Annual report 2012

Financial results of the Telekom Slovenije Group

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The Telekom Slovenije Group’s operating results in 2012 were in line with the expectations presented at the end of the third quarter. Net profit in the amount of EUR 43.7 million is the result of systematic measures to optimise operations. 

Highlights in 2012


  • The Telekom Slovenije Group’s operating revenues totalled EUR 793.1 million in 2012, down 3.8 % on those achieved in 2011.
  • The drop in revenues was primarily the result of a decline in revenues from traditional and mobile voice telephony services, which reflects the increasing price-sensitivity of users owing to the generally adverse economic situation.
  • Net profit amounted to EUR 43.7 million, up 28 % on 2011. 

Key financial performance indicators of the Telekom Slovenije Group

in EUR thousand

2010

2011

2012

Index 12/11

Operating revenues

845,548

824,507

793,057

96

EBITDA

247,156

255,616

241,563

95

EBITDA margin

29.2 %

31.0 %

30.5 %

98

EBIT

-178,482

63,250

62,531

99

Return on sales – ROS (EBIT/net sales revenues)

neg.

7.8 %

8.0 %

102

Net profit/loss

-210,317

34,011

43,687

128

Assets

1,658,228

1,575,314

1,554,737

99

Equity

807,812

815,275

814,717

100

Equity ratio

48.7 %

51.8 %

52.4 %

101

Net financial debt

503,360

388,591

330,287

85

Investment in property, plant and equipment (CAPEX)

113,575

91,966

128,092

139

EBITDA - CAPEX

133,581

163,650

113,471

69

Ratio of (EBITDA-CAPEX) to EBITDA (cash margin)

54.0 %

64.0 %

47.0 %

73


Income statement analysis

The Telekom Slovenije Group's operating revenues totalled EUR 793.1 million in 2012, down 3.8 % on those achieved in 2011. A similar trend was seen in net sales revenues, which amounted to EUR 785.1 million, down 3.7 % on the previous year.

Falling revenues at the parent company were offset by revenue growth in other companies in Slovenia and the countries of South-Eastern Europe, particularly in Macedonia and Bosnia and Herzegovina.

The main reasons for a decline in revenues at the largest companies were as follows:

  • a drop in revenues from mobile services, primarily owing to a declining number of users and the fact that users are optimising their use and migrating from limited subscriber relations to packages that include more services;
  • an increase in the number of disconnected fixed connections and the resulting decline in revenues, in particular due to the migration to the latest technologies. On the other, the number of broadband connections is not growing proportionally to compensate for the aforementioned loss in revenues; and 
  • a drop in revenues in Kosovo linked to the increased use of technologies that facilitate the use of free communication via the internet, particularly abroad, on both fixed and mobile terminals.

Total operating expenses amounted to EUR 735.3 million, down 4 % on 2011. Measures aimed at optimising operations at all Group companies have already produced their first results. All types of costs were down on 2011, expect materials costs (primarily owing to the increased scope of work) and labour costs (primarily due to departing of employees and the associated severance payments). The most notable decline was recorded by other operating expenses, which in 2011 included the effects of impairments of assets and investments.

The process of cost reduction, the comprehensive restructuring of operations and the optimisation of processes continued in 2012, and will ensure the future commercial success and development of the Telekom Slovenije Group.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) reached EUR 241.6 million or 30.5 % of operating revenues.

The ROS (return on sales) indicator stood at 8.0 %, up 3 percentage points on 2011.

Earnings before interest and taxes (EBIT) reached EUR 62.5 million, down EUR 719 thousand or 1.1 % on the previous year.

Finance income was down 20 % or EUR 2.1 million on the previous year. Finance costs in the amount of EUR 24.3 million were at the level recorded in 2011. 

Following the calculation of income tax in the amount of EUR 2.6 million, the Telekom Slovenije Group ended 2012 with a net profit of EUR 43.7 million, an increase of 28 % or EUR 9.7 million relative to 2011.


Balance sheet analysis 

Total assets stood at EUR 1,554.7 million as at 31 December 2012, down 1.3 % or EUR 20.6 million on the previous year primarily as the result of a decrease in property, plant and equipment in the amount of EUR 57.3 million and in intangible assets in the amount of EUR 8.5 million.

Non-current assets totalled EUR 1,183.8 million, a decrease of 5.3 %. The proportion of the Company’s total assets accounted for by non-current assets was down 3.9 percentage points to stand at 76.1 %.

Current assets totalled EUR 370.9 million as at 31 December 2012, an increase of 14 % or EUR 45.1 million, primarily as the result of an increase in current financial investments in the amount of EUR 40.2 million and an increase in income tax receivables in the amount of EUR 14.9 million.

Equity and reserves in the amount of EUR 814.7 million as at 31 December 2012 represented 52.4 % of total assets, an increase of 0.6 percentage points.

Non-current liabilities in the amount of EUR 468.1 million represented 30.1 % of total assets and were down 7 % on the end of 2011, primarily owing to a decrease in long-term loans in the amount of EUR 35.4 million.

Current liabilities in the amount of EUR 271.9 million represented 17.5 % of total assets and were up 5 % or EUR 12.5 million on the end of 2011, primarily owing to an increase in operating and other liabilities.


Segment reporting

The operating segments by which the Group reports are Slovenia, Macedonia, Kosovo and other countries, where the criterion for segment reporting is the registered office where an activity is performed by an individual company.

The disclosure of operations by segment is based on the financial statements of Telekom Slovenije Group companies. Sales between segments are carried out at market value.

More detailed information is provided in Section 3.2.2 Notes to the consolidated financial statements and summary of significant accounting policies of the Telekom Slovenije Group, point ae. Segment reporting.