PRESS RELEASE

BOARD OF DIRECTORS APPROVES INTERIM REPORT AT SEPTEMBER 30, 2016 All key financial indicators significantly improve FY 16 results expected to beat Guidance with the reaching of full operating profitability
  • REVENUES up 21.6% to Euro 36.6 million from Euro 30.1 million in 9M 2015
  • EBITDA boosted 45.6% to Euro 10.6 million from Euro 7.3 million in 9M 2015 - EBITDA margin at 29.0% from 24.2%
  • EBIT of Euro 1.4 million from EBIT loss of Euro 1.4 million in 9M 2015
  • Net Profit of Euro 1.8 million compared to a loss of Euro 0.6 million in the first nine months of 2015, recalculated on a like-for-like basis following the adoption of Hedge Accounting for derivative instruments. The 2015 9M Net Profit was Euro 2.1 million with derivatives measured at fair value.
  • Orders of Euro 26.9 million at Total Contract Value (TCV)
  • Net Cash Position of Euro 7.7 million compared to Euro 11.5 million at December 31, 2015
  • 2016 results expected to beat guidance with the delivery of EBIT profit

Milan, November 9, 2016 - The Board of Directors of Retelit S.p.A., in a meeting today chaired by Mr. Dario Pardi, reviewed and approved the Interim Report at September 30, 2016.

The first nine months featured sustained revenue growth to Euro 36.6 million, up 21.6%, with the rising margin producing EBITDA of Euro 10.6 million (+45.6%) and EBIT of Euro 1.4 million and all business lines again performing strongly.

The Chairman Dario Pardi, stated: "We are highly satisfied with the quarterly results which confirm the significant advancement of all key financial indicators on the previous year and which have fully responded to the operations rolled out under the Industrial Plan. In strategic terms, the quarter featured admission to the STAR segment of the Italian Stock Exchange - a key step for Retelit which joins Italian enterprises demonstrating excellence and good governance and transparency - furthering once again the company's opening up to the financial markets. Operationally, the third quarter saw involvement in the Infratel tenders initiated for the construction and management of passive ultra-broadband infrastructure, culminating with the presentation of an offer for the first call and an application for the second. These initiatives underline the key role which Retelit plays in the Italian TLC sector and

highlight the strength of the strategic operating choices taken by management over the last two years. Looking to the near future and recalling that ultra-broadband is not one of the targets of the current Industrial Plan, the results to date and the strong order performance indicate that both the earnings and financial forecasts will be outperformed".

9M 2016 CONSOLIDATED FINANCIAL HIGHLIGHTS

9M 2016 9M 2015

(in Euro thousands)

Cge.

Q3 2016 Q3 2015

(in Euro thousands)

Cge.

Value of production

36,624

30,124

22%

12,057

10,442

15%

Value added (1)

15,300

11,700

31%

5,056

4,082

24%

EBITDA

10,630

7,299

46%

3,523

2,540

39%

EBIT

1,425

(1,409)

n.a.

383

(343)

n.a.

Net Profit/(loss)

1,838

2,131

-14%

543

(67)

n.a.

Net margin percentage (2)

5.0%

7.1%

4.5%

-0.6%

30/09/2016

31/12/2015

Parent company shareholders net equity

134,192

132,437

Average workforce

n.

77.0

n.

76.6

INCOME STATEMENT

Revenues and other income for 9M 2016 totalled Euro 36.6 million, compared to Euro 30.1 million in 9M 2015 - up 21.6%. Telecommunication services were up 17% to Euro 29.2 million (Euro 24.9 million in 9M 2015), while network usage rights and maintenance revenues increased 46% to Euro 6.7 million, thanks to the new fiber optic connections released to mobile operators in the year.

The breakdown of revenues by market was as follows: National Wholesale Euro 15.9 million (44%), International Wholesale Euro 16.0 million (45%), Business (Corporate and Public Sector) Euro 4.0 million (11%).

