Pēd. atjaunots: 22.07.2024 11:04 (GMT+3)
Eesti Telekom FINANCIAL RESULTS 10/16/2003 09:00
3Q AND 9 MONTHS RESULTS (EUR)
16 October 2003
THE FINANCIAL RESULTS OF THE FIRST NINE MONTHS OF 2003
Eesti Telekom, the leading provider of telecommunications
services in Estonia, hereby announces its results for the
third quarter, and nine-month period, which ended 30
September 2003.
Financial highlights
Q3 Q3 Change 9 M 9 M Change
2003 2002 % 2003 2002 %
Total revenues, 79.4 71.9 10 226.0 216.5 4
mEUR
EBITDA, mEUR 36.2 35.9 1 106.7 105.5 1
EBITDA margin, % 46 50 47 49
EBIT, mEUR 22.5 20.1 12 64.2 57.1 13
EBIT margin, % 28 28 28 26
Profit before 22.8 20.2 13 69.4 56.8 22
taxes, mEUR
Net profit for the 22.6 20.3 11 50.9 50.9 -0
period, mEUR
EPS, EUR 0.16 0.15 11 0.37 0.37 -0
CAPEX, mEUR 11.4 8.7 32 19.6 21.2 -8
Net gearing, % -30 -19 -30 -19
ROA (annualised), 33 31 24 25
%
ROE (annualised), 38 36 38 33
%
Commenting on these financial results, Chairman Jaan Männik
stresses:
"Strong revenue growth combined with healthy margins
continued."
For further information, please contact:
Krister Björkqvist +372 6272 465
CFO
Hille Võrk +372 6272 460
Financial Manager
CHAIRMAN’S STATEMENT
Financial results
The consolidated revenues, of the Eesti Telekom Group, for
the third quarter of 2003 amounted to 79.4 mln EUR, up by
10%, compared to the third quarter of 2002. Operating
expenses of the third quarter were up by 20%, amounting to
43.2 mln EUR. The EBITDA of the Eesti Telekom Group was 36.2
mln EUR and the EBITDA margin was 46%. Both the revenues and
operating expenses of the third quarter were affected by a
significant transaction between Elion Enterprises Ltd. and
the Tallinn Education Authority (see section "Fixed
communications"), and by a new subsidiary, AS Reveko
Telekom, being added to the Group. Revenue growth from
mobile communications was traditionally high. In the area of
fixed communications, higher revenues from the Internet,
data communications, and IT compensated the declining
revenue from voice communications.
Depreciation of the Eesti Telekom Group in the third quarter
of 2003 amounted to 13.7 mln EUR, down by 13%. This decrease
is mainly caused by revised depreciation rates applied in a
subsidiary company, Elion Enterprises Ltd., at the beginning
of 2003. In addition to that, depreciation has started to
fall as a result of the relatively low CAPEX that the Group
has had during the past years, compared to earlier periods.
The financial revenues of the third quarter exceeded
financial expenses by 0.4 mln EUR.
The net profit of the Eesti Telekom Group in the third
quarter of 2003 was 22.6 mln EUR or 0.16 EUR per share.
Corresponding figures in the third quarter of 2002 were 20.3
mln EUR and 0.15 EUR per share.
During the first nine months of 2003, the consolidated
revenues of the Eesti Telekom Group amounted to 226.0 mln
EUR, growing by 4%, compared to the first nine month period
in 2002. Operating expenses were up by 8%, amounting to
119.3 mln EUR. The EBITDA of the Group was 106.7 mln EUR,
up by 1%. The EBITDA margin was 47%. The first nine month
consolidated revenues of 2002 included a non-recurring item,
a 3.5 mln EUR capital gain from the sale of real estate. The
elimination of this capital gain from the revenues of the
base-period would make the revenue growth to be 6% and the
EBITDA growth to be 5%.
The net profit of the Eesti Telekom Group in the first nine
months of 2003 was 50.9 mln EUR or 0.37 EUR per share.
