/raid1/www/Hosts/bankrupt/TCREUR_Public/030516.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
E U R O P E
Friday, May 16, 2003, Vol. 4, No. 96
Headlines
* B E L G I U M *
LERNOUT & HAUSPIE: Court to Consider Committee's Plan on May 29
* C Z E C H R E P U B L I C *
UNION BANKA: FPV Obtains Fund Needed to Compensate Depositors
HARVARDSKY PRUMYSLOVY: Regulator Puts Ban on Share Transfers
* F I N L A N D *
BENEFON OYJ: Teams with Pointer Solutions to Deliver Contract
* F R A N C E *
ALSTOM: Reports Results in Line with Guidance Given in March
FRANCE TELECOM: Ratings Raised, Off Watch, Outlook Positive
* G E R M A N Y *
BAYER AG: Settles Baycol Lawsuit Out of Court Ahead of Hearing
DEUTSCHE LUFTHANSA: Posts First-Quarter Loss of EUR 415 Million
DRESDNER BANK: New Chairman to Accelerate Cost-Cutting Plans
MOBILCOM AG: Break Even Already Achieved in the First Quarter
* I R E L A N D*
AER LINGUS: Chief Executive Condemns Ryanair's Advertising
ELAN CORP.: Unaffected by Withdrawal of Guaranteed Rating
* I T A L Y*
FIAT SPA: Board of Directors Approve 2003 First Quarter Results
FIAT SPA: Board of Directors Appointed in Stockholders Meeting
FIAT SPA: Chief Executive Morchio Addresses Shareholders Meeting
MEDIOBANCA: Loss Attributable to Parent Company is EUR206.2 M
TELECOM ITALIA: Shareholders Ask Intervention from Authorities
TELECOM ITALIA: Makes Available Documents on Olivetti Merger
* N E T H E R L A N D S*
KONINKLIJKE AHOLD: Announces Further Resignations at U.S. Unit
TELE ATLAS: Results for First Quarter in Line with Expectations
UNITED PAN-EUROPE: Achieves Improved Results in First Quarter
VERSATEL TELECOM: Details Improvements in First Quarter Results
* P O L A N D*
NETIA HOLDINGS: Regulator Registers Series I and II Notes
* R U S S I A *
OAO SIBIRTELECOM: Fitch Ups Ratings to 'B+', Outlook Positive
OAO URALSVYAZINFORM: Fitch Ups Rating to 'B+', Outlook Positive
* S P A I N *
JAZZTEL PLC: Reaches EBITDA Break-even in March Ahead of Plan
* S W E D E N *
SKANDIA: Details Certain Financial Effects Through March 2003
* S W I T Z E R L A N D *
JULIUS BAER: Announces Decisions Adopted at General Meeting
SWISS RE: Risk of Deflation Low, Uncertainties Remain -- Survey
* U N I T E D K I N G D O M *
AMP LTD.: Trustees of Staff Pension Fund To Sack Asset Manager
AMP LIMITED: Issues Response to S&P Ratings Announcement
AMP LTD: Ratings on U.K. Subsidiaries Lowered, Off CreditWatch
BRITISH AIRWAYS: Cancels Crews Overnight Stays in Saudi
IMPERIAL CHEMICAL: Investigation Into Fall in Share Value Closed
NTL INC.: Narrows First Quarter Net Loss to $254.4 Million
PO NA NA GROUP: Joint Administrators Offer Businesses for Sale
ROYAL DOULTON: Shareholders Okay Sale of Part of Baddeley Green
ROYAL DOULTON: Preliminary Announcement of Results for 2002
ROYAL DOULTON: Issues Chairman's Address at General Meeting
ROYAL & SUNALLIANCE: Shareholders Show Opposition to Pay Package
TRINITY MIRROR: Appoints Ellis Watson as New General Manager
=============
B E L G I U M
=============
LERNOUT & HAUSPIE: Court to Consider Committee's Plan on May 29
---------------------------------------------------------------
On March 11, 2003, the Official Committee of Unsecured Creditors filed its
Plan of Liquidation, along with an accompanying Disclosure Statement, for
Lernout & Hauspie Speech Products N.V. and its debtor-affiliates.
The U.S. Bankruptcy Court for the District of Delaware approved, on April
10, 2003, the Committee's Disclosure Statement, finding that it contained
adequate information, pursuant to Sec. 1125 of the Bankruptcy Code, for
creditors of L&H to make informed decisions about whether to vote to accept
or reject the Plan.
A hearing to consider confirmation of the Committee's Plan of Liquidation is
set for May 29, 2003, at 10:00 a.m. New York Time, before the Honorable
Judith H. Wizmur.
In order to be considered, confirmation objections must be received by the
Clerk of the Bankruptcy Court on or before May 19, and must be served on:
1. Co-counsel for the Committee
Akin Gump Strauss Hauer & Feld LLP
590 Madison Avenue
New York, NY 10022
Attn: Ira S. Dizengoff, Esq.
James R. Savin, Esq.
-and-
Monzack and Monaco
400 Commerce Center
1201 Orange Street, Suite 400
Wilmington, DE 19899
Attn: Francis A. Monaco, Esq.
Joseph J. Bodnar, Esq.
2. Co-Counsel for L&H NV
Milbank, Tweed, Hadley & McCloy LLP
1 Chase Manhattan Plaza
New York, NY 10005
Attn: Luc A. Despins, Esq.
Matthew S. Barr, Esq.
James C. Tecce, Esq.
-and-
Morris, Nichols, Arsht & Tunnell
1201 North Market Street
PO Box 1347
Wilmington, DE 19899-1347
Attn: Robert J. Dehney, Esq.
Gregory W. Werkheiser, Esq.
3. United States Trustee
Office of the U.S. Trustee
J. Caleb Boggs Federal Building
844 King Street, Suite 2313
Lockbox 35
Wilmington, DE 19801
Attn: Mark S. Kenner, Esq.
Lernout & Hauspie Speech Products and its debtor-affiliates filed for
Chapter 11 protection on November 29, 2000, (Bankr. Del. Case No. 00-04398).
Robert J. Dehney, Esq., Gregory W. Werkheiser, Esq., at Morris, Nichols,
Arsht & Tunnell and Luc A. Despins, Esq., Matthew S. Barr, Esq., and James
C. Tecce, Esq., at Milbank, Tweed, Hadley & McCloy LLP represent the Debtors
in their restructuring efforts.
===========================
C Z E C H R E P U B L I C
============================
UNION BANKA: FPV Obtains Fund Needed to Compensate Depositors
-------------------------------------------------------------
A contract for the syndicated loan drawn up by the Deposit Insurance Fund
(FPV) last week was signed yesterday, according to FPV board chairman Josef
Tauber.
News press Czech Happenings quoted Mr. Tauber saying the FPV signed a
contract with a syndicate of Czech banks for a loan worth CZK3 billion
intended to pay clients of the bankrupt Ostrava-based Union Bank.
Tauber said a decision whether FPV will back Union banka's petition for
court settlement is not yet made, since it still has no hold of necessary
legal and economic analysis. It is noted that investor Goldman Sachs has
been in favor of court settlement, a deal that needed consent of creditors
holding over 75% of the claims on UB.
Payments to clients of Union banka from the FPV are by volume the most
demanding operation in the history of the FPV, Tauber further revealed.
According to FPV executive director Pavel Trnka said some 20,000 clients
have deposits higher than the insured EUR25,000, and many of them are
municipalities. These clients will cost the FPV a total of CZK12.7 billion,
compared to the total CZK13 billion FPV paid to clients of 10 bankrupt
banks.
Czech Happenings said payments will begin on May 17 at outlets of GE Capital
Bank. Clients are entitled to 90% of their deposits or a maximum of close
to CZK800,000, but they are reportedly opposed to it and want to be paid
100% of their deposits, like clients of some previous banks that went
bankrupt.
The news agency also reported that two representatives of Demac from the
Goldman Sachs group will be dispatched at each of the 80 GE Capital outlets,
to try to persuade clients to agree with settlement. Clients will get 30%
more than the insured deposits within two years if settlement is approved;
they'll get less if bankruptcy. The decision now lies on the Ostrava
regional court.
FPV had only CZK9.7 billion at its disposal and had to borrow CZK3 billion
for the payment of UB clients. The syndicate of banks comprises CSOB,
Komercni banka, Ceska sporitelna, Zivnostenska banku, HVB Bank, Interbanka
and Vseobecna uverova banka Praha, reports say.
Under the contract, the FPV should start repaying the loan on February 15,
2005, and pay it in two installments. The funds for the repayment should be
generated by regular annual contributions from banks.
Union Banka closed down on February 21 due to insufficient liquidity. Its
trouble stemmed from an unmanageable expansion when it took over struggling
financial houses in mid-1990. A restructuring plan was submitted on March
3, but was later rejected by the Finance Ministry.
CONTACT: UNION BANKA
ul. 30 dubna c. 35
70200 Ostrava
Phone: 596108111
Fax: 596120134
Home Page: http://www.union.cz
E-mail: union@union.cz
HARVARDSKY PRUMYSLOVY: Regulator Puts Ban on Share Transfers
------------------------------------------------------------
The Securities Commission PR director Petra Guentherova said on Tuesday the
ban on trading in shares of Harvardsky prumyslovy holding was extended
indefinitely.
Shares in the holding company, which is currently under liquidation, were
first banned in February 2001.
The state of HPH's performance and the value of its assets are very unclear
for a longer time, but a progress has been made in issues concerning HPH's
liquidation, according to Ms. Guentherova.
The courts, which has frozen part of the firm's assets, have already ruled
the outcomes of two HPH general meetings that approved the end of
liquidation as invalid. A decision regarding another general meeting is due
to come out.
According to the KCP, the ban was put in place to avoid huge economic losses
to shareholders or other investors. The prohibition, which was made through
an injunction, is aimed at discouraging investment decisions based on
unclear or incomplete information about the holding company's economic
situation.
The regulator will later decide on the duration of the ban.
A 2002 preliminary unaudited financial statement of the holdings reveals a
CZK25 million loss, and total assets of CZK 6.34 billion. The figure for
the total assets remained unchanged over a year ago when the company
reported a CZK3.73 billion loss caused by provisioning for overdue bills of
exchange of the firm.
The unfinished audit of HPH's Cyprus-based subsidiary Daventree Resources
Limited prevented the audit of its results for 2002. Changes are still
expected due to provisioning.
Daventree Resources Limited Trust, owned by all of HPH shareholders, was set
up in December 2002 after the ban made it impossible to trade the shares.
The trust has US$114.5 million (CZK3.2 billion) under its accounts.
Some 7,000 of the fund's 240,000 shareholders are now claiming their
investments from the trust. One HPH share is CZK207.
The associations of HPH's individual shareholders had earlier criticized
payments through Daventree, suggesting this might be management's tactic to
draw out money.
HPH managers, meanwhile, reasoned this is an easy way to get money to the
shareholders.
KCP also considered the mode unclear and transparent, and had accordingly
advised shareholders to be cautious.
=============
F I N L A N D
=============
BENEFON OYJ: Teams with Pointer Solutions to Deliver Contract
-------------------------------------------------------------
Benefon and Pointer Solutions have signed a long-term contract on using
Benefon mobile telematics products in Pointer's hunting applications.
The first part of this year's deal, to be delivered during the summer, is
worth nearly 0,7 million euros.
Oy Pointer Solutions Ltd is a Finnish company with a twenty-year experience
in the animal tracking business. Benefon and Pointer developed jointly the
world's first GPS-based hunting dog tracking product, which Pointer has been
selling since summer 2002. With this product a hunter can track his dog in
real time during the hunt. These products have already been sold to over ten
countries.
Benefon and Pointer have continued the product development co-operation and
Pointer has now introduced a new, further enhanced tracking product for the
2003 hunting season.
"This new GPS-based dog tracking product has been received enthusiastically
around the world", tells President and CEO of Pointer Solutions, Matti
Koskelo. "For this season we are actually expanding our distribution to new
market areas."
"Our co-operation with Pointer Solutions is a great example of addressing
demanding applications through the seamless integration of Benefon's mobile
telematics solutions with the client's market knowledge", says President of
Benefon, Jukka Nieminen.
About Pointer Solutions
Oy Pointer Solutions Ltd. is an international Finnish company producing
positioning solutions. Oy Pointer Solutions Ltd develops, produces and sells
devices and services for positioning and tracking. Oy Pointer Solutions Ltd.
is one of the leading positioning device companies in Scandinavia. It has
delivered tens of thousands of devices for use in hunting and in needs of
daily life during the past twenty years the company has been in the
business. For more information, please visit www.pointersolutions.com.
About Benefon
Benefon is the leader in GSM/GPS mobile telematics terminals and solutions.
Implementations include professional and consumer applications in safety and
security, logistics, asset management, field management and telemedicine.
Headquartered in Salo, Finland, Benefon has designed and manufactured mobile
terminals for GSM and NMT systems since 1988. Please visit Benefon's website
at http://www.benefon.com.
*****
Handset maker Benefon Oyj applied for statutory corporate reorganization in
April after several attempts to find new investors failed.
CONTACT: POINTER SOLUTIONS
Matti Koskelo
President and CEO
Phone: +358 400 682 660
E-mail: matti.koskelo@pointersolutions.com
BENEFON OYJ
Ismo Laitakari
Business Development Director
Phone: +358 40 503 7364
E-mail: ismo.laitakari@benefon.fi
===========
F R A N C E
===========
ALSTOM: Reports Results in Line with Guidance Given in March
------------------------------------------------------------
Results in line with guidance given on 12 March 2003:
-- Orders received: EUR19.1bn, down 4% from fiscal year 2001/02 on a
comparable basis
-- Sales: EUR21.4bn, up 1% from fiscal year 2001/02 on a comparable basis
-- Operating margin before exceptional items: 4.1% (2001/02: 4.0%)
-- Net income: EUR(1.38)bn
-- Free cash flow: EUR(265)m, after cash outflow of EUR1,055m for GT24/GT26
-- Economic debt reduced to EUR4.9bn at 31 March 2003 from EUR5.3bn at March
31, 2002
Key achievements since presentation of Action Plan on 12 March 2003:
-- 50% of new EUR3.0bn target for disposals secured
-- New credit lines confirmed
-- Senior management renewed & new organisation implemented
-- Restructuring & overhead reduction plans launched
Commenting on the results Patrick Kron, Chairman & Chief Executive Officer,
said:
'The past twelve months have been difficult, with a weakening global
economy, tightening financial markets and a sharp deterioration in the
world-wide power generation market. These adverse conditions were reflected
in a slowdown in orders, particularly during the final quarter of our
financial year.
The Group faces many challenges. Our profitability is unsatisfactory, our
debt clearly remains too high, and we continue to pay the price of past
problems which we are working to close out, in particular in relation to the
GT24/GT26 gas turbines. Due to the severe downturn in some of our markets,
we need to adapt our capacity and further reduce our costs.
The action plan I outlined in March was a decisive response to these
challenges and I am pleased to report that we have made good progress on the
plan's key actions. We have secured fifty per cent of the proceeds targeted
from our disposal programme, strengthened our financial base by ensuring our
liquidity and launched a number of initiatives to improve our operational
performance.
We will continue to move with determination to deliver on our commitments,
so that ALSTOM's future performance better reflects both its leading
positions in power and transport and the sound fundamentals of these
markets.'
Full-year results 2002/03: Summary of Operating and Financial Review
Summary of results
Total Group
Actual figures Year ended March % Var.
(in EUR million) 2002 2003 March 03/
March 02
Orders received 22,686 19,123 -16%
Sales 23,453 21,351 -9%
Operating income 941 (434)
Net income (139) (1,381)
Free Cash Flow (a) (1,151) (265)
Economic debt (b) 5,290 4,918
Total
Year ended March % Var.
Comparable figures (c)
(in EUR million)
2002 2003 March 03/
March 02
Orders received 19,959 19,123 -4%
Sales 21,051 21,351 1%
(a) We define Free Cash Flow to mean Net cash provided by (used in)
operating activities less Capital expenditures, net of proceeds from
disposals of property, plant and equipment (excluding proceeds from the sale
of real estate as part of our strategic plan) and Increase (decrease) in
variation in existing receivables considered as source of funding of our
operations. However, this measure is not a measurement of performance either
under French or US GAAP.
