MOST SIGNIFICANT FINANCIAL INDICATORS
Eesti Telekom Group
--------------------------------------------------------------------------------
| | Q2 | Q2 | Change | HY1 | HY1 | Change |
| | 2007 | 2006 | % | 2007 | 2006 | % |
--------------------------------------------------------------------------------
| Total revenues, | 1,582 | 1,426 | 11.0 | 3,079 | 2,753 | 11.9 |
| million EEK | | | | | | |
--------------------------------------------------------------------------------
| EBITDA, million EEK | 590 | 582 | 1.4 | 1,133 | 1,103 | 2.7 |
--------------------------------------------------------------------------------
| Margin, % | 37.4 | 40.8 | | 36.8 | 40.0 | |
--------------------------------------------------------------------------------
| EBIT, million EEK | 467 | 449 | 4.1 | 892 | 800 | 11.5 |
--------------------------------------------------------------------------------
| Margin, % | 29.6 | 31.5 | | 29.0 | 29.1 | |
--------------------------------------------------------------------------------
| EBT, million EEK | 479 | 462 | 3.7 | 919 | 824 | 11.6 |
--------------------------------------------------------------------------------
| Net profit for the | 108 | 89 | 22.0 | 548 | 450 | 21.7 |
| period, million EEK | | | | | | |
--------------------------------------------------------------------------------
| EPS, EEK | 0.77 | 0.64 | 20.3 | 3.95 | 3.26 | 21.0 |
--------------------------------------------------------------------------------
| CAPEX, million EEK | 184 | 227 | -18.9 | 302 | 356 | -15.4 |
--------------------------------------------------------------------------------
| Net gearing, % | -23.3 | -33.1 | | | | |
--------------------------------------------------------------------------------
| ROA, % | 30.7 | 26.2 | | | | |
--------------------------------------------------------------------------------
| ROE, % | 46.8 | 40.9 | | | | |
--------------------------------------------------------------------------------
EMT Group (mobile communications)
--------------------------------------------------------------------------------
| | Q2 | Q2 | Change | HY1 | HY1 | Change |
| | 2007 | 2006 | % | 2007 | 2006 | % |
--------------------------------------------------------------------------------
| Total revenues, | 1,001 | 884 | 13.3 | 1,864 | 1,638 | 13.8 |
| million EEK | | | | | | |
--------------------------------------------------------------------------------
| EBITDA, million EEK | 376 | 332 | 13.2 | 706 | 641 | 10.2 |
--------------------------------------------------------------------------------
| Margin, % | 37.6 | 37.6 | | 37.9 | 39.1 | |
--------------------------------------------------------------------------------
| EBIT, million EEK | 322 | 269 | 19.5 | 600 | 499 | 20.3 |
--------------------------------------------------------------------------------
| Margin, % | 32.1 | 30.5 | | 32.2 | 30.5 | |
--------------------------------------------------------------------------------
| EBT, million EEK | 325 | 274 | 18.9 | 612 | 506 | 20.8 |
--------------------------------------------------------------------------------
| Net profit for the | 76 | 20 | 280.8 | 362 | 252 | 43.5 |
| period, million EEK | | | | | | |
--------------------------------------------------------------------------------
| CAPEX, million EEK | 79 | 45 | 76.7 | 128 | 106 | 20.1 |
--------------------------------------------------------------------------------
| ROA, % | 52.4 | 40.5 | | | | |
--------------------------------------------------------------------------------
| ROE, % | 91.3 | 71.9 | | | | |
--------------------------------------------------------------------------------
Elion Group (broadband and IT services)
--------------------------------------------------------------------------------
| | Q2 | Q2 | Change | HY1 | HY1 | Change |
| | 2007 | 2006 | % | 2007 | 2006 | % |
--------------------------------------------------------------------------------
| Total revenues, | 782 | 716 | 9.3 | 1,561 | 1,401 | 11.5 |
| million EEK | | | | | | |
--------------------------------------------------------------------------------
| EBITDA, million EEK | 222 | 256 | -13.4 | 439 | 475 | -7.5 |
--------------------------------------------------------------------------------
| Margin, % | 28.4 | 35.8 | | 28.1 | 33.9 | |
--------------------------------------------------------------------------------
| EBIT, million EEK | 154 | 186 | -17.5 | 304 | 314 | -3.0 |
--------------------------------------------------------------------------------
| Margin, % | 19.6 | 26.0 | | 19.5 | 22.4 | |
--------------------------------------------------------------------------------
| EBT, million EEK | 156 | 190 | -18.2 | 308 | 321 | -4.1 |
--------------------------------------------------------------------------------
| Net profit for the | 34 | 71 | -51.5 | 186 | 202 | -7.5 |
| period, million EEK | | | | | | |
--------------------------------------------------------------------------------
| CAPEX, million EEK | 105 | 182 | -42.3 | 174 | 251 | -30.9 |
--------------------------------------------------------------------------------
| ROA, % | 17.8 | 20.9 | | | | |
--------------------------------------------------------------------------------
| ROE, % | 30.3 | 31.7 | | | | |
--------------------------------------------------------------------------------
CHAIRMAN'S STATEMENT
Sales revenues, operating costs, and profit
A rapid increase in the sales revenues of the Eesti Telekom Group continued in
the second quarter of 2007. Compared to the same period of 2006, the
consolidated sales revenues increased 11%, reaching 1,582 million EEK. Rapid
growth was demonstrated by the revenues of both mobile communications and fixed
communications. Growth was also demonstrated by EBIDTA. Upon the elimination of
the 43-million-kroon profit earned in the second quarter of 2006 from the sale
of real estate, the growth in the second quarter of this year exceeded 9%.
