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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Elitel Telecom | LSE:ETM | London | Ordinary Share | IT0003021802 | ORD EUR0.05 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 22.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number:9483D
Elitel Telecom S.p.A.
02 June 2006
For immediate release 2 June 2006
ELITEL TELECOM S.P.A
Preliminary results for the year ended 31 December 2005
Elitel Telecom S.p.A. ("Elitel" or the "Company") (AIM: ETM) the independent
Italian telecom services provider, is pleased to announce its preliminary
financial results for the year ended 31 December 2005.
Highlights
* Revenues increased 67% to Euro154.7 million (2004: Euro92.5 million)
* Gross profit increased 41% to Euro28.4 million (2004: Euro20.1 million)
* Loss from operations reduced by 50% to Euro11.7 million (2004: Euro23.3 million)
* VoIP end users growth of 610%, as at 31 December 9,285 end users (2004:1,308)
* Significant investments in VoIP and wholesale international services
* Successful launch of new business line as Premium services
* Launch of international pre-paid calling card
For further information, please contact:
Elitel Telecom S.p.A +39 02 441 041
Federico d'Este (Chief Executive)
Ezio Ravaccia (Chief Financial Officer)
Buchanan Communications +44 (0)20 7466 5000
Mark Edwards / Isabel Podda
Charles Stanley Securities +44 (0)20 7953 2000
Russell Cook/Freddy Crossley
Commenting on the Financial Results, Federico d'Este, Chief Executive Officer,
said:
"During 2005 Elitel has strengthened its competitive position in the fixed line
market demonstrated by the significant growth in turnover, gross margin and
halving of the operating loss. The group has launched new services with the
intention to broaden its offering in the telecoms market in particular, in
premium services and international routes. In addition, VoIP services have been
successful in terms of acceptance by the market and represent an important
opportunity to strengthen Elitel's position in the SME and SOHO customers. The
majority of our investments have been focused in improving our network in order
to meet the traffic growth, to strengthen the international routes and to launch
new services based on our VoIP platform",
About Elitel
Elitel is an independent Italian fixed line telecommunications group. It
provides a broad range of voice, data and broadband services, including
voice-over IP ('VoIP'), to both businesses and residential customers. The
Company also provides wholesale telecommunications services to other carriers,
international call services specifically for the Italian ethnic market and
telecommunications services to premium content providers. Elitel's network,
which covers the whole of Italy, is based on interconnection agreements and
access through the leasing of lines from carriers including Telecom Italia and
other international carriers.
By 31 December 2005 the Elitel's own fixed line customer base comprised more of
69,000 business customers; 175,000 residential customers and more of 9,200 VoIP
end users.
In February 2006, Elitel (www.eliteltelecom.com) successfully floated on AIM,
part of the London Stock Exchange, raising #8.0 million (Euro 12 million) to fund
the expansion of the Group.
Chairman's statement
I am pleased to announce Elitel's maiden preliminary results, as an AIM company,
for the year to 31 December 2005.
Operating Performance
During 2005 the Group has strengthened its competitive position in the Italian
telecoms sector and now is one of the largest independent telecommunication
companies in Italy. Throughout the last year the management have been working
on the market launch of more innovative offers without jeopardizing the
traditional voice and data services. Elitel has continued to develop its
customer base in a number of important areas including, in particular, VoIP with
the priority to provide high-quality services and maximising cross-selling
opportunities for VoIP and other services. The group has also focused on the
provision of services such as the international pre-paid calling cards to the
ethnic market and the extension of the premium activities. The integration of
the call centre businesses in 2004 has been successfully completed and the
division has performed in line with expectations, with a strongly growing
customer base.
Financial Performance
After the financial restructuring of the Elitel Group in 2004, and the
subsequent reorganization into five business unit carried out at the beginning
of 2005, Elitel achieved a 67% growth in turnover to Euro154.7 million. This is
due to an improved performance by the core fixed line business of the Small
Business and Residential ("SBR") division and, in particular, the contribution
of new business lines such as Elitel's Premium Services and the significant
growth of the Wholesale division. This growth resulted in a 50% reduction in
operating losses to Euro11.7 million, compared to a loss of Euro23.3 million in 2004,
which is in line with the Board's intention to move toward profitability at the
operating level in 2006.