Corresponding figures for the first nine months of 2002 were
50.9 mln EUR and 0.37 EUR per share. The net profit of the
current year has been affected by an amendment in the
taxation regulations, which became effective in 2003. In
2002, the dividend tax applied only to dividend payments to
private individuals or nor-resident legal entities. But in
2003, the dividend tax became effective for all dividend
payments. Thus, for the Eesti Telekom Group, this tax
amendment brought with it a significant increase in the
dividend taxes that had to be paid.
At the end of September 2003, the total assets of the Eesti
Telekom Group amounted to 276.5 mln EUR (in December 2002,
283.8 mln EUR). Tangible assets were reduced, from the
beginning of the year, by 22.7 mln EUR. Current assets were
increased by 15.3 mln EUR. This enlargement was mainly the
result of an increase of cash and cash equivalents (cash,
bank accounts, units of money-market funds and other short-
term financial investments) by 14.6 mln EUR. By the end of
the period, the net debt of the Group amounted to -74.8 mln
EUR, and net gearing was -30%.
The balance of cash and cash equivalents (cash, bank
accounts, and units of money-market funds) of the Eesti
Telekom Group grew by 16.6 mln EUR during the first nine
months of 2003. The net operating cash flow was 81.2 mln EUR
(during the corresponding 9 months of 2002, 89.8 mln EUR).
Cash outflow into investments was essentially smaller than a
year ago: 11.2 mln EUR in 2003 (incl. 4.5 mln EUR from the
sale of the minority ownership in AS Connecto, and a 4.5 mln
EUR payment for the UMTS licence), compared with 19.6 mln
EUR in 2002. The cash outflow into financing was 53.3 mln
EUR, including 52.7 mln EUR paid as dividends (during the
corresponding 9 months of 2002, 50.6 mln EUR, including 48.3
mln EUR paid as dividends).
Fixed communications
Q3 Q3 Change 9 M 9 M Change
2003 2002 % 2003 2002 %
Total revenues, 42.3 38.8 9 121.2 122.9 -1
mEUR
EBITDA, mEUR 14.1 14.6 -4 43.6 48.3 -10
EBITDA margin, % 33 38 36 39
EBIT, mEUR 5.8 4.4 32 17.7 16.4 8
EBIT margin, % 14 11 15 13
Profit before 5.8 4.2 39 21.5 15.3 41
taxes, mEUR
Net profit for the 5.6 4.2 33 17.0 15.3 11
period, mEUR
CAPEX, mln EUR 4.0 5.1 -21 8.0 11.7 -32
ROA, % 17 11 16 13
ROE, % 21 16 26 20
The decrease in the consolidated revenues of the Elion Group
stopped in the third quarter of 2003. The consolidated
revenues of the Elion Group amounted to 42.3 mln EUR,
showing an increase of 9%, compared to the same period in
2002. The operating expenses of the third quarter were up by
17%, amounting to 28.2 mln EUR. The EBITDA of the Group was
14.1 mln EUR and the EBITDA margin was 33%.
In May 2003, the Tallinn Education Authority and Elion
Enterprises Ltd. signed a framework agreement concerning the
installation of new computers and other equipment into the
computer classes of Tallinn schools. The total value of the
procurement amounts to more than 4.0 mln EUR. In July,
within the framework of the agreement, computers were sold
to the Tallinn Education Authority for 2.0 mln EUR. This
transaction had a significant impact on both revenues
("revenue from IT and data communications") and expenses
("materials, consumables, supplies, and services") of the
third quarter. Since the transaction was extensive, but with
a low margin, it resulted in a decrease of the EBITDA margin
of the third quarter, compared to the same period in 2002.
The operating expenses of the third quarter were also
affected by the launching of a new brand name. On 18 August
2003, Elion Enterprises Ltd. introduced the new brand name
of Elion. Elion replaced the former brand names Eesti
Telefon, et, Hot, Hallo, and Atlas. One objective of the
change was to make the obtaining of services from, and
communicating with the company easier for the customer.
Elion adjusted its portfolio to customers’ needs by making a
distinction between household, business, and corporate
customers. Already starting this year, the company will also
"entertain" its customers at home by launching Internet
access to TV, movies, computer games, and music. In addition
to that, the company will help to finance the obtaining of
IT and communication equipment with hire purchase and
leasing opportunities. Operating expenses related to the new
brand name amounted to approximately 0.5 mln EUR.
