solutions by stc issues prospectus for planned IPO

Logo of Arabian Internet and Communications Services Co. (solutions by stc)

Arabian Internet and Communications Services Co. (solutions by stc) announced today, Aug. 29, issuing the prospectus for its planned initial public offering (IPO) on the Saudi Exchange (Tadawul).

solutions by stc plans to float 20% of its share capital (or 24 million ordinary shares) in an IPO on the Saudi market.

The Capital Market Authority (CMA) approved, on June 28, the company's request to float a 20% stake.

The subscription targets two tranches:

Participating parties: This tranche comprises the parties entitled to participate in the book building process as specified under the book building instructions. The number of shares that will be allocated initially is 24 million, representing 100% of the total shares offered for subscription. Final allocation will be made after the end of the subscription period for individual investors. Lead managers will have the right to reduce the number of shares allocated to participating parties to a minimum of 21.6 million, representing 90% of the total offered shares.

Individual investors This tranche comprises Saudi Arabian natural persons, in addition to any non-Saudi natural person who is resident in the Kingdom or any GCC natural persons, provided they have a bank account with one of the receiving entities and are allowed to open an investment account. The number of shares offered for individual investors amounts to 2.40 million maximum, or 10% of total offered shares.

The price range will be set through the book building that will start on Sept. 5. All tranches are allowed to participate in the process. After completing the book building, lead managers will announce the coverage ratio.

Lead managers and the company have the right to set the offer price, based on supply and demand, provided that it does not exceed the price set in the underwriting agreement.

Company Profile
Company	Arabian Internet and Communications Services Co. (solutions by stc)
Market	The Saudi Exchange (Tadawul)
Core Activities	Information technology services for business sector
Capital	SAR 1.200 bln

IPO Summary
Issue percentage (%)	20%
Number of shares offered	24 mln
Qualified subscribers	- Participating categories that include investment funds, qualified foreign investors (QFIs), and GCC legal persons. - Individual investors
IPO minimum limit individuals	10 shares
IPO minimum limit for institutional investors	50,000 shares
IPO maximum limit for retail investors	60,000 shares
IPO maximum limit for institutional investors	5,999,999 shares
Periods of registering requests and book building	September 05 – September 13
Retail offering period (3 days)	September 19 – September 21
Final allotment	September 27, 2021
Surplus refunds	September 29, 2021

Company Shareholders
Shareholders	Before IPO		After IPO
Shareholders	Number of shares (mln)	Ownership%	Number of shares (mln)	Ownership%
stc*	116.40	97 %	94.80	79 %
Total	116.40	97%	94.80	79%

*stc owns a 97% stake directly in the company and 100% indirectly through its subsidiary, Telecom Commercial Investment Co. that owns 3% of solutions by stc before the IPO. After the subscription, stc will sell 1.20 million shares, based on the final offer price to the company, to be utilized in its employee option program.

Additional Information
Financial advisor, lead manager, underwriter and book runner	HSBC Saudi Arabia SNB Capital Morgan Stanley Saudi Arabia
Lead Manager	HSBC Saudi Arabia
Receiving banks	Saudi British Bank (SABB) Saudi National Bank (SNB) Al Rajhi Bank Riyad Bank Alinma Bank Bank Albilad

Financial Results for H1 2021

solutions by stc posted SAR 461.3 million net profit for H1 2021, an increase of 19% year-on-year (YoY) from SAR 388.1 million

Financial Results (SAR mln)
Period	H1 2020	H1 2021	Variation%
Revenue	3199.0	3804.0	+ 19%
Gross profit margin	21.0%	21.6%	+ 0.6%
Net profit	388.1	461.3	+ 19%
Number of shares (mln)	120.0	120.0	--
EPS (SAR)	3.23	3.84	+ 19%

The profit growth was driven mainly by the rise in revenue by more than 19% YoY, following the collective rise in operating segments.

Revenue by Segment (SAR mln)
Period	H1 2020	H1 2021	Variation
Systems integration	1163.8	1185.3	+ 2%
Telecommunications and Internet services	613.7	843.4	+ 36%
Outsourcing services	565.8	683.2	+ 21%
Cloud services	292.2	469.9	+ 61%
Managed services	188.5	264.9	+ 41%
Cyber security	239.3	216.1	(10%)
Digital services	135.8	141.0	+ 4%

The table below illustrates the company's sales and net profit since 2017.

Income Statement (SAR mln)
Period	2017	2018	2019	2020
Sales	2962.3	4041.3	5257.3	6891.4
Net profit	549.9	556.5	393.8	701.8
Number of shares (mln)	120.0	120.0	120.0	120.0
EPS (SAR)	4.58	4.64	3.28	5.85

The table below illustrates key items of the company's balance sheet since 2017.

Balance Sheet (SAR mln)
Period	2017	2018	2019	2020	June 2021
Cash and cash equivalents	595.8	892.4	414.3	993.5	888.4
Current assets	3432.1	4261.2	4523.3	5571.0	5324.5
Non-current assets	75.9	188.8	354.1	763.6	782.5
Total assets	3508.0	4450.0	4877.4	6334.6	6107.0
Current liabilities	2017.6	2658.9	3377.3	4068.1	3777.6
Non-current liabilities	92.3	125.8	243.3	342.9	264.4
Total liabilities	2109.9	2784.7	3620.6	4411.1	4042.0
Capital	100.0	100.0	100.0	1200.0	1200.0
Shareholders’ equity	1398.1	1665.4	1256.8	1923.6	2065.0

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