On 19 October 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 nine months period ended 30 September 2015.
Third quarter of 2015
The total revenue for the third quarter of 2015 was EUR 51.1 million, an increase by 3.3 per cent over the total revenue of EUR 49.4 million for the third quarter of 2014.
EBITDA for the third quarter of 2015 decreased by 8 per cent to EUR 18.8 million over EUR 20.4 million in the third quarter of 2014, but was higher by 2.7 per cent than EBITDA for the second quarter of 2015. EBITDA margin for the third quarter of 2015 amounted to 36.8 per cent (41.4 per cent in 2014).
Profit before income tax in the third quarter of 2015, compared with the third quarter of 2014, went down by 15.8 per cent and amounted to EUR 9.6 million (EUR 11.4 million a year ago).
Profit for the period in July-September 2015 amounted to EUR 8.6 million, while a year ago it was EUR 10.3 million, a decrease by 16.6 per cent. The profit margin for the third quarter of 2015 was 16.9 per cent (20.9 per cent a year ago).
Nine months of 2015
The total revenue for the nine months of 2015 were by 1.1 per cent higher than revenue of EUR 148.8 million for the same period a year ago and amounted to EUR 150.4 million. The total revenue excluding revenue from continuously declining voice telephony services increased by 5.6 per cent.
EBITDA for the nine months of 2015 went down by 5.6 per cent to EUR 55.9 million over EUR 59.2 million for the same period year ago. EBITDA margin declined and amounted to 37.2 per cent (39.8 per cent in 2014). Over the year, EBITDA (excluding non-recurring items) decreased by 8.1 per cent while EBITDA margin (excluding non-recurring items) stood at 38.8 per cent.
Profit before income tax in the nine months of 2015 was down by 13.4 per cent and amounted to EUR 27.9 million (EUR 32.2 million a year ago). Profit before income tax (excluding non-recurring items) was by 16.8 per cent lower than during the nine months of 2014.
Profit for the period in January-September 2015 amounted to EUR 24.9 million, a decrease by 13.6 per cent over the profit of EUR 28.8 million for the same period year ago. The profit margin was 16.5 per cent (19.3 per cent a year ago). Profit for the period (excluding non-recurring items) was by 17.3 per cent lower than in January-September 2014 and profit margin (excluding non-recurring items) was 18.2 per cent.
Management’s comment on financial results:
“In the third quarter of 2015, Teo net sales (EUR 51.1 million) showed an increase by 3.3 per cent (EUR 1.6 million) compared with the same period a year ago, driven by a 32.8% growth in IT revenues. Revenue from residential customers showed a growth of 6.6 per cent, while revenue from business customers and other operators grow by 0.4 per cent. The customer intake continued to accelerate and during the third quarter of 2015 Teo delivered the highest IPTV and broadband Internet customers’ net increase during the last 3 years.
During the quarter actions were taken to reduce operating expenses (excl. COGS), with reduction of number of full time employees (FTE) at the end of the quarter (that will show effect in employee related expenses in the next period), as well as other expenses that went down by 3.6 per cent, compared with the third quarter of 2014.
EBITDA (excl. non-recurring items) for the third quarter of 2015, compared with third quarter of 2014, declined by EUR 0.8 million (or 4 per cent) due to the product mix changes with declining revenue from fixed voice and increased revenue from IT and IPTV services, giving lower gross margin. EBITDA (excl. non-recurring) in the third quarter of 2015 was by 5.3% higher than EBITDA in the second quarter of 2015.
During July-September 2015, revenue from retail fixed voice telephony services continued to decline by 11 per cent in both B2B and B2C segments. However, disconnection of telephone lines showed the lowest level during the last 3 years. Revenue from voice transit increased by 4.6 per cent. Revenue from Internet services showed a growth of 2.8 per cent and revenue from IPTV services increased by 22 per cent due to continuous growth in our customer base. Quarterly net increase of broadband Internet and IPTV subscriptions (6 and 8.4 thousand, respectively) was the best during the past 3 years. This is a result of marketing campaigns, improved customer satisfaction and expanded retail sales places. Over the year, number of FTTH Internet customers increased by 24 thousand (a growth by 12 per cent) and by the end of September 2015 it amounted to almost 218 thousand. Number of IPTV customer increased by almost 29 thousand (or 23 per cent) and exceeded 152 thousand. During the third quarter of 2015, revenue from IT services showed a growth of 32.8 per cent as a result of high IT goods sales in our Online shop (B2C) and also in B2B segment.
Product mix (lower fixed voice traffic and higher IT goods sales, increase in transit traffic and IPTV subscriptions) had an impact on cost of goods and services (COGS) which during the third quarter of 2015 increased by 12.8 per cent (EUR 1.7 million).
During the third quarter of 2015, the Company reduced number of employees, but competence shift and pressure on salaries especially in the IT market, resulted in increase of employee related expenses (excl. non-recurring items) by 9.7 per cent. Other operating expenses went down by 3.6 per cent.
Investment into next generation fiber-optic access network, IT and in IPTV continued, and during the nine months of 2015 capital investments increased by 14.5 per cent and amounted to EUR 20.5 million.
During the third quarter of 2015, Teo continued to optimise and improve its customer care. A new customer care showrooms of a new “Smart Teo Home” concept were opened in Telšiai, shopping centre Ozas (with special focus on business customers) in Vilnius and shopping centre Saules Miestas in Šiauliai.”
ENCL.:
- TEO LT, AB Consolidated Interim Financial Statements for the nine months period ended 30 September 2015.
- Presentation of TEO LT, AB Group results for 9 months of 2015.
Darius Džiaugys,
Head of Investor Relations,
tel. +370 5 236 7878
