Telio Holding ASA 4 th quarter report 2013

Transcription

1 Telio Holding ASA 4 th quarter report 2013

2 Telio Holding ASA 4 th Quarter 2013 Report Summary The fourth quarter concluded a successful year for the Telio Group. The successful restructuring of NextGenTel continued in the fourth quarter and Telio has maintained its profitability level. The sale of the NextGenTel office building was completed at the end of the year and brings NOK 95 million in cash to the company. The Group s strong cash position will be used in a financial debt restructuring. At the start of 2014, the Group is well positioned to achieve its financial targets for the year. Market development As announced during 2013, the Telio companies have reduced customer intake in favor of increased profitability. Total net customer intake in Q4 was a net loss of 4,095 customers *). Norway had a net decline of 3,260 VoIP customers, partly offset by 1,619 new mobile and broadband customers. While the Dutch market has contributed substantially to the Group s net customer growth, the white label business in the Netherlands had a net decline of 1,738 customers in Q4. As announced previously, the company has expected a slow-down in customer intake due to changes within the largest white label partner. NextGenTel had a slight increase in its customer base during Q4 and had 204,000 customers at the end of December. The Telio Group had 430,000 customers at the end of December. Key figures (Figures in NOK million) Q Q Revenues Gross profit Gross margin 53.3% 53.0% EBITDA EBIT Note: EBITDA/EBIT are adjusted for non-recurring items and EBIT is adjusted for amortization cost related to the acquisition of NextGenTel Group financials Q (2012 figures in brackets) Revenues in Q4 were NOK million (110.6). Gross profit was NOK million 53.3% ( %). EBITDA adjusted for nonrecurring items was NOK 73.9 million 22.5 % ( %). Operating profit adjusted for nonrecurring items was NOK 21.4 million (4.6). Profit after tax was NOK 18.9 million (a loss of 1.6). The Q financial statements include NOK 11.4 million in amortization cost related to the acquisition of NextGenTel AS. Cash and cash equivalents were NOK million at 31 December 2013 (before settlement of the property sale at NOK 95 million in January 2014). Investments Investments in Q were NOK 29.1 million, including leased equipment (see notes 6 and 7 for details). Capex /sales ratio was 8.9% in Q4. *) Customers defined as revenue generating units, not unique customers NextGenTel NextGenTel has developed positively also during Q4 and the financial performance is ahead of plan. Rightsizing of the organization has been ongoing also during the fourth quarter. As of 31 December 2013, the organization had 100 FTEs less than at the transaction date. Related party transactions There have been no transactions by related parties that have had a material effect on the Group s financial position or results in the period.

3 Shareholder information The total number of registered shares outstanding at the end of Q was 23,283,180 (23,283,180 at the end of Q3 2013) out of which 229,001 shares were owned by Telio Holding ASA (229,001 shares at the end of Q3 2013). The total number of shareholders was 524 (516 at the end of Q3 2013) and 37.6% of the shares were registered abroad (34.1% at the end of Q3 2013). Total outstanding options at the end of Q was 548,100 (548,100 at the end of Q3 2013) with a weighted average strike price of NOK (NOK at the end Q3 2013). The stock price moved from NOK to NOK (+14.6%) during Q4. Financial debt The acquisition of NextGenTel AS was financed by external loans of NOK 500 million, split in a 3-year term loan of NOK 200 million and a 4-year bond of NOK 300 million. There are financial covenants related to the loan facilities and the company s performance is in compliance with the financial covenants as of 31 December Net interest bearing debt was NOK 257 million at 31 December 2013 (before settlement of the property sale at NOK 95 million in January 2014). As announced, the company is in a process to refinance its debt. In a bondholders meeting on 5 February 2014, an early redemption of the bond was approved. The NOK 300 million bond will be repaid at % of par value plus accrued interest on or about 7 March The company has agreed on new loan facilities with Nordea. The new financing comprises a five year term loan of NOK 250 million and a NOK 75 million overdraft facility, replacing the current bank loan of NOK 175 million. The reduced financial expenses following the new loan facilities will offset the call premium for the bond within approximately 24 months and the new financing reduces financial expenses by approximately 60% (NOK 56 million) over the loan term. Altogether, this financial restructuring including less strict financial covenants makes it possible for Telio to pay dividend already in 2014 based on the 2013 annual accounts. Risks The Dutch wholesale business increases the company s risk since one distributor represents a majority of the customers. Sale of NextGenTel property The sale of Sandslimarka 31 AS, where the NextGenTel office building is the main asset, was completed on 31 December As agreed, NextGenTel received NOK 95 million in payment for the transaction on 15 January Future market developments The board expects no significant short term changes in the markets and business environment in which Telio operates. Events after quarter-end After quarter-end, Telio announced a new contract to provide VoIP services to M7 customers in the Netherlands. M7 operates in the Netherlands with a.o. the brand Canal Digitaal. During 2014, Telio Netherlands will start providing all VoIP services for their Dutch customers. This includes the migration of the voice services of all existing customers (currently approximately 145,000 customers). An intention has been expressed by both M7 and Telio to also look into providing VoIP services to other M7 customers across Europe. NextGenTel announced a contract with TeliaSonera to deliver fiber to TeliaSonera s locations in Norway, including the NetCom shops. With this contract, NextGenTel further strengthens its position within the retail stores segment. The company currently provides broadband accesses to twenty thousand businesses making NextGenTel one of the largest