The consolidated turnover of the EMT Group reached 1,001 million EEK, increasing
13% compared to the same period of 2006. The principal part of the supplemental
sales revenues was generated by the Group's principal activities. The turnover
of the Group's parent company, AS EMT, increased by 12% compared to the second
quarter of 2006, reaching 840 million EEK. The increase in the revenues for
principal activities was primarily caused by the growth of the number of call
minutes initiated from and entering the EMT network.
The growth of the number of call minutes initiated from the EMT network is a
result of an increased client base, as well as the more active mobile calling by
the customers. Compared to the end of the second quarter of 2006, the AS EMT
client base was 9% larger at the end of June of this year, reaching 746 thousand
active SIM cards (June 2006: 686 thousand cards). In one year, the number of
users of both contractual and pre-paid cards has increased. The number of
active contractual SIM cards at the end of June was 450 thousand, which is 24
thousand more than at the end of June 2006. At the end of the second quarter,
the number of pre-paid SIM cards was 296 thousand, which is 36 thousand more
than the previous year. EMT assesses its market share of active SIM cards to be
48%. The penetration of active cards in Estonia is 116%.
The growth of call minutes initiated by EMT clients exceeded the increase in
the client base, reaching 19% in the second quarter of 2007 compared to the same
period in 2006. In the second quarter, a 7% average increase per client was
demonstrated in initiated call minutes compared to last year. A strong, more
than 10% increase was also demonstrated by the call minutes terminating the EMT
network. According to the regulation of the Communications Board of 23 March
2006, regarding the declaration of the operators as undertakings with
significant market power in the market of terminating voice calls, a successive
reduction in the termination fees of mobile operators was to take place on 1
July 2007, in order to align the rates with the levels in the European countries
with the lowest rates. Since both Tele2 Eesti AS and Elisa Eesti AS have
disputed the resolution of the Communications Board, and the court dispute is
continuing, the termination fees of all three mobile operators remained at 2.50
EEK per minute, and in the EMT network, the increase in terminated minutes was
accompanied by a similar rate of increase for interconnection revenues.
Very rapid growth continued to be demonstrated by AS EMT revenues for messaging
services and mobile Internet. In the second quarter of this year, the number of
SMSs sent exceeded the indicator for the same period of 2006 by almost 50%. The
number of MMSs has increased by 16%. The number of users of AS EMT mobile data
communications increased to 142 thousand by the end of June 2007. The rapid
growth of the popularity of mobile data communications was driven by the
introduction of new minimum-invoice data communications packages in June, which
provide the client quality and rapid data communications at conveniently
controllable costs. The clients can choose from packages with monthly fees of 99
EEK, 199 EEK, and 399 EEK, which include data volumes of 30MB, 500MB or 3GB per
month.
The increase in the ratio of packages with fixed minimum monthly fees has caused
the increase in revenues earned from monthly fees. In the second quarter of this
year, the revenues earned from monthly fees exceeded the revenues earned in the
same period in 2006 by 11%.
Of the principal fields of activity, the revenues from roaming fees continued to
decline. The revenues from roaming services decreased by 13% compared to the
second quarter of 2006. The ratio of revenues for roaming services in the total
turnover of AS EMT has fallen below 5%. A regulation applies to AS EMT, as it
does to other mobile operators in the European Union, which specifies that
starting in September 2007, the rate per minute for outgoing calls made within
the borders of the European Union cannot exceed 9.05 EEK per minute and the rate
for incoming calls cannot exceed 4.43 EEK per minute. Since compared to the
total turnover of AS EMT, the revenues from roaming services have decreased to a
relatively low level the company assesses the effect of the regulation on its
2007 profit to be insignificant.
The EMT Group revenues for the retailing and wholesaling of telecommunications
merchandise increased in the second quarter of 2007 compared to the same period
in 2006 by almost 15% due to an expanded range of merchandise.
The sales revenues of the Elion Group increased by 9% in the second quarter,
reaching 782 million EEK. Of the revenues for broadband services, the fastest
growth was demonstrated by revenues from connection fees, which grew by 19%
compared to the second quarter of 2006.
In the case of connection fees, the trend whereby the clients replaced
individual services with service packages continued. Thereby, the number of
users of the Elion triple package increased by 6,586 in the last quarter,
reaching 36.4 thousand as of June 30th (30 June 2006: 8.8 thousand). The
popularity of the triple package has also been helped by the range of additional
services. In the second quarter of this year, Elion was the first in Estonia to
offer remote video rental. Via DigiTV, customers can choose from approximately
100 foreign and Estonian films or karaoke videos without leaving their homes.
