LONDON--(BUSINESS WIRE)--Magyar Telecom B.V. (“Matel B.V.”) announced today its financial results for the quarter ended March 31, 2012.
FIRST QUARTER 2012 RESULTS
The results for the quarter ended March 31, 2012 reflect the consolidated financial results of Magyar Telecom B.V. and its subsidiaries (collectively, the “Company”).
On February 28, 2011, Invitel, a wholly owned subsidiary of Matel B.V., acquired FiberNet Kft. and its subsidiaries, FiberNet Zrt., Dunaweb Távközlési Kft. and Donet-Info Kft. (collectively, “Fibernet”). The results of Fibernet are included from March 1, 2011 in the consolidated financial statements of Matel B.V. On September 30, 2011 Fibernet was merged into Invitel.
The reporting currency of the Company is the euro; however, the functional currency of continuing operations is the Hungarian forint, being the currency of the primary economic environment in which the Company operates.
When comparing the financial results for the quarter ended March 31, 2012 to the financial results for the quarter ended March 31, 2011, the reported results in euro have been affected by the difference between the average HUF/EUR exchange rates. The Hungarian forint depreciated against the euro by 9% with an average HUF/EUR exchange rate of 296.97 during the quarter ended March 31, 2012 compared to the average HUF/EUR exchange rate of 272.48 during the quarter ended March 31, 2011. This change in exchange rates had an impact on Hungarian forint denominated earnings when converted into euro.
The Company’s revenue was EUR 42.7 million for the quarter ended March 31, 2012 which represents a 10% decrease compared to the quarter ended March 31, 2011. Segment gross margin decreased by 10% from EUR 39.1 million for the quarter ended March 31, 2011 to EUR 35.1 million for the quarter ended March 31, 2012. General operating expense decreased by 6% from EUR 20.6 million for the quarter ended March 31, 2011 to EUR 19.4 million for the quarter ended March 31, 2012. Income from operations decreased to EUR 2.0 million for the quarter ended March 31, 2012 from EUR 4.1 million for the quarter ended March 31, 2011, mainly as a result of the decrease in segment gross margin. Net result for the quarter ended March 31, 2012 was a loss of EUR 10.3 million compared to a net income of EUR 25.2 million for the quarter ended March 31, 2011, which reflects the gain of EUR 28.5 million accounted for in relation to the acquisition of Fibernet.
Residential Voice – Residential Voice segment gross margin was EUR 8.7 million for the quarter ended March 31, 2012, representing a decrease of 26% compared to the quarter ended March 31, 2011. The decrease was mainly due to the decrease in our Residential Voice revenue as a result of the decrease in the number of customers and traffic and the 9% depreciation of the HUF against the EUR during the three months ended March 31, 2012 compared to the prior year.
Residential Internet – Residential Internet segment gross margin was EUR 6.5 million for the quarter ended March 31, 2012, representing a decrease of 7% compared to the quarter ended March 31, 2011. The decrease was mainly due to the 9% depreciation of the HUF against the EUR during the three months ended March 31, 2012 compared to the prior year, offset in part by the increase in IPTV revenue.
Cable – Cable segment gross margin was EUR 3.1 million for the quarter ended March 31, 2012 compared to EUR 1.3 million for the quarter ended March 31, 2011. The Cable segment was introduced as of March 1, 2011 and relates to the revenue generated by the ex-Fibernet business.
Corporate – Corporate segment gross margin was EUR 11.5 million for the quarter ended March 31, 2012, representing a decrease of 11% compared to the quarter ended March 31, 2011. The decrease was mainly due to the decrease in Corporate voice revenue as a result of loss of lines and price erosion due to competition and the 9% depreciation of the HUF against the EUR during the three months ended March 31, 2012 compared to the prior year.
Wholesale – Wholesale segment gross margin was EUR 5.3 million for the quarter ended March 31, 2012, representing a decrease of 13% compared to the quarter ended March 31, 2011, which is mainly due to the 9% devaluation of the HUF against the EUR compared to the prior year.
Segment gross margin is a non-IFRS financial measure, which is used by management to evaluate the performance of the business segments. The following table represents the reconciliation of segment gross margin to income from operations as per our interim consolidated statement of comprehensive income (loss):
|
Quarter ended March 31, |
||||||||||||
| (euro in millions) | 2012 | 2011 | ||||||||||
| Residential Voice | 8.7 | 11.8 | ||||||||||
| Residential Internet | 6.5 | 7.0 | ||||||||||
| Cable | 3.1 | 1.3 | ||||||||||
| Corporate | 11.5 | 12.9 | ||||||||||
| Wholesale | 5.3 | 6.1 | ||||||||||
| Segment Gross Margin | 35.1 | 39.1 | ||||||||||
| Network operating expenses | (4.9 | ) | (5.1 | ) | ||||||||
| Direct personnel expenses | (2.7 | ) | (3.2 | ) | ||||||||
| Selling, general and administrative expenses | (11.8 | ) | (12.3 | ) | ||||||||
| Depreciation and amortization | (13.1 | ) | (13.4 | ) | ||||||||
| Cost of restructuring | (0.6 | ) | (1.0 | ) | ||||||||
| Income from operations | 2.0 | 4.1 | ||||||||||
Net cash provided by continuing operations, which includes interest paid but excludes capital expenditure and debt repayments, was EUR 14.7 million for the quarter ended March 31, 2012.
