Results for the twelve months of 2014


On 28 January 2015, the Board of TEO LT, AB (hereinafter – “TEO” or “the Company”) approved unaudited TEO LT, AB Consolidated Interim Financial Statements, prepared according to International Financial Reporting Standards as adopted by the European Union, for the twelve months period ended 31 December 2014.

The total consolidated TEO Group’s revenue for the fourth quarter of 2014 was LTL 185 million (EUR 53.4 million), an increase by 3.2 per cent over the total revenue of LTL 179 million (EUR 51.8 million) for the fourth quarter of 2013. The total revenue for the twelve months of 2014 was LTL 698 million (EUR 202.3 million), a decrease by 3.1 per cent over the total revenue of LTL 721 million (EUR 208.7 million) for the twelve months of 2013.

EBITDA for the fourth quarter of 2014 was up 2.3 per cent to LTL 67 million (EUR 19.3 million) over LTL 65 million (EUR 18.9 million) in the fourth quarter of 2013. EBITDA margin amounted to 36.1 per cent (36.4 per cent in 2013). EBITDA for the twelve months of 2014 was down by 7.4 per cent to LTL 271 million (EUR 78.5 million) over LTL 293 million (EUR 84.8 million) for the same period year ago. EBITDA margin declined and amounted 38.8 per cent (40.6 per cent in 2013). EBITDA excluding non-recurring items over the year went down by 3.7 per cent while EBITDA margin excluding non-recurring items stood at 41.1 per cent.

Profit before income tax for the fourth quarter of 2014 was up by 2.9 per cent and amounted to LTL 35 million (EUR 10.2 million). LTL 34 million (EUR 9.9 million) a year ago. Profit before income tax for the twelve months of 2014 was down by 11.5 per cent and amounted to LTL 147 million (EUR 42.4 million). LTL 166 million (EUR 47.9 million) a year ago. Profit before income tax excluding non-recurring items was by 4.8 per cent lower than in 2013.

Profit for the period in October-December 2014 amounted to LTL 32 million (EUR 9.3 million), while a year ago it was LTL 31 million (EUR 8.9 million), an increase by 3.8 per cent. The profit margin was 17.4 per cent (17.3 per cent a year ago). Profit for the period in January-December 2014 amounted to LTL 131 million (EUR 38.1 million), a decrease by 11.9 per cent over the profit of LTL 149 million (EUR 43.2 million) for the same period year ago. The profit margin was 18.8 per cent (20.7 per cent a year ago). Profit for the period excluding non-recurring items in 2014 was by 4.5 per cent lower than in 2013 and profit margin excluding non-recurring items was 21.1 per cent.

 

Management’s comment on financial results for the twelve months period of 2014:

“The fourth quarter of 2014 was a successful quarter, showing both revenue as well as EBITDA growth and also a record high net intake of new customers and on the same time a growth in our customer satisfaction index. Operating expenses, excluding cost of goods and services, were down by 16 per cent in the fourth quarter comparing with the previous year, and EBITDA margin, excluding non-recurring items, for the year 2014 ended up at 41.1 per cent, almost at the same level as in previous year.

During the fourth quarter net sales increased by 3.2 per cent, being the first quarter during the last two years that shows growth in net sales. Expenses were stable and EBITDA, excluding non-recurring items, increased by 3.5 per cent in the fourth quarter. Net sales from non-voice services increased by 5 per cent and the share of non-voice services in the fourth quarter amounted to 61.2 per cent of total revenue. Number of new IPTV customers increased by 7.6 thousand, the best quarterly result since service launch. Number of broadband Internet subscriptions (excluding Wi-Fi) showed a growth of 5.7 thousand during the fourth quarter, all of them were fiber-optic connections. Focus on our voice services with bundling offers, resulted in the lowest quarterly voice disconnections during the last three years.

During the fourth quarter, TEO started to provide a new generation Internet TV service "Interneto.tv" as a separate service. Also „Internet everywhere“, a new product for B2B customers, was launched in cooperation with Omnitel in December. Our service "Smart TEO television" was awarded with Gold Medal during the contest "Lithuanian Product of the Year 2014" and TEO was recognized as one of the best companies in Lithuania for our anti-corruption initiatives and received an award from the Ministry of Economy of the Republic of Lithuania. During the fourth quarter, we also reduced share capital and paid LTL 194 million (EUR 56.2 million) to the shareholders.

During 2014, TEO reached several milestones: number of Internet subscriptions, including Wi-Fi, exceeded half a million and at the end of 2014 amounted to 517 thousand (371 thousand excl. Wi-Fi). Customers using our modern fiber-optic network reached 201 thousand, an increase by 20 thousands or 11 per cent over the year, while number of IPTV customers was 131 thousand, a record growth of 24 per cent.

In terms of total revenue, the decline in 2014 was by 3.1 per cent: residential customers’ segment declined by 1.3 per cent, business customers’ by 7 per cent, while Business to Operators showed a growth of 2.2 per cent due to positive development in the transit services. During the year non-voice revenue increased in total by 1.3 per cent, driven by net increase in customer base of broadband Internet and IPTV subscriptions as well as higher sales in IT goods and equipment, and the share of non-voice services for the first time reached over 60 per cent. Negative impact on revenue during 2014 was still from the decrease in revenue from fixed voice telephony (down by 9.1 per cent) as disconnection of telephone lines continues, but in a slower pace than before. During the last twelve months voice subscription base decreased by 7 per cent, outgoing voice traffic generated by residential and business customers decreased by 15.4 and 11.4 per cent, respectively, while total volume of calls to mobile operators’ networks increased by 29.6 per cent.

Our efficiency improvement program and the setup of new organization with rather high non-recurring (redundancy) costs during the year resulted that operating expenses were almost the same as in 2013, i.e. lower by 0.1 per cent. Excluding non-recurring items, the operating expenses (excluding cost of goods and services) were down by 10.5 per cent, while cost of goods and services increased by 8.7 per cent due to higher sales of IT goods, customer equipment and transit services. The operating free cash flow in 2014 stood at LTL 139 million (EUR 40.2 million), a decrease of 3.8 per cent compared with the previous year. Positive was that bad debts decreased by over 50 per cent with a ratio of only 0.16 per cent of the total revenue. Return on capital employed ended up at 15.2 per cent (16.4 per cent in 2013), while return on shareholders’ equity reached 13.8 per cent (14.7 per cent in 2013). During 2014, EBITDA excluding non-recurring items decreased by 3.7 per cent and reached LTL 287 million (EUR 83.1 million), while EBITDA margin (excl. non-recurring items) was almost on the same level as in previous year and amounted to 41.1 per cent (41.4 per cent in 2013).“

 

ENCL.:

  • TEO LT, AB Consolidated Interim Financial Statements for the twelve months period ended 31 December 2014.
  • Presentation of TEO LT, AB Group results for the 12 months of 2014.

 

         Darius Džiaugys,
         Head of Investor Relations,
         tel. +370 5 236 7878


Attachments

2014_12_months_report.pdf 2014_12_months_results.pdf