4 players within broadband to retail stores and other enterprises in Norway. The Norwegian Post and Telecommunications Authority issued a decision related to the regulation of the fiber market and reduction of the LLUB cost. Oslo, 10 February 2014 Board of Directors Telio Holding ASA Ellen Hanetho Erik Osmundsen Aril Resen (sign.) Chairman of the Board (sign.) (sign.) Silje Veen Snorre Kjesbu Eirik Lunde (sign.) (sign.) CEO (sign.)

5 Condensed consolidated interim balance sheet (unaudited) (Figures in NOK 1000) Note ASSETS Non-current assets Property, plant and equipment Intangible assets Goodwill Deferred tax assets Current assets Inventory Trade and other receivables Cash and cash equivalents Total assets EQUITY Share capital Other reserves Retained earnings Total equity LIABILITIES Non-current liabilities Borrowings Deferred tax liabilities Current liabilities Trade and other payables Current income tax liabilities Borrowings Deferred income Total liabilities Total equity and liabilities Oslo, 10 February 2014 Board of Directors Telio Holding ASA Ellen Hanetho Erik Osmundsen Aril Resen (sign.) Chairman of the Board (sign.) (sign.) Silje Veen Snorre Kjesbu Eirik Lunde (sign.) (sign.) CEO (sign.)

6 Condensed consolidated interim income statement (unaudited) (Figures in NOK 1000) Note Q Q Jan-Dec 2013 Jan-Dec 2012 Total revenues Cost of connection and traffic charges Salaries and personnel costs Selling and marketing costs Other costs Depreciation and amortization 6, Operating profit Finance Profit before income tax Income tax Profit Attributable to: Equity holders of the parent company Other comprehensive income Q Q Jan-Dec 2013 Jan-Dec 2012 Translation differences Other income and expenses during the period (after tax) Comprehensive profit for the period Profit attributable to: Equity holders of the parent company Earnings per share Earnings per share 0.82 (0.08) Diluted earnings per share 0.81 (0.08)

7 Condensed consolidated interim statement of changes in equity (unaudited) (Figures in NOK 1000) Share capital Treasury shares Share premium reserve Other paid-in equity Translation differences Retained earnings Total equity Equity as at 1 January 2012 *) Comprehensive profit/loss for the period Profit/Loss Other income and expenses - Translation differences Total other revenues and expenses Comprehensive profit/loss for the period Transactions with owners, recorded directly against equity - Receipts from and distributions to owners - Purchase of treasury shares Dividends to owners Share-based payment transactions Share options exercised Total receipts from and distributions to owners Equity as at 31 December Equity as at 1 January Comprehensive profit/loss for the period Profit/Loss Other income and expenses Translation differences Total other revenues and expenses Comprehensive profit/loss for the period Transactions with owners, recorded directly against equity Receipts from and distributions to owners Share issues Dividends to owners Share-based payment transactions Share options exercised Total receipts from and distributions to owners Equity as at 31 December *) Adjusted for change in accounting principle