(b) We define Economic debt to mean Net debt (or Financial debt net of short
term investments and cash and cash equivalents) plus cash proceeds from sale
of trade receivables ('securitisation of existing receivables'). Economic
debt does not represent our Financial debt as calculated under French GAAP,
and should not be considered as an indicator of our currently outstanding
indebtedness because trade receivables securitised are sold irrevocably and
without recourse.
(c) Adjusted for changes in business composition and exchange rates
Trading impacted by difficult market conditions
Despite an unfavorable economic climate, markets remained generally buoyant
in rail transport and stable in both electricity transmission and power
generation service. Conditions were unfavorable, however, in large gas- and
steam-related plant and equipment activities in power generation, following
the end of the 'gas boom' in the US market, and remained difficult in
electricity distribution.
Our Marine market remained very weak.
Overall, Group order intake was down 4% on a comparable basis against the
prior year and sales were broadly stable (+1%). The order backlog amounted
to over EUR30.3 billion at 31 March 2003, representing approximately 17
months of sales.
Results affected by exceptional provisions
Operating income was EUR(434) million, after the impact of exceptional
provisions of EUR(1,300) million, primarily to cover additional costs
relating to our GT24/GT26 gas turbines and, to a lesser extent, additional
costs associated with our UK trains issues.
Excluding these provisions, the Group's operating income was EUR866 million
and the operating margin was 4.1% (4.0% in fiscal year 2001/02).
Restructuring charges increased from EUR(227) million in 2001/02 to EUR(268)
million in 2002/03. Pensions charges increased from EUR(139) million to
EUR(214) million due to the increase in amortisation of the difference
between benefits and market value of pension assets. Financial income
improved from EUR(294) million to EUR(270) million. Due to the negative
pre-tax result, a tax credit of EUR241 million was recorded in fiscal year
2002/03. Goodwill amortisation remained broadly stable at EUR 284 million.
Net income, after exceptional provisions, was EUR(1,381) million for fiscal
year 2002/03.
Improvement in free cash flow
Free cash flow improved to EUR(265) million, from EUR(1,151) million in
fiscal year 2001/02, reflecting a substantial improvement in working
capital. Excluding cash outflows relating to the GT24/GT26 gas turbines,
free cash flow was EUR790 million positive.
Economic debt reduced by EUR372 million
Economic debt was EUR4,918 million at the end of March 2003, compared with
EUR5,290 million at the end of March 2002, a reduction of EUR372 million.
This primarily reflects the impact of the capital increase in July 2002 and
the disposals, partly offset by the negative free cash flow.
Sector Review
Power
In difficult conditions linked to the new equipment market downturn,
particularly in the US, orders fell by 16% on a comparable basis, with a
pronounced decline in the final quarter. Sales on a comparable basis
declined by 10%, with growth in boilers, environmental services, hydro and
customer service partially offsetting a sharp decrease in gas segment sales
and a reducing backlog of large turnkey steam projects.
Margins improved in the Boiler & Environment, Steam Power Plant and
Industrial Turbine segments, although these were offset by the negative
impact of the GT24/GT26 problems and the related exceptional provisions.
As reported on 12 March, the difficulties with the GT24/GT26 gas turbines
were reassessed and an additional gross provision of EUR1,160m was taken in
fiscal year 2002/03. Good progress is now being made on the recovery package
and of the 80 units sold, 71 are now in service. Excluding this GT24/GT26
provision, the operating margin of the Power Sector was 4.3%.
Transmission & Distribution (T&D)
The T&D market declined year-on-year, principally due to uncertainties over
deregulation in the US. The Chinese and North African markets remained
strong. Against this background, orders on a comparable basis increased by
4%, reflecting sound activity levels in transmission, contrasted with weak
demand in distribution. Sales on a comparable basis grew by 1%.
T&D's operating margin improved from 5.9% to 6.3%, reflecting better
monitoring of overhead expenditure and the effects of cost-reduction
programs, partly offset by continuing price pressure in some market
segments.
Transport
Transport took advantage of a generally buoyant market: orders were up 17%
and sales up 27% in fiscal year 2002/03 versus the prior year, on a
comparable basis.
A gross provision of EUR140 million was taken in fiscal year 2002/03 to
cover additional costs on the regional trains and West Coast Main Line
(WCML) contracts. Excluding this exceptional provision, the margin in the
Transport Sector was 3.7%, still adversely affected by low workload in UK,
Canada and locomotives businesses.
Marine
Sales grew by 26%, reflecting the strong workload in fiscal year 2002/03
which will continue through fiscal year 2003/04. But due to the weak marine
market, order intake was very low at EUR163 million, creating uncertainty as
to the workload for fiscal year 2004/05 and beyond.
Action Plan Update
On 12 March 2003 ALSTOM's new Chairman & CEO, Patrick Kron, launched an
Action Plan. The plan has three main objectives:
(1) Focus the Group's activities through an extended disposal program
(2) Strengthen the financial base
(3) Improve operational performance
Several steps have already been achieved:
(1) Disposal program: 50% secured
The targeted total proceeds from the extended disposals program of EUR3
billion by March 2004, are already 50% secured following the sale of the
Industrial Turbines businesses for EUR1,100 million (EUR950 million of net
cash proceeds) announced in April 2003 and a further EUR138 million received
in April 2003 from real estate sales. Together with the EUR418 million of
proceeds realized in fiscal year 2002/03, this brings proceeds secured to
date to EUR1.5 billion. The remaining part of the program is progressing:
additional real estate sales should be finalized over the next few months
and the sale of the Transmission &
Distribution Sector is proceeding according to schedule.
(2) Strengthen financial base: liquidity secured; capital increase planned
Liquidity secured
The Group's current liquidity requirements have been secured with the formal
agreement of banks to amend covenants on existing facilities. A new bridge
loan of EUR600 million and the extension of credit lines totalling EUR475
million have been obtained pending the disposals.
Capital increase planned
The non-consolidated losses in the Company's Statutory Accounts encompass an
exceptional write-off reflecting current accounting values of its
subsidiaries.
Such losses will be applied to reduce the Company's share capital by a
reduction of the nominal value of each existing share of the Company from
EUR6 to EUR1.25.
ALSTOM will seek to raise up to EUR600 million of additional funds at the
appropriate time through a capital increase by way of a rights issue.
Resolutions authorizing the reduction of nominal value and the capital
increase will be submitted for approval at the Company's Annual General
Shareholders' Meeting on 2 July 2003. If shareholders do not approve the
authorization to increase the capital, the banks will be entitled to require
repayment of the
EUR600 million bridge loan and EUR475 million extended credit lines.
(3) Operational performance: improvement underway
Management & organisation: renewed
ALSTOM's top management has been renewed: five new members joined the
Executive Committee, with changed management in the Power and Transport
Sectors.
A more efficient organisation is being implemented: the Power Sector has
been delayered and split into three Sectors: Power Turbo-Systems, Power
Service and Power Environment. A Corporate Risk Committee chaired by the
Chairman & CEO is now operational.
Cost-reduction: programmes launched
The restructuring and cost-reduction programmes have been launched. These
programs should lead to recurring annual savings of EUR500 million within
two years.
Industrial restructuring is being accelerated and the planned reduction of
3,000 employees out of the current 11,000 in the Power Turbo-Systems Sector
has been announced. Overhead reduction programs have also started with the
announcement of a planned 40% reduction in employee numbers at Corporate and
Power headquarters.
Commercial activity: encouraging successes
Activity at the end of the fiscal year was impacted by the downturn in some
of our markets and uncertainties as to ALSTOM's future following the
announcements of 12 March. Through strong marketing efforts, however, the
Group has been able to maintain the support of its customer base and secure
new, good-quality
contracts in its various sectors over the past few weeks, including the
EUR179 million 25-year maintenance contract with the Barcelona metro; a
EUR315 million contract for the supply of Coradia trains in Italy; and a
EUR320 million contract for the supply of a gas-fired combined-cycle power
plant in Bahrain.
Outlook
Whilst we expect overall demand to be generally low over the next few months
due to the depressed power generation market, we are confident that market
fundamentals will lead, in the medium to long-term, to growing demand for
both new equipment and service.
The timing of recovery in the power generation equipment and cruise-ship
markets is uncertain. The Transport market, however, should remain sound,
even if activity may be slightly lower than last year's exceptionally high
level.
Given the progress in our operating margin before exceptional provisions in
fiscal year 2002/03, coupled with the extensive restructuring plans now
underway, we are confident of achieving our target of 6% operating margin by
fiscal year 2005/06. In view of the current free cash flow, we foresee the
Group to generating positive free cash flow, once the GT24/GT26 gas turbine
problem is resolved.
We also anticipate our economic debt will be reduced from EUR4.9 billion in
March 2003 to a level in the range of EUR2.0 - 2.5 billion by March 2005,
depending on the quantity of additional funds raised through the planned
capital increase.
A full copy of the Operating and Financial review and prospects and a full
set of accounts and notes is available on ALSTOM's website
(http//www.alstom.com).
CONTACT: ALSTOM
Investor relations
E. Chatelain
Phone: +33 1 47 55 25 33)
E-mail: investor.relations@chq.alstom.com
FRANCE TELECOM: Ratings Raised, Off Watch, Outlook Positive
-----------------------------------------------------------
Standard & Poor's Ratings Services said that it had raised its long- and
short-term corporate credit ratings on French telecommunications provider
France Telecom S.A. (FT) to 'BBB' from 'BBB-', and 'A-2' from 'A-3', and had
raised its long-term corporate credit rating on FT's mobile-phone subsidiary
Orange S.A. to 'BBB' from 'BBB-'. At the same time, the ratings were removed
from CreditWatch, where they had been placed on March 24, 2003. The outlook
is positive.
The action follows FT's recent EUR15 billion rights issue and Standard &
Poor's review of the new management's business strategy for the group, as
well as the debt-reduction potential arising from its plan to boost cash
flow generation during the next three years.
"The ratings on FT take into account the group's substantially improved
credit measures, primarily the result of its April 2003 rights issue and of
certain asset disposals made in the first quarter of 2003," said Guy
Deslondes, a credit analyst in Standard & Poor's Milan office.
FT's improved credit quality also reflects its steady, material progress in
profitability and cash flow generation during the past two quarters.
During first-quarter 2003, the group achieved an EBITDA margin of 36.2%
(materially above the 2002 level of 32%) and EBITDA net of capital
expenditures reached 27% of sales, compared with 15% in 2002. FT plans
further debt reduction through cash flow of at least EUR3 billion (excluding
asset disposals) in 2003. At year-end 2003, FT's credit measures should
improve to levels in line with the current ratings, including a ratio of net
debt to EBITDA of no more than 3.5x, adjusted for operating lease
obligations, securitization, pension liabilities, and outstanding put
options.
"Standard & Poor's expects that FT's credit quality will continue to improve
during the coming quarters, in line with enhanced net cash flow and
profitability metrics," added Mr. Deslondes. "This could allow the French
telecoms operator to post, at year-end 2004, debt-protection measures
adjusted for leases, securitization, and pensions (on a proportionate basis)
compatible with a higher rating."
The timing of any further improvement in FT's ratings will depend upon the
group's earnings and cash flow visibility for 2004, as well as management's
continued commitment to drastically reduce debt to levels in line with its
public statements for 2005.
=============
G E R M A N Y
=============
BAYER AG: Settles Baycol Lawsuit Out of Court Ahead of Hearing
--------------------------------------------------------------
Bayer was able to settle out of court a lawsuit over its
cholesterol-lowering drug Baycol ahead of a hearing on June 6, a company
spokesman said.
Spokesman Michael Diehl told Reuters the German chemicals and drugs group
had settled the case two weeks ago but did not say how much it had paid.
Mr. Diehl said the case, which was supposedly to be heard in Minneapolis,
was not among the more than 100 deaths linked to Baycol. He also revealed
that the deal is included in the 785 cases it said it settled for US$240
million.
The company's next case will be heard on June 16 in Texas.
Bayer faces some 8,800 cases related to Baycol, the anti-cholesterol drug it
recalled from the market in August 2001. It was cleared of all liability in
the first two U.S. trials.
DEUTSCHE LUFTHANSA: Posts First-Quarter Loss of EUR 415 Million
---------------------------------------------------------------
The Group also anticipates an operating loss for the year as a whole
The continuing weak economy, the after-effects of the Iraq war and the SARS
disease have led to a worldwide decline in the demand for air travel. These
overlapping crises also had a serious impact on the Lufthansa Group's
business in the first quarter of 2003. The company was hit particularly hard
by the consequences of the SARS epidemic in the Asia/Pacific region, where
Lufthansa had earlier emerged as the market leader ahead of other European
airlines. Despite prompt capacity cuts and cost savings Lufthansa was unable
to buck this trend, and consequently posted a negative operating result
of -415 million euros. This compares with an operating profit of 12 million
euros in the same period last year. "Air transport worldwide is facing its
greatest economic crisis ever. The situation has never been so serious",
Jürgen Weber said, presenting the first-quarter figures. "If we want to
remain a healthy company and keep our staff on board, we have to further
reduce our costs in cooperation with our internal and external partners."
Strict cost discipline and higher productivity would remain at the core of
Lufthansa's success, he emphasised.
Lufthansa acted swiftly at the beginning of 2003 and introduced a
comprehensive package of drastic measures. Capacities at Lufthansa and its
regional partners were trimmed by an equivalent of 70 aircraft. Capital
expenditure and other expenses were cut back, a further D-Check initiative -
"Cash 100" - was launched and, in addition to a recruitment freeze, the
company also took steps to lower staffing costs. "We must make a concerted
effort to take timely contingency measures if we want to keep ahead of our
competitors, even in times of crisis," Weber said. But there would come a
time after the crisis, and it was vital to be well prepared for that, he
added. Lufthansa was therefore pressing ahead with its future-oriented
projects, such as inflight Internet access, the introduction of business
jets, improved seats on intercontinental routes and a new service offer for
top customers. "Cost saving is important, but cost saving alone is not the
future," Weber stressed. "At the same time we must invest in our products
for tomorrow if we want to keep a competitive edge. We have proved
repeatedly that we can overcome crises by pooling our strengths."
In the light of the first-quarter results and the latest traffic results and
booking figures, Lufthansa no longer anticipates a positive operating result
for the year as a whole. In view of the current uncertainties, it is
impossible to estimate the expected loss. But Lufthansa remains as before
one of the most financially robust airlines with high liquidity. "Thanks to
our financial strength we will be able to maintain the position we have
achieved, even if the crisis proves to be protracted. Of that I am
convinced", Weber said. "But we cannot afford to sit idly by. We must take
decisive action and then seize our opportunities."
The first quarter of 2003 in figures
From January to March the Lufthansa Group generated total revenue of 3.7
billion euros, 4.6 per cent less than in the same period last year. Despite
the difficult market environment, the Group's airlines earned 2.6 billion
euros in traffic revenue, which represents a year-on-year decline of 5.8 per
cent. Other operating income grew by 91.9 per cent to 401 million euros.
This figure includes book profits totalling 79 million euros from the sale
of Lufthansa's stake in Start Amadeus.
Operating expenses rose by 9.1 per cent to 4.4 billion euros in the first
quarter. Staffing costs increased by 11.1 per cent to 1.2 billion euros,
mainly due to the first-time consolidation of additional companies. The cost
of materials climbed by 6.2 per cent to 1.8 billion euros. In the first
quarter the Group spent 331 million euros on fuel, a year-on-year increase
of 13.4 per cent. Had it not been for the hedging measures that are embedded
in Lufthansa's risk management strategy, the fuel bill would have been 53
million euros higher.
For the first three months of 2003 the Lufthansa Group returned a net loss
of -356 million euros, compared to a net loss of -186 million euros in the
previous year. The Group's net indebtedness was further reduced, as planned,
falling by 11 per cent compared with the position at 31 December 2002 to
Euro 1.0 billion. The company's strict cost cutting measures brought capital
expenditure down to 207 million euros, compared to 277 million euros in the
first quarter of 2002.