The selection is constantly being improved. In the second quarter, DigiTV
started transmitting to business clients. The business client service allows for
the reception of quality digital TV reception in offices, as well as small
service and lodging establishments. In addition to the triple package, the
number of Kodulahendus clients, who are provided with two products—telephone and
permanent Internet connections—continued to increase, since the demand for new
permanent Internet connections is increasing primarily among private
individuals. By the end of June 2007, the total number of Elion permanent
connection customers increased to 152 thousand (30 June 2006: 119 thousand) and
the company assesses its market share of permanent connection customers to be
54%. In cooperation with its affiliate, AS EMT, an updated Ühislahendus reached
the customers at the beginning of July, which provides business clients both
telephone and mobile services, an Internet connection and a large number of
other communications services, for a uniform monthly fee. The Elion Group
revenues from the monthly fees for service packages increased by 66% in the
second quarter of this year compared to the same period in 2006. Unfortunately,
the increase of revenues from service packages was accompanied by a decrease in
the monthly fees for call connections and Internet connections by 12% and 16%
respectively.
The Elion Group revenues from IT services for non-group clients increased by 2%
compared to the second quarter of 2006. Compared to the very strong sales
revenues in the second quarter of 2006, as well as the results of the first
quarter of this year, the results for the second quarter were modest. The
revenues for IT services depend to a significant degree on income form large
projects and client contracts that are not distributed evenly among quarters.
During the second quarter of 2007, the Group's IT service provider, AS MicroLink
Eesti, concluded several important contracts that will generate revenues in the
future. Thus, on May 18th, a contract was signed with the Ministry of Social
Affairs, based on which AS MicroLink Eesti will start working on the solution
for the IT digi-prescription service that will become operational throughout
Estonia on 1 January 2009. The operational system must be delivered to the
client in June 2008. The contract with the Unemployment Insurance Fund to host
their server was renewed for four more years. In the second quarter, a
supplemental contract was also signed with the shipping company SuperSeaCat OÜ
for the administration of computer workstations, which will result in MicroLink,
along with Elion Enterprises, providing the shipping company with a broad range
of communications and IT services, as a strategic business partner.
The revenues earned from Elion Group call minutes decreased in the second
quarter by 1% compared to the same period in 2006. Fees from interconnection
services increased, while the revenues earned from end consumers decreased by
8%.
Elion assesses its market share for call minutes initiated in the fixed network
to be 82% (June 2006: 85%). The market share for local call minutes is 84% (June
2006: 85%), 65% for international call minutes
(June 2006: 66%), 69% for call
minutes made to mobile phones (June 2006: 71%), and 97% for internal calling
minutes (June 2006: 96%).
In the second quarter, the Communications Board completed the latest analysis of
the market segments, which for Elion Enterprises, as the company with the
largest market share in the fixed market, again meant several designations as an
undertaking with significant market power.
On April 20th, Elion Enterprises was declared an undertaking with significant
market power in the copper pair wholesale market and broadband access market by
a resolution of the Director General of the Communications Board. The
Communications Board is establishing in the above mentioned markets for Elion
Enterprises a transparency obligation, a non-discrimination obligation, access
obligation, and price controls and cost accounting obligation. Elion Enterprises
must fulfill these obligations starting on
1 September 2007.
The Communications Board also declared Elion Enterprises an undertaking with
significant market power in the markets for the initiation of calls from a
specific location and the termination of calls from specific location. The
Communications Board is establishing a transparency obligation,
non-discrimination obligation, access obligation, and an obligation for
accounting separation, price controls, and cost accounting for Elion Enterprises
in the given markets.
Elion has taken the given resolutions into consideration in the preparation of
its financial projections and does not anticipate that the financial results for
future periods will suffer significant negative impact.
The revenues of the Elion Group retail network from the retail sales of
telecommunications and IT merchandise increased by 47% in the second quarter of
2007 compared to the second quarter of 2006.
Eesti Telekom Group operating costs increased by 12% in the second quarter,
reaching 994 million EEK
(2nd quarter: 888 million EEK).
The EMT Group operating costs increased by 13% in the second quarter of 2006,
reaching 626 million EEK (2nd quarter of 2006: 553 million EEK). The principal
part of the supplemental operating costs is related to the Group's primary
activity, in which the operating costs were 11% higher than in the second
quarter of 2006. The increase of the principal activity costs are related to two
basic cost categories—interconnection costs, the growth of which is caused by an
increase in the number of call minutes made to other networks and of roaming
costs, which are related to active travel by customers and their use of mobile
phones outside of Estonia. In the second quarter, the rapid increase in salary
costs continued, sustained by the strong salary pressure in the economy as a
whole. Compared to the second quarter of 2006, the expenses related to GSM
licenses were significantly lower this year. As opposed to previous quarters, a
positive result in the second quarter was the slower rate of growth for the
operating costs related to the EMT Group's principal activity as compared to the
turnover growth rate. The operating costs related to retail and wholesale trade
increased approximately as much as the sales turnover.
The operating costs of the Elion Group increased by 11% in the second quarter,
reaching 561 million EEK (2nd quarter 2006: 503 million EEK). The principal part
of the increase in operating costs is related to the rapid growth of retail
trade turnover. Increased personnel costs contributed significantly to the
increase of operating costs. The salary increase has been especially noticeable
among the IT specialists at MicroLink Eesti. In case of the Elion Group, the
third growth factor in operating costs for the last quarter was the increase in
the costs for international call transit services.