8 Condensed consolidated interim statement of cash flows (unaudited) Cash flows from operations Q Q Jan-Dec 2013 Jan-Dec 2012 Profit/loss for the year before tax Adjustment for: - Net financial items Interest paid Interest received Realized foreign exchange gain/(loss) Taxes paid Depreciation Amortisation Non-cash transactions related to option costs Non-cash transactions related to acquisition Changes in inventory Changes in trade accounts payable and other liabilities Changes in trade accounts and other receivables Change in deferred revenue Net cash flow from operations Cash flows from investment activities Purchase of property, plant and equipment (tangible fixed assets) Purchase of PPE through financial lease Purchase of other investments (intangible assets) Acquisition of subsidiary, net of cash acquired Net cash flows used in investment activities Cash flows from financing activities Proceeds from share issues Proceeds for shares issued to employees New long term debt New borrowings (financial lease) Payment of liabilities related to financial leasing Dividends paid Net cash flows used in financing activities Change in cash and cash equivalents Cash and cash equivalents and credit facilities utilised as at beginning of period Effect of exchange rate fluctuations on cash and cash equivalents Cash and cash equivalents as at end of period

9 Telio Holding ASA Notes to the condensed consolidated interim financial statements (unaudited) Note 1: Reporting entity Telio Holding ASA (the Company ) is a company domiciled in Oslo, Norway. These December 2013 condensed consolidated interim financial statements of Telio Holding ASA and its subsidiaries (together the Group ) are for the twelve months ended 31 December The consolidated financial statements of the Group as at and for the year ended 31 December 2012 are available upon request from the Company s registered office at Harbitzalleen 2A, Oslo, or at Note 2: Statement of compliance These condensed consolidated interim financial statements of Telio Holding ASA Group have been prepared in accordance with rules and regulations from Oslo Stock Exchange and International Financial Reporting Standard (IFRS) IAS 34, Interim Financial Reporting. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 31 December These condensed consolidated interim financial statements were approved by the Board of Directors on 10 February Note 3: Significant accounting policies These condensed consolidated interim financial statements have been prepared under the historical cost convention. They have been prepared under the same accounting principles as those set out in the consolidated financial statements of the Group as at and for the year ended 31 December 2012, except for a change in the accounting principle related to customer acquisition costs. From 1 January 2013, customer acquisition costs are expensed when incurred. This has been treated as a change in accounting principle in accordance with IAS 8 and comparable figures have been restated to reflect this change. Note 4: Estimates The preparation of interim financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing these condensed consolidated interim financial statements, the significant judgments made by management in applying the Group s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 31 December 2012.

10 Note 5: Segment information IFRS 8 requires segment reporting for operative segments. The following geographic segments have been defined based on where the customer is domiciled: Norway, Denmark, the Netherlands and Switzerland. The risk and return are influenced by the geographic location of the operations, in addition to the market. Telio's definition of the geographic segment is based on the location and customer segment in these markets. Transactions between the segments are eliminated. The company's highest decision-making body is the company's Board of Directors and management. Telio acquired the Norwegian broadband services company NextGenTel AS with effect from 1 February The figures for NextGenTel AS are included in the 'Norway' segment from Q and onwards. Geographical segments (Figures in NOK 1000) Q Total Telio NextGenTel Profit and loss by segment Norway Norway Norway Denmark Netherlands Switzerland Other 1) Group Total revenues Intra-group revenues Net revenues Total costs of sales Intra-group cost of sales Net cost of sales Gross profit/loss Gross margin 53 % 59 % 51 % 66 % 52 % 44 % 0 % 53 % Total operating expenses Intra-group operating expenses Net operating expenses Operating profit/loss Q Total Telio NextGenTel Profit and loss by segment Norway Norway Norway Denmark Netherlands Switzerland Other 1) Group Total revenues Intra-group revenues Net revenues Total costs of sales Intra-group cost of sales Net cost of sales Gross profit/loss Gross margin 54 % 54 % 0 % 59 % 45 % 40 % 0 % 53 % Total operating expenses Intra-group operating expenses Net operating expenses Operating profit/loss