Key data of the Lufthansa Group
Jan-Mar 2003 Jan-Mar 2002 Change in per cent
Revenue EURm 3,676 3,854 -4.6
of which traffic revenue EURm 2,581 2,741 -5.8
Loss/profit from operating activities EURm -300 47 -
Net loss for the year EURm -356 -186 -91.4
Operating result EURm -415 12 -
Capital expenditure EURm 207 277 -25.3
Operational cash flow EURm 307 478 -35.8
Net indebtedness EURm 1,008 3,500 -71.2
Gearing per cent 26.9 100.2 -73.3PP.
(Average) Number of employees 94,187 84,802 11.1
Earnings per share EUR -0.93 -0.49 -
The full Group Report for the first quarter of 2003 is available on the
Internet at http://www.lufthansa-financials.com
Deutsche Lufthansa AG
Corporate Communications
DRESDNER BANK: New Chairman to Accelerate Cost-Cutting Plans
------------------------------------------------------------
Recently appointed chairman of Dresdner Bank AG, Herbert Walter, is
reportedly planning to accelerate the ailing German bank's cost-cutting
plans.
The Financial Times Deutschland cited sources at the bank saying Mr. Walter
does not believe the plans put into place by his predecessor to save EUR1
billion this year will go far enough. He wants to save at least EUR250
million more.
Mr. Walter was also reported to be considering a reduction in the number of
Dresdner Bank branches to 500 from the current 800. He is in talks with the
works council about introducing shorter working hours as well.
Dresdner lost more than 11,000 jobs since May 2000 as the company's position
in the market drops. It went down from being the ninth top company in the
field of advising global mergers in 2001, to 18th last year, Bloomberg data
showed. It also fell to 32nd in global sales from 17th in 2001.
CONTACT: DRESDNER BANK AG
Jurgen-Ponto-Platz 1
D-60301 Frankfurt/Main, Germany
Phone: +49-(0) 69/2 63-0
Fax numbers: General enquiries
+49-(0) 69/2 63-48 31
+49-(0) 69/2 63-40 04
MOBILCOM AG: Break Even Already Achieved in the First Quarter
-------------------------------------------------------------
The mobilcom Group has achieved an important milestone of its restructuring
plan by breaking even earlier than expected: although only the first quarter
of 2003, the Company already shows breakeven earnings before interest and
taxes (EBIT) of Euro0.1m (Q4 2002 without UMTS: -Euro70.7m) and slightly
positive group earnings of Euro0.5m (Q4 2002: -Euro289.1m ).
Earnings before interest, taxes and depreciation (EBITDA) are already
clearly positive and stand at Euro18.8m (Q4 2002 without UMTS: -Euro21.7m).
Due to the debt discharge by France Telecom in the first quarter, the Group
now shows net assets of Euro48.9m (Q4 2002: Euro6.955bn). With an equity
ratio of 25.4% and liquid assets of Euro223.2m (Q4 2002: Euro199.8m), the
financing of the recapitalization of the Mobilcom Group rests on a solid
foundation.
The drastic reduction in losses in the wireless service provider business
was a decisive factor for the positive development of earnings. In this
business area, the loss on an EBITDA basis was cut from -Euro32.6m in the
fourth quarter of 2002 to -Euro5.2m in the first quarter of 2003. In the
business area Fixed Line/Internet, the EBITDA improved to Euro24.0m (Q4
2002: Euro17.2m).
As a consequence of the strict budget and liquidity orientation, turnover
(Euro452.9m) remained below the level of the previous quarter (Euro499.7m).
It must be taken into account here that Mobilcom pursued the strategy
'profitability before market share' and aimed at more favorable earnings
instead of growth in quantity in order to secure the long-term success of
the company.
Issuer's information/explanatory remarks concerning this
ad-hoc-announcement:
Q1 / 2003 Q4 / 2002 Q1 / 2002
Employees end of period 3,462 4,752 5,494
Revenue (Euro m) 453 499.7 514.3
Service Provider 321 357 350
Fixed Line / Internet 132 142 149
EBITDA (Eurom)* 18.8 61.0 -120.7
EBITDA (Eurom) excl. UMTS 18.8 -21.7 -26.8
Service Provider -5.2 -32.6 -21.5
Fixed Line / Internet 24.0 17.2 18.1
UMTS 0 82.7 -93.9
EBIT (Eurom) 0.1 6.5 -16.1
EBIT (Eurom) excl. UMTS 0.1 -70.7 -59.4
Service Provider -14.2 -38.0 -36.7
Fixed Line / Internet 14.3 2.5 6.6
UMTS 84.8 77.2 -100.7
Earnings per share (Euro) 0.01 -4.40 -2.63
Net debt (Eurom)** +48.9 -6,955.2 6,366.8
Cash and cash equivalents (Eurom) 223.2 199.9 163.5
Equity Ratio in % 25.4 3.9 32.1
Operating income 0.5 0.5 -116.4
*In calculating EBITDA and EBIT in the first quarter of 2003, the interest
expenses in the amount of Euro84.8m borne by France Télécom and shown under
"Other operating income" were included with the interest expenses Without
this adjustment, reasonable from a business point of view, the EBITDA and
EBIT would have correspondingly been shown to be Euro84.8m higher.
**Total of the bank liabilities and the pension provisions, less liquid
assets
=============
I R E L A N D
=============
AER LINGUS: Chief Executive Condemns Ryanair's Advertising
----------------------------------------------------------
The Chief executive of struggling Irish airline Aer Lingus, Willie Walsh,
condemned the recent Ryanair advertising on supposed 'average' fares as
"untruthful and grossly misleading".
News agency Business Plus Online said the recent Ryanair advertising has
claimed the Aer Lingus "average" fare to be EUR185.86, which Mr. Walsh
dismissed as "bizarre and basic financial miscalculation by Ryanair to
vastly and knowingly inflate the Aer Lingus average fair."
Mr. Walsh spoke to the Lienster Society of Chartered Accountants in Dublin.
He set out the actual Aer Lingus average fares on a range of routes and
challenged Ryanair's Michael O'Leary to publish this accurate information
alongside the equivalent Ryanair average fares for the same routes, the news
agency said.
The irate Aer Lingus executive was quoted saying: "Where I draw the line is
when the normal cut and thrust of competitive rhetoric becomes what can only
be called lies being peddled by one business against a competitor. For
customers to make an informed choice they are entitled to the truth."
He further emphasized that although it is "entirely a matter for Ryanair as
to the accuracy with which they choose to portray their own financial
information," he will not "stay silent" when they choose to misinterpret Aer
Lingus financial information in such a "cavalier and untruthful way".
Moreover, Mr. Walsh explained that in Ryanair advertising the average Aer
Lingus fare has been calculated on the basis of total Aer Lingus Group
turnover divided by flown passenger numbers as published in the annual
accounts for 2002.
The calculation Ryanair reached included hundreds of millions of euro in
revenues generated from subsidiaries, which have since been sold and clearly
identified in our accounts as discontinued operations.
Aer Lingus has been struggling from the global economic slowdown, industrial
unrest, decline in tourism, stiff transatlantic competition and rising fuel
prices even before the September 11 attack. The tragedy only worsened its
situation, leading it to post a EUR52 million loss in 2001.
The Irish government is looking for a private sector investor after a slump
in airline stocks ruled out a market flotation originally proposed in 2000.
ELAN CORP.: Unaffected by Withdrawal of Guaranteed Rating
---------------------------------------------------------
Moody's Investors Service said it withdrew the (P)Caa2 shelf registration
rating of Athena Neurosciences Finance LLC, guaranteed by Elan Corporation
plc on a senior basis.
But the rating agency clarified that the action does not affect either the
existing Caa2 rating of Athena Neurosciences notes, or the ratings of Elan's
other existing debt obligations.
Specifically, the action does not affect Elan Corporation Plc's Caa2 senior
implied and Caa2 issuer rating; Athena Neurosciences Finance's guaranteed
notes (on a senior basis) rated Caa2; Elan Finance Corporation Ltd's
guaranteed notes (on a subordinated basis) rated Ca; Elan Pharmaceutical
Investments II Ltd.'s guaranteed notes (on a subordinated basis) rated Ca;
and Elan Pharmaceutical Investments III Ltd.'s guaranteed notes (on a
subordinated basis) rated Ca.
=========
I T A L Y
=========
FIAT SPA: Board of Directors Approve 2003 First Quarter Results
---------------------------------------------------------------
The Board of Directors of Fiat S.p.A. met in Turin under the chairmanship of
Umberto Agnelli to review the Group's consolidated results for the first
three months of 2003.
Financial Overview
As expected, the first quarter of 2003 was another difficult period for the
Fiat Group, as it continued to confront the problems that hampered its
profitability last year in a weak global economy that continues to be
characterized by a climate of uncertainty.
The key financial data for the first quarter are reviewed below.
Revenues amounted to about 12.3 billion euros, compared with 14.1 billion
euros in the first three months of 2002. The decline was about 10% on a
comparable consolidation basis. This shortfall is largely the result of
lower unit sales by Fiat Auto and CNH and of non-operating factors,
including the impact of the conversion of CNH's dollar-denominated revenues
into euros (which reduced revenues by about 500 million euros) and, of
lesser magnitude, the divestitures of certain Group businesses in 2002 and
at the beginning of 2003 (Teksid's Aluminum Business Unit and Iveco's
Fraikin).
The operating loss for the quarter totaled 342 million euros, compared with
299 million euros in the first three months of 2002, when the bottom line
benefited from higher gains (about 50 million euros) earned on the sale of
real estate assets, especially by Toro Assicurazioni. Overall, while Fiat
Auto narrowed its loss, the Group's other businesses saw their operating
profits fall, even though, in the aggregate, they operated close to
breakeven.
The net consolidated loss for the quarter came to 699 million euros (681
million euros attributable to the Group), compared with 663 million euros
(529 million euros attributable to the Group) in the first three months of
2002. The main reasons for the loss are the costs and lost profits resulting
from the flood that completely stopped production at the Termoli engine
plant this past January and two charges of a temporary nature: an entry
booked to mark to market the equity securities held by Toro Assicurazioni
and the adjustment of the total return equity swap on General Motors shares,
which was booked to reflect the fair market value of these shares at March
31, 2003. This loss, however, would almost totally disappear if the shares
were valued at today's market prices. There were also some positive factors,
including the extraordinary income earned on the sale of the Brazilian
automobile retail financing activities.
At March 31, 2003, the net financial position showed net borrowings of 5.2
billion euros, up about 1.4 billion euros from December 31, 2002 but down
from the 6.6 billion euros recorded at March 31, 2002. The increase from the
beginning of the year was due mainly to a rise in working capital caused by
higher inventories held by CNH (due to seasonal factors) and Iveco (due to
seasonal factors and the launch of new products), a drop in the amount of
trade receivables held by Fiat Auto and a rise in receivables owed by the
tax authorities. Another factor affecting the level of indebtedness was the
negative cash flow experienced during this period. The resources absorbed by
these factors were replaced in part by the proceeds generated by
divestitures.
When the financing secured by an agreement with EDF within the context of
the Italenergia transaction (1,150 million euros) and the expected sale of
the entire capital stock of Toro Assicurazioni, which is covered by a
binding agreement and will bring in about 1.4 billion euros, are taken into
account, the Group is fully in compliance with the requirements for
reduction of net indebtedness stipulated in the terms of the mandatory
convertible facility provided by the banks.
Fiat Auto
In Western Europe, the contraction that characterized the automobile market
in 2002 continued during the first quarter of 2003. Overall demand was down
2.7%, aided in part by an increase of 5.8% in Italy, where motorists took
advantage of environmental incentives provided by the government during the
last three months of this program. The Polish market continued to improve,
but a credit crunch had a negative impact on demand in Brazil.
Fiat Auto had revenues of 4.9 billion euros in the first quarter of 2003,
compared with 6 billion euros in the same period last year. Worldwide sales
totaled 419,000 units (-19%). About one-third of this decline is
attributable to a drop in unit sales. The remaining two-thirds reflect a
production shortfall (about 31,000 cars) caused by a flood at the Termoli
plant and the aggressive actions taken to cut inventories in the sales
network (more than 45,000 vehicles since the end of 2002) in anticipation of
new model launches planned for later this year.
Fiat Auto reported an operating loss of 334 million euros in the first
quarter of 2003 (-429 million euros in the same period last year). The
improvement over the loss incurred in the first three months of 2002 shows
that the Sector is beginning to respond to restructuring and cost-cutting
efforts and reflects the benefits of the synergies developed with General
Motors and of programs implemented to increase the quality of its sales.
At the beginning of March 2003, on the occasion of the Geneva International
Motor Show, Fiat Auto unveiled the Fiat Gingo city car, a compact minivan
called Fiat Idea, the Lancia Ypsilon and the Alfa GT Coupé.
Planning for the medium term, we are in the process of finalizing an
agreement with General Motors to develop another common architecture for
cars, this time in the "C" segment, which is the most important in Europe.
CNH Global
The market for agricultural equipment was stable in Europe but contracted
(-3.5%) in Latin America. In North America, overall demand was up 5.2%
thanks exclusively to higher sales of low-horsepower tractors. The market
for construction equipment was weaker than expected. It shrank further in
Europe (-5.3%) and North America (-11.7%), but held steady in Latin America.
CNH reported revenues of 2.2 billion euros, down from 2.7 billion euros in
the first quarter of 2002. This decrease reflects the impact of an
unfavorable exchange rate for the U.S. dollar, which weakened versus the
euro. When stated in U.S. dollars ($2.4 billion) and converted into euros on
a comparable foreign exchange basis, revenues show a decline of about 5%,
attributable primarily to lower sales of construction equipment.
Sales of agricultural equipment were roughly in line with those for the
first quarter of 2002, as a positive performance in Europe offset lower
shipments of certain product lines in North America and Latin America. On
the other hand, sales of construction equipment were affected by weak market
demand and heightened competitive pressure.
The Sector had an operating loss of 8 million euros ($9 million), compared
with operating income of 30 million euros ($26 million) in the first three
months of 2002. Price increases, better margins on new agricultural
equipment models and the benefit of additional synergies developed by Case
and New Holland were not enough to offset the effect of lower unit sales,
especially in the area of construction equipment; a less favorable sales
mix; the impact of anticipated cost increases for medical and pension costs
(especially in the United States); and the costs incurred to launch new
products.
Iveco
In Western Europe, total demand for commercial vehicles weighing more than
2.8 tons was weak. It increased by 2.7% compared with the first quarter of
2002 when, however, the market had contracted sharply. A breakdown by market
segment shows a gain of 8% for heavy-range vehicles, a modest improvement of
2% for light vehicles and a drop of 5% for intermediate vehicles.
Iveco had revenues of 2 billion euros in the first quarter of 2003, compared
with 2.1 billion euros in the same period a year ago. The deconsolidation of
Fraikin accounts for this decrease. Healthy sales gains for light vehicles
(+5%), heavy-range vehicles (+5%) and Irisbus (+24%) were offset by a drop
in shipments of intermediate vehicles (-19%).
The deconsolidation of Fraikin, heightened competitive pressures and the
unfavorable exchange rate used to translate the data of the Brazilian
operations had a negative impact on the Sector's operating income, which
totaled 2 million euros, down from 11 million euros in the first three
months of 2002.
Ferrari
Rising sales of Maserati cars helped Ferrari post higher revenues in the
first quarter of 2003. However, it reported an operating loss due to normal
seasonal factors, higher research and development outlays, and unfavorable
foreign exchange rates.
Other Sectors
The difficulties that are affecting the performance of carmakers had a
negative impact on the components sectors. In this environment, revenues
were down at Magneti Marelli, which suffered from lower unit sales and the
impact of unfavorable foreign exchange rates. Teksid's revenue decline was
due mainly to the sale of certain businesses in 2002. Nevertheless, these
two Sectors reported an aggregate loss of 9 million euros, an improvement
from a loss of 21 million euros in the first quarter of 2002. Comau had
higher revenues, but its operating result deteriorated. As was the case in
2002, Comau's loss of 26 million euros (loss of 12 million euros in the
first three months of 2002) was caused exclusively by the higher costs
incurred to complete outstanding orders.
FiatAvio was affected by the crisis that is gripping the civil aviation
market and by the postponement of space launches. Nevertheless, its return
on sales held at 8%, yielding operating income of 24 million euros (54
million euros in the first quarter of 2002).
Toro Assicurazioni reported operating income that, net of gains on the sale
of real estate assets, was roughly the same as in the first three months of
2002.