The operating loss of Euro11.7 million included the following items:
Amortisation, depreciation and leasing Euro9.0 million
Write-down of trade receivables Euro4.0 million
Other extraordinary items Euro2.7 million
Euro15.7million
Employees
Elitel has a team of professional and dedicated managers and employees which is
reflected in the significant growth achieved in 2005. The Board would like to
thank all our staff for their efforts during the year.
Outlook
The current financial year has started strongly, with growth across each of our
divisions during the first five months compared to last year, despite increasing
competition in certain of our markets. While the Wholesale and Premium Services
divisions have faced more challenging conditions, progress from our Call Centre
activities and the SBR division are in line with management expectations.
The Board is exploring further opportunities to enhance its product offering for
its customers and, in particular, with convergence of Broadband, fixed line and
mobile Elitel intends to build on the success of its VoIP products with a range
of further bundled services for its business customers. The Board looks forward
to reporting further significant progress during 2006.
Elserino Piol
Chairman
Chief Executive's Review
Introduction
During the past year Elitel Telecom has experienced significant growth in terms
of business development and the consolidation of our core-business. The Company
has successfully launched our Premium Service, as well as continuing to
consolidate our existing customer base within the SBR (Small Business and
Residential) and the Large Account business units. Elitel's VoIP services
launched in 2004, has attracted more than 9,000 end users by the end of the
financial year.
Operational Review
Small Business and Residential
Divisional Highlights
* Revenues up 16% to Euro52.1 million (2004: Euro44.8 million)
* Operating profit of Euro17.4 million; margin 33% (2004: Euro15.3 million)
* Number of customers increase to 242,845 (2004: 91,682)
* VoIP end users increased 457% to 5,132 (2004: 921)
The SBR division has continued to strengthen its position in its market despite
increased competition and margin pressure within the CPS (Carrier Pre-selection)
business. Margins have remained stable at 33% (2004: 34%) and during 2005 the
Company has started to upgrade our offering to its existing customer base with
the VoIP service, in particular targeting small business customers.
Large Account
* Revenues Euro20.4 million (2004: Euro20.7 million)
* Operating profit of Euro5.2 million, margin 25% (2004: Euro7.5 million)
* Number of customers increased to 2,274 (2004: 1,388)
* VoIP end users increased 970% to 4,153 (2004: 387)
The Large Account division has consolidated its market share. Despite the
pricing pressure due to increased competition, the results have been
satisfactory in terms of contribution to the gross margin. The number of
customers increased, particularly our VoIP end users. The VoIP services
represent an important opportunity to enlarge market share in the future.
During 2005 the commercial approach changed from the pure carrier service
towards higher margin value added and consultancy services.
VAS and Multimedia
* Revenues Euro28.9 million (2004: Euro1.0 million)
* Operating profit of Euro4.3 million; margin 15% ( 2004: Euro0.3 million)
* Premium services launched since April 2005 showing positive growth
Our Premium Services were launched in April 2005 with a European focus. This
division has made a significant contribution in terms of turnover and margin.
The Board believes that the Premium market represents an important opportunity
for future growth with strategic opportunities in mobile premium services. The
customer base for multimedia services continues to grow in line with
expectations.
Wholesale
* Revenues up 83% to Euro39.2 million (2004: Euro21.4 million)
* Operating profits of Euro1.2 million; margin 3% (2004: Euro2.6 million)
* Significant investment in the Digitalk platform to meet traffic growth
* Launch of the pre-paid calling card services
The growth in turnover during 2005 has produced a different mix in terms of
margins. The growth in our lower margin ethnic market business has more than
compensated the anticipated decrease in the higher margin fixed mobile traffic.
In June 2005 we recruited a new team to manage the ethnic business division and
in November 2005 we launched our pre-paid calling card.