In the second quarter of 2007, the Eesti Telekom Group EBITDA was 590 million
EEK, which is 1% more than the second quarter of 2006 (2nd quarter 2006: 582
million EEK). At the same time, the result for the second quarter of 2006
included a 43-million-kroon profit, which Elion Enterprises earned from the sale
of
real estate. If this one-time revenue were deducted from EBITDA in the
second quarter of 2006, the given indicator for this year would demonstrate an
increase of 9%. Very strong EBITDA was demonstrated in the second quarter by the
EMT Group—the results of the same period in 2006 were exceeded by 13%. The Elion
Group EBITDA increased by 4% (if the profit from the sale of real estate is
deducted from the 2006 results). In the second quarter of 2007, the EBITDA
margin was 37.3%, which is slightly lower than the margin for the corresponding
period in 2006. The main reason for the lower margin is fast growth in the low
margin areas, first of all in the area of retail sales of equipment.
In the second quarter of 2007, the Group's depreciation cost reached 123 million
EEK, decreasing 8% compared to the same period in 2006. The reduction in
depreciation costs halted abruptly in the last quarter, since as of May, the
effect of the implementation of new useful life spans for fixed assets no longer
affected depreciation cost (new useful life spans were applied on 1 May 2006,
and the longer life spans in the case of several fixed asset groups caused a
reduction in depreciation costs from May 2006 until April 2007, compared to the
same periods in the previous year). At the same time, based on extensive
investments in 2006, the fixed assets have increased, accompanied by an increase
in depreciation costs.
In the second quarter of 2007, the Eesti Telekom Group earned an operating
profit of 468 million EEK, which is 4% more than the second quarter of 2006 (2nd
quarter 2006: 448 million EEK). The Group's (net) financial revenues in the
second quarter were 14 million EEK (2nd quarter 2006: 11 million EEK). In the
second quarter, the Eesti Telekom Group earned EBT of 479 million EEK (2nd
quarter 2006: 462 million EEK).
On 19 June of this year, AS Eesti Telekom again paid its shareholders of record
dividend of 1,311 million EEK. To enable the payment of the dividend to the
shareholders of AS Eesti Telekom, a dividend of
885 million EEK was paid to the
parent company by AS EMT (2nd quarter 2006: 850 million EEK) and one of 430
million EEK by Elion Enterprises (2nd quarter 2006: 400 million EEK). The
payment of the dividend was accompanied by a dividend income tax cost of 371
million EEK (2nd quarter 2006: 373 million EEK), of which 250 million EEK was
paid by AS EMT (2nd quarter 2006: 254 million EEK) and 121 million EEK by Elion
Enterprises (2nd quarter 2006: 119 million EEK).
In the second quarter of 2007, the Eesti Telekom Group earned a net profit of
108 million EEK (2nd quarter 2006: 89 million EEK). A net profit per share of
0.77 EEK was earned (2nd quarter 2006: 0.64 EEK).
Balance sheet and cash flows
As of 30 June 2007, the Eesti Telekom Group balance sheet was 4,392 million EEK
(31 December 2006: 4,812 million EEK). Compared to the beginning of the year,
fixed assets worth 58 million EEK were accrued, thereby bring the depreciated
value to 2,453 million EEK at the end of the second quarter. The accrual of the
fixed assets was based primarily on investments of the Group's companies. The
Group's current assets during the first half of the year decreased by 478
million EEK, reaching 1,939 million EEK (31 December 2006: 2,417 million EEK) by
the end of June. The balance of cash and cash equivalents as well as financial
investments have decreased by 604 million EEK in connection with the dividend
paid out in June.
As of 30 June 2007, Eesti Telekom Group equity totaled 3,351 million EEK, which
is 762 million EEK less than at the end of 2006 (31 December 2006: 4113 million
EEK). The reduction of equity is related to the payment of dividends totaling
1,311 million EEK. At the same time, the equity had been increased in the first
half of 2007 by a 548-million-kroon net profit. As of the end of June, the
long-term liabilities of the Group totaled 31 million EEK (31 December 2006: 38
million EEK) and the short-term debt obligations totaled 1,010 million EEK (31
December 2006: 660 million EEK). The growth of the short-term debt results from
the 371-million-kroon income tax liability that is to be paid in July.
The net debt of the Eesti Telekom Group at the end of the second quarter was
-780 million EEK and the net debt to equity ratio was -23% (31 December 2006:
-1383 million EEK and -34%).
The Eesti Telekom Group cash flow from operations in the first half of 2007 was
1,010million EEK (first half of 2006: 1054 million EEK). The Group's cash flow
from investments was 666 million EEK (first half of
2006: 388 million EEK).
This year, the principal part of the cash flow from investments in the first
half of this year came from short-term financial investments as it did in 2006.
The cash flow into tangible and intangible fixed assets in the first half of the
year was 301 million EEK (first half of 2006: 356 million EEK). During the six
months of this year, the EMT Group has invested 128 million EEK (6 months of
2006:
106 million EEK). The primary area for investment is mobile data
communications - the expansion of the EDGE network to cover the entire territory
of Estonia by the end of the year, and the expansion of 3G and 3.5G into new
areas of Estonia. During the last quarter, the super-high-speed mobile Internet
reached two new towns—Haapsalu and Rakvere. Previously, 3G and 3.5G had covered
Tallinn, Tartu, Pärnu, Kuressaare, Narva, and Viljandi and their immediate
vicinities. The development of the Mobile-ID service was completed in the second
quarter. Mobile-ID is a means of mobile authentication worked out in cooperation
with the Certification Center, an associated company of the Eesti Telekom Group
that is essentially a further development of the ID-card. Mobile-ID facilitates
the convenient and secure identification of people without the necessity of
having a special card reader. Since people carry mobile phones with them all the
time, this provides greater flexibility in conducting Internet transactions that
require the identification of people and providing digital signatures. Mobile-ID
encourages the use of e-services that require great security, such as e-banking
and the e-tax office, making it possible to execute from public Internet points,
and when one spending time abroad. Cooperation has already started with Latvia
and Lithuania to develop Mobile-ID into a personal identification and digital
signature service that unites the three Baltic countries, and is based on a
uniform technical standard. During the first half of the year, the investments
of the Elion Group reached
174 million EEK (6 months of 2006: 251 million EEK).
