Pēd. atjaunots: 23.07.2024 19:09 (GMT+3)
Eesti Telekom CORRECTIVE RELEASE 07/18/2002
CORRECTED RELEASE ABOUT FINANCIAL RESULTS, H1 2002, EUR
In previously discloused announcement about financial results, H1 2002, EUR,
there was a mistake in the number of main lines.
The correct sentence would be
"The number of main lines in use at the end of June was 472
thousand (a penetration of 34.7 lines per 100 people)."
Corrected announcement follows:
-------------------------------
18 July 2002
THE FINANCIAL RESULTS OF THE FIRST SIX MONTHS OF 2002
Eesti Telekom, the leading provider of telecommunication
services in Estonia, hereby announces its results for the
six-month period ended 30 June 2002.
Financial highlights
6 months 6 months Change, %
2002 2001
Total revenue, mEUR 145 132 10
EBITDA, mEUR 70 65 7
EBITDA margin, % 48 49
EBIT, mEUR 37 32 17
EBIT margin, % 25 24
Profits before taxes, 37 34 8
mEUR
Net profits for the 31 32 -4
period, mEUR
EPS, EUR 0.22 0.23 -4
No. of A- shares 137,383,178 137,383,178
Investments, mEUR 13 27 -52
Net gearing, % -12.0 2.4
ROA, % 23 23
ROE, % 33 31
Commenting on these financial results, Chairman, Jaan
Männik, stressed:
"Several favourable trends in the operations of the Group
have continued to prevail during the first half-year of
2002. Measures oriented on efficiency improvement have
started to show positive results."
For further information, please contact:
Krister Björkqvist +372 6272 465
CFO
Hille Võrk +372 6272 460
Financial Manager
CHAIRMAN’S STATEMENT
Results of the first half-year of 2002 were favourable for
the Eesti Telekom Group. Although the Estonian mobile market
has been intensively penetrated, AS EMT, the mobile operator
of the Group, has still found new possibilities for
increasing its revenues and profits. The fixed market was
liberalized on January 1, 2001. AS Eesti Telefon, the fixed
communications operator, has adjusted to the existing
working environment and has been able to stabilize its
market shares.
Last year, we talked extensively about measures meant for
improving efficiency. Our investing policy and the structure
of our tangible assets were reviewed. Changes were made in
our customer service sphere. As a result, the profit margins
of almost all the companies of the Group improved in the
first half of 2002.
The Eesti Telekom Group cash flow has continued to be
positive. Net gearing has reached -12%.
Revenues, expenses and profit
In the first half of 2002, consolidated revenues of the
Eesti Telekom Group amounted to 145 mln EUR, showing a rise
of 10% compared to the first half-year of 2001. Operating
expenses were 76 mln EUR, up by 12%. EBITDA of the Group was
70 mln EUR (margin 48%), showing a rise of 7%. Depreciation
for the period was 2% lower than a year ago. EBIT of the
Group was up by 17%, amounting to 37 mln EUR. On June 19,
2002, AS Eesti Telekom paid out dividends in the amount of
48 mln EUR to its shareholders for the year 2001. Income tax
on dividends amounted to 6 mln EUR (2 mln EUR in 2001). The
net profit of the Eesti Telekom Group in the first half-year
of 2002 was 31 mln EUR, or 0.22 EUR per share.
Outcomes of the first six months of 2001 and 2002 were
influenced by the following extraordinary factors:
2002 2001
Total revenues AS Eesti Telefon sold
property with a
capital gain of 3.5
mln EUR.
Total expenses AS Eesti Telefon
released a 2.9 mln
EUR reserve related
to the OÜ Albufent
claim.
Income from AS Eesti Telefon sold
associates its ownership in AS
Teabeliin. 2.1 mln
EUR of profit were
accounted as income
from associates.
