On 22 April 2014, 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 three months period ended 31 March 2014.
The total revenue of TEO Group in January-March of 2014 was LTL 169 million (EUR 49 million), a decrease by 7.2 per cent over the total revenue of LTL 183 million (EUR 53 million) in the first three months of 2013.
Due to redundancy charge of LTL 7.6 million (EUR 2.2 million) EBITDA for the first three months of 2014 went down by 11.7 per cent and amounted to LTL 66 million (EUR 19 million). EBITDA for the first quarter of 2013 amounted to LTL 74 million (EUR 22 million). EBITDA margin for the first quarter of 2014 amounted to 38.8 per cent, while a year ago it was 40.8 per cent. Over the year EBITDA excluding non-recurring items declined by just 1.6 per cent while EBITDA margin excluding non-recurring items stood at 43.2 per cent.
Profit before income tax in the first three months of 2014 went down by 16.5 per cent and amounted to LTL 35 million (EUR 10 million) Year ago it was LTL 42 million (EUR 12 million). Profit before income tax excluding non-recurring items was by 1.5 per cent higher that during the first quarter of 2013.
Profit for the period amounted to LTL 32 million (EUR 9 million), a decrease by 17.1 per cent over the profit of LTL 38 million (EUR 11 million) for the same period year ago. The profit margin was 18.7 per cent while a year ago it was 20.9 per cent. Profit for the period excluding non-recurring items was by 2.6 per cent higher than in January-March 2013 and profit margin excluding non-recurring items was 23.2 per cent.
Management’s comment on financial results for the three months period of 2014:
“The year 2014 the Company started with the number of changes: revision of its organizational structure, simplifying brand portfolio, upgrading of existing and launch of new services.
This year it was decided to consolidate the Company’s brands into one TEO brand and, at the same time, offer new generation services, which are more integrated as well as easier and more intuitive to use. With a single name, the Company intends to market its services more clearly to its private and business customers.
In March television GALA became TEO television and from April Internet ZEBRA is called TEO Internet. At the same time TEO changed the graphic user interface (GUI) of IPTV service – the customers are able to use TV content more simply and intuitively, to easier find the programs and video recordings. Exclusive features of IPTV service led to a record (the highest during the last twelve months) increase in number of IPTV customers during the first quarter of 2014. Internet offerings of the Company were also enhanced with additional value added services and increased speed for a part of customers.
Over the year, in terms of revenue residential customers’ segment remained almost stable, while business customers’ segment declined by 6.3 per cent. Major negative impact on revenue was from operators’ business (decrease by 22.6 per cent) due to lower volume of low margin international transit.
In 2014, TEO started its efficiency improvement program and revision of its organizational structure. Up to 130 employees of TEO Group terminated their employment contracts during the first quarter of 2014. The Company incurred a non-recurring redundancy cost of LTL 7.6 million (EUR 2.2 million) which had a negative impact on the Company’s results for this quarter. Nevertheless, the Company will save up to LTL 8 million (EUR 2.3 million) annually due to reduced number of employees.
In March the Board approved a new organizational structure of the Company which will come into force in June 2014. We believe that new organization will make it possible to understand better and respond faster to the customers’ needs and to create solutions and services that are easier to use. In the new Company structure the service development and sales units will be replaced by two new units: Business-to-Consumer (B2C) and Business-to-Business (B2B). The new organization will reduce the number of layers and will increase the span of control.”
ENCL.:
- TEO LT, AB Consolidated Interim Financial Statements for the twelve months period ended 31 March 2014. - Presentation of TEO LT, AB results for the 3 months of 2014.
Darius Džiaugys, Head of Investor Relations, tel. +370 5 236 7878