The principal part of the investments continues to be directed into improving
permanent Internet connections and the availability of DigiTV. In May, a
frequency permit for the expansion of the network of WiMax base stations
throughout Estonia was issued to Elion by the Communications Boards, thereby
expanding the opportunities for sparsely populated rural areas to access rapid
permanent Internet connections. Elion is planning to intensify the network of
wireless WiMax permanent connections in 8 counties already this year, thereby
enabling more than 2,000 clients, who live outside DSL coverage areas to get
permanent Internet connections. During the first six months of the year,
25
million EEK has been invested by MicroLink Eesti (6 months of 2006: 27 million
EEK). Currently, the company's IT-maintenance services cover 95% of the
territory of Estonia. In the second quarter, MicroLink Eesti installed the
cornerstone for its new, 10-story headquarters, which will be erected in the
heart of Tallinn's new innovation center. The cost of the construction is
planned at 120 million EEK.
In the first half of the year, the cash flow into Eesti Telekom Group financing
activities totaled 1,311 million EEK, of which 1,311 million EEK was used to pay
dividends (1,242 million EEK and 1,243 million EEK, respectively in the first
half of 2006).
Ownership structure of AS Eesti Telekom
In the second quarter of 2007, the majority shareholder, TeliaSonera AB (through
its subsidiary Baltic Tele AB) increased its share in AS Eesti Telekom.
TeliaSonera acquired an additional 6,353,820 AS Eesti Telekom shares, thereby
increasing its participation to 58.33%.
During the second quarter, the resolution of the Government of the Republic to
transfer of some its shares in AS Eesti Telekom to the share capital of the
Estonian Development Fund was carried out. The Estonian Development Fund is a
public organization that invests in start-up technology companies and conducts
monitoring of socio-economic and technological developments. In June 2007, the
Government of the Republic transferred 4,138,636 AS Eesti Telekom shares to the
Development Fund. The Development Fund may use the resources received from
dividends or from the sale of the shares for investment activities. In order to
conduct transactions with AS Eesti Telekom shares, the Development Fund needs
the approval of the Ministry of Finance.
The increase in the participation of TeliaSonera reduced the ratio of freely
traded shares (shares that do not belong to TeliaSonera AB, the Estonian state,
or the Development Fund). As of the end of the second quarter, the ratio of
freely traded shares is 14.50% of the total number of shares. Compared to the
beginning of the
year, the number of shares traded on the London Stock
Exchange has decreased by almost 9 million. The ratio of freely traded shares
converted to GDRs was 18% by the end of the second quarter.
As of 4 July 2007, the 10 largest shareholders in AS Eesti Telekom were:
--------------------------------------------------------------------------------
| | Number of | Participation |
| | securities | |
--------------------------------------------------------------------------------
| Baltic Tele AB | 80,463,899 | 58.3264% |
--------------------------------------------------------------------------------
| Ministry of Finance / State Treasury | 33,346,464 | 24.1721% |
--------------------------------------------------------------------------------
| Estonian Development Fund | 4,138,636 | 3.0000% |
--------------------------------------------------------------------------------
| Deutsche Bank Trust Company (GDR | 3,676,668 | 2.6651% |
| accounts) | | |
--------------------------------------------------------------------------------
| Skandinaviska Enskilda Banken AB | 2,448,640 | 1.7750% |
| clients | | |
--------------------------------------------------------------------------------
| Danske Bank clients | 1,377,091 | 0.9982% |
--------------------------------------------------------------------------------
| ING Luxembourg S.A. | 1,285,330 | 0.9317% |
--------------------------------------------------------------------------------
| Morgan Stanley Co International Equity | 1,198,900 | 0.8691% |
| clients | | |
--------------------------------------------------------------------------------
| Bank Austria Creditanstalt AG clients | 959,098 | 0.6952% |
--------------------------------------------------------------------------------
| ABN Amro Bank | 591,755 | 0.4289% |
--------------------------------------------------------------------------------
Shareholders' general meeting
The regular general meeting of AS Eesti Telekom shareholders took place on 22
May 2007. The general meeting approved the 2006 financial statement and proposal
for the distribution of profits. For the last financial year, dividends of 9.50
EEK per share, or a total of 1,311 million EEK, were paid to AS Eesti Telekom
shareholders. The dividends were paid on 19 June 2007 on the basis of the list
of shareholders that was fixed as of 12:59 pm on 8. June 2007. Accumulated
profits of 924 million EEK were not distributed.
The general meeting made four amendments to the company's articles of
association in order to bring it into compliance with the amendments to the
Commercial Code and to facilitate the management of the company. The updated
articles of association are available for review on the AS Eesti Telekom website
at www.telekom.ee.