The consolidated revenues of the Eesti Telefon Group
amounted to 85 mln EUR, down by 9% compared to the same
period in 2001. Operating expenses were 51 mln EUR, down by
16%. EBITDA of the Group was 34 mln EUR. The EBITDA margin
has risen to 40%. Depreciation during the first six months
of the year was significantly lower than in 2001 (down by
9%). EBIT of the group was up by 40%, amounting to 12 mln
EUR. The Eesti Telefon Group earned 11 mln EUR of net profit
in the first half-year of 2002 (up by 18%, compared to the
same period in 2001).
The operating revenues of AS Eesti Telefon were down by 11%,
compared to the same period in 2001. Revenues from all
categories of voice-communication services to end-customers
were down: domestic call revenues by 17%, dial-up revenues
by 41%, international call revenues by 9%, and revenues from
calls to mobile networks by 14%. On the positive side,
revenues from monthly fees were up by 26%. Revenues from
data communications and the Internet grew by 89%. In the
first half of 2002, Eesti Telefon made a capital gain of 3.5
mln EUR from the selling of various assets, which is
categorized under "other revenues".
Market shares of AS Eesti Telefon have been stable. The
company estimates its share of total call minutes, domestic
call minutes, fixed to mobile minutes, and international
call minutes to be 89%, 89%, 75%, and 71%, respectively.
The operating expenses of AS Eesti Telefon were down by 18%.
The largest part of the decrease was due to lower
interconnection costs resulting from directing a large part
of mobile calls directly from the network of one operator to
the network of another. Personnel expenses were down by 10%.
The number of employees of AS Eesti Telefon had fallen to
1,418 by the end of June 2002 (June 2001: 1,797).
The total revenues of the EMT Group amounted to 74 mln EUR,
up by 10%. The operating expenses of the Group were 38 mln
EUR, also up by 10%. EBITDA of the EMT Group was 37 mln EUR,
with a margin of 49%. The net profit of the Group was 26 mln
EUR, up by 6%, compared to the same period in 2001.
The number of customers of AS EMT reached 406 thousand by
the end of June. The company had 267 thousand contractual
customers and 139 thousand prepaid-card users. Monthly ARPU
(Average Revenues Per User) has been traditionally high over
the summer. Monthly ARPU in June 2002 was 29 EUR (June 2001:
30 EUR, December 2001: 28 EUR).
EMT’s revenues from all main categories were up during the
first half-year of 2002. Revenues from SMS had the highest
growth-rate, exceeding the corresponding figure in 2001 by
28%. The growth resulted from a wider customer base and new
services being offered by EMT. A good example is the multi-
SMS service, which allows enterprises to send messages via
Internet to their numerous customers’ mobile phones, or
offers consumers the possibility of paying for purchases by
mobile phone. For instance, at the recent exceedingly
popular beer festival in Tallinn, it was possible to pay for
a glass of beer by mobile phone. In February, Sonera, the
Finnish mobile operator, and EMT successfully demonstrated
the roaming and interconnection capability of the multimedia
messaging service (MMS) between the various pay GPRS
networks available to the consumer. The successful
implementation of this service showed that mobile
subscribers can send and receive multimedia messages even
through other networks. Sonera and EMT also demonstrated
how multimedia messages can be exchanged between the
subscribers of different operators. In June, EMT continued
testing MMS in Estonia in cooperation with Ericsson. But,
despite rapid growth, SMS revenues were only 3% of the total
revenues of AS EMT during the first half-year of 2002,
thereby showing that there is still plenty of space for
future growth.
Balance sheet and cash flows
At the end of June, 2002, the total assets of the Eesti
Telekom Group amounted to 258 mln EUR (December 2001: 271
mln EUR). Tangible assets were reduced, from the beginning
of the year, by 21 mln EUR. Current and non-current interest
bearing liabilities of the Group were reduced by 1 mln EUR.
By the end of the period, net debt of the Group amounted to
-26 mln EUR, and net gearing was -12%.
Net cash inflows of the Group in the first half of 2002
amounted 3 mln EUR. Net operating cash flow was 61 mln EUR
(first half-year of 2001: 51 mln EUR). The operating cash
flow does not include income tax on dividends in the amount
of 6 mln EUR. Cash outflow into investing activities was
essentially smaller than a year ago: -8 mln EUR in 2002, -23
mln EUR in 2001. Cash outflow into financing activities was
49 mln EUR, including dividends of 48 mln EUR.