In the nine months, commercial operations generated new orders totalling Euro 26.9 million (measured over the full contract duration - TCV), beating Industrial Plan objectives and the results for the same period of the previous year (Euro 26.8 million). 61% of new orders concern the National Wholesale market, 25% the International Wholesale market and 14% the Business market, while the breakdown by type of service indicates that connectivity services account for 79% of total orders. The churn rate of Euro 3.8 million was lower than the plan and shows an increase on the first nine months of 2015 (Euro 3.1 million). These results, compared with trends across the various markets, highlight the acquisition of market share by the company.

EBITDA in the first nine months of 2016 grew 45.6% to Euro 10.6 million from Euro 7.3 million in 9M 2015, with the EBITDA margin rising from 24.2% to 29.0%. This result benefitted from the revenue increase and the improved mix, the optimisation of infrastructure management and was only partly impacted by increased personnel costs following the development of the technical and commercial departments for the implementation of the Industrial Plan. EBIT amounts to Euro 1.4 million - considerably advancing on 9M 2015 (loss of Euro 1.4 million) - despite the increase in amortisation and depreciation concerning the new recently completed network investments (Carrier Ethernet Platform and Client final drop investments). The Net Profit for the first nine months totalled Euro 1.8 million compared to Euro 2.1 million in the same period of the previous year. This development is strictly related to the change in the accounting treatment of derivative instruments. From 2016, the hedge accounting standard was adopted which requires the recognition of the fair value changes of a derivative to a specific cash flow hedge reserve (IAS 39). In the first nine months of 2015, the recognition to the income statement of the fair value of the derivatives resulted in financial income of Euro 1.8 million and exchange gains of Euro 1 million. The net result for 9M 2015 recalculated on a like-for-like basis would be a loss of Euro 0.6 million.

QUARTERLY PERFORMANCE

€000

Q1 2015

Q2 2015

Q3 2015

Q4 2015

Q1 2016

Q2 2016

Q3 2016

TOTAL REVENUES

9,549

10,134

10,442

11,979

12,402

12,165

12,057

EBITDA

2,296

2,464

2,540

3,742

3,401

3,706

3,523

EBIT

(458)

(608)

(343)

628

416

626

383

Quarterly growth continued with a significant improvement on Q3 2015 and operating revenues and income up to Euro 12.1 million (up over 15% on Euro 10.4 million in Q3 2015) and substantially in line with Q2 2016.

Quarterly EBITDA advanced 38.7% to Euro 3.5 million in Q3 2016, thanks to revenue development and an improved mix. Quarterly EBIT was again in positive territory at Euro 0.4 million, and compares to a Q3 2015 loss of Euro 0.3 million, highlighting the strength of the actions taken in the quarter.

BALANCE SHEET

The net cash position was Euro 7.7 million, compared to Euro 11.5 million at December 31, 2015. This benefitted from the recognition of Euro 565 thousand of the current financial receivable from the fair value measurement at September 30, 2016 of currency derivatives. The Net Financial Position includes loans undertaken in the period to fund the investment in the AAE-1 project for approx. Euro 8.5 million, of a total of Euro 30 million agreed with a banking syndicate, a medium-term loan of Euro 1.7 million signed and issued in the period with Banco Popolare Soc. Coop. and a loan of Euro 1.9 million from Banco Popolare Soc. Coop. with 60-month maturity issued within the scope of Ministerial Decree of November 27, 2013 ("New Sabatini").

In the first nine months of 2016, the group generated liquidity of Euro 22.5 million, compared to Euro 12.2 million in the same period of 2015.

In 9M 2016, the Retelit Group invested Euro 25.4 million, of which Euro 13.9 million for the AAE-1 submarine cable, Euro 10.9 million for fiber optic network infrastructure and Data Center investment, in addition to minor investments for Euro 0.6 million.

Total investment in the AAE-1 project at September 30, 2016 was Euro 39.4 million out of a total estimated investment of approx. Euro 60.0 million, of which Euro 33.9 million (USD 38.9

Retelit S.p.A. published this content on 09 November 2016 and is solely responsible for the information contained herein.
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