Telio Holding ASA. 3rd QUARTER REPORT 2011

Transcription

1 Telio Holding ASA 3rd QUARTER REPORT 2011

2 Telio Holding ASA 3 rd Quarter Report 2011 Summary Telio has seen an improvement in customer intake during the 3rd quarter adding net 3,883 customers to the customer base, which is higher than the customer intake for 1 st half Despite the introduction of VAT on electronic services from 1 st of July, the company continues to deliver strong profit and cash flow in the 3 rd quarter. Key figures (Figures in NOK million) Q Revenues 94.0 Gross profit 59.5 Gross margin 63.2% EBITDA 29.6 EBIT 20.5 Market development Telio showed improved customer growth in the 3 rd quarter. Total net customer intake was 3,883. Norway had a net increase of 242 customers (residential and business). Sales to the business segment in Norway showed continued strong development, although affected by the holiday season. The Swiss operation added 635 net new customers in the quarter while Denmark added 82 net customers. The Dutch operation through its white label agreements also showed increased customer intake adding 2,269 new customers. Total new mobile customers were 655. Financials Q (2010 figures in brackets) Revenues in Q3 were NOK 94.0 million (97.1). Gross profit was NOK 59.5 million 63.2% gross margin ( %). EBITDA was NOK 29.6 million 31.5% ( %). Operating profit was NOK 20.5 million (21.4). Profit after tax was NOK 15.2 million (16.7). Cash flow from operations was NOK 27.1 million in Q Cash and cash equivalents were NOK 72.3 million at 30 September after dividend payment of NOK 57.3 million and purchase of treasury shares of NOK 5.6 million during the year. Changes in VAT regulations from 1 July 2011 Norwegian authorities have introduced VAT on all electronic services provided over the Internet from abroad effective from 1 July Telio, represented by its Swiss subsidiary Telio SA providing Internet services to Norwegian customers, are in compliance with the new VAT regulations from 1 July. Investments Investments in Q were NOK 8.7 million, including leased equipment (see notes 6 and 7 for details). 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. Shareholder information The total number of registered shares outstanding at the end of Q was 19,392,700 (19,392,700 at the end of Q2 2010) out of which 405,001 shares were owned by Telio Holding ASA (295,668 shares at the end of Q2 2011). The total number of shareholders was 569 (594 at the end of Q2 2011) and 31.1% of the shares were registered abroad (32.4% at the end of Q2 2011).

3 Total outstanding options at the end of Q was 647,234 (661,234 at the end of Q2 2011) with an average strike price of NOK (NOK at the end Q2 2011). The stock price moved from NOK to NOK (-7%) during Q3. Risk Telio has been subject to a tax audit by the Norwegian tax authorities since On 23 March 2011, the company received a report from the Norwegian tax authorities, according to which the tax authorities are considering to claim up to an additional NOK 88.8 million in VAT (exclusive of interest) for the financial years The notice of the potential claim is extensive and contains highly complicated legal and factual assumptions. The company has reviewed all legal and factual aspects of the notice of claim and submitted the company s reply to the tax authorities on 30 June Further information was disclosed in a stock exchange notice on 12 April Based on the principle rulings from the ecom court case and the legal and factual information regarding the VAT issue, the company will uphold its strong arguments and is prepared to take the case to court, if needed. The company is expecting to receive a final report from the tax authorities in the near future. Future market developments The board expects no significant short term changes in the markets and business environment in which Telio operates. The company has not received any claim for the periods after The company has applied the same practice in the years after Therefore, the tax authorities may also open a tax audit for the years after Oslo, 26 October 2011 Board of Directors Telio Holding ASA Cecilie Amdahl Erik Osmundsen Aril Resen (sign.) Chairman of the Board (sign.) (sign.) Odd Johnny Winge Liv Bergtorsdottir Eirik Lunde (sign.) (sign.) CEO (sign.)