Call Centre
* Revenues Euro13.9 million (consolidated from September 2004: Euro4.4 million)
* Operating profit Euro6.8 million (consolidated from September 2004: Euro1.6 million)
* New customers acquired throughout 2005
During 2005 the integration of the two companies managing the call centre
business was completed and new investments were made in hardware equipment and
an upgrade to the billing system. The division performed in line with
expectations in terms of turnover and margin contribution. The division has
developed its customer base and has acquired a number of significant new clients
in the ICT, Food and Beverage, Fashion and Utilities sectors. Identifying
appropriately qualified and experienced call centre workers remains a challenge
for the business, although the number of call centre workers had increased to
1,500 by the year end. Further growth in this area is anticipated.
Outlook
Elitel has continued to experience strong year on year growth in turnover and
profitability since the start of the year.
The Large Accounts division has strengthened its sales team with the recruitment
of new key staff bringing with them extensive experience in the
telecommunications sector.
In terms of marketing activities three new offerings for the SBR division have
been launched: "Cellulare zero", "Risparmio Certo" and "Estensione Casa for the
residential market", all of which are generating significant commercial
interest. Elitel is also launching a "Telephone Account Manager", with special
emphasis on the cross-selling of ADSL products across Elitel's diverse customer
base.
The new VoIP offer "Elitel Futura Digit", for those clients with an existing
switchboard, will be launched shortly and initial reaction from the market has
been very positive.
Furthermore, we are launching "Servizi Etici", a new "ethical service" which
will enable Elitel customers to donate a proportion of their call charges to non
profit and charitable associations under an agreement between Elitel and those
organisations. Agreements with organisations including Lazio region of
Compagnia delle Opere and ANCI (Association of the Italian Municipalities) have
already been signed.
The development of our VoIP technology remains a key driver to sustain the
Group's development.
The Company is also exploring the development of its services to offer both
fixed and mobile telephony services to its clients as a single product, enabling
Elitel to strengthen and extend further its market position. Discussions have
been started with certain mobile operators regarding the opportunity for Elitel
to offer both fixed and mobile telephony services to its clients issuing one
single invoice, enabling Elitel to enhance its market position and to increase
customer loyalty and spend.
New developments are also envisaged in the VAS market, with the possibility to
move the group's role from the one of simple carrier to the one of content and
services aggregator.
In the WiFi sector, where we expect significant growth over the next few months,
we are continuing to test new technologies in cooperation with a specialist
product partner. We expect results of these tests to be announced later this
year.
As we announced last month we have launched a new international pre-paid card,
both branded and white label, with Western Union and Sisal.
We have been pleased with progress at our call centre operations. AMI' Sicilia
has been rebranded as "OneCall" and we have opened a new call centre in Brescia.
Further developments in this division will be announced shortly.
Finally, the Unbundling of the Local Loop across Italy remains an important
project for the country and for Elitel. We have identified some 30 sites, which
are currently under evaluation, where we anticipate establishing local networks
together with our technology suppliers. This will be an important development
for Elitel during 2006 and 2007.
Federico D'Este
Chief Executive
Consolidated income statements
Year ended 31 December 2005 2004
Euro'000 Euro'000
Revenue 154,672 92,458
Cost of sales (126,256) (72,333)
--------- ---------
Gross profit 28,416 20,125
--------- ---------
Personnel expenses (15,122) (12,148)
Sales and marketing expenses (5,108) (3,654)
Other operating expenses (net) (19,641) (26,032)
Restructuring costs (266) (1,598)
--------- ---------
(40,137) (43,432)
--------- ---------
Loss from operations (11,721) (23,307)
--------- ---------
Investment income 479 325
Long term debt restructuring (2,096) 10,978
Finance costs (717) (800)
--------- ---------
Loss before tax (14,055) (12,804)
--------- ---------
Income tax credit / (charge) 4,291 9,260
--------- ---------
Net loss for the year attributable to equity holders of the parent (9,764) (3,544)
========= =========
Basic and diluted earnings per share (euro) (0.46) (0.21)
========= =========
Consolidated balance sheets
As at 31 December 2005 2004
Euro'000 Euro'000