The buyback option for AS Eesti Telekom shares was extended for another year,
i.e. until 22 May 2008.
The general meeting recalled the current members of the AS Eesti Telekom
Supervisory Board and elected new members: Terje Christoffersen, Anders Gylder,
Jörgen Latte, Tarmo Porgand, Mats Salomonsson, Aare Tark and Jüri Raatma. The
members of the Supervisory Board can be paid 9,000 EEK per month for their work,
and the chairman of the Supervisory Board can be paid 20,000 EEK per month.
The general meeting chose AS PricewaterhouseCoopers (reg. code 10142876) to be
the AS Eesti Telekom auditor for the 2007 financial year. The execution of
auditing services and the payment for the services will take place based on a
contract concluded with the auditors.
New structure of the Eesti Telekom Group
On 5 December 2006, the AS Eesti Telekom Supervisory Board resolved that the
Chairman of AS Eesti Telekom, Jaan Männik, would resign his position on 22 May
2007. At the same time it was resolved to appoint Valdo Kalm, the Chairman of
AS EMT, will become the new Chairman of AS Eesti Telekom. Valdo Kalm's
authorization started on 23 May 2007. Valdo Kalm will continue in his former
position as Chairman of AS EMT.
On 1 July 2007, the AS Eesti Telekom Management Board was expanded to include
the following people: Leho Tamm, Financial Director and Member of the Board who
will continue in his former position as AS EMT Financial Director; Valdur Laid,
Member of the Board, who will continue in his former position as Chairman of
Elion Enterprises; Enn Saar, Member of the Board, who will continue in his
former position as the Chairman of AS MicroLink Eesti. Hille Võrk, the former
Member of the Board and Financial Director, resigned on 30 June 2007.
As of 1 July 2007, AS MicroLink Eesti AS is a direct 100% subsidiary of Eesti
Telekom. AS Eesti Telekom bought AS MicroLink Eesti from AS Microlink, which is
a 100% subsidiary of Elion Enterprises. The holding company, AS MicroLink, has
decided to merge with Elion Enterprises.
The purpose of the given changes is to improve the client service of the Eesti
Telekom Group and make the cooperation between the Group's companies more
effective.
II QUARTER CONSOLIDATED INCOME STATEMENT
In thousand of Estonian kroons (EEK)
--------------------------------------------------------------------------------
| | II Quarter | II Quarter |
| | 2007 | 2006 |
--------------------------------------------------------------------------------
| Net sales | 1,582,417 | 1,425,802 |
--------------------------------------------------------------------------------
| Cost of production | (870,081) | (780,481) |
--------------------------------------------------------------------------------
| Gross profit | 712,336 | 645,321 |
--------------------------------------------------------------------------------
| Sales, administrative, and research & | (246,647) | (240,773) |
| development expenses | | |
--------------------------------------------------------------------------------
| Other operating revenues | 3,137 | 48,272 |
--------------------------------------------------------------------------------
| Other operating expenses | (1,276) | (3,575) |
--------------------------------------------------------------------------------
| Operating profit | 467,550 | 449,245 |
--------------------------------------------------------------------------------
| Finance income | 13,923 | 11,845 |
--------------------------------------------------------------------------------
| Finance costs | (218) | (514) |
--------------------------------------------------------------------------------
| Finance income, net | 13,705 | 11,331 |
--------------------------------------------------------------------------------
| Net income / (expenses) from associated | (2,012) | 1,629 |
| companies | | |
--------------------------------------------------------------------------------
| Profit before tax | 479,243 | 462,205 |
--------------------------------------------------------------------------------
| Income tax on dividends | (370,897) | (373,377) |
--------------------------------------------------------------------------------
| Net profit for the period | 108,346 | 88,828 |
--------------------------------------------------------------------------------
| Attributable to: | | |
--------------------------------------------------------------------------------
| Equity holders of the parent | 106,863 | 88,828 |
--------------------------------------------------------------------------------
| Minority interest | 1,483 | - |
--------------------------------------------------------------------------------
| | 108,346 | 88,828 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per share for profit attributable | | |
| to the equity holders of the parent during | | |
| the reporting period (expressed in EEK) | | |
--------------------------------------------------------------------------------
| Basic earnings per share | 0.77 | 0.64 |
--------------------------------------------------------------------------------
| Diluted earnings per share | 0.77 | 0.64 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EBITDA | 590,446 | 582,371 |
--------------------------------------------------------------------------------
| Depreciation, amortization and write-downs | (122,896) | (133,126) |
--------------------------------------------------------------------------------
I HALF YEAR CONSOLIDATED INCOME STATEMENT
In thousand of Estonian kroons (EEK)
--------------------------------------------------------------------------------
| | I HY 2007 | I HY 2006 | 2006 |
--------------------------------------------------------------------------------
| Net sales | 3,078,935 | 2,752,777 | 5,767,734 |
--------------------------------------------------------------------------------
| Cost of production | (1,721,262) | (1,535,601) | (3,260,113) |
--------------------------------------------------------------------------------
| Gross profit | 1,357,673 | 1,217,176 | 2,507,621 |
--------------------------------------------------------------------------------
| Sales, administrative, and | (469,611) | (465,544) | (908,854) |
| research & development expenses | | | |
--------------------------------------------------------------------------------
| Other operating revenues | 6,264 | 54,095 | 53,011 |
--------------------------------------------------------------------------------
| Other operating expenses | (2,332) | (5,613) | (5,405) |
--------------------------------------------------------------------------------
| Operating profit | 891,994 | 800,114 | 1,646,373 |
