STOCKHOLM, Sweden, May 14, 2002 (PRIMEZONE) -- Song Networks Holding AB ("Song Networks" or the "Company"), formerly Tele1 Europe Holding AB (Stockholmsborsen:SONW) (Nasdaq:SONW), the leading pan-Nordic competitive provider of broadband communications services, today reported first quarter financial and operating results. Commenting on the results, Tomas Franzen, Chief Executive Officer, said: "I am very pleased to announce that Song Networks remains on the right track towards adjusted EBITDA break-even in the third quarter of 2002. I am especially pleased with our performance regarding improved gross margins, SG&A and CAPEX (capital expenditures). Despite a tough market situation in general and concerns about the Company's financial situation in particular, we have been able to increase our revenues with 4% on a continuing revenue basis. During the coming quarters we will, beside activities related to the restructuring of our balance sheet, continue to focus on margin improvements and tight control of our SG&A and CAPEX."
Song Networks' revenues in the first quarter 2002 were up 41% compared to the same period in 2001. Revenues for the first quarter of 2002 were SEK 590 million (USD 57 million), down 5% from the previous quarter. Total revenues on a continuing basis 1) increased by 4% during the first quarter of 2002 as compared to the fourth quarter of 2001. Gross margin improved by 400 basis points, from 36.1% in the fourth quarter of 2001 to 40.1% or by 450 basis points from the same period the previous year. Adjusted sales, general and administration costs (SG&A) 2) improved to 48% or SEK 284 million (USD 27 million) during the first quarter from 56% or SEK 350 million (USD 34 million) the previous quarter or 62%, SEK 259 million (USD 25 million) during the same period in 2001. Adjusted EBITDA 3) was -8% compared to -20% in the fourth quarter of 2001 and - 26% in the first quarter 2001. The Company added 1,123 directly connected sites 4) during the quarter totalling 11,621 in all. At the end of the quarter, the number of corporate customers was 21,186, of which 6,338 were directly connected. Direct revenues 5) increased by 10% and were 53% of total revenues in the first quarter of 2002 compared to 46% in the fourth quarter of 2001 or 39% the first quarter 2001. Revenues from data and internet services 6) increased to 38% from 35% of total revenues previous quarter.
Song Networks has engaged financial advisors to execute the Company's plans to reduce the Company's outstanding debt. Song Networks is actively considering several debt-restructuring options, including bond buy-back models or debt-for-equity swaps. In all circumstances the Company is focusing on restructuring the Group as a going concern.
The Company has repurchased a total of approximately 15% of its outstanding bonds, representing a face value of SEK 832 million (USD 80.3 million) in the first quarter and so far in the second quarter of 2002, at an average price of 15% equivalent to SEK 128 million (USD 12.4 million).
Financial Highlights:
- First quarter revenues totalled SEK 590 million (USD 57 million). This represents a 5% decrease over last quarter but a 4% increase of revenues from continuing operations. Revenues from continuing operations were SEK 568 million (USD 55 million) in the fourth quarter 2001. - Direct revenues totalled SEK 311 million (USD 30 million) in the quarter, up 10% from SEK 284 million (USD 27 million) in the fourth quarter 2001 and represented 53% of total revenues in the first quarter, compared to 46% in the previous quarter. - Revenues from data and internet services totalled SEK 227 million (USD 22 million) or 38% of total revenues in the first quarter, compared to 35% in the previous quarter. - Gross margin improved 400 basis points to 40.1% in the first quarter compared to 36.1% previous quarter. - Adjusted sales, general and administration costs (SG&A) improved to 48% or SEK 284 million (USD 27 million) in the first quarter of 2002, from 56% or SEK 350 million (USD 34 million) in the previous quarter. - Adjusted EBITDA margin improved to -8% or SEK - 47 million (USD - 4.5 million) in the first quarter. Adjusted EBITDA margin in the fourth quarter was -20% or SEK -126 million (USD -12 million). - Officially recorded EBITDA was positive SEK 72.4 million (USD 7 million) the first quarter of 2002 due to an unrealised foreign exchange gain of SEK 133 million (USD 12.8 million). - As of March 31, 2002, the Company had approximately SEK 917 million (USD 88.5 million) in cash and cash equivalents (including investments in bonds, other securities and restricted cash), as compared to SEK 1,447 million (USD 139.6 million) as of December 31, 2001. In addition, Song Networks continues to have access to an untapped credit facility of SEK 300 million (USD 29 million). - The Company has during the first quarter of 2002 repurchased 8.2% of its outstanding bonds for SEK 72 million (USD 7 million) plus accrued interest of SEK 15 million (USD 1.4 million), whereof SEK 56 million (USD 5.4 million) was paid during the first quarter of 2002 and SEK 16 million (USD 1.5 million) will be paid during the second quarter. The cash effect for the first quarter of 2002 was thus SEK -56 million (USD -5.4 million) plus accrued interest of SEK -11 million (USD -1.1 million). - The Company expects to be adjusted EBITDA break-even on a consolidated basis for the third quarter 2002 and expects full year 2002 revenues in the range of SEK 2.5-2.6 billion (USD 240-250 million).