4 Condensed consolidated interim balance sheet (unaudited) (Figures in NOK 1000) ASSETS Note Non-current assets Property, plant and equipment Intangible assets 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 Accrued liabilities Total liabilities Total equity and liabilities Oslo, 26 October 2011 Board of Directors Telio Holding ASA Cecilie Amdahl Erik Osmundsen Aril Resen (sign.) Chairman of the Board (sign.) (sign.) Odd Johnny Winge Liv Bergtorsdottir Eirik Lunde (sign.) (sign.) CEO (sign.)

5 Condensed consolidated interim income statement (unaudited) (Figures in NOK 1000) Note Q Q Jan-Sep 2011 Jan-Sep Sales Other revenues 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-Sep 2011 Jan-Sep 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 Diluted earnings per share *) YTD 2010 profit includes NOK 10.8 million in positive acquisition effect from the acquisition of Bellit AS

6 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 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 Adjusted 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 Purchase of treasury shares Dividends to owners Share-based payment transactions Share options exercised Total receipts from and distributions to owners Equity as at 30 September

7 Condensed consolidated interim statement of cash flows (unaudited) (Figures in NOK 1000) Cash flows from operations Q Q Jan-Sep 2011 Jan-Sep 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 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) *) Investments in subsidiaries Acquired cash Net cash flows used in investment activities Cash flows from financing activities (Purchase)/sale of treasury shares Proceeds for shares issued to employees 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 *) Includes capitalised expenses related to the development of a proprietary technical platform and capitalised customer acquisition costs

8 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 September 2011 condensed consolidated interim financial statements of Telio Holding ASA and its subsidiaries (together the Group ) are for the nine months ended 30 September The consolidated financial statements of the Group as at and for the year ended 31 December 2010 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 26 October 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 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 2010.

9 Note 5: Segment information IFRS 8 requires segment reporting for operative segments. Telio is a niche company that specialises in the development, marketing and sales of IP-based services and communication solutions, and it operates only in this one business segment. 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. (Figures in NOK 1000) Q Profit and loss by segment Norway Denmark Netherlands Switzerland Others *) 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 67 % 61 % 43 % 43 % 0 % 63 % Total operating expenses Intra-group operating expenses Net operating expenses Operating profit/loss Q Profit and loss by segment Norway Denmark Netherlands Switzerland Others *) 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 68 % 62 % 32 % 54 % 0 % 64 % Total operating expenses Intra-group operating expenses Net operating expenses Operating profit/loss

10 Jan-Sep 2011 Profit and loss by segment Norway Denmark Netherlands Switzerland Others *) 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 68 % 62 % 39 % 47 % 0 % 64 % Total operating expenses Intra-group operating expenses Net operating expenses Operating profit/loss Jan-Sep 2010 Profit and loss by segment Norway Denmark Netherlands Switzerland Others *) 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 67 % 57 % 36 % 53 % 0 % 64 % Total operating expenses Intra-group operating expenses Net operating expenses Operating profit/loss Balance sheet Norway Denmark Netherlands Switzerland Others *) Eliminations Group Assets Liabilities Equity capital Investments Balance sheet Norway Denmark Netherlands Switzerland Others *) Eliminations Group Assets Liabilities Equity capital Investments *) Other items consists primarily of the parent company Telio Holding ASA in addition to the subsidiary in Sweden (no activity).

11 Note 6: Tangible fixed assets (Figures in NOK 1000) Q Q Jan-Sep 2011 Jan-Sep 2010 FY 2010 Adapters Book value beg. of period Additions Depreciation Disposal *) Book value end of period Other equipment Book value beg. of period Additions Depreciation Book value end of period Total tangible fixed assets *) Reclassified as inventory (goods for sale) Note 7: Intangible assets (Figures in NOK 1000) Q Q Jan-Sep 2011 Jan-Sep 2010 FY 2010 Customer acquisition costs Book value beg. of period Additions Depreciation Book value end of period Technology platform Book value beg. of period Additions Depreciation Book value end of period Other intangible assets Book value beg. of period Additions Depreciation Book value end of period Total intangible assets Note 8: Inventory Inventory relates to hardware terminals for sale to customers and the increase in inventory in 2011 is related to build-up of inventory of Telio Touch terminals. The terminals are financed through a financial lease.