--------------------------------------------------------------------------------
| Finance income | 29,576 | 23,354 | 42,768 |
--------------------------------------------------------------------------------
| Finance costs | (768) | (1,402) | (1,950) |
--------------------------------------------------------------------------------
| Finance income, net | 28,808 | 21,952 | 40,818 |
--------------------------------------------------------------------------------
| Net income / (expenses) from | (1,809) | 1,539 | 193 |
| associated companies | | | |
--------------------------------------------------------------------------------
| Profit before tax | 918,993 | 823,605 | 1,687,384 |
--------------------------------------------------------------------------------
| Income tax on dividends | (370,897) | (373,377) | (373,377) |
--------------------------------------------------------------------------------
| Net profit for the period | 548,096 | 450,228 | 1,314,007 |
--------------------------------------------------------------------------------
| Attributable to: | | | |
--------------------------------------------------------------------------------
| Equity holders of the parent | 544,932 | 450,228 | 1,309,443 |
--------------------------------------------------------------------------------
| Minority interest | 3,164 | - | 4,564 |
--------------------------------------------------------------------------------
| | 548,096 | 450,228 | 1,314,007 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per share for profit | | | |
| attributable to the equity holders | | | |
| of the parent during the reporting | | | |
| period (expressed in EEK) | | | |
--------------------------------------------------------------------------------
| Basic earnings per share | 3.95 | 3.26 | 9.49 |
--------------------------------------------------------------------------------
| Diluted earnings per share | 3.95 | 3.26 | 9.49 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EBITDA | 1,132,528 | 1,103,005 | 2.194.709 |
--------------------------------------------------------------------------------
| Depreciation, amortization and | (240,534) | (302,891) | (548.336) |
| write-downs | | | |
--------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET
In thousand of Estonian kroons (EEK)
--------------------------------------------------------------------------------
| | 30 June | 31 December | 30 June |
| | 2007 | 2006 | 2006 |
--------------------------------------------------------------------------------
| ASSETS | | | |
--------------------------------------------------------------------------------
| Non-current assets | | | |
--------------------------------------------------------------------------------
| Property, plant and equipment | 2,118,025 | 2,044,595 | 1,890,318 |
--------------------------------------------------------------------------------
| Intangible fixed assets | 199,685 | 214,046 | 201,348 |
--------------------------------------------------------------------------------
| Investments in associates | 15,438 | 17,247 | 3,122 |
--------------------------------------------------------------------------------
| Other financial fixed assets | 119,475 | 119,139 | 53,323 |
--------------------------------------------------------------------------------
| Total non-current assets | 2,452,623 | 2,395,027 | 2,148,111 |
--------------------------------------------------------------------------------
| Current assets | | | |
--------------------------------------------------------------------------------
| Inventories | 161,464 | 142,692 | 122,456 |
--------------------------------------------------------------------------------
| Trade and other receivables | 990,365 | 884,212 | 882,643 |
--------------------------------------------------------------------------------
| Short-term investments | 123,394 | 1,064,859 | 501,050 |
--------------------------------------------------------------------------------
| Cash and cash equivalents | 661,721 | 324,405 | 584,676 |
--------------------------------------------------------------------------------
| Total | 1,936,944 | 2,416,168 | 2,090,825 |
--------------------------------------------------------------------------------
| Assets classified as | 2,235 | 771 | 13,443 |
| held-for-sale | | | |
--------------------------------------------------------------------------------
| Total current assets | 1,939,179 | 2,416,939 | 2,104,268 |
--------------------------------------------------------------------------------
| TOTAL ASSETS | 4,391,802 | 4,811,966 | 4,252,379 |
--------------------------------------------------------------------------------
| EQUITY AND LIABILITIES | | | |
--------------------------------------------------------------------------------
| Capital and reserves | | | |
| attributable to equity holders | | | |
| of the parent | | | |
--------------------------------------------------------------------------------
| Share capital | 1,379,545 | 1,379,545 | 1,379,545 |
--------------------------------------------------------------------------------
| Share premium | 356,018 | 356,018 | 356,018 |
--------------------------------------------------------------------------------
| Statutory legal reserve | 137,955 | 137,955 | 137,955 |
--------------------------------------------------------------------------------
| Retained earnings | 924,263 | 925,388 | 925,388 |
--------------------------------------------------------------------------------
| Net profit for the period | 544,932 | 1,309,443 | 450,228 |
--------------------------------------------------------------------------------
| Total capital and reserves | 3,342,713 | 4,108,349 | 3,249,134 |
| attributable to equity holders | | | |
| of the parent | | | |
--------------------------------------------------------------------------------
| Minority interest | 8,194 | 5,030 | 466 |
--------------------------------------------------------------------------------
| Total equity | 3,350,907 | 4,113,379 | 3,249,600 |
--------------------------------------------------------------------------------
| Non-current liabilities | | | |
--------------------------------------------------------------------------------
| Interest bearing loans and | 2,183 | 3,124 | 4,638 |
| borrowings | | | |
--------------------------------------------------------------------------------
| Retirement benefit obligations | 3,735 | 7,912 | 6,572 |
--------------------------------------------------------------------------------
| Provisions | 20,274 | 22,124 | - |
--------------------------------------------------------------------------------
