply an Islamic Finance term for taxes in Saudi Arabia. Zakat expense is very low with an
average effective rate of roughly 1% of pre-Zakat income, based on the earning statements of STC and
Mobily. As a result, the value of the tax shield is very minimal. As for the tax expense in STC’s financial
statement, that is due to the company’s operations in foreign countries, which is not relevant to Zain
KSA.
5. CONCLUSIONS FROM FINANCIAL ANALYSIS
5.1. Licensing Fees
There are a number of reasons behind the losses of Zain. The first is the high license fee that Zain had to
incur to operate in the Saudi market. Zain had to pay $6.1 billion for the license in 2008, which is almost
twice what Mobily had to pay in 2005 ($3.45 billion). STC never even had to pay for its 2G license
because of its public-private structure. All three operators paid approximately $200M for their 3G
licenses.
Page 11 of 15
This initial high capital expenditure had various negative effects on Zain. First, due to the high license
fee, the depreciation and amortization expense would be significantly higher compared to Mobily,
resulting in bigger operating losses. Even though depreciation isn’t an actual cash flow, the accumulated
net losses of the firm can trigger a freeze on the stock of the firm to force a restructuring and
recapitalization, which is likely to happen in the coming months.
The high license fee has forced Zain to take on a lot of debt to finance the operating license. This raised
the firm’s leverage (debt to value) to 66%, compared to 42% at STC and 31% at Mobily. High leverage
increased the cost of equity and burdened the company with high interest expenses.
The short-term liquidity of Zain is also worrisome when compared to its two counterparts. The current
ratio indicates that the company barely has any liquid assets to meet its short term debt obligations.
Table 7: Current Ratio Analysis
STC Mobily Zain
Current Ratio 0.870 0.548 0.157
5.2. Economies of Scale and Scope
Aside from the initial high CAPEX, Zain is also operating under significant disadvantages from economies
of scale. With only 17% market share, Zain’s fixed costs are distributed over a smaller number of users
compared to the other two players.
Since Zain operates with an underdeveloped infrastructure, it often has to pay additional network access
fees to its competitors in order to have a fully operational coverage. In total, Zain pays 32% of its
revenue for the network access, which is higher than the 20% and 17% that Mobily and STC pay for
network access.
Additionally, Zain operates in the mobile phone segment of the telecom industry only. It is at
disadvantage in economies of scope. STC has also a landline segment of the market, in addition to the
DSL and internet services. Mobily operates in WiMax/internet broadband segment. Both of the
competitors are diversified into less competitive segments, and have the ability to attract the customers
through promotions that package these services along with mobile services.
5.3. Marketing Efficiency
Another notable high expense is the marketing expense, which amounts to twice Mobily’s spending.
Although Zain has the most efficient marketing based on attracting new customers, Zain is much weaker
when the efficiency is based on revenue generated as was discussed earlier in this report.
Page 12 of 15
6. FUTURE OUTLOOK
The most imminent threat to Zain is the $2.6 billion loan that is due in about two months. It appears,
however, that the company will survive it and be able to refinance as it heads into the restructuring and
recapitalization. It was announced that the restructuring plan will consist of a $1.6 billion cash infusion
through a rights offering. This will help Zain to do both: pay a significant portion of the debt and to
expand the coverage network. With lower debt and better coverage, Zain is expected to have lower
interest expenses and lower access charges in its expected future cash flows.
Although we are expecting that Zain will be able to pay a portion of the debt and refinance the rest, the
debt to equity ratio remains relatively high and keeps the company under a notable default risk. So far,
Zain has been able to keep rolling over and refinancing the debt because of the lenders’ trust in the
rapidly growing telecom industry. With the high profits that STC and Mobily are generating, the banks
believe that Zain is more valuable as a going concern and that it will eventually be able to become
profitable and pay down its debt. However, Zain will have to maintain this trust by improving its
operation efficiency to ensure its long-term presence in the Saudi telecom market.
One way to do that is to improve its marketing efficiency. So far, Mobily has been the most efficient in
marketing, with STC and Zain trailing. With roughly 2 billion Saudi Riyals spent on distribution and
marketing, we think that there is a significant room for cost cutting before the company reaches
Mobily’s spending level of 1 billion Riyals. Although this can have negative effects on the market share
growth, it would improve the company’s ability to pay down its debt.
Besides marketing efficiency, Zain might consider diversifying its revenue stream by entering other less
competitive market segments, as Mobily did with the acquisition of Bayanat. This diversification would
reduce the risk of future cash flows, and might improve the profit margins due to the less competition in
the new segment. Moreover, Zain will have the ability to attract customers by combining the various
services into promotion packages.