ASSETS
Non-current assets
Property, plant and equipment 9,385 11,150
Goodwill 53,825 53,825
Trademarks 74 74
Intangible assets 1,234 854
Investments 8,365 11,050
Deferred tax assets 19,015 13,863
--------- ---------
Total non current assets 91,898 90,816
--------- ---------
Current assets
Inventories - 56
Trade and other receivables 69,445 51,592
Non trade receivables 23,380 13,476
Cash and cash equivalents 632 1,247
--------- ---------
Total current assets 93,457 66,371
--------- ---------
Total assets 185,355 157,187
========= =========
EQUITY AND LIABILITIES
Equity
Issued capital 1,244 964
Share premium 35,702 9,874
Shareholders grants 73 16,612
Retained losses (13,169) (3,450)
--------- ---------
Total equity attributable to equity holders of the parent 23,850 24,000
--------- ---------
Non-current liabilities
Interest-bearing loans and borrowings 49,124 53,958
Employee benefits 2,433 2,009
Provisions 2,168 2,068
Deferred tax 4,412 4,313
Other liabilities 2,000 -
--------- ---------
Total non-current liabilities 60,136 62,348
--------- ---------
Current liabilities
Current portion of interest-bearing loans and borrowings 9,182 6,836
Bank overdrafts 950 2,668
Trade and other payables 90,589 61,032
Income tax payable 648 304
--------- ---------
Total current liabilities 111,369 70,840
--------- ---------
Total equity and liabilities 185,355 157,188
========= =========
Consolidated statements of changes in equity
Share capital Share premium Shareholders' grants Retained losses Total
Euro'000 Euro'000 Euro'000 Euro'000 Euro'000
Balance at 1 January 2004 745 - 63,599 (53,343) 11,001
Net loss for the year - - - (3,544) (3,544)
Consolidation and IFRS - - - (131) (131)
application
Capital increases 219 9,874 (10,029) - 64
Loss coverage - - (36,958) 53,568 16,610
------ ------ -------- -------- -------
Balance at 31 December 2004 964 9,874 16,612 (3,450) 24,000
Net loss for the period - - - (9,764) (9,764)
Consolidation and IFRS - - - 45 45
application
Loss coverage 2,801 25,828 (16,539) - 9,570
------ ------ -------- -------- -------
Balance at 31 December 2005 1,244 35,702 73 (13,169) 23,850
====== ====== ======== ======== =======
Consolidated statements of cash flows
Year ended 31 December 2005 2004
Note Euro'000 Euro'000
OPERATING ACTIVITIES
Cash generated from operations (2,280) (10,718)
Income taxes paid (761) (286)
Interest paid (717) (800)
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES (3,758) (11,804)
-------- --------
INVESTING ACTIVITIES
Interest received 468 303
Dividends received from trading investments - 22
Proceeds on disposal of trading investments 2,685 -
Proceeds on disposal of available-for-sale investments - 244
Proceeds on disposal of property, plant and equipment 94 1,992
Purchase of property, plant and equipment (4,100) (1,685)
Purchase of trading investments - (4,602)
Purchase of intangible assets (1,378) (377)
Acquisition of subsidiary - (78)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES (2,231) (4,181)
-------- --------
FINANCING ACTIVITIES
Repayment of borrowings (2,488) (2,956)
Proceeds on issue of share capital and shareholders commitments 9,570 16,674
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES 7,082 13,718
-------- --------
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 1,092 (2,267)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR (1,421) 846
Effect of foreign exchange rate changes 11 -
-------- --------
CASH AND CASH EQUIVALENTS AT END OF YEAR (318) (1,421)
======== ========
Notes
1. General
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 31 December 2004 and 2005 but is derived
from those accounts. Statutory accounts for 2004 have been delivered to the
Italian Registrar of Companies and those for 2005 will be delivered following
the Company's Annual general meeting .
The auditors have reviewed those accounts without qualifications.
The financial information set out above has been prepared on the basis of the
accounting policies as set out in the AIM Admission Document issued the 17TH
February 2006 .
2. Segmental information
Business segments
Elitel Telecom S.p.A. supplies a wide range of telecommunications operator
services on the fixed line telephony market, including internet protocol ('IP')
related services (Voice over Internet Protocol ('VoIP'), internet services,
voice services, multimedia, and call centres).
For management purposes, the Group is organised into five principal business
units:
* Small business and residential (SBR)
* Large account (LA)
* Wholesale (WHL)
* Call centres (CC)
* Value added services (VAS)
The small business and retail unit provides services to both small corporate
clients and private users. The large account unit trades with larger
corporations. Both units offer services across the following business streams:
Voice over Internet Protocol, fixed line telephony and data transfer, and
internet related services.