11 Jan-Dec 2013 Total Telio NextGenTel Profit and loss by segment Norway Norway Norway Denmark Netherlands Switzerland Others 1) Group Total revenues Intra-group revenues Net revenues Total costs of sales Intra-group cost of sales Net cost of sales Gross profit/loss Gross margin 54 % 58 % 52 % 62 % 50 % 44 % 0 % 54 % Total operating expenses Intra-group operating expenses Net operating expenses Operating profit/loss Jan-Dec 2012 Total Telio NextGenTel Profit and loss by segment Norway Norway Norway Denmark Netherlands Switzerland Others 1) Group Total revenues Intra-group revenues Net revenues Total costs of sales Intra-group cost of sales Net cost of sales Gross profit/loss Gross margin 63 % 63 % #DIV/0! 60 % 45 % 47 % 0 % 60 % Total operating expenses Intra-group operating expenses Net operating expenses 2) Operating profit/loss Total Telio NextGenTel Balance sheet Norway Norway Norway Denmark Netherlands Switzerland Other 1) Eliminations Group Assets Liabilities Equity capital Total Telio NextGenTel Balance sheet Norway Norway Norway Denmark Netherlands Switzerland Other 1) Eliminations Group Assets Liabilities Equity capital ) Other items include the parent company Telio Holding ASA and Group adjustments (including non-recurring transaction costs of NOK 2.9 million and amortization of NOK 42.3 million YTD 2013)

12 Note 6: Property, plant and equipment (Figures in NOK 1000) Q Q Jan-Dec 2013 Jan-Dec 2012 Equipment Book value beg. of period Additions Depreciation Disposals Book value end of period Property Book value beg. of period Additions Depreciation Disposals Book value end of period Property, plant and equipment Note 7: Intangible assets and goodwill (Figures in NOK 1000) Q Q Jan-Dec 2013 Jan-Dec 2012 Intangible assets Book value beg. of period Additions Amortization Book value end of period Goodwill Book value beg. of period Additions Revaluation Book value end of period Intangible assets and goodwill Amortization of intangible assets include amortization of excess values related to the acquisition of NextGenTel AS (Q4 13: NOK 11.4 million, FY 13: NOK 42.3 million). Note 8: Finance Q Q Jan-Dec 2013 Jan-Dec 2012 Interest income Interest expense Foreign currency gain/(loss) Other financial income/(expenses) Net finance

13 Note 9: Business combination - purchase price allocation Telio Holding ASA acquired NextGenTel AS at 31 January 2013 at a purchase price of NOK 601 million. The acquisition was financed by NOK 500 million in senior debt facilities, NOK 100 million in new shares and NOK 1 million in own cash. Transaction costs have been expensed and amounted to NOK 5 million in Q and NOK 2.9 million in Q The company has arrived at the following allocation of the purchase price of NOK 601 million. The allocation of the purchase price is based on the acquisition method as regulated in IFRS 3. The purchase price is allocated to fair value of assets and liabilities in NextGenTel AS and was revised in connection with the sale of the NextGenTel property at the end of 2013: NOK million Cash 501,0 Consideration shares 100,0 Total purchase price 601,0 Deferred tax asset 13,0 Trade marks and trade names 14,0 Customer relationships 241,0 Intangible assets 57,3 Property 94,9 Tangible fixed assets 197,4 Accounts receivable 143,9 Prepaid and other current assets 39,2 Cash part of net working capital 30,0 Cash and cash equivalents (estimate at final settlement of the transaction) 35,7 Public duties payable -18,9 Taxes payable -7,4 Deferred tax -70,3 Accounts payable -55,6 Other short term liabilities -157,2 Total identified assets and liabilities 557,0 Goodwill 44,0

14 Company Facts Telio Holding ASA Harbitzalleen 2A P.O. Box 54 Skøyen 0212 Oslo Telephone: Homepage: Company reg. number: Founded: 12 August 2003 Board of Directors Erik Osmundsen (Chairman) Aril Resen Ellen Hanetho Silje Veen Snorre Kjesbu Group Management Eirik Lunde, Chief Executive Officer Tom Nøttveit, Chief Financial Officer Sven Ole Skrivervik, Chief Technology Officer Jens Hetland, Sales & Marketing Director Nina Forsberg Mathiesen, Customer Services Director Erik Trondsen, Product Director Investor Relations Tom Nøttveit, Chief Financial Officer Telephone: address: Web: Financial Calendar 1 st quarter 2014: 8 May at 09:00 2 nd quarter 2014: 21 August at 09:00 3 rd quarter 2014: 28 October at 09:00 Equity Research Coverage Company Contact Phone SEB Enskilda Peder Strand Norne Securities Leonas Bauzys Indep Research LTD Ola Sekkesæter