Financial results of the Telekom Slovenije Group

Highlights in 2015

  • The Group generated a net profit of EUR 68.1 million and EBITDA of EUR 200.8 million.
  • Total operating revenues amounted to EUR 747.2 million, down 2% on 2014. Operating expenses were down 8% relative to 2014 to stand at EUR 697.9 million.

Key financial performance indicators of the Telekom Slovenije Group

in EUR thousand and % 2015 2014 Index 15/14
Net sales revenue 729.543 756.454 96
Other operating revenues 17.663 8.442 209
Total operating revenues 747.206 764.896 98
EBITDA 200.759 170.051 118
EBITDA margin (EBITDA/net sales revenue) 27.5 % 22.5 % 122
EBIT 49.265 11.418 431
Return on sales: ROS (EBIT/net sales revenue) 6.8 % 1.5 % 447
Net profit 68.095 1.506 -
Assets 1.315.988 1.342.989 98
Capital 698.692 694.956 101
Return on assets (ROA) 5.1 % 0.1 % -
Return on equity (ROE) 10.3 % 0.2 % -
Equity ratio 53.1 % 51.7 % 103
Net financial debt 376.257 344.057 109
NFD / EBITDA 1.9 2.0 93
Investment in property, plant and equipment (CAPEX) 112.962 176.481 64
EBITDA – CAPEX 87.797 –6.430 -
Ratio of (EBITDA – CAPEX) to EBITDA (cash margin) 43.7 % –3.8 % -
Number of employees as at 3.803 4.431 86
Investments as a proportion of operating revenues 15.1 % 23.1 % 66

Notes: Pursuant to the requirements of IAS 1 and IAS 8, the financial statements for the comparative period, have been adjusted for a change to an accounting policy. More information can be found in the Financial Report beginning on page 164.

 

Income statement analysis

The Telekom Slovenije Group’s operating revenues totalled EUR 747.2 million, a decrease of 2% relative to 2014.

Net sales revenue was down 4% in 2015 relative to the previous year to stand at EUR 729.5 million, but is not comparable with the revenue generated in 2014, as ONE was only included in the Group’s fully consolidated results until 31 July 2015, which affected all revenue categories.

Revenues in the mobile segment were lower on account of the migration to new, more affordable packages for subscribers and the resulting drop in services outside mobile subscriber packages. The drop in revenues from traditional voice telephony in the fixed segment (as the result of a decreasing number of traditional voice telephony connections driven by the optimisation of costs through the migration to mobile and IP telephony) was offset by higher revenues from IT and ICT services in Slovenia. Revenues on the wholesale market were lower, despite growth in revenues on the international wholesale market, due to regulation of the call termination market in the mobile network and the call termination market in the fixed network. Primarily revenues from international transit traffic are recording growth on the international wholesale market. Lower revenues outside of Slovenia were in part the result of lower revenues from incoming calls in Kosovo due the increasing use of free internet voice applications.

The Group’s operating expenses were down 8% relative to 2014 to stand at EUR 697.9 million. Through the consolidation of operations and the optimisation of processes within the Telekom Slovenije Group, we achieved a reduction in all costs relative to 2014, except the costs of materials, which were up 10% due to the scope of operations. The largest decline was recorded in other operating expenses, which were down EUR 33.9 million or 72% in 2015 due to the creation of provisions in 2014. Labour costs were also down 6% due to the exclusion of ONE and severance payments to redundant workers at Telekom Slovenije.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) reached EUR 200.8 million or 27.5% of net sales revenue.

Return on sales amounted to 6.8%.

Earnings before interest and taxes (EBIT) was EUR 49.3 million.

Finance income amounted to EUR 39.2 million, which is EUR 22.1 million or 1.3 times higher than the finance income recorded the previous year. Finance costs in the amount of EUR 18.8 million were down by 8% or EUR 1.7 million.

Following the calculation of income tax in the amount of EUR 4.1 million, the Telekom Slovenije Group generated net profit of EUR 68.1 million in 2015.

Balance sheet analysis

Total assets stood at EUR 1,316.0 million as at 31 December 2015, down 2% or EUR 27.0 million on the previous year.

Non-current assets totalled EUR 1,009.8 million, an increase of 8% or EUR 77.2 million. The proportion of the Company’s total assets accounted for by non-current assets stand at 82.6%. The increase in other financial assets in the amount of EUR 75.4 million was the result of the acquisition of a participating interest in ONE.VIP in the context of the simultaneous disposal of non-current assets relating to ONE when the latter was merged with VIP.  Non-current assets include derivatives linked to the put option (forward contract) relating to the sale of the participating interest in ONE.VIP that was concluded with the Telekom Austria Group. Assets linked to the purchase of Debitel, including goodwill, were also recognised in the final quarter.

Current assets totalled EUR 229.4 million, and were down by EUR 94.4 million on the end of 2014 due to the disposal of assets of the subsidiaries ONE and Digi Plus.

Equity and reserves totalled EUR 698.7 million, representing 53.1% of total assets.

Non-current liabilities in the amount of EUR 66.9 million represented 5.1% of total assets, primarily on account of the reclassification of financial liabilities from issued bonds that mature at the end of 2016 to current liabilities.

For the same reason, current liabilities were up EUR 345.5 million to stand at EUR 550.4 million, representing 41.8% of total assets. The majority of the Group’s financial liabilities relate to a bond issue in the amount of EUR 300 thousand, which falls due for payment in December 2016.

Segment reporting

The criterion for segment reporting is the registered office where an activity is performed. The Telekom Slovenije Group thus presents its operations in the following two segments: Slovenia and other countries.