RETELIT S.P.A.
PRESS RELEASE
THE BOARD OF DIRECTORS APPROVED
THE INTERIM REPORT ON OPERATIONS AT 31 MARCH 2015
Improving operating and financial results
REVENUES of € 9.6 million, up 7% compared to €8.9 million in Q1 2014
EBITDA of €2.3 million - EBITDA margin 24% - vs. €2.2 million in Q1 2014
Negative EBIT of €0.5 million vs. negative EBIT of €0.6 million in Q1 2014
Profit before tax of €3.7 million compared to a €0.2 million loss in Q1 2014
Net financial position: positive by €20.5 million, improving compared to a NFP positive by
€15.7 million at 31 December 2014
Milan, 8 May 2015 - The Board of Directors of Retelit S.p.A. met today and, chaired by Mr. Dario
Pardi, reviewed and approved the Interim Report on Operations at 31 March 2015.
The Chairman Dario Pardi commented: 'We are satisfied with the results of the first quarter of 2015, which demonstrate the soundness of the tactical and strategic choices made by the Management. Thanks to the recently approved 2015-2019 Business Plan, the Retelit Group is focusing on strategic lines that will lead to long-term growth and to more profitable business areas looking forward. The plan envisages the growth and geographic expansion of the telecommunication services wholesale market, investment in the AAE-1 submarine cable, and strong integration of our offer with Data Center and Cloud connectivity services and value added services (VAS) for private companies and public administrations (Business clients)'.
KEY CONSOLIDATED OPERATING AND FINANCIAL RESULTS AT 31 MARCH 2015
INCOME STATEMENT
Consolidated revenues for the first quarter of 2015 totalled €9.6 million compared to €8.9 million in the same period of 2014, up approximately 7%. Telecommunication services increased by 6% (€8 million compared to €7.6 million in Q1 2014), and use right concessions and network maintenance grew by 25% mainly due to the new optical fiber connections to mobile operator sites released in the period. This component stood at €1.5 million. The percentage breakdown by market of revenues from core business is as follows: Wholesale 95%, Business (Corporate and Public Administration) 5%.
Additionally, in the first quarter of the year the company's business activities generated new orders for a total value (measured in the first 12 months of contract) of €2.4 million, better than the recently
approved plan, against a churn rate lower than both plan figures and historical data. Of this €2.4 million, 5% refers to the Business segment.
The gross operating margin (EBITDA) realised in the first three months of 2015 amounted to €2.3 million compared to €2.2 million in the same period of the previous year, with an EBITDA Margin of
24%. This result benefited from an increase in the value of production and was impacted by an
increase in customer activation costs and personnel costs following improvements to the technical and commercial structures aimed at implementing the activities envisaged in the Business Plan.
The operating profit (EBIT) though negative by €0.5 million, improved from the first quarter of 2014, negative by €0.6 million, and was affected by increased depreciation and amortisation of tangible and intangible assets, in connection with the recently completed network investments (Carrier Ethernet Platform and investments in final drop to customers)
Profit before tax for the first three months of 2015 stood at €3.7 million compared to a loss of €0.2 million in the first quarter of 2014. This improvement was due, for €3.5 million, to financial income generated by changes in the fair value of forward currency derivative instruments used for hedging payments for the submarine cable in US foreign currency. These derivatives were signed for a total of US$ 35.7 million in December 2014 and the residual amount at the reference date was US$ 33.3 million. These financial incomes could be subject to positive or negative changes, which may be significant, throughout the rest of the year as a result of the appreciation or depreciation of the US currency. Net of this effect, however, the profit before tax for the period would still be positive by €0.2
million.
31/03/2015 31/03/2014 change
(in € thousands)
Value of production 9.549 8,917 7% Added value (1) 3,709 3,376 10%
Earnings before interest, tax, depreciation and amortisation
(EBITDA)2,2962,1527%Operatingresult(EBIT)(458)(616)26%
Profit/ (loss) before taxes 3,647 (227) n.a.