The wholesale unit delivers wholesale services to other telecommunications
operators and phone centres. It also trades in prepaid cards which are
distributed primarily through phone centres.
The call centre business unit relates to the activity of the Telework S.r.l. and
Ami Sicilia S.r.l. subsidiary companies. Both companies provide call centre
services for both the group and third party customers.
The value added services unit supplies connectivity to content providers
(premium market) as well as developing multimedia and value added services for
the corporate market, including premium access numbers and multimedia services
(television, audio visual).
These business units are the basis on which the Group reports its primary
segmental information.
Segmental information about these business units is presented below:
Year ended 31 December 2005
SBR LA WHL CC VAS Total
Euro'000 Euro'000 Euro'000 Euro'000 Euro'000 Euro'000
Revenue 52,110 20,429 39,230 13,945 28,958 154,672
====== ====== ====== ====== ====== ======
There is no inter-segment trading
Result
Segment result 17,513 5,201 1,222 6,785 4,338 35,059
====== ====== ====== ====== ====== ======
3. Interest-bearing loans and borrowings
2005 2004
Euro'000 Euro'000
Non-current liabilities
Trade payable (reclassified into loans) 46,328 50,668
Secured bank loans 525 279
Finance lease liabilities 157 253
Unsecured bank facilities 2,114 2,758
------ ------
49,124 53,958
====== ======
Current liabilities
Trade payable (reclassified into loans) 6,420 2,848
Secured bank loans 639 1,365
Finance lease liabilities 96 240
Unsecured bank facilities 2,027 2,383
------ ------
9,182 6,836
====== ======
4. Earnings per share
Basic earnings per share
The calculation of basic earnings per share for the years ended 31 December 2005
and 31 December 2004 have been determined as the net loss attributable to
ordinary shareholders divided by the weighted average number of ordinary shares.
2005 2004
Net loss attributable to ordinary shareholders
Net loss attributable to ordinary shareholders (Euro'000) (9,764) (3,544)
Number of ordinary shares (in thousand of shares)
Issued ordinary shares at the beginning of the year (nominal value 1 euro) 964 745
Issued on 30 April 2004 - 63
Issued on 2 August 2004 - 156
Issued on 8 July 2005 178 -
Issued on 16 November 2005 102 -
------- -------
Issued ordinary shares at period end 1,244 964
------- -------
Share split: from 1.00Euro per share to 0.05Euro per share
resolved upon on 28 November 2005 24,886 19,271
======= =======
Weighted average number of ordinary shares (in thousand of shares)
Issued ordinary shares at the beginning of the year (nominal value 1 euro) 964 746
Effect of shares issued on 30 April 2004 - 42
Effect of shares issued on 2 August 2004 - 64
Effect of shares issued on 8 July 2005 89 -
Effect of shares issued on 16 November 2005 13 -
------- -------
Weighted average number of ordinary shares at period end 1,066 852
------- -------
Weighted average number of ordinary shares after the split 21,303 17,032
------- -------
Basic earnings per share at period end (euro) (0.46) (0.21)
======= =======
Diluted earnings per share
Diluted earnings per share is calculated by dividing the loss attributable to
ordinary shareholders by the weighted average number of ordinary shares
outstanding during the period adjusted for the effects of all potentially
dilutive shares. The only potentially dilutive shares during the periods were
share warrants. These warrants are at present anti-dilutive as they would
decrease the loss per share. They have therefore been excluded from the diluted
loss per share calculation in accordance with the requirements of International
Accounting Standard 33 "Earnings per share". There is therefore no difference
between the basic loss per share figures and the diluted loss per share figures.
5. Availability of Reports
Copies of the Company's Annual Report and Account will be sent to shareholders.
Copies will also be available from the Company's registered office at Via
Mecenate 90, 20138 Milan and from the Company's Nominated Adviser, Charles
Stanley Securities, 25 Luke Street, London EC2A 4AR.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EAPKFELXKEFE_SN_RNS9483D_SU_RNSTEST_XX_070130.3242_RZ__RT_R.xRoute.001
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