Investments
The Eesti Telefon Group invested 7 mln EUR during the first
half of 2002 (first half-year of 2001: 19 mln EUR). The
majority of the investments went into improving the quality
of the network. By the end of June, the digitalisation rate
had risen to 74.1% (December 2001: 71.8%). 5,400 new ADSL
connections were installed during the six-month period. The
total number of Atlas ADSL connections reached 22,300 (a
penetration of 1,7 lines per 100 people). In May, the speed
of most ADSL Internet permanent connection packages was as
much as doubled, allowing customers to better enjoy the
various multi-media and content services. If, up until now,
ADSL services could primarily be enjoyed by the consumers
and firms located in the more highly populated areas, then,
in July 2002, Eesti Telefon began to offer a new wireless
Internet permanent connection Atlas RDSL. New connection
functions through of radio waves and gives rural consumers
also an opportunity to make use of a practical and even
faster Internet permanent connection.
The number of main lines in use at the end of June was 472
thousand (a penetration of 34.7 lines per 100 people). The
number of main lines, compared to the beginning of the year,
has been reduced by 29 thousand. Mainly residential
customers have been giving up their fixed lines. The number
of lines per employee was 326.
The second biggest sphere of investment for Eesti Telefon,
during the first half-year, was the development of an in-
house IT network. In February, the Group expanded through
the acquisition of a new firm. So as to extend its
activities beyond Estonia, AS Connecto, a subsidiary of the
Group, acquired 100 % of the shares of the network
construction company SIA Connecto Latvia (previously SIA
Link), which operates in Latvia. In April, AS Eesti Telefon
invested an additional 0.3 mln EUR into the Group associated
firm AS Sertifitseerimiskeskus.
The EMT Group invested 6 mln EUR during the first half-year
(2001: 9 mln EUR). The majority of investments made by EMT
went into base stations and exchanges. AS EMT also made also
a 0.3 mln EUR investment into AS Sertifitseerimiskeskus.
On May 21, 2002, the Ministry of Roads and Communications
presented to the Riigikogu (Parliament) an amendment for
the Telecommunications Act, which establishes the conditions
for the issuing of the third generation mobile network
licenses. According to the Ministry’s proposal, the licenses
would be issued on a tender basis. The participation fee in
the tender would be 50 mln EUR. The Ministry’s plan is to
issue four third generation licenses. The tender is expected
to take place in the beginning of 2003. It is the opinion of
the management of AS EMT, that for a small market like
Estonia, four licenses are too many. If four licenses are
issued, the capacity of the frequency band of each operator
would be quite limited, leading to lower efficiency of
investments, and higher prices for the final consumers.
Relations with state regulators
During the second quarter of 2002, two legal disputes
between AS Eesti Telefon and certain government agencies
came to an end.
On April 24, 2001, the Competition Board issued a precept,
based on the Competition Act, prohibiting Eesti Telefon from
levying a per-minute rate of 0.02 euro-cents at peak time,
0.017 euro-cents at off-peak time, and 0.01 euro-cents at
night for voice calls in its network. Eesti Telefon was
expected to levy a rate lower than the aforementioned rates.
According to the Competition Act, a fine in the amount of up
to 5% of the net sales for the year preceding the decision
to impose the fine can be imposed for the abuse of a market
dominant position.
Eesti Telefon was of the opinion that the aforementioned
rates were cost-based, and contested the precept at the
Tallinn Administrative Court on May 23, 2001. The Tallinn
Administrative Court agreed with Eesti Telefon and nullified
the precept of the Competition Board on January 17, 2002.
The Competition Board appealed to a higher court, but the
Circuit Court confirmed the Administrative Court’s decision.
On April 18, 2001, the Communications Board issued a precept
to Eesti Telefon, which required Eesti Telefon to provide
interconnection services below the cost of the service.