One other action that Zain can take is to try and renegotiate the license fee, which is the prime cause
behind the consecutive losses that the company had. There might be some room for renegotiation as
the fee was almost twice what Mobily paid, even though the market was more saturated when Zain
entered. In addition to that, Zain should keep pushing the communication and information technology
commission to add more regulations and reduce the access charges that Zain has to incur as a new
entrant with significant disadvantage in infrastructure.
Page 13 of 15
Net Income 2011 2010 2009
Revenue 6,699,060 5,934,370 3,004,052
Cost of revenue (3,498,893) (3,403,922) (2,127,026)
Gross profit 3,200,167 2,530,448 877,026
Operating Expenses
Distribution and marketing (1,972,132) (1,848,666) (1,573,741)
SG&A (329,185) (351,143) (375,898)
Depreciation (1,710,328) (1,494,220) (1,394,310)
Operating Expenses (4,011,645) (3,694,029) (3,343,949)
Operating Profit (811,478) (1,163,581) (2,466,923)
Other income/(expenses
Financial Charges (1,113,856) (1,195,511) (633,742)
Commission income 138 665 1,316
Net Income (1,925,196) (2,358,427) (3,099,349)
Zain Income Statement
Page 14 of 15
2011 2010
Net loss (1,925,196) (2,358,437)
Adjustments
Provision for bad debt 76,461 159,889
Depreciation and amortization 1,710,328 1,494,220
Provision for slow moving inventory items 750 2,250
Finance Charges 1,113,856 1,195,511
Provision for employees end of service benefits 7,415 6,981
Operation income before changes in working capital 983,614 500,414
changes in working capital
accounts receivable 380,131 (623,808)
inventories (15,568) 8,373
prepaid expenses and other assets (193,179) (103,052)
accounts payable (344,621) 289,711
due to related parties 90,254 139,720
deferred revenue (16,950) 200,083
accrued expenses and other liabilities (786,365) 622,474
cash generated from operations 97,316 1,033,915
financial charges paid (183,530) (571,186)
provision for employees end of service benefits, net (1,310) (285)
Net cash (used in) from operating activities (87,524) 462,444
Investing Activities
Purchase PP&E (712,601) (284,633)
Additions to intangible assets (8,815) (24,234)
Sale of PP&E 1,727 1,217
Net cash used in investing acitivities (719,689) (307,650)
Financing Acitivities
Notes Payable 410,592 (2,152,219)
Shory-term borrowing facility (2,193,750) 2,193,750
Proceeds from long-term borrowing 2,223,529 0
Syndicated Murabaha Financing 91,945 0
Advances from shareholders 353,053 0
Net cash from financing activities 885,369 41,531
Net change in cash position 78,156 196,325
Beginning Cash 702,117 505,792
Ending Cash 780,273 702,117
Zain Statement of Cash Flow
Page 15 of 15
2011 2010 2009
Assets
Current assets
Cash 780,273 702,117 505,792
Accounts Receivable 1,006,574 1,463,166 1,007,247
Inventories 43,617 28,799 39,422
Prepaid expenses and other assets 601,706 408,527 297,475
Total Current Assets 2,432,170 2,602,609 1,849,936
Non-current Assets
PP&E 4,058,813 4,298,200 3,846,700
Intangible assets 20,252,778 21,154,628 22,133,477
Total non-current assets 24,311,591 25,452,828 25,980,177
Total assets 26,743,761 28,055,437 27,830,113
Liabilities
Current Liabilities
Notes payable 915,876 0 2,152,219
Short-term borrowing facility 0 2,193,750 0
Syndicated Murabaha Financing 9,747,638 0 0
Accounts payable 1,609,284 2,104,503 1,814,792
Due to related parties 26,673 117,294 51,365
Deferred revenue 434,392 451,342 251,259
Derivative financial instruments 45,781 0 0
Accrued expenses and other liabilities 2,731,184 2,587,223 1,964,749
Total Current Liabilities 15,510,828 7,454,112 6,234,384
Non-current liabilities
Notes payable 153,937 659,221 0
Long-term borrowing facility 2,223,529 0 0
Syndicated Murabaha financing 0 9,655,693 9,494,023
Advances from shareholders 4,018,550 3,665,497 3,468,827
Due to related parties 520,651 339,776 0
Derivative financial instruments 0 134,630 0
Provision for employee's end-of-service benefits 23,201 17,096 10,400
Total non-current liabilities 6,939,868 14,471,913 12,973,250
Total liabilities 22,450,696 21,926,025 19,207,634
Shareholders' equity
Share capital 14,000,000 14,000,000 14,000,000
Hedging reserve (45,781) (134,630) 0
Accumulated deficit (9,661,154) (7,735,958) (5,377,521)
Total shareholders' equity 4,293,065 6,129,412 8,622,479
Total liabilities and shareholders' equity 26,743,761 28,055,437 27,830,113
Zain Balance Sheet