Corporate information
Principal Executive Office:
Song Networks Holding AB Box 501 SE-182 15 Danderyd Sweden Visiting adress: Svardvagen 19 Tel: +46 8 5631 00 00 Fax: +46 8 5631 01 01 Web site: www.songnetworks.net Enquiries: Tomas Franzen, CEO Tel: +46 8 5631 01 11 E-mail: tomas.franzen@songnetworks.net Liia Nou, CFO Tel: +46 8 5631 02 3 E-mail: liia.nou@songnetworks.net Jenny Moquist, IR manager Tel: +46 8 5631 02 19 E-mail: jenny.Moquist@songnetworks.net
Revenues on a continuing basis exclude SEK 53 million (USD 5 million) in revenues contributed by a Swedish reseller phased out by Song Networks during the fourth quarter of 2002 as part of its strategy to focus on its core business.
"Adjusted" SG&A is defined as SG&A before provisions for social security fees and compensation expense related to employee stock options and non-recurring restructuring charges. The Company did not have any non-recurring restructuring charges during Q1 2001 or Q1 2002. Non- recurring restructuring charges totalled SEK 19 million (USD 1.8 million) for Q2 2001, which amount was included in SG&A. In addition non- recurring restructuring charges of SEK 108 million (USD 10.4 million) in Q3 2001 and SEK 56 million (USD 5.4 million) in Q4 2001 were recorded as items affecting comparability and were thus excluded from SG&A. With new SEC guidance effective as of this quarter, we also give the following information: SG&A was SEK 283 million (USD 27 million) or 48% of total revenues for the first quarter 2002, as compared to SEK 259 million (USD 25 million) or 62% of total revenues for the first quarter of 2001. SG&A totalled SEK 330 million (USD 32 million) for Q2 2001, SEK 350 million (USD 38 million) in Q3 2001, SEK 350 million (USD 38 million) for Q4 2001.
Song Networks defines EBITDA as earnings (loss) before interest, income taxes, depreciation and amortization. "Adjusted" EBITDA is defined as EBITDA before provisions for social security fees and compensation expense related to employee stock options, non-recurring restructuring charges, foreign exchange gains and losses, and all other reported as Other income/ expense. EBITDA was SEK 72 million (USD 7 million), or 12% of total revenues for the first quarter of 2002, as compared to SEK -77 million (USD -7.5 million) or -18.5% for the first quarter 2001.
With new SEC guidance effective as of this quarter, we also give the following information: EBITDA totalled SEK -191 million (USD -18 million) for Q2 2001, SEK -253 million (USD -24 million) in Q3 2001 and SEK -137 million (USD -13 million) for Q4 2001.
A "site" is defined as a customer connection/ office. Direct revenues include on-net revenues, hosting revenues and revenues from leasing capacity to corporate customers.
Revenues from data and internet services include hosting revenues and revenues from leasing capacity to corporate customers.
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