Among the main revenue categories of the Group, the revenues
from domestic calls decreased by 12%, compared to the third
quarter of 2002. Revenues from international calls were also
down by 12%. Revenues from calls into mobile networks were
lower by 8%. Revenues from phone installations and monthly
fees were down by 4%. Revenues from the Internet, and
revenues from IT and data communications were up by 27% and
99% respectively. Revenues from network services were up by
6%.
The market shares of Elion Enterprises Ltd. have been
stable. The company estimates its share of total call
minutes to be 87% (September 2002: 89%). The estimated
market share of domestic call minutes, international call
minutes, and fixed to mobile call minutes are 87% (88%), 68%
(73%) and 76% (76%) respectively. The estimated market share
of dial-up minutes is 95% (95%).
The net profit of the Elion Group in the third quarter of
2003 was 5.6 mln EUR, showing an increase of 27%, compared
to the same period in 2002. This growth is largely the
result of the implementation of the revised depreciation
rates from the beginning of 2003. The new rates are more
differentiated than the previous ones. The useful lifetime
of different categories of tangible assets is determined
more accurately. In addition to that, depreciation charge
has started to fall as a result of the relatively low CAPEX
that the Group has had during the last years, compared to
earlier periods. Depreciation of the Elion Group, in the
third quarter of 2003, was reduced by 1.9 mln EUR or 19%.
The consolidated revenues of the Elion Group, during the
first nine months of 2003, amounted to 121.2 mln EUR, down
by 1%, compared to the first nine months of 2002. However,
the consolidated revenues of the first nine months of 2002
contain a capital gain from the sale of real estate in the
amount of 3.5 mln EUR. Elimination of the capital gain would
make the revenues of 2003 2% higher than the revenues of
2002. Operating expenses of the period were up by 4%,
amounting to 77.7 mln EUR. The EBITDA of the Group was 43.6
mln EUR and the EBITDA margin was 36%. As a result of
amendments in regulations on income taxation, the Group
declares a dividend income tax expense of 4.3 mln EUR in its
first nine months’ income statement. The net profit of the
Elion Group for the first nine months of 2003 was 17.0 mln
EUR, up by 9%, compared to the same period in 2002.
The Elion Group invested 8.0 mln EUR during the first nine
months of 2003 (2002: 11.7 mln EUR).
The number of main lines in use at the end of September was
446,240 (a penetration of 32.9 lines per 100 people). The
net decrease in the number of main lines, since the
beginning of 2003, was 14,020. After launching the new brand
name, Elion Enterprises Ltd. started a campaign, which
provided customers with the opportunity of joining the
company’s network without having to pay an installation fee.
A total of 5,300 customers applied to be connected in the
course of the campaign. 87% of the additions were private
individuals. 12% of the new customers also applied for an
ADSL connection. The total number of ADSL connections at the
end of September was 41,132 (3 connections per 100 people).
The net increase in the number of ADSL connections since the
beginning of 2003 was 10,650.
The sale of minority interests in AS Connecto, a subsidiary
of Elion Enterprises, were completed in June. A 49% minority
stake in AS Connecto was sold to ELTEL Networks Corporation,
a Finnish telecommunications network development firm. The
price of the deal was 4.3 mln EUR, and the capital gain
declared was 3.8 mln EUR. Elion Enterprises will remain an
active owner of Connecto, but ELTEL Networks has the right
to acquire 100% of the company shares after two years. This
sale enables Elion Enterprises to focus on its core
business, which is the providing of telecommunications and
IT solutions. The involvement of a strategic partner will
also accelerate the expansion of AS Connecto into the other
Baltic states.
On 1 July 2003, AS Connecto, a 51% owned subsidiary of Elion
Enterprises Ltd., acquired all of the shares of AS Reveko
Telekom. 55% of the shares were purchased from TeliaSonera,
and 45% from Estonian private individuals. The price of the
deal was 0.9 mln EUR. AS Reveko Telekom was founded in 1995.
The firm specialises in various aspects of indoor
telecommunications: the sales and installation of telephone
relays and communications systems, the construction of
computer and telephone networks, the design and installation
of low current systems, and operating services. Reveko
Telekom has 22 employees.