Business Solutions had higher revenues, but its operating income declined
due to the lower gains earned on the sale of real estate assets.
Itedi's operating income was higher than in the first quarter of 2002,
thanks to the success of cost-cutting programs and brand-stretching
initiatives.
Outlook for 2003
2003 will be a difficult and challenging transition year for the Fiat Group,
since it will be working to overcome its operational difficulties,
especially those that have been penalizing Fiat Auto's profitability, in an
economic climate characterized by low growth and aggressive competition.
The Group's key markets are not expected to show appreciable signs of a
turnaround until later this year. In Europe, demand for automobiles will be
lower than in 2002. The market for agricultural equipment should hold
relatively steady, but sales of construction equipment are expected to
decline further. Demand for commercial vehicles will be down across the
board.
Despite such an unfavorable environment, all Group Sectors are working hard
to achieve significant improvements in operating results and cash flow
through rigorous cost-cutting programs and other measures.
The exceptionally rapid pace at which the divestitures of Fidis, Toro and
FiatAvio were completed in recent months underscores the Group's commitment
to meet the debt-reduction requirements agreed upon with its lending banks
and to permanently strengthen its balance sheet.
By June, the Group's management intends to present to the financial markets
the industrial and financial action guidelines that it will implement to
achieve a lasting structural turnaround of its operations. At that time,
management will also be able to provide a better forecast of the Group's
performance for all of 2003. It can already be stated that, though the
operating result is expected to remain negative, it should mark an
improvement from the full year 2002 level.
To see financials: http://bankrupt.com/misc/FIAT_SPA.pdf
FIAT SPA: Board of Directors Appointed in Stockholders Meeting
-------------------------------------------------------------
The Fiat Stockholders' Meeting that met to approve the 2002 Annual Report
also appointed a new Board of Directors for the 2003/2005 period. The
previous Board of Directors had resigned to enable its renewal after the
many replacements that had occurred in the preceding months.
Upon a motion of the majority stockholder IFIL S.p.A. the Stockholders'
Meeting appointed the following as Directors:
Umberto Agnelli
Angelo Benessia
Luca Cordero di Montezemolo
Flavio Cotti
John Philip Elkann
Luca Garavoglia
Franzo Grande Stevens
Hermann-Josef Lamberti
Sergio Marchionne
Giuseppe Morchio
Daniel John Winteler
The new Board of Directors met after the Stockholders' Meeting and confirmed
Umberto Agnelli as Chairman and Giuseppe Morchio as Chief Executive Officer.
Pursuant to the Code of Conduct for Listed Companies, the Board also
assessed as independent the following five Directors: Angelo Benessia,
Flavio Cotti, Luca Garavoglia, Hermann-Josef Lamberti and Sergio Marchionne.
The Board then updated the composition of the Corporate Governance
committees, that are now made up as follows:
The Audit Committee by three independent Directors: Angelo Benessia
(Chairman), Hermann-Josef Lamberti and Sergio Marchionne;
The Nominating and Compensation Committee by five Directors, three of whom
are not executive: Umberto Agnelli (Chairman), Flavio Cotti, Luca
Garavoglia, Franzo Grande Stevens and Giuseppe Morchio.
FIAT SPA: Chief Executive Morchio Addresses Shareholders Meeting
----------------------------------------------------------------
2002 was an especially difficult year for Fiat, which was weighed down by
the negative performance of Fiat Auto, which could not be completely offset
by the positive contributions of the other Sectors and, more importantly,
the extremely high costs incurred to jump-start the Company's recovery.
Revenues were down about 4%, declining from 58 billion euros to 55.6 billion
euros. The drop in Fiat Auto's revenues was offset by an improvement at
Iveco. At the same time, the gain reported by CNH in U.S. dollars was
reduced by the revaluation of the euro.
The operating result was a loss of 762 million euros (1.4% of revenues)
against an operating income of 318 million euros (0.5% of revenues) in the
previous year.
This loss was the result of the particularly difficult situation encountered
by the Automobile Sector, combined with that of Comau and Magneti Marelli.
The loss was reduced by the positive contributions of other Sectors, which,
however, did not perform as well as in 2001. The exceptions were Ferrari,
Teksid, FiatAvio, Toro and Itedi.
The large net loss incurred in 2002 - equal to 4,263 million euros, of which
3,948 million euros attributable to the Group - while due primarily to a
negative operating result, was also caused by these other factors:
The significant costs incurred to restructure the Group's industrial
operations, especially those of Fiat Auto;
The extraordinary provisions booked to adjust the value of the Group's
assets to reflect changing market conditions;
The losses incurred on some of the divestitures, particularly on the sale at
market values of the Group's General Motors shares;
The negative results reported by companies in which the Group holds equity
investments and the writedowns required to mark to market the equity
securities held by the insurance companies;
High net financial expenses, which, however, were less than those incurred
in 2001.
The negative impact of these factors was partly offset by the substantial
gains earned on the divestitures of other assets.
At the end of 2002, the net financial position showed that Group
indebtedness was lower by about 2.2 billion euros compared with December 31,
2001.
The main reasons for this improvement are:
Sales of several businesses (including Teksid's Aluminum operations and
Magneti Marelli's Aftermarket and Electronic Systems units) and equity
investments (the General Motors shares and interests of 34% in Ferrari and
14% in Italenergia Bis);
The capital increases carried out at Fiat SpA and CNH;
A decrease in working capital requirements made possible by a reduction in
the inventories carried by Fiat Auto and CNH and a drop in Fiat Auto's trade
receivables, which, in turn, reflects lower unit sales and a decline in the
inventories held by the distribution network.
The various transactions carried out in 2002 helped strengthen the overall
structure of the Group's net financial position, producing a better mix of
short-term and long-term debt.
The Group was successful in attaining the debt reduction objectives set
forth in the banking agreements it signed, which call for pro-forma net
borrowings to decrease to 3 billion euros. They expressly allow the proceeds
expected from binding sales contracts that have not yet been finalized and
the financing secured by an agreement with EDF within the context of the
Italenergia Bis transaction (1,150 million euros) to be counted in
determining whether the net debt reduction objective has been reached.
First Quarter of 2003
Group's results for the first quarter of this year were affected by the same
problems that hampered its profitability in 2002 and by a generalized
deterioration of market conditions, which had an impact not only on Fiat
Auto but on the other Sectors as well.
In the first quarter of 2003, the Group had revenues of 12.3 billion euros,
down about 10% on a comparable consolidation basis from the same period last
year. The reasons for this shortfall are:
Lower unit sales by Fiat Auto and CNH;
Non-operating factors, including the significant impact of the conversion
into euros of CNH's dollar-denominated revenues (which reduced revenues by
about 500 million euros) and, of lesser magnitude, the divestitures of
certain Group businesses in 2002 and at the beginning of 2003.
The operating result for the quarter was a loss of 342 million euros, as
against 299 million euros in the same period last year.
The widening of the loss compared with a year ago is due to a decrease in
the gains earned on the sale of real estate assets, especially by Toro
Assicurazioni, which were about 50 million euros less than in the first
three months of 2002.
Moreover:
The loss reported by Fiat Auto decreased, falling from 429 million euros to
334 million euros;
The Group's other businesses saw their operating profits fall, but, on the
aggregate, operated close to breakeven.
The net consolidated loss came to 699 million euros, little changed from the
first quarter of 2002.
Two main factors are responsible for this loss:
The costs and lost profits resulting from flooding that blocked all
production at the Termoli engine plant this past January;
And the following charges of a temporary nature:
An entry booked to mark to market the equity securities held by Toro
Assicurazioni;
The adjustment of the equity swap on the General Motors shares, which was
booked to reflect the market price of these shares at March 31, 2003.
With regard to these two items, it is important to keep in mind that:
The losses recognized in the securities held by Toro have no impact on Toro'
s sales price, which has been set at 2.4 billion euros, and, therefore, will
produce a gain when the sales price is collected.
The equity swap on the GM shares is beneficial for the Group, but, because
it is affected by market fluctuations, it injects an element of volatility
in the results that we report each quarter. To illustrate this point, most
of the loss reported for the first quarter would disappear if the shares
were valued at today's market prices.
Without these two items, the loss for the first quarter would have been
significantly smaller than it was in the first three months of 2002.
There were also some positive factors, including the extraordinary income
earned on the sale of the Brazilian retail financing activities.
At March 31, 2003, the net financial position showed net borrowings of 5.2
billion euros. This amount is about 1.4 billion euros higher than at the
beginning of the year, but is down from the 6.6 billion euros recorded at
March 31, 2002.
The increase that occurred in the first quarter was due mainly to a rise in
working capital caused by:
higher inventories held by CNH (due to seasonal factors) and Iveco (due to
seasonal factors and the launch of new products);
a drop in the amount of trade receivables held by Fiat Auto; an increase in
receivables owed by the tax authorities.
Another factor affecting the net financial position was the negative cash
flow experienced during this period.
The resources absorbed by these factors were replaced in part by the
proceeds generated by divestitures, which totaled about 400 million euros.
Based on the rules set by the banks, which I outlined earlier, the value of
assets for which the Group has reached a definitive sales agreement (such as
Toro Assicurazioni) can be deducted from net borrowings. As a result, the
Group is in full compliance with its debt reduction objectives.
The Group's indebtedness will continue to decrease in the coming months as
other divestitures are completed. These include the sale of Toro and the
disposal of a 51% interest in the European operations of Fidis Retail
Italia, which requires only the final approval of the regulatory
authorities.
The sale of Fidis will enable the Group to comply with the second
requirement for the reduction of total debt stipulated in the terms of the
mandatory convertible facility provided by the banks.
The Group's Action Guidelines
The priorities we are focusing on are, on the one hand, the structural
strengthening of the Group's balance sheet and, on the other hand, the
program to relaunch the industrial operations of all the Sectors.
The absolute pre-requisite for the success of this program is the
development of a strategy that clearly defines the scope of our operations.
We have decided to concentrate all of our efforts on Automobiles,
Agricultural and Construction Equipment, Commercial Vehicles, and Automotive
Components.
This means that the Group's traditional core businesses will be the core
businesses of its future.
Given these objectives, we can announce that the divestiture program has
been completed.
We are now defining the industrial action guidelines of our relaunch
program. This process is essential in determining the Group's financial
requirements.
We are also determining what additional resources may be necessary, if any,
and we plan to present the results of this ongoing study by the end of June.
We trust that the confidentiality with which we treat the plans that we
intend to implement will not be viewed as a lack of confidence in our
stockholders, but as a necessary part of our responsibility, namely to
enhance the Group's credibility and reliability in the marketplace, which
must be provided with clear and detailed programs and initiatives.
In any case, these programs and initiatives will be consistent with three
main avenues of action along which the Group must strive to travel as
quickly as possible.
< The first avenue of action is the pursuit of technological innovation.
A portfolio of innovative products and the use of proprietary technologies,
coupled with a continuous improvement of quality levels in all phases of the
business, from design to production and customer care, are essential to
sustain the relaunch of the Group.
Starting in the second half of the year, Fiat Auto will begin to reap the
benefits of its new product launches. Next year, these new products, which
mark the beginning of a complete renewal of the Sector's product line, are
expected to make a significant contribution to Fiat Auto's profitability.
CNH will continue to implement a plan launched last year to almost
completely renew its line of agricultural equipment in 2003 and 2004. The
Sector's construction equipment line will follow. The Sector will introduce
new products based on common platforms for New Holland and Case and, in 2003
alone, CNH will launch 60 new agricultural equipment models and 50 new
construction equipment products.
Iveco has already developed engines that are highly innovative in terms of
performance, efficiency and compliance with environmental regulations. In
addition, it has just introduced two new models that round out its line of
heavy on-road trucks. Iveco is presenting this very day to the press its new
EuroCargo intermediate vehicle and is working on a new line of off-road
heavy vehicles.
In pursuing innovation over the medium and long term, the Group can count on
two leading-edge organizations: the Fiat Research Center and Elasis. We
intend to strengthen these organizations and enhance their value, as well as
the components area.
< The second avenue of action is the pursuit of a competitive cost
structure.
In this area, there is plenty of room for improvement and major potential
for rationalization. We will work to optimize all components, expand the use
of common platforms and increase the efficiency of the internal structures
and the distribution network.
< The third avenue of action we are focusing on is customer care - before,
during and after a sale is made.
To do this, we will strengthen and enhance the marketing organizations of
all Sectors, adapting them to a marketplace that is becoming increasingly
dynamic and diversified and enabling them to understand and satisfy with
increasing effectiveness the needs of an ever growing number of customers
and market segments.
The relaunch program we have undertaken will require the cooperation of
forces outside the Fiat Group.
A determining factor will be the contribution of professionals, whose
presence is particularly strong in Turin. In this area, we look forward to
working with suppliers, engineering center staff and designers, with whom we
wish to establish even stronger partner relationships.
Our relationship with the banks will be equally important. We have already
established a fruitful and supportive relationship with them as we pursue
the relaunch of our Group.
We also expect General Motors to play a major role.
At the manufacturing level, the alliance with our American partner is
producing very significant mutual advantages. We also plan to pursue other
collaborative relationships. An example of this approach is the recent
agreement between Fiat Auto and Suzuki (also a GM partner) to produce an
SUV. More importantly, we are in the process of finalizing an agreement to
develop another common architecture for cars, this time in the "C" segment,
which is the most important in Europe.
In our relationship with General Motors, we will focus on all those areas
that can help increase the development of industrial synergies and generate
value for both partners.
Discussions on how to achieve these goals are ongoing, and a further
in-depth review is scheduled for the coming days.
Outlook for 2003
While postponing until June a discussion of our industrial action
guidelines, an overview of the Group's expected performance for all of 2003
can now be given.
The results for the first quarter show that 2003 will be a tough and
challenging transition year.
In view of the low and uncertain growth that is expected to characterize the
economy at least until the latter part of 2003, we do not expect the Group's
principal target markets to show signs of improvement.
In Europe, demand for automobiles will be lower than in 2002. The market for
agricultural equipment should hold relatively steady, but sales of
construction equipment are expected to decline further. Demand for
commercial vehicles will be down across the board.
Despite such a clearly unfavorable environment, all Group Sectors will be
required to show significant improvements in operating results and cash
flow.
For the full year we expect:
An operating result that will remain negative but less so than in 2002;
A net financial position and gross indebtedness below the parameters agreed
upon with the lending banks.
We are aware that the job of restoring the health of an industrial group
such as ours can be accomplished only over the medium to long term.
We also know that in all Sectors and at all levels we can count on the
competencies, technical skills and desire for success of our people to carry
out this difficult task.
MEDIOBANCA: Loss Attributable to Parent Company is EUR206.2 M
-------------------------------------------------------------
At a Board meeting held Wednesday with Mr Gabriele Galateri di Genola in the
Chair, the Directors of Mediobanca approved the Bank's accounts for the
quarter ended March 31, 2003.
In the nine months to March 31, 2003, the Group earned a pre-tax profit from
ordinary operations of EUR350.3 million, up to 34.3% on the total recorded
at the same juncture last year, due principally to a 46% increase in fee
income achieved despite the ongoing stagnation in corporate and especially
investment banking.
The interest margin improved by 15.5%, benefiting from gains on trading
involving the Bank's treasury portfolio. The 12% rise in costs was due to
an increase in our headcount, as well as our customary policy of accounting
for fees payable as and when contracts are entered into, given the 18.5%
increase in business volumes by the Compass group.
The difficult market conditions continue to take their toll on the Group's
accounts, which for the nine months to March 31, 2003 reflect a loss
attributable to the parent company of EUR206.2 million.
This was after charging writedowns of EUR351.2 million in our equity and
bond portfolios to profit and loss (EUR322.2 million on our investment
portfolio and EUR29 million on our treasury portfolio), and a EUR49.3
million loss on disposal of equity investments, some two-thirds of which
relate to the sale of our holding in Fondiaria-SAI. This was offset by gains
on the equity swaps entered into when this interest was sold, which amount
to some EUR30 million based on current prices.
In the same period last year the Group earned a profit of EUR244 million,
after gains of EUR465.4 million on disposal of investment securities, EUR429
million of which related to Montedison, and interim net losses of EUR419.8
million on our securities portfolio.