Eesti Telefon contested the precept. In June 2002, Eesti
Telefon decided to end the actions concerning the legality
of the precept, and the conformity of the underlying
provisions of the Telecommunications Act to the
Constitution, because the legal action had lost its meaning
for Eesti Telefon. Namely, these provisions of the
Telecommunications Act expired on December 31, 2001. Thus,
the cause of the legal action became null and void.
Potential change in the ownership structure
On March 26, 2002, Sonera of Finland and Telia of Sweden,
the strategic partners of AS Eesti Telekom, announced that
they are planning to merge. Telia will make a purchase offer
to the shareholders of Sonera, offering 1.51440 Telia shares
for one Sonera share. The Sonera and Telia merger plan was
presented to the European Union for approval, which was
given on July 10, 2002. However, the approval is dependent
upon the fulfilment of certain conditions by Sonera and
Telia.
Annual General Meeting of the Shareholders
The Annual General Meeting of the Shareholders of AS Eesti
Telekom took place on May 17, 2002. The meeting approved
Annual Report 2001, and the proposal for allocation of net
profit. It was decided that the owners of A-shares would be
paid dividends of 0.35 EUR per share (in total 48 mln EUR,
or 97% of the net profit of 2001). The owner of B-share
was entitled to dividends of 639 EUR.
The list of shareholders entitled to dividends was fixed on
June 5, 2002 and dividends were paid out on June 19, 2002.
The General Meeting authorised AS Eesti Telekom to acquire,
within one year, AS Eesti Telekom A-series shares, so that
the total nominal value of own shares held by AS Eesti
Telekom would not exceed the legal limits, and so that the
price payable per share would not exceed the highest price
paid for an AS Eesti Telekom A share on the Tallinn Stock
Exchange, on the day of acquiring the shares. Any possible
share buy-back shall be approved by AS Eesti Telekom
council.
Kennet Rådne, Heido Vitsur, Raivo Vare, and Aimo Eloholma
were elected to be new members of the Supervisory Council of
Eesti Telekom, where they replaced Mart Nurk, Andrus Villem,
Madis Üürike, and Timo Virtanen. The remaining six members
of the council were re-elected for one more term. Aare Tark
continues as the chairman of the Council.
Villu Vaino from AS Deloitte & Touche Audit continues to
audit Eesti Telekom in 2002.
Definitions
Net debt - long term and short term debt, less cash and cash
equivalents and short term investments
ROA - Net profit for the period expressed as percentage of
average total assets
ROE - Pre-tax profit for the period expressed, as percentage
of average equity
AS EESTI TELEKOM AND SUBSIDIARY COMPANIES
INCOME STATEMENT
In thousands of euros (EUR)
6 mths to 6 mths to 2001
30 June 02 30 June 01
Restated
Revenue
Net sales 140,348 129,833 265,516
Change in work-in- 224 240 34
progress
Capitalized self- 374 1,128 5,568
constructed assets
Other revenue 4,234 1,145 2,714
Total revenue 145,180 132,346 273,832
Operating expenses
Materials, 44,591 37,220 82,492
consumables,
supplies and
services
Other operating 14,061 12,683 31,634
expenses
Personnel expenses 15,772 16,508 34,177
Other expenses 1,091 1,002 2,117
Total expenses 75,515 67,413 150,420
Profit from 69,665 64,933 123,412
operations before
depreciation and
amortisation
Depreciation and 32,712 33,302 72,582
amortisation
Profit from 36,953 31,631 50,830
operations
Income/ expenses -224 2,089 1,715
from subsidiaries
and associated
companies (net)
Other net financing -144 213 -749
items
Profit before tax 36,585 33,933 51,796
Income tax on 5,986 1,977 1,977