The number of employees of the Elion Group at the end of
September 2003 was 1,974 (in December 2002: 1,999).
Mobile communications
Q3 Q3 Change 9 M 9 M Change
2003 2002 % 2003 2002 %
Total revenues, 44.9 40.6 11 127.5 115.0 11
mEUR
EBITDA, mEUR 22.6 21.5 5 64.3 58.2 11
EBITDA margin, % 50 53 50 51
EBIT, mEUR 17.2 16.0 8 47.7 41.6 15
EBIT margin, % 38 39 37 36
Profit before 17.2 15.9 8 48.3 41.8 16
taxes, mEUR
Net profit for the 17.2 15.9 8 34.8 41.8 -17
period, mEUR
CAPEX, mln EUR 7.4 3.6 105 11.6 9.5 22
ROA, % 66 69 42 55
ROE, % 80 82 77 64
The growth of the consolidated revenues of the EMT Group
accelerated again in the third quarter of 2003. Revenues of
the second quarter were up by 9%, compared to the same
period in 2002. In the third quarter, the growth reached
11%. Revenues from SMS and data continued to have the
highest growth rate, showing an increase of 28%. Revenues
from domestic calls, prepaid call-cards, and interconnection
have also increased. There was some decline in the revenue
from monthly fees, compared to the third quarter of 2002. In
September 2003, the ARPU was 27.0 EUR (in September 2002,
27.7 EUR; in December 2002, 27.0 EUR). The lower ARPU was
mainly caused by an increase in the usage time of prepaid
call-cards.
The operating expenses of the EMT Group in the third quarter
of 2003 amounted to 22.3 mln EUR, up by 17%, compared to the
same period in 2002. The growth resulted from higher
interconnection expenses, caused by an increase of outgoing
call minutes, and the increased business activities of a
subsidiary of the Group, AS Mobile Wholesale.
The EBITDA of the third quarter was 22.6 mln EUR, up by 5%.
The EBITDA margin was 50%. The net profit of the EMT Group
was 17.2 mln EUR, showing an increase of 8%, compared to the
third quarter of 2002.
The total number of customers of EMT grew by 24.3 thousand
during the third quarter of 2003. The number of contractual
customers was up by 3.8 thousand and the number of customers
with prepayment was up by 20.5 thousand. The growth in the
number of customers was partly caused by changes in the
terms of the Simpel call-cards, which became effective 1 May
2003. Until 1 May 2003, customers could use the calling time
stored on their cards in the course of two months for
calling out, plus, for one more month, they could receive
incoming calls. In accordance with the new terms, the
calling time stored on the card can be used for calling out
in the course of five months, plus, incoming calls can be
received for an additional month. Due to the change in
terms, EMT will not close any prepaid cards between 2 August
and the end of October. The total number of AS EMT customers
reached 463.8 thousand by the end of September. The number
of contractual customers was 295.1 thousand, and the number
of prepaid customers was 168.7 thousand. EMT estimated its
market share to be around 47%.
The consolidated revenues of the EMT Group, during the first
nine months of 2003, amounted to 127.5 mln EUR, up by 11%,
compared to the same period in 2002. Operating expenses of
the period amounted to 63.2 mln EUR, also up by 11%. The
EBITDA of the Group was 64.3 mln EUR, and the EBITDA margin
was 50%. As a result of amendments, which were made to the
regulations concerning the calculating of income tax on
dividends, the Group declared a dividend income tax expense
of 13.5 mln EUR in its income statement. The net profit of
the EMT Group for the nine-month period was 34.8 mln EUR.
The EMT Group invested 11.6 mln EUR during the first nine
months of 2003 (during the first nine months of 2002, 9.5
mln EUR).
On 8 May 2003, a direct offer was made by the Estonian
National Communications Board to AS EMT, Radiolinja Eesti
AS, and Tele2 AS to acquire third generation mobile
communications licences. All three operators submitted their
applications in July, and received licences from the
Communications Board after paying a licence fee and state
duty of 4.5 mln EUR per licence. By acquiring a licence,
each operator also accepted an obligation to establish,
within seven years of the issuance of the licence, a third
generation network, covering at least 30% of the Estonian
population, and having a data transmission speed of at least
144 Kb/sec in urban areas and 64Kb/sec anywhere else in
Estonia.