The downturn which continues to affect financial markets, and which
currently shows no sign of any significant, lasting recovery, has meant that
for the third quarter's accounts too we have adopted the conservative
principle of writing down our equity investment portfolio on the basis of
prices at the end of the period concerned, rather than on their average
values throughout the period as a whole. This has resulted in a change to
profit and loss which is some EUR94 million higher.
After such writedowns, at March 31, 2003 our investment securities portfolio
reflected a gain of EUR2,241.8 million, which rises to EUR2,681.4 million
based on current prices (for securities held in treasury the figures are
EUR77.4 million and EUR146.9 million respectively).
The net loss of EUR87.5 million on exchange and derivative transactions was
offset by EUR60.2 million in unrealized gains on these instruments, EUR45.8
million of which have been accumulated since the beginning of the Bank's
financial year, plus the EUR77.4 million gains on treasury securities
mentioned earlier; such items are only booked as and when they are realized/
Baddebt wroteoffs as usual involve only consumer credit and factoring, and
to a much lesser extent the Group's leasing activities. The higher
writedowns are attributable to the rigour being applied in the light of a
deterioration in the general risk environment.
As at March 31, 2003, funding had fallen by EUR298 million, or 1.3%, in
comparison with December 31, 2002, loans and advances by EUR180.7 million,
or 1.1%, and investment securities and equity investments by EUR320.4
million, or 9.5%. The Group's net worth stood at EUR4,839.5 million
(31/12/02: EUR4,841.8 million), not including profits made in the quarter or
the surplus of market over book value of listed securities.
The Parent Company's accounts for the first nine months of its financial
year reflect a loss of EUR297.2 million, as compared with a profit of
EUR106.5 million one year previously, after charging EUR56 million (EUR60
million) to Credit risks provision and interim net writedowns of EUR353.8
million based on prices as at March 31, 2003 for equities and listed
convertible bonds.
Earnings from ordinary operations totalled EUR226.1 million, up to 44% over
the figure recorded at the same juncture last year. Such growth was
attributable to both the interest margin, which rose by 21.6%, greatly
helped by treasury transactions, and to fee income, which grew by 44.1% as a
result of the Bank's involvement in several major market transactions.
Funding fell from EUR19,809.8 at year-end 2002 to EUR19,586.4 million, and
loans and advances from EUR13,056.9 million to EUR12,981.8 million. Cash
and liquid assets grew marginally by EUR34.6 million, including forward
transactions and changes in other assets and liabilities.
To see Condensed Income Statement and Balance Sheet:
http://bankrupt.com/misc/Mediobanca.pdf
TELECOM ITALIA: Shareholders Ask Intervention from Authorities
--------------------------------------------------------------
Shareholders opposed to the proposed merger between Telecom Italia and
Olivetti carried their dissent further by asking intervention from
authorities in Italy and the US.
Telecom Italia shareholders had argued before that the transaction, put up
by Telecom Italia chairman, Marco Tronchetti Provera, would result to a loss
of EUR5 billion on the phone company.
Mr. Provera wants to merge the companies to allow Olivetti to better tap
Telecom Italia's strong cashflow and speed up the reduction of Olivetti's
debt.
In a recent development, institutional shareholder Liverpool Ltd
Partnership, a Bermuda-based hedge fund manager, sought a court injunction
to block Olivetti, which is also a Telecom shareholder, from voting on the
deal. An unnamed fund manager has also asked the SEC in the US to
investigate possible improprieties regarding the merger, according to the
Financial Times.
Shareholders of Telecom Italia are set to meet on May 24 to decide on the
merger, and Olivetti, being a 55% stakeholder, will also cast its vote
during the meeting. The stake in Telecom Italia is Olivetti's only asset.
An unnamed fund manager, meanwhile, had approached the SEC to launch an
inquiry into the Telecom Italia-Olivetti merger, according to Deminor, a
shareholder rights group. Two other institutional investors said the same.
Telecom Italia trades on the New York Stock Exchange through American
depository receipts.
Olivetti has EUR15.8 billion (US$18.2bn) in net debt, hence, the stock is
considered a leveraged play on Telecom Italia, and rises and falls sharply,
according to the report.
Yet despite shareholders' insistent that Telecom Italia will lose in the
deal, shares in the company have risen about 20% since the announcement of
the plan. Many investors, though, believe Telecom Italia is still losing up
at least EUR500 million.
TELECOM ITALIA: Makes Available Documents on Olivetti Merger
------------------------------------------------------------
Olivetti
Registered office in Ivrea, Via Jervis 77
Fully paid-up share capital
Euro 8,845,677,947
Tax/VAT and Turin Company
Register number 00488410010
Telecom Italia
Registered Office in Milan, Piazza degli Affari, 2
Corporate Headquarters in Rome
Corso, d'Italia, 41
Fully paid-up share capital Euro 4,023,816,860.80
Tax/VAT and Milan Company
Register number 00471850016
Information Document Concerning the Merger of Telecom Italia into Olivetti
is Available to the Public
(pursuant to Article 70, paragraph 4 of Consob Regulation 11971/1999 as
amended)
Notice is hereby given that, the information document concerning the merger
of Telecom Italia into Olivetti is available to the public at the registered
offices of the two companies and at Telecom Italia's corporate headquarters,
and in Milan at the offices of Borsa Italiana S.p.A.
The aforesaid document will also be made available on the following Internet
sites: http://www.telecomitalia.it
http://www.olivetti.com
***
Request for clarification of information may be made for Telecom Italia
S.p.A.: calling the toll-free number +39 800020220 or sending an e-mail to
corporate.affairs@telecomitalia.it
For Olivetti S.p.A.: calling the toll-free number +39 800149941 or sending
an e-mail to: investor.relations@olivetti.com
=====================
N E T H E R L A N D S
=====================
KONINKLIJKE AHOLD: Announces Further Resignations at U.S. Unit
--------------------------------------------------------------
Ahold on Wednesday announced that following the resignation of U.S.
Foodservice President & CEO Mr. Jim Miller, Mr. Michael Resnick, Chief
Financial Officer of U.S. Foodservice, and Mr. David Abramson, Executive
Vice President and General Counsel of U.S. Foodservice have offered their
resignations. Both resignations have been accepted by Ahold, and are
effective immediately.
Mr. Resnick joined U.S. Foodservice in October, 2000, and has served in
several financial capacities since that time. He became CFO in 2001.
Mr. Abramson has been with U.S. Foodservice since July, 1996, when he was
hired as General Counsel. He later became an Executive Vice President in
addition to his duties as General Counsel.
CONTACT: ROYAL AHOLD
P.O. Box 3050 1500 HB
Zaandam Netherlands
Phone: +31 (0)75 659 57 20
Fax: +31 (0)75 659 83 02
Home Page: http://www.ahold.com
Corporate Communications
Phone: +31.75.659.57.20
TELE ATLAS: Results for First Quarter in Line with Expectations
---------------------------------------------------------------
-- Result from european activities continues to improve
-- Global revenues stable
-- Lower revenues and EBITDA in North America
-- American database launched
-- Growth market PDA navigation software
-- Difficult North American market environment in the short term
-- Major shareholders express confidence
Tele Atlas, one of the world's leading developers of detailed geographical
databases, realized revenues of EUR 18.5 million for the first quarter of
2003, slightly lower than in the comparable period of 2002. Adjusted for
currency movements, revenues remained unchanged. Revenues improved further
in Europe
The group realized an operating loss (EBIT) of EUR 7.8 million (first
quarter 2002: EUR 5.8 million), principally on account of higher
depreciation and amortization. The group net loss came to EUR 7.9 million
(first quarter 2002: EUR 4.9 million).
In Europe, further growth was realized. Revenues increased from EUR 15.7
million to EUR 16.4 million. The increase was nearly all due to the
navigation market and the growth in the number of PDAs with navigation
software. With European operating expenses unchanged due to cost control
measures, EBITDA in Europe increased by 14% to EUR 6.7 million.
In North America, first-quarter revenues fell to EUR 2.1 million owing to
the decline in service activities for third parties and lower income from
patents. The decline in these activities was in line with expectations. As a
result, the EBITDA loss rose by EUR 1.3 million to EUR 4.2 million. The
North American database, the most powerful ever built, was officially
marketed in January 2003 and is expected to increase Tele Atlas's market
share in North America. Owing to the time required for testing and
incorporating the data into systems and applications, the growth will only
feed through in the course of 2004.
Prospects
In Europe the positive developments in the aftermarket for navigation
systems and the growth of the PDA market are encouraging. New developments
such as the C-IQ system developed by Siemens VDO may increase demand for
digital map data while the renewed contract with Siemens VDO will already
contribute to revenues this year. The contract concluded with Harman
International Industries (Becker) in 2002 will contribute to results as of
the second half of 2003. In February, Tele Atlas successfully launched
navshop.com, a web shop for navigation CD ROMS. Tele Atlas expects further
growth in EBITDA and EBIT in Europe in 2003.
The US market environment is difficult at the present time. Although many
important new customer prospects are evaluating the database, new business
is not expected to generate significant revenue in 2003. The current
uncertainties about the economy have caused companies switching to a new
data supplier to be extra cautious. A growing number of people in America,
however, are becoming familiar with in-car and PDA navigation applications
and Tele Atlas should profit from its state-of-the-art database as soon as
the economy improves.
The two major shareholders, Robert Bosch GmbH and IAM BV, have expressed
their belief and confidence in the company by announcing that they will
provide standby funding to Tele Atlas. If required, Tele Atlas can use these
funds to finance its expansion and support ongoing commercialization of its
US database.
Key figures
(in millions of euros except for Earnings per share and Average number of
employees)
2002 - first quarter 2001 - first quarter
----------------------------------------------------------------
Total Europe USA Total Europe USA
----------------------------------------------------------------
Revenues 18.5 16.4 2.1 18.8 15.7 3.1
----------------------------------------------------------------
Earnings before interest,
tax, depreciation and
amortization (EBITDA) 2.5 6.7 (4.2) 3.0 5.9 (2.9)
----------------------------------------------------------------
Earnings before interest
and tax (EBIT) (7.8) (0.5) (7.3) (5.8) (0.5) (5.3)
----------------------------------------------------------------
Net result (7.9) (4.9)
----------------------------------------------------------------
Average number of
employees 1,854 1,410 444 1,792 1,367 425
----------------------------------------------------------------
Net earnings per share (0.21) (0.13)
----------------------------------------------------------------
(a) including the operation in India
Tele Atlas is a leading player in the development and construction of
detailed geographical databases that form the basis for a wide range of
applications. Tele Atlas's databases cover 388 million people in Europe and
313 people in North America. Tele Atlas is engaged chiefly in the in-car
navigation, GIS applications, Location Based Services and Telematics
markets. Thanks to the combination of coverage, content and detail, the
company's products are the benchmark for quality in these extremely
specialized markets.
CONTACT: TELE ATLAS
Jasper Vredegoor
Investor Relations manager
GSM: +31 (6) 52 32 52 89
Phone: +31 (73) 640 21 70
Fax: +31 (73) 640 21 22
E-mail: jasper.vredegoor@teleatlas.com
UNITED PAN-EUROPE: Achieves Improved Results in First Quarter
-------------------------------------------------------------
United Pan-Europe Communications N.V. (EURONEXT Amsterdam: UPC), one of the
leading broadband communications companies in Europe, today announces its
operating and financial results for the first quarter, 2003.
-- First quarter 2003 financial targets were met or exceeded, with:
-- Revenue growth of 3% from EUR 350m in Q4 2002 to EUR 359m in Q1 2003
-- Adjusted EBITDA1 growth of 27% from EUR 84m in Q4 2002 to EUR 106m in Q1
2003.
-- Net income before income tax and other items improved to positive EUR 57m
in the first quarter of 2003 from a net loss of EUR (396)m in the fourth
quarter 2002
-- Adjusted EBITDA less capital expenditure improved from positive EUR 4.0m
for the fourth quarter 2002 to positive EUR 64m in the first quarter 2003
Management Comments
Commenting on UPC's results, John F. Riordan, CEO of UPC, said:
"UPC has continued to perform strongly during the first quarter of 2003; our
performance met or exceeded our financial guidance for the quarter.
We continue to prioritize the service we offer our customers and have
recently completed a re-assessment of our brand. The company is implementing
a comprehensive program across its European footprint based on redefined
mission, vision and values, putting the customer at the heart of everything
we do.
Customer satisfaction is our key principle of operation and we are dedicated
to offering our eight million customers more choice, better value and an
ever-improving quality of service.
Financially we have continued to target cashflow generation and will not
chase less profitable revenue growth. This prudent revenue improvement is
driven by increased take up of our new services and targeted rate increases.
We will work to achieve our financial goals by realising economies of scale
across our network and cost rationalisation through integration synergies.
Since we updated the market with our year-end results at the end of March we
were pleased to announce the extension of waivers under our senior bank
facility until the end of September 2003.
This will allow UPC sufficient time to complete its restructuring process
and to deal with the appeal procedure that has been filed by InterComm
Holdings L.L.C. ('ICH') in relation to the decision of the Amsterdam court
of March 13, 2003 to ratify the Akkoord. While, as expected, the Dutch Court
of Appeals rejected ICH's claim at the beginning of April, ICH has appealed
the ratification of the Akkoord to the Dutch Supreme Court.
The Supreme Court has scheduled briefs to be submitted by May 23, 2003 and
is expected to rule on the appeal expeditiously. The Supreme Court will be
the final point of appeal for ICH in relation to the ratification of the
Akkoord.
We believe the appeal is without merit. However, the appeal will delay the
Effective Date for emergence from Chapter 11 and Akkoord process and the
completion of the recapitalisation beyond the end of the second quarter
2003. We will provide more information on the expected timing of completion
of the restructuring as soon as it is available.
Finally, I would like to sincerely thank management and staff for their hard
work during the first quarter 2003, in continuing to successfully execute
our revised strategy."
Group Financial Review
UPC's core operations are split into four principal divisions as follows:
(1) UPC Distribution - local operating systems providing video, telephone
and internet services for residential customers (Triple Play).
(2) UPC Media - broadband internet and interactive digital products and
services, transactional television services such as pay-per-view movies,
digital broadcast and post-production services and thematic channels for
distribution on UPC's network, third party networks and DTH platforms.
(3) Priority Telecom - providing network solutions to the business customer.
(4) Investments Division - managing our non-consolidated investment assets.
During April 2003, UPC sold its shares in SBS Broadcasting S.A. to
UnitedGlobalCom for EUR 100m, against a book value at March 31, 2003 of EUR
63m. UPC will continue to focus on rationalising its investment portfolio to
maximise value.
Revenue For the Quarter ended
Revenues (EUR '000s) Q1 2003 Q2 2002 % change
Q on Q
Triple Play Distribution (1) 322,792 297,296 9%
Deconsolidated German
EWT/TSS Operations 0 12,491
DTH 9,202 7,212
Other (2) 6,471 9,834
Total UPC Distribution 338,465 326,833 4%
Priority Telecom 26,604 32,116
UPC Media 20,671 18,515
UPC Investments (3) 123 123
Intercompany Eliminations (4) (26,763) (31,275)
UPC Consolidated Operations 359,100 346,312 4%
(1) Includes basic cable, digital, telephony and internet revenues. Excludes
Germany.
(2) Network revenue, generated by operating, maintenance and leasing
agreements with Priority Telecom, eliminated on consolidation
(3) UPC Investment Division has been formed in 2003 and manages our
non-consolidated investment assets
(4) Intercompany eliminations are the eliminations of intercompany UPC Media
revenues and network revenues
UPC's consolidated revenue in the three months ending March 31, 2003 was EUR
359m, an increase of 4% from EUR 346m in the first quarter 2002. UPC Triple
Play Distribution revenue from continued operations increased 9% to EUR 323m
in Q1 2003, compared to EUR 297m in Q1 2002. Revenues increased due to price
rises in the period and increasing take up of new services.
Revenues at Priority Telecom decreased to EUR 27m in the first quarter 2003
from EUR 32m in the first quarter 2002 as a direct result of its revenue
rationalisation strategy whereby low margin or high price erosion and credit
risk customer contracts are reduced or even eliminated, due to the shifted
focus of resources towards high margin direct business customer contracts,
adhering to Priority's internal margin and profitability guidelines.
Priority continues to refocus its product portfolio to concentrate efforts
on profitable products and services. While Priority anticipates weak market
conditions in the business telecommunications market during 2003 it is
proactively introducing initiatives that will enable it to continue to
enhance its profitability and expand the business during the remainder of
the year.