dividends
Profit after tax 30,599 31,956 49,819
Minority interest 0 36 36
Net profit from 30,599 31,920 49,783
ordinary activities
Net profit for the 30,599 31,920 49,783
period
Earnings per share
Basic earnings per 0.22 0.23 0.36
share (in EUR)
Diluted earnings per 0.22 0.23 0.36
share (in EUR)
AS EESTI TELEKOM AND SUBSIDIARY COMPANIES
BALANCE SHEET
In thousands of euros (EUR)
30 June 31 Dec 30 June
2002 2001 2001
Restated
ASSETS
Current assets
Cash and cash 33,156 29,669 15,675
equivalents
Trade receivables, 30,009 25,777 27,297
net
Other receivables 790 685 459
Accrued income 7,702 6,342 6,105
Prepaid expenses 909 1,800 1,764
Inventories 6,652 6,648 10,262
Total current assets 79,218 70,921 61,562
Non-current assets
Long term financial 2,093 1,692 2,353
assets
Tangible assets, net 173,830 194,538 199,914
Intangible assets, 2,844 3,588 3,596
net
Total non-current 178,767 199,818 205,863
assets
TOTAL ASSETS 257,985 270,739 267,425
EQUITY AND
LIABILITIES
Current liabilities
Interest bearing 5,319 5,635 13,287
loans and borrowings
Customer prepayments 232 590 389
Accounts payable to 8,362 16,677 13,071
suppliers
Other payables 0 11 41
Tax liabilities 13,795 2,090 7,629
Accrued expenses 13,701 9,756 9,180
Provisions 791 1,117 411
Prepaid revenue 104 661 2,774
Total current 42,304 36,537 46,782
liabilities
Non-current
liabilities
Interest bearing 2,308 3,139 7,443
loans and borrowings
Total non-current 2,308 3,139 7,443
liabilities
Equity
Issued capital 87,804 87,804 87,804
Share premium 19,810 19,810 19,810
Statutory legal 8,781 8,781 8,781
reserve
Retained earnings 66,379 64,885 64,885
Net profit for the 30,599 49,783 31,920
period
Total equity 213,373 231,063 213,200
TOTAL EQUITY AND 257,985 270,739 267,425
LIABILITIES
AS EESTI TELEKOM AND SUBSIDIARY COMPANIES
CASH FLOW STATEMENT
In thousands of euros (EUR)
6 mths to 6 mths to
30 June 30 June
02 01
Restated
Cash flows from operating
activities
Profit before tax and minority 36,585 33,933
interest
Adjustments for:
Depreciation and 32,712 33,302
amortisation
Profit/loss from disposal of -3,368 -300
fixed assets
Income/ expense from 224 -2,089
subsidiaries and associates,net
Interests income/ expense, -456 -292
net
Other non-cash adjustments 44 147
Operating profit before working 65,741 64,701
capital changes
Change in current -4,727 -4,663
receivables
Change in inventories 65 -725
Change in current -115 -7,801
liabilities (except loans)
Adjusted cash generated from 60,964 51,512
operations
Interest paid -259 -701
Net cash flows provided by 60,705 50,811
operating activities
Cash flows from investing
activities
Purchase of tangible assets -11,858 -25,540
Purchase of licenses -712 -605
Purchase of shares, investments -639 -1,405
and other
Proceeds from sales of tangible 4,761 481
assets
Proceeds from sales of 0 2,780
associates
Loans granted -8 -20
Cash receipts from repayment of 2 3
loans
Dividends received 6 0
Interest received 703 1,039
Net cash flows used in -7,745 -23,267
investing activities
Cash flows from financing
activities
Proceeds from convertible long- 2 28
term debt
Proceeds from nonconvertible 79 0
long-term debt
Repayment of nonconvertible -242 -217
long-term debt
Repayment of long-term -1,019 -1,294
borrowings
Payment of finance lease 0 -1,063
liabilities
Dividends paid -48,293 -48,293
Net cash flows used in -49,473 -50,839
financing activities
Net increase / (decrease) in 3,487 -23,295
cash and cash equivalents
Cash and cash equivalents at 29,669 38,970
beginning of year
Cash and cash equivalents at 33,156 15,675
end of period
Hille Võrk
Financial manager
6 272 460
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