On 17 September 2003, Meelis Atonen, the minister of
economic affairs and communications, and Peep Aaviksoo, the
CEO of AS EMT, made the first UMTS-call in Estonia via the
EMT trial network. A commercial UMTS-network is expected to
start functioning in 2005.
The number of employees of the EMT Group at the end of
September 2003 was 417 (in December 2002, 406).
Relations with state regulators
On 25 August 2003, the Estonian National Communications
Board presented letters to AS EMT and Elion Enterprises
Ltd., in which the Board announces its intention to declare
AS EMT and Elion Enterprises Ltd. to be firms with
significant market power (SMP) for the year 2004. The
Communications Board intends to declare AS EMT to have SMP
in the public mobile communications services market
throughout Estonia. It intends to declare Elion Enterprises
Ltd. to have SMP in the public telephone services market,
the public leased line services market, and the public
interconnection services market.
AS EMT had also been declared to have SMP in the public
mobile communications services market for the years 2002 and
2003. Elion Enterprises Ltd. had also been declared to have
SMP in the public telephone services market, the public
leased line services market, and the public interconnection
services market for the years 2001, 2002, and 2003.
The lawsuit continues between Elion Enterprises Ltd. and the
Competition Board over the justification of tariffs for
calls inside the network, which were established 1 April
2001. The first and second level courts made their decisions
in favour of AS Elion, but the Competition Board appealed to
the Supreme Court, which, on 18 December 2002, annulled the
earlier judgments and forwarded the case to the
Administrative Court for revision. The Supreme Court found
that the precept of the Competition Board, regarding minute
rates of the voice communication services within a network,
is inadequate for making the final judgment. The
Administrative and the District Court had, according to the
Supreme Court, not assessed all available evidence. The
Supreme Court considered it necessary for the Administrative
Court to use the assistance of the Communications Board when
revising the case.
Reporting schedule in 2004
In 2004, the financial reports of the Eesti Telekom Group
will be published on the following dates:
Preliminary results for 2003 5 February 2004
Final results for 2003 5 March 2004
1st quarter results for 2004 15 April 2004
Half-year results for 2004 15 July 2004
9 month results for 2004 14 October 2004
INCOME STATEMENT
Financial statements are prepared in thousands of euros
kroons (EUR)
9 mnth to 9 mnth to 2002
30 09 2003 30 092002
Restated
Revenues
Net sales 224551 211952 285513
Other revenues 1448 4561 5863
Total revenues 225999 216513 291376
Operating expenses
Change in work-in- 62 134 55
progress
Capitalized self- 1499 2033 4 179
constructed assets
Materials, (74385) (69199) (96107)
consumables, supplies
and services
Other operating (21001) (19546) (27792)
expenses
Personnel expenses (24421) (22874) (32787)
Other expenses (1101) (1523) (2735)
Total operating (119347) (110975) (155187)
expenses
Profit from 106652 105538 136189
operations before
depreciation
Depreciation and (42482) (48481) (63941)
amortisation
Profit from 64170 57057 72248
operations
Net fnancial income / 3612 (290) (329)
(-expenses) from
associates
Other net financing 1593 16 411
items
Profit before tax 69375 56783 72330
Income tax on (18280) (5835) (5835)
dividends
Minority interest (223) - -
Net profit for the 50872 50948 66495
period
Earning per share
Basic earning per 0.37 0.37 0.48
share (in euros)
Diluted earning per 0.37 0.37 0.48
share (in euros)
BALANCE SHEET
Financial statements are prepared in thousands of euros
(EUR)
30 092003 31 12 2002 30 09
2002
ASSETS
Non-current assets
Property, plant and 143833 170879 168224
equipment
Goodwill 262 236 404
Licenses, patents and 6930 2483 1990
trademarks
Investments in 1314 1451 1490
subsidiaries and