UPC Media performed well in Q1 2003 and generated an increase in revenue 12%
in Q1 2003 compared with Q1 2002 with revenues increasing from EUR 19m in Q1
2002 to EUR 21m in Q1 2003, driven by a strong performance in the internet
access business.
Non GAAP and Other Financial Measures
UPC uses Adjusted EBITDA, a non-GAAP financial measure, as a management tool
to measure and monitor financial performance and as part of the calculation
of Company performance against senior bank facility covenants. As previously
highlighted, Adjusted EBITDA is defined as earnings before interest, tax,
depreciation, amortisation, stock based compensation, restructuring and
impairment charges. The most directly comparable financial measure to
Adjusted EBITDA that is calculated and presented in accordance with US GAAP
is Income (loss) before income taxes and other items.
Adjusted EBITDA
Adjusted EBITDA (EUR '000s) Q1 2003Q1 2002% change Q on Q
Triple Play Distribution (1) 113,098 67,549 67%
Deconsolidated German
EWT/TSS Operations 0 5,521
DTH 1,216 524
Other(2) 5,139 5,827
Corporate (3) (17,861) (14,254)
Total UPC Distribution 101,592 65,167 56%
Priority Telecom (4) 2,601 (4,676)
UPC Media 2,465 (5,575)
UPC Investments (5) (170) (102)
UPC Consolidated 106,488 54,81 94%
(1) Includes basic cable, digital, telephony and internet revenues.
(2) Other includes network revenue and costs and administrative costs not
attributable to a specific business line
(3) Head office activities included in the calculation of UPC Distribution
Adjusted EBITDA
(4) Since Priority Telecom's listing, its results are separately announced
in Dutch GAAP, and presented in US GAAP in our financial statements.
Differences may occur as a result of this.
(5) UPC Investment Division has been formed in 2003 and manages our
non-consolidated investment assets
UPC consolidated Adjusted EBITDA continued to improve strongly during the
first quarter 2003 increasing 94% to EUR 106m, compared to EUR 55m in Q1
2002. UPC Triple Play Distribution Adjusted EBITDA increased 67% to EUR 113m
in Q1 2003 from EUR 68m in Q1 2002.
Q1 2002 Adjusted EBITDA has been restated in the table above following the
reallocation of previously centralized costs including Information
Technology and Other (including marketing) costs to cost centers in the
relevant countries. In addition, from April 2003 certain corporate costs
have been transferred into the UPC Distribution bank group, this change is
reflected in the Q1 2003 results. Corporate costs have increased to EUR 18m
in Q1 2003 from EUR 14m in Q1 2002 in large part because of certain one-off
expenses that occurred in the period.
Our Central European DTH business, Priority Telecom and UPC Media all
demonstrated significant continued operating improvements in Q1 2003. For
the first quarter 2003, Priority Telecom improved its Adjusted EBITDA loss
from EUR (5)m in the first quarter 2002 to positive EUR 3m in Q1 2003. UPC
Media improved its Adjusted EBITDA loss from EUR (6)m in Q1 2002 to EUR
positive 2m Q1 in 2003.
The table below highlights the reconciliation of Adjusted EBITDA to the US
GAAP measure Net Income (loss) before income taxes and other items.
Reconciliation of Adjusted EBITDA to Net Income (loss) before income taxes
and other items (EUR '000s)
Q1 2003 Q1 2002 Q4 2002
Adjusted EBITDA 106,488 54,814 83,586
Depreciation and amortisation (166,616) (172,632)(174,921)
Impairment and restructuring charges 0 (3,943)(397,101)
Stock-based compensation
and retention bonuses (3,893) (6,790) (3,061)
Net Operating Loss (64,021) (128,551) 491,497)
Interest Income 3,569 5,985 11,042
Interest Expense (82,377) (230,205)(219,372)
Foreign exchange gain (loss)
and other income (expense), net 133,355 (56,057) 237,893
Other income (expense) 66,486 (62,429) 95,246
Net Loss before income taxes
and other items 57,012 (471,257) 366,688)
Free Cashflow Reconciliation, Capital Expenditures and Working Capital
Update
As previously highlighted, UPC is focused on improving underlying cashflow
generation. The table below demonstrates the positive Free Cashflow of EUR
28m achieved during the first quarter 2003 driven in part by strong working
capital flows in the quarter. Free Cashflow is a measure management use to
monitor the business and represents net cash provided by operating
activities less capital expenditure. We continue to target tighter working
capital management during the year and recurring Free Cashflow.
Free Cashflow Reconciliation (EUR '000s) Q1 2003
Cash and cash equivalent at beginning of period 255,062
Adjusted EBITDA 106,488
Capital expenditure (42,915)
Accrued and cash pay Interest1 (69,684)
Change in assets and liabilities and other 33,738
Free Cashflow 27,627
Restricted cash deposited (net) 2(18,060)
Repayment of debt net of proceeds (2,429)
Other3 (13,361)
Cashflow after financing activities (6,223)
Cash and cash equivalent at end of period 248,839
1 Total Interest expense minus accreted interest
2 Includes cash to repay PCI Notes
3 Effect of exchange rates on cash, purchase of derivatives and proceeds
received from the sale of assets
Reconciliation of cash provided by operating activities to Free Cashflow
Reconciliation of cash provided by operating activities to Free Cashflow
(EUR 000's) Q1 2003
Net cash provided by operating activities 70,542
Capital expenditure (42,915)
Free Cashflow 27,627
Capital expenditure at EUR 43m for the quarter from EUR 102m in Q1 2002 was
below expectations for the quarter due to continued management control and
the subscriber growth achieved in the quarter. This reduction in capital
expenditure reflects both the variable nature of UPC's capital expenditure
requirements and the company's ongoing focused investment in new build and
upgrade; ensuring this investment generates a NPV (net present value)
positive return.
The table below highlights our capital expenditure for the first quarter
2003, classified in accordance with NCTA cable industry guidelines.
Capital expenditures (EUR 000's) Q1 2003
Customer premise equipment 17,296
Commercial spending 0
Scalable infrastructure 6,180
Line extensions 6,735
Upgrade / Rebuild 2,359
Support capital 9,747
Intangibles 598
Total Capital Expenditures 42,915
In addition, working capital flows were strong. Seasonal subscriber
prepayments and deposits particularly in Austria and the deferral of payment
of a portion of the costs associated with our restructuring (due to the
ongoing appeal process) resulting in cash balances (including restricted
cash) increasing to EUR 285m at the end of Q1 2003 from EUR 273 at year end
2002, with an increase in subscriber prepayments of EUR 48m in the first
quarter 2003 compared to Q4 2002.
Update Quarter 1, 2003 compared with Quarter 4, 2002
UPC's financial performance in the first quarter 2003 was inline with or
exceeded our financial guidance for the quarter. In the three months ended
March 31, 2003, total consolidated revenues grew 3% compared to the fourth
quarter of 2002. Total revenues from triple pay distribution also increased
3% quarter over quarter to EUR 323m in Q1 2003 compared with EUR 315m in the
fourth quarter 2002. Total consolidated Adjusted EBITDA increased 27% to EUR
106m in Q1 2003 compared with EUR 84m in Q4 2002. Net operating loss before
income taxes and other items improved from negative EUR (396)m in Q4 2002 to
positive EUR 57m in Q1 2003.
Consolidated Operating Statistics
The table below shows operating statistics for UPC on a consolidated basis:
UPC continues to drive ARPU growth per basic cable subscriber, and has now
reached EUR 20.91 in Q1 2003 in Western Europe from 19.22 in Q1, 2002, a 9%
increase in the period. In Eastern Europe ARPU per basic cable subscriber
has increased to EUR 9.01 in Q1 2003 from EUR 8.54 in Q1, 2002, an increase
of 6% in the period. Across all properties, ARPU per RGU increased during
the twelve months to March 31, 2003 by 6% to EUR 13.74 per RGU from 12.97 in
Q1, 2002.
As highlighted in our year-end 2002 results we did not expect our subscriber
numbers to significantly increase during Q1 2003 due to the implementation
of the new subscriber management system, involving the consolidation of a
number of customer databases in the Netherlands. This new system has enabled
a systematic reduction in the period over which an overdue account is
disconnected for non-payment of service fees and has resulted in a reduction
in the number of subscribers in the Netherlands during the first quarter
2003. Net subscriber growth has however been strong in all other respects
and UPC added 32,000 new service subscribers during the quarter.
Consolidated Operating Statistics Q1 2003 Q1 2002
(all figures in '000s)
Total Homes Passed (1) 10,273 10,149
Two-way Homes Passed (1) 5,510 5,242
Basic Cable Subscribers 6,621 6,595
Digital Subscribers 129 121
Telephony Subscribers (2) 462 465
Internet Subscribers (3) 706 565
New Service Subscribers 1,297 1,150
DTH Subscribers 151 112
Total Residential RGUs (4) 8,069 7,857
Disposed operationsGermany (EWT / TSS) 0 579
Total Disposed operations 0 579
Total consolidated RGUs 8,069 8,436
ARPU per RGU (5) EUR 13.74 EUR 12.97
ARPU per basic
West European cable subscriber (6) EUR 20.91 EUR 19.22
ARPU per basic
East European cable subscriber (6) EUR 9.01 EUR 8.54
1) Excludes Germany EWT / TSS
2) Includes residential cable and non-cable telephony subscribers.
3) Includes residential and third party ISP subscribers
4) Sum of basic cable, digital, Internet telephony and DTH subscribers
5) ARPU calculations exclude Germany but include DTH. In EUR per month,
calculated as straight line average: quarterly revenues divided by average
of opening and closing subs in the quarter
6) Basic cable, Internet, telephony, digital revenue (excludes DTH) divided
by basic cable subscribers (excluding Germany)
Net Results UPC generated net income of EUR 46m, during Q1 2003 compared
with a net loss of EUR (1,990)m for Q1 2002. Net income has been achieved in
the first quarter 2003 as a result in part of foreign currency gains of EUR
133m and other income and expense of EUR 66m, due to the sale of our cable
business in Israel. Additionally we no longer accrue for the interest on our
senior notes during our restructuring, in accordance with Statement of
Position (SOP) 90 - 7. We do not expect to generate net profit for the full
year 2003.
2003 Outlook
The Company continues to prioritize Adjusted EBITDA and Free Cashflow
generation over revenue growth and will not be providing a further update to
its revenue guidance for the full year 2003. However it is anticipated that
revenue growth will be lower than the 12% annual growth previously
highlighted.
A key variable for UPC's 2003 financial results continues to be the
resolution of the court case regarding minimum programme guarantees. In
addition, the Company's financial results will be impacted by its success in
reaching its targeted net additions of 430,000 subscribers during the year.
The Company is currently undergoing a reforecast which may be impacted by
the items noted above, however it currently reaffirms its Adjusted EBITDA
and capital expenditure guidance for the full year 2003.
This press release should be read in conjunction with the Company's audited
financial statements and notes, which will be filed on Form 10Q with the SEC
on May 15, 2003. This filing will be found on the UPC website at
http://www.upccorp.com.
United Pan-Europe Communications N.V. is one of the leading broadband
communications and entertainment companies in Europe. Through its broadband
networks, UPC provides television, Internet access, telephony and
programming services. UPC's shares are traded on Euronext Amsterdam Exchange
(UPC) and in the United States on the Over The Counter Bulletin Board
(UPCOY). UPC is majority owned by UnitedGlobalCom, Inc. (NASDAQ: UCOMA).
To See Full Release of UPC's Financial Results:
http://bankrupt.com/misc/UPC.pdf
CONTACT: UPC
Claire Appleby
Director of Investor Relations
Phone: 0044 (0) 207 647 8233
E-mail: ir@upcorp.com
Bert Holtkamp
Director of Corporate Communications
Phone: 0031 20 778 9447 or 0031 655 38 0594
E-mail: corpcomms@upcorp.com
Home Page: http://www.upcorp.com
VERSATEL TELECOM: Details Improvements in First Quarter Results
---------------------------------------------------------------
Financial Highlights
(EUR millions) Q1 Q1 Q1 Q4
2003 2002 Growth 2003 2002 Growth
Revenue 87.1 67.5 29% 87.1 83.4 4%
Gross Margin % 53% 46% n/m 53% 52% n/m
Adj. EBITDA 13.1 (3.7) n/m 13.1 13.3 n/m
EBITDA 28.1 (3.7) n/m 28.1 10.6 n/m
Capex (17.8) (17.2) n/m (17.8) (19.8) n/m
Adj. EBITDA -
Capex (4.6) (20.9) n/m (4.6) (6.5) n/m
Cash 151.9 633.6 n/m 151.9 191.0 n/m
Fiscal year begins January 1st
First quarter 2003 revenues increased to EUR 87 million or by 4 percent from
4Q02 revenues of EUR 83 million and 29 percent compared to 1Q02 revenues of
EUR 67 million.
On-net revenues for 1Q03 were EUR 63 million compared to EUR 58 million for
4Q02 and EUR 43 million for 1Q02.
Gross margin as a percentage of revenues for 1Q03 was 53 percent compared to
52 percent for 4Q02 and 46 percent in 1Q02.
Adjusted EBITDA in 1Q03 was positive EUR 13 million compared to positive EUR
13 million (EUR 10 million on a recurring basis) in 4Q02 and negative EUR 4
million in 1Q02.
EBITDA in 1Q03 increased to positive EUR 28 million from positive EUR 11
million in 4Q02 and negative EUR 4 million in 1Q02.
At March 31, 2003, Versatel had approximately EUR 152 million in cash on its
balance sheet.
DSL and other on-net copper business and residential lines increased by
30,515 during 1Q03 for a total of 141,982 at March 31, 2003.
Other
In 1Q03, Versatel added approximately 21,000 Zon DSL customers on its
residential DSL offering in The Netherlands.
In March 2003, Versatel reached an agreement with Deutsche Telekom regarding
renting central office space in Germany. As a result of this agreement,
Versatel recognized a one-time claim settlement gain of EUR 15 million in
1Q03.
On March 24, 2003, Versatel announced that it has reached agreement with
ARQUES-Group ("Arques"), that owns Tesion Telekommunikation GmbH ("Tesion")
and its wholly owned subsidiary, Completel GmbH ("Completel Germany"), to
merge their German entities.
Recent Events
As of May 7, 2003, Versatel has filed for de-registration from its reporting
requirements with the United States Securities and Exchange Commission
("SEC").
Amsterdam, May 7, 2003 - Versatel Telecom International N.V., today reported
first quarter financial and operating results.
Revenues for 1Q03 were EUR 87.1 million compared to revenues of EUR 83.4
million (EUR 81.8 million on a recurring basis excluding EUR 1.6 million of
prior period revenue) in 4Q02 and revenues of EUR 67.5 million in 1Q02.
Versatel will no longer be providing gross billing information as management
believes that revenue is a better indication of Versatel's financial
performance and future growth.
On-net revenues for 1Q03 were EUR 63.4 million compared to EUR 57.9 million
in 4Q02 and EUR 43.4 million in 1Q02. On-net customer additions and the
success of Versatel's consumer operations in Germany and The Netherlands
primarily drove this growth as we continued to leverage our initial
investments in both fiber- and copper-based technologies.
Versatel's gross margin as a percentage of revenues in 1Q03 was 52.5 percent
compared to 52.1 percent (51.2 percent on a recurring basis, excluding the
impact of EUR 1.6 million of prior period revenue) in 4Q02 and 46.2 percent
in 1Q02. The increase in gross margin was driven by the increase in on-net
revenues and the continued rationalization of fixed network costs as
Versatel better utilizes its own network.
Raj Raithatha, Chief Executive Officer, commented: "We have followed a
strong fourth quarter with another quarter of strong growth across all
important operating and financial metrics. I am most pleased with the
continued growth of our on-net revenues, which now comprise over 72% of
total revenue and highlights the continued success of our local access
strategy. Long term, we would like to generate approximately 80% of revenue
from on-net services. Additionally, during the quarter we launched several
successful initiatives, including a new bundled voice and internet service
offering in the city of Recklinghausen, Germany that has resulted in several
thousand new orders in the first few weeks."