COMMENTS FROM DAVID McGOWAN
Commenting on the financial results, David McGowan, Chief Executive Officer of Invitel, said, “The general economic and trading conditions in Hungary continue to be challenging with a highly competitive market coupled with the deterioration of exchange rates during the period. In the Residential and Cable segments we still have a significant decline in voice; however, we saw signs of stabilization in relation to the introduction of television-led offerings. Our Corporate segment is stable despite the bankruptcy of a large client and the competitive pricing pressure on contract renewals. Despite the challenging market environment, we saw a reduced level of decline in our corporate voice customer base and stability in our data business, as bundling with ICT services has begun to prove effective. Our Wholesale business, which by its nature can be rather spiky, continues to perform well.”
CONFERENCE CALL
On June 13, 2012 (at 14:00 UK time, 15:00 CET, 9:00 AM ET), the CEO and CFO of Matel B.V. will host a conference call to discuss the first quarter 2012 financial results.
You can participate in the conference call by dialing 800-4626-6666 (UK toll free), +1-201-689-8049 (International) or +1-877-407-9210 (U.S. toll free) and referencing “Matel B.V.”
A webcast of the call and the presentation materials will be available on Invitel’s website at http://english.invitel.hu/ under “Press/Investor Relations.” The webcast will be available for replay until September 13, 2012. In addition, a replay of the call will be available until June 27, 2012 at 11:59 PM ET. To access the replay of the call, please dial +1-877-660-6853 (U.S. toll free) or internationally dial +1-201-612-7415 and enter account (286) followed by the replay access code (394935).
ABOUT MAGYAR TELECOM B.V.
Magyar Telecom B.V., through its subsidiary, Invitel, is one of Hungary’s leading telecommunications and info-communications service providers. It provides 16 thousand satisfied business clients with a broad portfolio of media, telecommunication, and info-communication services; on the other hand Invitel has 750 thousand residential and SOHO subscriptions on the digital TV, internet and voice services market. The number of its wholesale partners exceeds 250. In its customer service offices, called “Telepoints,” Invitel is directly available to residential customers at 27 different sites throughout Hungary, while the work of business partners is supported by skilled account managers through continuous personal communication. To ensure excellent service quality and maximum customer satisfaction, Invitel employs a staff of 1,200 employees. The company is headquartered in Budaörs.
Forward-Looking Statements
The information above includes forward-looking statements about Magyar Telecom B.V. and its subsidiaries (“Matel B.V.”). These and all forward-looking statements are only predictions of current plans that are constantly under review by Matel B.V. Such statements are qualified by important factors that may cause actual results to differ from those contemplated, including those risk factors detailed in Matel B.V.’s Annual Reports, which may not be exhaustive. For a discussion of such risk factors, see Matel B.V.’s Annual Reports. Matel B.V. operates in a continually changing business environment and new risk factors emerge from time to time. Matel B.V. cannot predict such new risk factors, nor can it assess the impact, if any, of such new risk factors on its business or events described in any forward-looking statements. Matel B.V. has no obligation to publicly update or revise any forward-looking statements to reflect the occurrence of future events or circumstances. In addition, Matel B.V. is no longer subject to certain reporting obligations with the SEC, and no longer intends to file or furnish any updates with the SEC.
| Magyar Telecom B.V. | ||||||||||
| Financial Highlights | ||||||||||
|
(in millions of euro) |
||||||||||
| Statements of Operations | ||||||||||
| Quarter ended | Quarter ended | |||||||||
| March 31, | March 31, | |||||||||
| 2012 | 2011 | |||||||||
| Residential Voice | 9.7 | 13.4 | ||||||||
| Residential Internet | 8.0 | 8.6 | ||||||||
| Cable | 4.1 | 1.6 | ||||||||
| Corporate | 14.1 | 16.4 | ||||||||
| Wholesale | 6.8 | 7.7 | ||||||||
| Total Revenue | 42.7 | 47.7 | ||||||||
| Segment Cost of Sales | 7.6 | 8.6 | ||||||||
| Income (Loss) from Operations | 2.0 | 4.1 | ||||||||
| Interest Expense | 10.7 | 9.6 | ||||||||
| Foreign Exchange Gains (Losses), net | (1.4 | ) | (1.0 | ) | ||||||
| Gains (Losses) on Derivative Financial Instruments | - | 0.3 | ||||||||
| Net Income (Loss) for the Period | (10.3 | ) | 25.2 | |||||||
| Magyar Telecom B.V. | ||||||||||||
| Financial Highlights | ||||||||||||
|
(in millions of euro) |
||||||||||||
| Balance Sheets | ||||||||||||
| March 31, | December 31, | |||||||||||
| 2012 | 2011 | |||||||||||
| Current Assets | 66.6 | 67.9 | ||||||||||
| Property, Plant and Equipment, net | 268.6 | 257.2 | ||||||||||
| Total Assets | 369.1 | 357.5 | ||||||||||
| Total Current Liabilities | 45.8 | 44.4 | ||||||||||
| Long Term Debt | 315.1 | 313.5 | ||||||||||
| Total Shareholders’ Equity | (6.0 | ) | (14.4 | ) | ||||||||
| Total Liabilities and Shareholders’ Equity | 369.1 | 357.5 | ||||||||||