associates
Other investments 185 173 176
Other non-current assets 169 130 360
Total non-current assets 152693 175352 172644
Current assets
Inventories 6573 5971 6739
Trade receivables 29411 27504 25983
Other receivables 11701 13483 10108
Investments held for 3101 5052 7320
trading
Cash and cash equivalents 73076 56497 45055
Total current assets 123862 108507 95205
TOTAL ASSETS 276555 283859 267849
EQUITY AND LIABILITIES
Equity
Issued capital 87971 87804 87804
Reserves 29937 28591 28591
Translation reserve (2) (2) 5
Retained earnings 80187 66375 66375
Net profit for the period 50872 66495 50948
Total equity 248965 249263 233723
Minority interest 829 - -
Non-current liabilities
Interest-bearing loans 817 1263 1521
and borrowings - due
after one year
Current liabilities
Trade payables 10359 15648 9894
Other current liabilities 10164 12536 12397
Tax liabilities 3713 1825 3065
Interest-bearing loans 589 2282 6195
and borrowings - due
within one year
Provisions 1119 1042 1054
Total current liabilities 25944 33333 32605
TOTAL EQUITY AND 276555 283859 267849
LIABILITIES
CASH FLOW STATEMENT
Financial statements are prepared in thousands of euros
(EUR)
9 mnth to 9 mnth to
30 09 2003 30 09 2002
Restated
Operating activities
Profit operations 64170 57057
Adjustments for:
Depreciation and amortisation 42482 48481
(Profit) from sales and write-off (852) (3392)
of fixed assets
Operating cash flow before 105800 102146
movements in working capital
Change in current receivables 273 (1328)
Change in inventories (554) (22)
Change in current liabilities (6054) (4823)
Cash generated by operations 99465 95973
Interest paid (29) (329)
Income tax on dividends paid (18280) (5835)
Net cash from operating 81156 89809
activities
Investing activities
Purchase of property, plant and (14647) (20183)
equipment
Purchase of licenses (4951) (1041)
Proceeds from sales of property, 1311 4929
plant and equipment
Acquisition of subsidiaries (853) -
Proceeds from sales of 4355 -
subsidiaries
Acquisition of associates - (639)
Purchases of other long-term (12) -
investments
Purchases of trading investments (3101) (14515)
Proceeds of disposal of trading 5055 11072
investments
Loans granted (89) (14)
Cash receipt from repayment of 3 2
loans
Dividends received 1 6
Interest received 1687 822
Net cash used in investing (11241) (19561)
activities
Financing activities
Proceeds from long-term - 2
convertible debt
Repayment of long-term (11) -
convertible debt
Proceeds from nonconvertible long- 23 180
term debt
Repayment of nonconvertible long- (578) (370)
term debt
Repayment of long-term borrowings (1487) (1763)
Repayment of obligations under (68) (320)
finance lease
Shares issues (Rights Offering) 1496 -
Dividends paid (52683) (48293)
Net cash used in financing (53308) (50564)
activities
Net increase in cash and cash 16607 19684
equivalents
Cash and cash equivalents at 56497 25797
beginning of year
Effect of foreign exchange rate (28) (426)
changes
Cash and cash equivalents at end 73076 45055
of period
AS EESTI TELEKOM AND SUBSIDIARY COMPANIES
STATEMENT OF CHANGES IN EQUITY
Financial statements are prepared in thousands of euros
(EUR)
Issued Reserves Transl Ret. Net TOTAL
cap. res. earn. profit
for period
Share Stat.
prem. legal
res.
31 12 2001 87804 19810 8781 - 64885 49783 231063
Net profit - - - - 49783 (49783) -
for 2001
transf. to
retained
earnings
Exch. Diff. - - - 5 - - 5
Arising
from transl.
of
foreign
operations
Dividends - - - - (48293) - (48293)
paid
Net profit - - - - - 50948 50948
for the
period
30 09 2002 87804 19810 8781 5 66375 50948 233723
31 12 2002 87804 19810 8781 (2) 66375 66495 249263
Net profit - - - - 66495 (66495) -
for 2002
transf. to
retained
earnings
Exch. Diff. - - - - - - -
Arising
from transl.
of
foreign
operations
Dividends - - - - (52683) - (52683)
paid
Share 167 1346 - - - - 1513
issuance
Net profit - - - - - 50872 50872
for the
period
30 09 2003 87971 21156 8781 (2) 80187 50872 248965
Hille Võrk
Financial manager
6272460
Lapas karte