BALANCE SHEET
The net financial position is positive by €20.5 million, compared to €15.7 million at 31 December 2014. The financial position benefits for €3.3 million from recognition of current financial receivables
resulting from the effect of designation at fair value at 31 March 2015 of forward currency derivative instruments. In the first three months of 2015, the company generated cash for a total of €1.7 million compared to €0.1 million in the same period of the previous year.
During the first quarter of 2015, the Retelit Group made investments totalling €2.9 million, of which €
2.2 million relating to the accounting for an instalment due for participation in the AAE-1 consortium, and €0.6 million for investments in optical fibre network infrastructure and Data Centers. In particular, Retelit expanded by 54 km its network coverage, reaching 8,804 km (including stretches where dark fibre coexists with third-party infrastructure on concession for 818 km, therefore the total length of the network is 7,986 km), of which 2,140 km in urban areas, both through the creation of new
connections and through the acquisition of third-party network.
SIGNIFICANT EVENTS DURING THE QUARTER
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On 7 January 2015, the General Shareholders' Meeting appointed the company's Board of Directors. The Board of Directors, composed of 9 members, will remain in office until the date of the Shareholders' Meeting called to approve the financial statements at 31 December 2017.
On 12 January 2015, the Board of Directors of Retelit S.p.A. checked the independence requirements of the independent Directors and established the 'Appointment and Remuneration Committe' and the 'Control and Risks Committee'. On 19 January 2015, the Board of Directors of Retelit S.p.A. appointed Federico Protto, Eng. as Managing Director and General Manager.
TheShareholders'Meetingof29January2015approvedaresolutionagainstthepreviousBoardofDirectors'proposalsconcerningacapitalincreaseofupto€25milliontobeofferedforsubscriptionand, in accordance with article 2441, paragraph 5 of the Italian Civil Code, to the qualified foreign investor 'GEM Global YieldFund LLC SCS' and the assignment of warrants free of charge to the same investor; and the issue of up to 20,000,000 bonds convertible into Retelit S.p.A. common shares linked to warrants, to be offered upon subscritpion, in accordance with article 2441, paragraph 5 of the Italian Civil Code, of the qualified foreign investor 'KBC Telco Infrastructure Pty Ltd', and as such with exclusion of pre-emption pursuant to article 2441, paragraph 1 of the Itallian Civil Code.
On 30 March 2015 the Board of Directors approved the new 2015-2019 Business Plan, which envisages the implementation of four areas during the five-year period. These four areas are: i) Strengthening and development of the service and telecommunication Wholesale segment; ii) development of connectivity and value added services (VAS) for the Corporate segment and for the Public Administration; iii) development of Data Center and Cloud services; iv) continuation of the AAE-1 submarine cable project. The five-year plan objectives include sales revenues of approx. €70 million, EBITDA of approx. €25 million, cumulative investments over the 5-year period of approx. € 114 million and a positive net financial position of approx. €25 million
On 31 March 2015, the Group - through its subsidiary e-via - manifested its interest in active participation in Italy's ultra broadband strategy described in the document issued by the Presidency of the Council of Ministers on 3 March 2015. In support of this manifestation of interest, the Group notified to the Ministry for Economic Development its intention to make investments, in line with the
2015-2019 Business Plan, which fall within the definition of infrastructural interventions as set out in
article 33, paragraph 7-ter of Law Decree no. 179 of 2012. Participation in Italy's broadband strategy would allow the Group to benefit from any reliefs provided by the regulations.
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SIGNIFICANT EVENTS AFTER THE END OF THE PERIOD
By resolution dated 20 April 2015, the Board delegated to the Managing Director the powers to carry out all acts required for the winding up of the US subsidiary Retelit USA LLC. To date, the records do not show that the aforesaid company has performed any significant transaction or that it owns financial resources.
In April 2015, leading financial institutions with which the Group's management started negotiations for the granting of a loan, necessary for the investments related to the AAE-1 cable, approved resolutions to grant short and medium to long-term loans and to open commercial credit lines at market conditions, for amounts adequate to the Group's financial requirements in the foreseeable future.