Selling, general and administrative expenses (SG&A) for 1Q03 was EUR 32.6
million compared to EUR 30.2 million (EUR 31.4 million excluding the release
of an over accrual of EUR 0.7 million primarily related to marketing around
our financial restructuring and a release of EUR 0.5 million of bad debt
provisions given the improvement in the quality of our customer base) in
4Q02 and EUR 34.9 million in 1Q02. Marketing expenditures were EUR 2.2
million for 1Q03 compared to EUR 1.0 million in 4Q02 and EUR 2.4 million in
1Q02. The increase in SG&A is primarily related to this increase in
marketing expenditures from the launch of new products and an increase in
maintenance expense due to installing more customers on our network.
In March 2003, Versatel reached an agreement with Deutsche Telekom related
to the provisioning of central office space associated with our former joint
venture, VersaPoint. Under the agreement, Versatel recognized a
non-recurring gain of EUR 14.9 million related to the settlement in 1Q03.
For the quarter ended March 31, 2003, Versatel's adjusted earnings before
interest, tax, depreciation and amortization, claim settlements, idle
building space and bond professional fees (adjusted EBITDA) was positive EUR
13.1 million compared to positive EUR 13.3 million (EUR 10.5 million on a
recurring basis excluding EUR 1.6 million of prior period revenue and EUR
1.2 million for the release of over accruals) in 4Q02 and negative EUR 3.7
million in 1Q02.
For the quarter ended March 31, 2003, Versatel's result before interest,
tax, depreciation and amortization (EBITDA) was positive EUR 28.1 million
compared to positive EUR 10.6 million in 4Q02 and negative EUR 3.7 million
in 1Q02.
Mark Lazar, Chief Financial Officer, commented: "We are pleased with our
quarter over quarter recurring EBITDA improvement in excess of 25%. This
growth continues despite the significant additional marketing spend required
to launch some innovative new products for the residential and business
markets. Although we are exploiting our debt-free financial position to
invest for future growth, we continue to focus on generating free cash flow
from operations in early 2004 which will provide us even more flexibility to
further increase our customer growth trends."
In 4Q02, Versatel booked a deferred tax liability of EUR 133.9 million in
respect of the gain related to the financial restructuring, whereby any
subsequent losses in The Netherlands are recognized and taken against this
deferred tax liability. As a result, Versatel recognized an income tax
credit of EUR 4.3 million related to the net operating losses of the Dutch
fiscal unity during the first quarter of 2003.
Versatel recognized a net profit in 1Q03 of EUR 1.0 million (EUR 18.3
million loss excluding a credit of EUR 4.3 million related to income tax and
a one time gain of EUR 14.9 million related to the settlement with Deutsche
Telekom) compared to a loss of EUR 22.1 million (EUR 282.3 million including
a EUR 260.2 million impairment of fixed assets) in 4Q02 and a loss of EUR
87.6 million in 1Q02. This net profit is not currently recurring in nature
and is primarily related to the income tax credit and claim settlement in
1Q03. Versatel expects to generate a net loss in 2Q03 and for the full year
2003.
Versatel's capital expenditures for 1Q03 were EUR 17.8 million. The capital
expenditures for the quarter related primarily to new customer additions and
the building of stock for customer equipment as we aggressively launch new
on-net products. In total, Versatel's free cash outflows for 1Q03 were EUR
39.1 million compared to a cash inflow of EUR 6.7 million in 4Q02 and a cash
outflow of EUR 88.5 million in 1Q02. The free cash outflow in 1Q03 was
primarily related to the improvement in working capital and the acquisition
of Tesion and Completel Germany that was paid for at the end of 1Q03, but
was not consolidated until April 1, 2003 and is therefore currently
accounted for as a prepaid asset.
As of March 31, 2003, Versatel had EUR 151.9 million in cash, cash
equivalents and marketable securities on its balance sheet. As mentioned
previously, Versatel will not consolidate the balance sheet of Tesion and
Completel Germany until 2Q03, therefore the 1Q03 cash figure does not
include cash from the acquired companies. Versatel believes that its organic
business plan is fully funded without a need for third party financing.
Given its significant cash balance and funding position, Versatel believes
it has cash over-funding that will allow it to explore potential growth
opportunities through the acquisition of customer bases, distressed assets
or going concerns in its core markets of The Netherlands, Belgium and
Germany.
Tesion & Completel Germany Integration
On March 24, 2003, Versatel announced the acquisition of Tesion
Telekommunikation GmbH ("Tesion") and its wholly owned subsidiary, Completel
GmbH ("Completel Germany"). Versatel will consolidate the figures of Tesion
and Completel Germany as of April 1, 2003. Versatel commenced the process of
integrating these companies with its existing German operations and believes
this process will take approximately 12 months to complete. Versatel will
come out with revised financial guidance with its 2Q03 earning release, but
believes that Tesion and Completel will roughly double its revenues in
Germany on an annual basis and will increase recurring EBITDA.
Mr Raithatha commented, "We are very pleased with the initial integration
steps that we have achieved to date. We are in the process of completing the
"quick and obvious" wins and are now focused on the larger projects
including network, billing and IT integration that will take approximately
6-9 months to complete. Most importantly, we are pleased with the competency
of the sales organizations where we have experienced several significant
customer wins since completing the acquisition."
Recent Events
Versatel is a Dutch company, with operations in The Netherlands, Belgium and
Germany, and believes it is not necessary to have a dual listing in the
United States and on Euronext Amsterdam. As of May 7, 2003, Versatel has
filed for de-registration from its reporting requirements with the SEC.
After a third party investigation into its shareholder base, Versatel has
determined it falls below the threshold for SEC reporting requirements.
To see financials: http://bankrupt.com/misc/Versatel.pdf
Financial tables 1Q03
Versatel Telecom International N.V. (Euronext: VRSA). Versatel, based in
Amsterdam, is a competitive communications network operator and a leading
alternative to the former monopoly telecommunications carriers in its target
market of the Benelux and Germany. Founded in October 1995, the Company
holds full telecommunication licenses in The Netherlands, Belgium and
Germany and has approximately 860,000 customers and over 1,242 employees.
Versatel operates a facilities-based local access broadband network that
uses the latest network technologies to provide business customers with high
bandwidth voice, data and Internet services. Versatel is a publicly traded
company on Euronext Amsterdam under the symbol "VRSA". News and information
are available at http://www.versatel.com
CONTACT: VERSATEL TELCOM
AJ Sauer
Investor Relations & Corporate Finance Manager
Phone: +31-20-750-1231
E-mail: aj.sauer@versatel.nl
Anoeska van Leeuwen
Director Corporate Communications
Phone: +31-20-750-1322
E-mail: anoeska.vanleeuwen@versatel.nl
===========
P O L A N D
===========
NETIA HOLDINGS: Regulator Registers Series I and II Notes
---------------------------------------------------------
The Registration of Netia's Series I and II Notes by the KDPW, the
Separation of the Subscription Warrants and the Date of Their Transfer to
the Entitled Shareholders
Netia Holdings S.A. (WSE:NET, NET2), Poland's largest alternative provider
of fixed-line telecommunications services, announced that following the
Polish National Securities Depository's (the "KDPW") consideration of the
Company's applications filed on April 30, 2003, the Management Board of the
KDPW decided, under resolution No. 216/03 dated May 14, 2003, to:
1) register by the KDPW:
-- 31,419,172 (thirty-one million, four-hundred and nineteen thousand, one
hundred and seventy-two) series I notes and assign them code No.
PLNETIA00105;
-- 1,005,154 (one million, five thousand, one hundred and fifty-four) series
II notes and assign them code No. PLNETIA00113; and
2) assign the following codes to the subscription warrants attached to the
above-mentioned notes:
-- assign code No. PLNETIA00139 to the subscription warrants constituting
two-year rights to subscribe with priority over the Company's shareholders
for ordinary bearer series J shares of the Company at a nominal price of PLN
1 (one) per share (the Two-Year Warrants")
-- assign code No. PLNETIA00147 to the subscription warrants constituting
three-year rights to subscribe with priority over the Company's shareholders
for ordinary bearer series J shares of the Company at a nominal price of PLN
1 (one) per share (the "Three-Year Warrants").
The Company announced that on May 14, 2003, 32,424,326 Two-Year Warrants and
32,424,326 Three-Year Warrants were separated from the series I and II
notes. The Two-Year Warrants and the Three-Year Warrants are to be
transferred on May 16, 2003 to the accounts of the KDPW's participants
(brokerage houses and depositary banks, etc.) which maintain the securities
accounts of the shareholders who held Netia's shares on December 22, 2002
(the "Entitled Shareholders"). The actual date on which the subscription
warrants will be recorded in the Entitled Shareholders' securities accounts
depends on the internal rules and procedures applied by the particular
participants of KDPW.
The series I and II notes do not give rise to substantial long- or
medium-term indebtedness of Netia and have been issued solely in order to
provide a means of distributing the subscription warrants.
CONTACT: NETIA HOLDINGS S.A.
Anna Kuchnio (IR)
Phone: +48-22-330-2061
===========
R U S S I A
===========
OAO SIBIRTELECOM Fitch Ups Ratings to 'B+', Outlook Positive
-------------------------------------------------------------
Fitch Ratings, the international rating agency, has upgraded OAO
Sibirtelecom's (Sibirtelecom) Senior Unsecured rating to 'B+' (B plus) from
'B'. The Short-term rating of 'B' has been affirmed. The Outlook is
Positive.
The upgrade underlines the successful completion of the company's first two
phases of restructuring, which resulted in the merger of 11 fixed-line
telecom operators in the Siberian region. Further growth of the Russian
economy has assisted in improvements in the operating performance of the
enlarged Sibirtelecom, a fixed-line monopoly provider in the Siberian
region, an area of 5.1 million sq. km, with a population of 21m. The region
generates c.15% of Russian GDP and at the end of 2002 had a fixed line
penetration rate of 18.9%.
Sibirtelecom's structure has not changed after the merger, and state-owned
Svyazinvest remains the main shareholder with 50.67% stake. At the end of
2002, Sibirtelecom had an installed fixed-line capacity of 3.4 million lines
and digitalisation level of c.43%. The tariff rebalancing programme should
help the company to improve its operating performance, although it is being
implemented at a slow pace reflecting its political sensitivity. The
enlarged company plans to invest further in development of its mobile
network, consolidating it under one regional brand. The first step was taken
in February 2003 when Sibirtelecom agreed to purchase the remaining stakes
in two regional mobile operators, ZAO Baikalvestkom (49% stake at USD8.5m)
and ZAO Eniseitelecom (49% at USD12.5m).
Continuing economic growth in Russia and successful integration of the
merged regional entities should benefit Sibirtelecom's business growth. The
company's investment requirements remain high, although discretional, and
progress will depend on availability of capital. The agency's view is that
Sibirtelecom will continue to operate a low leveraged structure, however the
company has indicated some moderate increase in debt levels to finance its
fixed-line and mobile network development in the short to medium term.
Fitch indicates that Sibirtelecom post-restructuring stage may pose some
implementation risk, reflecting the degree of operational complexity in
integrating 11 operators under the Sibirtelecom brand.
CONTACT: FITCH RATINGS
Raymond Hill, London
Phone: +44(0)20 7417 4314
Larissa Malycheva, London
Phone: +44(0)20 7417 4207
OAO URALSVYAZINFORM: Fitch Ups Rating to 'B+', Outlook Positive
---------------------------------------------------------------
Fitch Ratings, the international rating agency, has upgraded OAO
Uralsvyazinform's (Uralsvyazinform) Senior Unsecured rating to 'B+' (B plus)
from 'B'. The Short-term rating of 'B' has been affirmed. The Outlook is
Positive.
The rating action reflects the continuing progress of the company's
restructuring, which resulted in the merger of seven fixed-line telecom
operators in the Ural region. The improvements in the economic environment
in Russia have led to further growth in the operating performance of the
enlarged Uralsvyazinform, which has become the licensed monopoly provider of
fixed and mobile telecommunication services in the Urals region, an area of
2 million sq. km, with a population of 15.5m. The region generates c.16% of
Russian GDP and at the end of 2002 had a fixed line penetration rate of
19.2%.
Following the restructuring, Uralsvyazinform remains a 51.42% controlled
subsidiary of Svyazinvest, the state owned and controlled telecommunications
investment holding company. At the end of 2002, Uralsvyazinform had an
installed fixed-line capacity of 3 million lines, of which 81% were in urban
areas, and a digitalisation level of 58%. The company is likely to benefit
from the launch of a tariff rebalancing programme on 16 May 2003, which is
aimed at withdrawal from cross-subsidies provided by international and
national long distance calls.
The company's mobile network operates NMT-450 and GSM900/1800 standards.
With 646,400 subscribers, or 2.9% national and 57% regional market shares,
Uralsvyazinform was the fifth largest mobile operator in Russia in April
2003. Uralsvyazinform's growth prospects in both the fixed line and mobile
businesses remain strong, although dependent on the continuing stability of
the economic climate and successful implementation of the company's
significant investment programme.
The agency believes that the enlarged Uralsvyazinform's operating cash flow
should further improve, benefiting from economic growth and post-merger cost
efficiencies, which are estimated at USD150 million over the next five
years. The company is likely to retain a relatively conservative capital
structure, although some modest increase in leverage is anticipated as
Uralsvyazinform will be required to finance its investment plans.
Fitch notes a degree of event risk in the company's implementation of the
next phase of restructuring, the integration of seven operators under the
Uralsvyazinform umbrella.
CONTACT: FITCH RATINGS
Raymond Hill
London
Phone: +44 (0)20 7417 4314
Larissa Malycheva, London
Phone: +44 (0)20 7417 4207
=========
S P A I N
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JAZZTEL PLC: Reaches EBITDA Break-even in March Ahead of Plan
-------------------------------------------------------------
Jazztel p.l.c. (NASDAQ, Nasdaq Europe: JAZZ and the Nuevo Mercado in Spain:
JAZ), the leading pan-Iberian competitive provider of broadband
communication services, today announced results for the first quarter of
2003. Amounts are presented in Euros and in accordance with US GAAP.
Massimo Prelz, Chairman of Jazztel p.l.c. commented : "We are happy to
report that for the first time in our history and earlier than expected we
reached positive EBITDA in our overall operations in the month of March
2003. We will be concentrating in the coming months on continuing this
progression and assuring EBITDA break-even for the second quarter. We also
see a recovery in certain segments of customer demand which shows that the
message of the "new Jazztel" being one of the most financially sound and
advanced telecom operators in the Iberian Peninsula is starting to be
understood and valued"
Highlights of the quarter
Financial
-- First quarter revenues amounted to Euro 57,7 million compared to Euro
53,0 million in the first quarter of 2002, representing an increase of 8,9%.
Revenues remained flat compared with the previous quarter.
-- Direct access revenues amounted to Euro 14,8 million increasing 20,3%
from Euro 12,3 million in the same period of 2002. Compared with the
previous quarter, revenues increased 1,4% from Euro 14,6 million.
-- Indirect Access Revenues decreased, due to the January and February
seasonality effect, to Euro 21,1 million, down 2,8% from Euro 21,7 million
in the first quarter of 2002. Compared to the fourth quarter in 2002,
indirect access revenues decreased 12,4% from Euro 24,1 million.
-- Carrier services revenues increased by 69,1% to Euro 9,3 million up from
Euro 5,5 million in the same period of 2002. Compared with the previous
quarter Carrier services revenues increased 47,6% from Euro 6,3 million.
-- Internet and value added services revenues decreased by 1,6% from 12,5 in
the previous quarter to Euro 12,3 million in the first quarter of 2003.
Internet Services revenues decreased by 8,2% from Euro 13,4 million in the
same period of 2002.
-- Gross margin improved to Euro 24,3 million. In absolute terms Gross
Margin grew by Euro 5,3 million, a 27,9% increase over the same period in
2002, and decreased Euro 0,3 million from the previous quarter, a 1,2%
decrease. As a percentage of revenues, Gross Margin amounted to 42,1% in the
first quarter of 2003 up from 35,8% in the same period of 2002 and down 0,5%
from the previous quarter.
-- Selling, General and Administrative Expenses (SG&A) decreased by 19,8%
from Euro 33,9 million in the first quarter of 2002 to Euro 27,2 million in
the first quarter of 2003 or by 3,9% from Euro 28,3 million in the previous
quarter.