12 Financial information Q Telio reports revenues of NOK 94.0 million in 3rd quarter EBITDA was NOK 29.6 million (EBITDA margin of 31.5%) and EBIT was NOK 20.5 million. EBIT was NOK 20.5 million compared to NOK 21.4 million in Q3 10. Profit before tax was NOK 20.4 million compared to NOK 21.5 million in Q3 10. Total gross profit in Q3 11 was NOK 59.5 million (63.2% margin) compared to NOK 61.8 million (63.7% margin) in Q3 10. Average monthly revenue per customer (VoIP Norway) during Q3 11 was NOK 211 compared to NOK 227 in the previous quarter. Q3 11 is the first reporting after Norwegian authorities introduced VAT on electronic services. Average monthly gross profit per customer for Norwegian VoIP customers was NOK 158 during the quarter compared to NOK 171 in the previous quarter. Salaries and personnel costs were NOK 14.8 million in Q3 11 (15.8% of revenues). The company capitalized NOK 2.4 million in development costs during the quarter. Selling and marketing costs were NOK 4.5 million in Q3 11 (4.8% of revenues). The company capitalized customer acquisition costs of NOK 4.4 million during the quarter. Cash flow from operations was NOK 27.1 million in the quarter, negatively affected by payment of corporate income tax for 2009 and 2010 (Switzerland). Cash and cash equivalents were NOK 72.3 million at 30 September after dividend payment of NOK 57.3 million and purchase of treasury shares of NOK 5.6 million. Consolidated equity was NOK 63.2 million (equity ratio of 36.6%) compared to NOK 63.4 million (33.5%) at the end of Q Deferred revenues (current liabilities) decreased by NOK 0.7 million during the quarter. Deferred revenues at the end of Q3 11 were NOK 18.5 million of which NOK 2.9 million has been collected and is nonrefundable. Total financial lease debt was NOK 16.4 million at the end of the quarter which is NOK 1.4 million below the end of the previous quarter (NOK 17.8 million). Of the total financial lease debt, NOK 5.2 million was classified as current liabilities (payable within one year from the balance sheet date). The Telio Group had 128 employees (FTE) at 30 September (Figures in NOK 000) rd quarter 2 nd quarter 1 st quarter 4 th quarter 3 rd quarter 2 nd quarter 1 st quarter Total revenue 94,048 97,236 98, ,383 97,053 95,714 95,751 Gross margin (%) 63% 65% 64% 61% 64% 63% 64% Operating profit 20,506 23,509 23,030 22,311 21,417 24,090 22,725 Operating margin (%) 22% 24% 24% 22% 22% 25% 24% EBITDA 29,624 33,229 33,290 32,353 32,298 34,306 33,213 EBITDA margin (%) 32% 34% 34% 32% 33% 36% 35% EPS (NOK) EPS (NOK) fully diluted

13 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 Cecilie Amdahl Liv Bergtorsdottir Odd Johnny Winge Group Management Eirik Lunde, Chief Executive Officer Tom Nøttveit, Chief Financial Officer Alan Duric, co-founder and Chief Technology Officer Jens Hetland, Sales & Marketing Director (Residential) Nina Forsberg Mathiesen, Director Customer Services Thomas Gunleiksrud, Sales & Marketing Director (Business) Investor Relations Tom Nøttveit, Chief Financial Officer Telephone: address: Financial Calendar 1 st quarter 2011: 5 May at 09:00 2 nd quarter 2011: 18 August at 09:00 3 rd quarter 2011: 27 October at 09:00 Annual General Meeting: 12 April 2011 at 11:00 Equity Research Coverage Company Contact Phone Carnegie Espen Torgersen SEB Enskilda Peder Strand Terra Markets Jonas Jarutis First Securities Ole Jørgen Rød