| Non-interest bearing | 5,148 | 5,152 | 10,079 |
| liabilities | | | |
--------------------------------------------------------------------------------
| Total non-current liabilities | 31,340 | 38,312 | 21,289 |
--------------------------------------------------------------------------------
| Current liabilities | | | |
--------------------------------------------------------------------------------
| Trade and other payables | 1,000,240 | 651,365 | 972,185 |
--------------------------------------------------------------------------------
| Interest bearing loans and | 2,456 | 2,742 | 3,028 |
| borrowings | | | |
--------------------------------------------------------------------------------
| Retirement benefit obligations | 4,689 | 865 | 865 |
--------------------------------------------------------------------------------
| Provisions | 2,170 | 5,303 | 5,412 |
--------------------------------------------------------------------------------
| Total current liabilities | 1,009,555 | 660,275 | 981,490 |
--------------------------------------------------------------------------------
| Total liabilities | 1,040,895 | 698,587 | 1,002,779 |
--------------------------------------------------------------------------------
| TOTAL EQUITY AND LIABILITIES | 4,391,802 | 4,811,966 | 4,252,379 |
--------------------------------------------------------------------------------
CONSOLIDATED CASH FLOW STATEMENT
In thousand of Estonian kroons (EEK)
--------------------------------------------------------------------------------
| | I HY 2007 | I HY 2006 |
--------------------------------------------------------------------------------
| Operating activities | | |
--------------------------------------------------------------------------------
| Net profit for the period | 548,096 | 450,228 |
--------------------------------------------------------------------------------
| Adjustments for: | | |
--------------------------------------------------------------------------------
| Depreciation, amortisation and impairment | 240,534 | 302,891 |
| of fixed and intangible assets | | |
--------------------------------------------------------------------------------
| (Profit) / loss from sales and discards of | (9,552) | (44,443) |
| fixed assets | | |
--------------------------------------------------------------------------------
| Net (income) / expenses from associated | 1,809 | 1,539 |
| companies | | |
--------------------------------------------------------------------------------
| Provisions | (5,113) | (2,409) |
--------------------------------------------------------------------------------
| Financial items | 10,824 | (4,148) |
--------------------------------------------------------------------------------
| Income tax on dividends | 370,824 | 373,377 |
--------------------------------------------------------------------------------
| Miscellaneous non-cash items | (2,472) | (3,135) |
--------------------------------------------------------------------------------
| Cash flow before change in working capital | 1,154,950 | 1,073,900 |
--------------------------------------------------------------------------------
| Change in current receivables | (102,431) | (23,965) |
--------------------------------------------------------------------------------
| Change in inventories | (18,812) | (35,546) |
--------------------------------------------------------------------------------
| Change in current liabilities | (23,257) | 40,103 |
--------------------------------------------------------------------------------
| Change in working capital | (144,500) | (19,408) |
--------------------------------------------------------------------------------
| Cash flow from operating activities | 1,010,450 | 1,054,492 |
--------------------------------------------------------------------------------
| Investing activities | | |
--------------------------------------------------------------------------------
| Intangible and tangible fixed assets | (301,456) | (356,291) |
| acquired | | |
--------------------------------------------------------------------------------
| Intangible and tangible fixed assets | 11,924 | 48,805 |
| divested | | |
--------------------------------------------------------------------------------
| Shares, participations and operations | - | (77,898) |
| acquired | | |
--------------------------------------------------------------------------------
| Shares, participations and operations | - | 10,785 |
| divested | | |
--------------------------------------------------------------------------------
| Net change in interest-receivables short | 968,924 | 760,765 |
| maturities | | |
--------------------------------------------------------------------------------
| Net cash changes of other long-term | (13,464) | 1,848 |
| receivables | | |
--------------------------------------------------------------------------------
| Cash flow from investing activities | 665,928 | 388,014 |
--------------------------------------------------------------------------------
| Cash flow before financing activities | 1,676,378 | 1,442,506 |
--------------------------------------------------------------------------------
| Financing activities | | |
--------------------------------------------------------------------------------
| Proceeds from non-convertible debts | 196 | 100 |
--------------------------------------------------------------------------------
| Repayment of finance lease liabilities | (899) | (1,103) |
--------------------------------------------------------------------------------
| Dividends paid | (1,310,568) | (1,241,591) |
--------------------------------------------------------------------------------
| Cash flow used in financing activities | (1,311,271) | (1,242,594) |
--------------------------------------------------------------------------------
| Cash flow for the year | 365,107 | 199,912 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash and cash equivalents at beginning of | 324,405 | 430,393 |
| year | | |
--------------------------------------------------------------------------------
| Cash flow for the year | 365,107 | 199,912 |
--------------------------------------------------------------------------------
| Effect of foreign exchange rate changes | 25 | (603) |
--------------------------------------------------------------------------------
| Cash and cash equivalents at end of period | 689,537 | 629,702 |
--------------------------------------------------------------------------------
Consolidated Interim Report of AS Eesti Telekom II Quarter and I Half Year 2007, EEK
| Source: Eesti Telekom
Attachments
