Orange Jordan tables JD62.5m capital reduction to shareholders

AMMAN —  Shareholders of Jordan Telecom Group (JTG) will be asked next month to vote on a JD62.5 million capital reduction proposed by the board of directors.

JTG, operating under Orange Jordan brand name, last week informed the Jordan Securities Commission in a disclosure that the board decided on October 29, 2015 to restructure the company's capital and that it called on shareholders to attend an extraordinary general assembly meeting on December 10, 2015.

"The board is recommending a reduction in capital from JD250  million to JD187.5 million because the difference is an amount in excess of the company's needs," the disclosure said.

Separately, the interim consolidated income statement as of September 30, 2015 showed that Orange Jordan generated JD13 million profit during the first nine months of this year, a sharp drop from the JD31.1 million recorded during the same period of last year.

The acute fall by 58.2 per cent was due to lower earnings and a decline in operational profit, and pretax profit.

According to the income statement, net earnings from services during the first nine months of 2015 were down by 4.1 per cent to JD249.4 million (JD260.1 million during January-September 2014). 

A breakdown of the 2015 net earnings that appeared in the notes accompanying the financial statements revealed that JD105.5 million were derived from mobile communication services (JD111.2 million in 2014), JD104.5 million from fixed lines (JD112.8 million), and JD39.4 million from data services (JD36 million).

The regression in earnings reflected negatively on the gross profit which fell to JD134.6 million (JD137.5 million).

Depreciation, amortisation, financing costs, tax, and  impairment loss  further reduced the operational profit to JD75.4 million (JD77.1 million).

The pretax profit boiled down to JD22.3 million  (JD43.3 million) mainly because of an impairment loss and an increase in depreciation and amortisation noting also that net income from foreign exchange differences was lower as was the finance proceeds.

After taking into account the JD9.3 million income tax (JD12.6 million), the profit after tax stood at JD13 million (JD31.1 million).

The notes showed that the government's share of JTG's earnings was JD6.1 million (JD6.6 million) and that the company paid JD5.3 million as expenses related to the business support agreement and the trademark fees. 

"JTG bought property and equipment worth JD46.7 million during the nine months ending September 2015," the notes indicated, mentioning in this regard that purchases worth JD26.7 million were also procured during the same period of 2014.

As the company was unable to precisely determine the impairment loss resulting from the equipment being replaced with fourth generation services 4G, a JD9.8 million charge was applied. 

The notes disclosed that, as of September 30, 2015, commitments related to major projects carried JD22.3 million in outstanding capital expenditure on  expanding and developing communication networks.

As per the balance sheet at the end of September 2015, JTG's assets totaled JD563.7 million, mostly in mobile communications whose assets amounted to JD315.5 million. Those concerning fixed lines added up to JD196.8 million and assets related to data services were JD51.4 million.

Of the total, JD205.8 million were current assets, the largest item of which was receivables which amounted to JD89.8 million, followed by JD86.6 million in cash and short term deposits. JD23.9 million were amounts due from operators of telecom networks.

Fixed assets totaled JD357.9 million, the largest item of which was JD194.7 million of property and equipment and the other JD161.5 million were listed as intangibles.

Most of the property and equipment was allocated to mobile communications which accounted for JD95.7 million followed by JD94.7 million for the fixed lines and JD4.3 million for the data services. 

Intangibles were highest at the mobile communications with JD140.8 million, followed by JD14.8 million at the fixed lines and JD5.8 million at the data services.

Liabilities totaled JD238.1 million, JD120.6 million of which were related to fixed lines.  Mobile communications and data services  followed with JD107.9 million and JD9.5 million of liabilities respectively.

Of the total, JD3.7 million were long term loans and JD0.4 million was  another liability as the short term portion of the loans.

Other payables were listed in the balance sheet as JD168.7 million besides JD65 million due to operators of telecom networks.

JTG's equity included JD62.5 million in mandatory reserves and JD13.1 million in retained earnings.

The company distributed JD32 million in cash dividends to shareholders this year at a rate of 16.8 per cent.