On 16 July 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, and Consolidated Interim Report for the six months period ended 30 June 2015.
Six months of 2015
The total revenue for the first six months of 2015 were almost the same as a year ago (a slight decline of 0.1 per cent) and amounted to EUR 99.4 million, while the total revenue excluding revenue from continuously declining voice telephony services increased by 3.8 per cent.
EBITDA for the first half of 2015 went down by 4.3 per cent to EUR 37.1 million over EUR 38.8 million for the same period year ago. EBITDA margin declined and amounted to 37.3 per cent (39 per cent in 2014). Over the year, EBITDA (excluding non-recurring items) decreased by 10.1 per cent while EBITDA margin (excluding non-recurring items) stood at 38.5 per cent.
Profit before income tax in the first half of 2015 was down by 12 per cent and amounted to EUR 18.3 million (EUR 20.8 million a year ago). Profit before income tax (excluding non-recurring items) was by 20.8 per cent lower than during the first half of 2014.
Profit for the period in January-June 2015 amounted to EUR 16.3 million, a decrease by 11.8 per cent over the profit of EUR 18.4 million for the same period year ago. The profit margin was 16.4 per cent (18.6 per cent a year ago). Profit for the period (excluding non-recurring items) was by 21.6 per cent lower than in January-June 2014 and profit margin (excluding non-recurring items) was 17.6 per cent.
Second quarter of 2015
The total revenue for the second quarter of 2015 was EUR 49.4 million, which is by just 1.8 per cent lower than the total revenue of EUR 50.3 million for the second quarter of 2014.
EBITDA for the second quarter of 2015 decreased by 7.2 per cent to EUR 18.3 million over EUR 19.7 million in the second quarter of 2014. EBITDA margin for the second quarter of 2015 amounted to 37 per cent (39.2 per cent in 2014).
Profit before income tax in the second quarter of 2015, compared with the second quarter of 2014, went down by 16.6 per cent and amounted to EUR 8.9 million (EUR 10.7 million a year ago).
Profit for the period in April-June 2015 amounted to EUR 7.8 million, while a year ago it was EUR 9.3 million, a decrease by 16 per cent. The profit margin for the second quarter of 2015 was 15.8 per cent (18.4 per cent a year ago).
Management’s comment on financial results:
“Revenue for the first six months of 2015 were on the same level (-0.1 per cent) as for the same period a year ago and amounted to EUR 99.4 million. Revenue from Internet, TV and IT services continued to grow while revenue from voice telephone, data communication and network capacity went down. During the first half of 2015, total revenue, excluding revenue from continuously declining voice telephony services, increased by 3.8 per cent and share of revenue from non-voice telephony services amounted to 62 per cent of the total revenue.
Revenue for the second quarter of 2015 was EUR 49.4 million, which is by 1.8 per cent lower than in previous year. Revenues from voice services (including transit) decreased by 12.3 per cent, while the growth continued in Internet, TV and IT services, and revenue for these services increased by 12.7 per cent. During April-June of 2015, revenue from residential customers showed a growth of 3.3 per cent, while revenue from business customers and operators (transit revenues mainly) were lower by 4.2 and 10.7 per cent, respectively.
The change in product mix, with decline in voice services, and growth in IP and IT services, put a pressure on gross margin and during the second quarter of 2015, cost of goods and services increased by 7.3 per cent, compared with the second quarter of 2014. For the six months of 2015, cost of goods and services were by 19.5 per cent higher than a year ago due to higher volume of transit traffic and higher equipment sales.
Employee-related expenses (excluding non-recurring) for the second quarter and the first half of 2015 were higher by 7.2 and 2.8 per cent, respectively, due to higher average salary in 2015 driven by competence shift and market salary increase. Other operating expenses for the second quarter and the six months of 2015, decreased by 7.4 and 10.6 per cent, respectively.
All in all this gave an EBITDA (excluding non-recurring) for the six months of 2015 of EUR 38.3 million, a decrease by 10.1 per cent compared with the previous year. The EBITDA (excluding non-recurring) for the second quarter was 19.1 EUR million, a decrease by 10.7 per cent. EBITDA margin (excluding non-recurring) for the first six months of 2015 was 38.5 per cent.
The positive customer intake continued as well as customer’s satisfaction. During April-June 2015, Teo opened 5 new customer care showrooms of a new concept in Vilnius, Šilutė, Šiauliai, Klaipėda and Elektrėnai. Marketing campaign in mass media had positive impact on Internet and TV sales in the second quarter.
By the end of June 2015, the total number of broadband Internet access (excluding Wi-Fi) users amounted to 378 thousand, an increase by 18.1 thousand over the last 12 months. Teo now has 842 thousand households passed (69 per cent of the country’s households) by the FTTH network. Over the year, the number of active Internet connections over the FTTH/B network increased by 12.1 per cent and in second quarter of 2015 reached 210 thousand, meaning that 55.5 per cent of Teo active Internet customers now are having fiber-optic connections. In June 2015, the Company increased the bandwidth for its new and existing users of fiber-optic Internet plan “Premium” from 500 to 600 Mbps. During the last 12 months, number of Teo Wi-Fi connections increased by 1.7 times and amounted to 176 thousand.
The number of IPTV services users over the year increased by 27.7 thousand (or 23.8 per cent) and by the end of June 2015 amounted to 144 thousand. During the second quarter of 2015, the number of voice services subscriptions showed the lowest churn level during the last 3 years, and over the last 12 months, the total number of voice subscriptions decreased by 5.6 per cent.
During the first six months of 2015 capital investments increased by 14.4 per cent and amounted to EUR 11.9 million (EUR 10.4 million a year ago). The majority of capital investments went to development of the next generation fiber-optic access network and expansion of the core network including end customer equipment.
In May, following the resolution of the Annual General Meeting of Shareholders of 29 April 2015, dividend of the total amount of EUR 39.6 million or EUR 0.068 per share for the year 2014 were paid to Teo shareholders.”
ENCL.:
- TEO LT, AB Consolidated Interim Financial Statements and Consolidated Interim Report for the six months period ended 30 June 2015.
- Presentation of TEO LT, AB Group results for the six months of 2015
Darius Džiaugys,
Head of Investor Relations,
tel. +370 5 236 7878