In April 2015, a further €2.2 million was paid to the AAE-1 Consortium for the installation of a submarine cable.
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OUTLOOK FOR THE CURRENT YEAR
In the early months of 2015 the Group performed slightly better than expected in the 2015 - 2019
Business Plan, which forecasts by the end of 2015 the achievement of sales revenues range from €39 to €41 million and EBITDA of €9 to €10 million.
The Group continues to implement actions to strengthen its positioning in the wholesale market of infrastructures and fiber-optic broadband data transmission services and to develop business in the are of Data Center, Cloud and value added service (VAS) services to companies and public entities, in accordance with the 2015-2019 Business Plan .
With regard to the AAE-1 project, the Group is continuing negotiations with leading international operators potentially interested in reserving in advance part of the capacity and band-width that will
be available to Retelit as soon as the submarine cable becomes operational. By the first half of July
2015, medium to long-term loan agreements are expected to be closed with top financial institutions, in order to ensure the availability of adequate additional financial resources to carry on the AAE-1 project and to complete the investments envisaged in the Business Plan.
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Please note that this press release contains forward-looking statements concerning the Group's intentions, beliefs or current expectations with regard to financial results and other Group activities and strategies. Readers of this press release should not unduly rely on these forward-looking statements, as the final results could differ significantly from those contained in those statements as a result of multiple factors, most of which are beyond the Group's control.
We would like to recall that the Interim Report on Operations at 31 March 2015 is not subject to audit and is available as prescribed by law at the Group's registered office and in the Investor Relations section of the company's website (www.retelit.it)
Mr. Antonio Maconi, as member of the Management team in charge of preparing the company's accounting documents, declares, in accordance with article 154-bis, paragraph 2 of the Italian Consolidated Finance Law (TUF), that the accounting information contained in this press release reflects the data contained in the accounting documents, books and records.
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The Retelit Group
Operating with approximately 8,000 km of optical fibers, 9 underground networks and 18 Data Centers, Retelit is a leading
Italian data transmission service provider and infrastructure operator for the telecommunication and ICT markets. Since
2013, large investments in new technologies have allowed Retelit to expand its offer to include next-generation ultra- broadband VPN, Cloud Storage and value added Data Center services. The Retelit has been listed in the MTA market of the Milan Stock Exchange since 2000.
For additional information:
Investor Relations
Dario Pardi
tel +39 02 2020451 inv.relations@retelit.it
Institutional Media Relations
CDR Communication
Angelo Brunello
Tel. + 39 329 2117752 angelo.brunello@cdr-communication.it
Media Relations ICT Key4Media
Lucia Casartelli
Mob. +39 346 2191801 media.relations@retelit.it
The Retelit Group's Income Statement and Net Financial Position at 31 March 2015 are attached hereto.
(€ thousands) | 31/03/2015 | 31/03/2014 |
Revenues Other income | 9.501 48 | 8.822 95 |
Total operating revenues and income | 9.549 | 8.917 |
Purchases di raw materials and external services Cost of personnel Other operating expenses | (4.632) (1.413) (1.207) | (4.430) (1.225) (1.111) |
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION | 2.296 | 2.152 |
Amortisation, depreciation and write-downs of tangible and intangible assets Other provisions and write-downs | (2.754) - | (2.629) (138) |
OPERATING PROFIT/(LOSS) | (458) | (616) |
Financial income Financial income from derivative instruments Financial expenses | 610 3.495 (0) | 400 (10) |
RESULT BEFORE TAXES | 3.647 | (227) |
BREAKDOWN | Balance at 31 March 2015 | Balance at 31 March 2014 |
A. Cash and cash equivalents | 17.267 | 15.583 |
Cash | 17.267 | 15.583 |
E.Current financial receivables | 3.269 | 124 |
Current financial debt | 0 | 0 |
Net current financial debt I - E - D | (20.536) | (15.707) |
Non-current financial debt | 0 | 0 |
Net financial debt J+N | (20.536) | (15.707) |
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