-- Adjusted EBITDA improved from negative Euro 14,9 million in the first
quarter of 2002 to negative Euro 2,9 million in the first quarter of 2003.
On a quarterly basis, adjusted EBITDA improved by Euro 0,8 million from
negative Euro 3,7 million in the fourth quarter of 2002. This represents a
decrease in EBITDA losses of 21,6%. As a percentage of revenues, adjusted
EBITDA improved from negative 28,1% in the first quarter of 2002 to negative
5,0% in the first quarter of this year. On a quarterly basis adjusted EBITDA
margin improved to negative 5,0% from negative 6,4% in the fourth quarter
2002.
-- Net losses decreased from negative Euro 33,1 million in the first quarter
of 2002, to negative Euro 26,8 million in the first quarter of 2003, a 19,0%
reduction. On a quarterly basis net loss decreased from Euro 28,2 million in
the fourth quarter of 2002, a 5,0% reduction.
Operational
-- Total traffic on the Jazztel network amounted to 923 million minutes in
the first quarter 2003, a 7,9% increase over the same period of 2002. Total
traffic increased 10,5% compared to the fourth quarter of 2002.
-- Total contracts signed for direct access provisioning reached 3.653 by
the end of the first quarter of 2003, a 33,5% increase over the same period
of last year and a 9,7% increase over the end of the previous quarter. A
total of 323 new contracts were signed during the first quarter 2003,
compared with 350 in the previous quarter.
-- Number of sites connected increased by 45,8% to 3.348, up from 2.296 in
the same period of 2002 and 3.016 in the previous quarter, an 11,0%
increase.
-- In Indirect Access, Jazztel has managed to accelerate its upward trend in
preselected customers. The number of preselected lines grew from 116.579 in
the first quarter of last year to 171.164 in the first quarter of 2003, a
46,8% increase. This upward trend shows the success of our commercial
activity in this business through the reactivation of the indirect
distribution channels and the new advertising campaigns "weekends for free"
and "one day for free". The reason for decrease in revenues in this business
despite the impressive performance of all the operating indicators is the
effect that seasonality has on the usage pattern of our clients.
-- A similar strong growth took place in xDSL services with contracts signed
for "masDSL" services growing from 698 customers at the end of the fourth
quarter of 2002 to 918 at the end of the first quarter of 2003, a 31,5%
increase. The number of provisioned "masDSL" sites climbed from 434 in the
previous quarter to 633 sites at the end of the first quarter of 2003, a
45,9% increase.
Other Significant Events
-- For the first time in our history we reached positive EBITDA in our
overall operations for March 2003.
-- At the end of the first quarter, a total of 1.238.921 convertible bonds
issued as part of the Recapitalization had been exchanged for 1.873.509
shares that were listed in the Nuevo Mercado and NASDAQ Europe.
-- At the end of the first quarter, only 25% of the shares resulting from
the Recapitalization were still locked up subject to lock-up provisions, in
addition to the shares not claimed yet by former bondholders. As of April
2nd all shares resulting from the Recapitalization have been released.
-- From January 1, 2003 to May 5, 2003 a total of 919,7 million shares have
been traded in the stock markets. This trading is more than two times the
newly issued shares resulting from the Recapitalization.
Financial Position
-- Jazztel's total cash position at March 31st, 2003 was Euro 72,7 million.
This includes a total of Euro 19.8 million in the form of a cash deposit
pledged to the Government in respect of the commitments for its license
obligations regarding Banda 26 and a Euro 11,2 million cash counter
guarantee in favour of the Ministry of Finance (Agencia Tributaria),
regarding the claim against the 2001 spectrum fee for the LMDS license,
which is currently being challenged in the Spanish courts. The Euro 72,7
million includes Euro 30,0 million of a fully drawn senior credit facility
available for its Spanish subsidiary, Jazz Telecom S.A. At March 31st, 2003
the Company had Euro 15,0 million in a pledged cash account in accordance
with the Senior Credit Facility. Excluding the restricted funds mentioned
above and including the Euro 15,0 million in the pledged account, Jazztel
had Euro 41,7 million of cash at March 31st, 2003 which management expects
will be sufficient to fully fund operations under the company's current
business plan.
To see Financial Statistics and Operational Statistics:
http://bankrupt.com/misc/JAZZTEL_PLC.pdf
Summary of Performance
During the first quarter 2003 Jazztel confirmed its ability to grow its
customer base and the number of clients connected to its network. The Group
had signed by the end of the first quarter 2003 a total of 3.653 contracts
for direct service provisioning which represents a 9,7% increase over the
previous quarter figures and had connected 3.348 customer sites directly to
its network
Continuing with our commitment on fine tuning our operations we proceeded to
cancel a number of indirect access business customers with no usage for an
extended period of time. This will allow us to focus our commercial efforts
on our active customers and enhance our customer care operations.
Roberto de Diego, Managing Director of Jazztel p.l.c., commented on these
developments: "We are very encouraged by the evolution of our direct access
customer acquisition rate. This shows that the negative effect on our
commercial performance caused by the Recapitalization has started to
diminish and Jazztel is recovering its positive customer perception.
Revenues for the quarter are significantly ahead of the same period of 2002
making us confident on reaching our growth objectives for 2003. We are
equally pleased with the evolution in our preselected customers. Our
commercial offer of "weekends free" for residential and "one day free" for
our corporate customers has proven to be very successful, reaching as of May
4, 2003 a 52% increase in our preselected lines compared to March 31, 2002."
Additionally, Roberto de Diego commented: "We have launched a number of
other commercial initiatives such as targeting key commercial agreements and
contracts with associations such as CETM (Haulage Road Transport
Confederation in Spain formed by more than 34.000 businesses in Spain that
employ's more than 215.000 employees)"
As of March 31st 2003, the Group had built 2.787 local access km and is
finalising its DSL deployment with 34 Central Offices of Telefonica already
connected to our network. During the first quarter of 2003 we completed the
migration of our network backbone from the RENFE leased dark fibre to Uni2.
Uni2 now provides all our backbone maintaining the reach of our network
while minimizing costs and cash outflow.
Financial Information
Revenues for the quarter ended on March 31, 2003 were Euro 57,7 million, up
from Euro 53,0 million in the first quarter 2002, representing a 8,9%
growth. Direct access activities reached Euro 14,8 million in the first
quarter 2003, a 20,3% increase compared to the same quarter of 2002.
Internet and Value Added Services decreased to Euro 12,3 million from Euro
13,4 million in the same period in 2002 and from Euro 12,5 million the
previous quarter. Indirect access revenues decreased 12,4% to Euro 21,1
million in the first quarter of 2003 from Euro 24,1 million in the fourth
quarter of 2002. Carrier service revenues increased 47,6% to Euro 9,3
million from Euro 6,3 million in the previous quarter.
Business Lines 1st Q 4th Q 1st Q Q1 2002 Q4 2002
(Euro Million) 2002 2002 2003 % Growth % Growth
Indirect Access 21,7 24,1 21,1 -2,8% -12,4%
Direct Access 12,3 14,6 14,8 20,3% 1,4%
Carrier services 5,5 6,3 9,3 69,1% 47,6%
Internet Services(a)13,4 12,5 12,3 -8,2% -1,6%
Other Revenues 0,2 0,1 0,2 0,0% 100,0%
Total revenues 53,0 57,7 57,7 8,9% 0,0%
(a) Internet revenues includes generated by OCS, our Software consulting and
implementation subsidiary. Revenues generated by OCS were Euro 8,5 million
for the first quarter of 2002, Euro 8,5 million in the fourth quarter of
2002 and Euro 8,1 million for the first quarter of 2003.
Cost of Sales were Euro 33,4 million for the first quarter of 2003, or 57,9%
of sales, up from 57,4% of sales in the previous quarter.
Gross margin in the first quarter of 2003 declined to Euro 24,3 million from
Euro 24,6 million in the fourth quarter of 2002.
Selling, General and Administrative (SG&A) expenses for the first quarter of
2003 were Euro 27,2 million compared with Euro 28,3 million for the fourth
quarter of 2002. This reduction is caused by the effects that are flowing
into 2003 of the cost cutting program executed in 2002.
Adjusted EBITDA losses in the quarter were negative Euro 2,9 million,
compared with negative Euro 3,7 million losses in the fourth quarter of
2002. Adjusted EBITDA losses as a percentage of sales decreased from
negative 28,1% in the fourth quarter of 2002 to negative 5,0% in the first
quarter of 2003.
Depreciation and Amortisation Expense was Euro 17,3 million for this
quarter, decreasing from Euro 19,7 million for the fourth quarter of 2002.
Net Financial Expense for the first quarter 2003 was Euro 6,0 million
compared to Euro 20,6 million in the first quarter of 2002 and consisted
primarily of accrued interest on our convertible notes, on our high yield
notes issued in April 1999, December 1999 and July 2000, less interest
earned on invested funds.
Net Loss for the first quarter 2003 amounted to Euro 26,8 million compared
to Euro 33,1 million in the first quarter of 2002 and Euro 28,2 million in
the fourth quarter of 2002.
Financial Needs and Resources
Jazztel's total cash position at March 31st, was Euro 72,7 million. This
includes a total of Euro 19,8 million in the form of a cash deposit pledged
to the Government in respect of the commitments for its license obligations
regarding Banda 26 and a Euro 11,2 million cash counterguarantee in favour
of the Ministry of Finance (Agencia Tributaria), regarding the claim against
the 2001 spectrum fee for the LMDS license, which is currently being
challenged in the Spanish courts. The Euro 72,7 million includes Euro 30
million of a fully drawn senior credit facility available for its Spanish
subsidiary, Jazz Telecom S.A. At March 31st, 2003 the Company had Euro 15.0
million in a pledged cash account in accordance with the Senior Credit
Facility. Excluding the restricted funds mentioned above Jazztel and
including the Euro 15,0 million of the pledged account, Jazztel had Euro
41,7 million of cash at March 31st, 2003 which management expects will be
sufficient to fully fund operations under the company's current business
plan.
To see financials: http://bankrupt.com/misc/JAZZTEL_PLC_financials.pdf
CONTACT: JAZZTEL PLC
Home Page: http://www.jazztel.com
Investor Relations
Andrew Hazell
Phone: 34 91 2917200
E-mail: Jazztel.IR@jazztel.com
===========
S W E D E N
===========
SKANDIA: Details Certain Financial Effects Through March 2003
-------------------------------------------------------------
Skandia's result is affected by external factors such as changes in the
stock market and interest rates. Future revenues, which are based on fund
values, increase or decrease as a result of these factors. When the value of
funds decrease, the company's tax situation is also affected in certain
cases. Altogether this entails a one-time effect on the operating result.
During the first quarter of 2003 the aggregate negative financial effect on
the operating result is estimated to be in the range of SEK 250 - 350
million.
Comparison figures pertaining to American Skandia
On 1 May 2003 it was announced that the agreement with Prudential Financial,
Inc. (USA), under which Prudential Financial is acquiring American Skandia,
has been completed. Since the transaction was completed in accordance with
the agreed-upon terms, there is no result effect for the first quarter of
2003. To facilitate comparisons, the group overview for the first quarter
(as in the 2002 Annual Report) will be presented excluding the USA, unless
indicated otherwise. This format is shown in the appended table.
Skandia's interim report for the first quarter of 2003 will be released on
21 May 2003.
For further information, please contact:
Harry Vos, Head of Investor Relations, tel +46 8 788 3643
Format for group overview in future interim reports
GROUP OVERVIEW - QUARTERLY ANALYSIS
2002 2002 2002 2002 2002
SEK million 12 mos. Q 4 Q 3 Q 2 Q 1
Sales 1)
Unit linked assurance 53,967 13,391 13,185 13,638 13,753
Mutual funds 16,963 3,750 4,147 5,220 3,846
Direct sales of funds 2,344 425 591 264 1,064
Life assurance 1,638 710 408 273 247
Other businesses 453 114 95 118 126
Total sales 75,365 18,390 18,426 19,513 19,036
Result summary
Unit linked assurance (according to
the embedded value method) 3,027 795 724 733 775
Mutual funds -291 -90 -56 -87 -58
Life assurance 119 5 35 20 59
Other businesses -182 -41 -85 -69 13
Group expenses -569 -179 -122 -159 -109
Result of operations 2,104 490 496 438 680
Financial effects, unit linked-2,267 -457 -898 -792 -120
assurance (according to the embedded
value method)
Items affecting comparability 1,566 -450 - 2,016 -
Operating result 1,403 -417 -402 1,662 560
Other comparison figures
Total annualized new sales, unit 9,176 2,318 2,064 2,36 2,433
linked assurance 2), SEK million
Profit margin new sales,
unit linked 13.5 13.4 14.9 12.9 13.1
assurance, %
Profit and loss account (according to the Annual Accounts Act)
Result after tax,
including USA, SEK -4,298 -4,505 -1,451 1,498 160
million
Result after tax,
excluding USA, SEK 2,555 -101 615 1,745 296
million
Earnings per share, including USA, -4.20 -4.40 -1.42 1.46 0.15
SEK
Earnings per share, excluding USA, 2.50 -0.10 0.60 1.70 0.29
SEK
1) Sales pertain to paid-in premiums and deposits in funds.
2) Periodic premiums recalculated to full-year figures plus 1/10 of single
premiums during the period.
=====================
S W I T Z E R L A N D
=====================
JULIUS BAER: Announces Decisions Adopted at General Meeting
-----------------------------------------------------------
Raymond J. Baer elected new Chairman of the Board of Directors
The Annual General Meeting of Julius Baer Holding Ltd., Zurich, on Wednesday
elected Raymond J. Baer as the new Chairman of the Board of Directors and
Beatrice Speiser and Andreas J. Baer as new members of the Board. The Annual
General Meeting also declared a dividend of CHF 6.00 per bearer share and
CHF 1.20 per registered share. Assets under management narrowed by 3% in the
first quarter of 2003, from CHF 106 billion to CHF 103 billion.
"From a political and economical perspective, last year was far from ideal."
With these words, Thomas Baer, outgoing Chairman of the Board, opened this
year's Annual General Meeting of Julius Baer Holding Ltd. But Mr Baer also
said that Julius Baer aims to use this time of uncertainty and turbulence to
adapt to the changed conditions. He expects the redimensioning measures
introduced last year to be completed by the end of this year.
Solid business strategy guarantees medium-term stability and longer-term
growth
In his comments on the 2002 financial year, Walter Knabenhans, President of
the Group Executive Board and Chief Executive Officer, emphasized once again
that the focus will be on the core business of private and institutional
asset management as well as investment funds. Knabenhans also stressed that
Julius Baer will remain independent in its home market Switzerland, and that
potential partnerships and alliances were being developed in select European
markets. "Even though the markets have stabilized somewhat after the war in
Iraq, we will push ahead with the measures announced in March to lower costs
and boost earnings. There is still no indication of a return any time soon
to the euphoric market conditions of the late 1990s."
More than CHF 30 million has been earmarked this year for growth investments
in the Group's key markets. Julius Baer plans to build on the superior
investment performance achieved over the last few years in the US, which
once again led to a welcome influx of new money in 2002: "Our reputation as
a top-quality provider in international asset management, combined with our
targeted distribution strategy, means we have the opportunity for successful
growth in this important market," Knabenhans said.
Decisions of the Annual General Meeting
Shareholders elected Raymond J. Baer as member and Chairman of the Board of
Directors. He previously served as Vice President of the Group Executive
Board and head of the Private Banking Business Line. Raymond J. Baer, who
has been with the Julius Baer Group for 15 years, takes over from his uncle,
Thomas Baer, Chairman of the Board since 1996. The changeover means that the
overall responsibility for the company will pass to a representative of the
fourth generation of the Baer family. "My aim is to write the next chapter
in the success story of our bank and its traditions," said Raymond J. Baer
in his speech accepting the position of Chairman.
Beatrice Speiser and Andreas J. Baer were also elected as new members of the
Board of Directors. Ms Speiser has many years of experience as a lawyer and
head of a consulting firm. In addition, she has been a lecturer at the
Universite de Haute-Alsace since 1998 and a member of the Board of Directors
of Julius Baer Family Office Ltd. since 2000.
Andreas J. Baer has worked since January 2000 as an attorney in business law
for the Zurich law firm of Baer & Karrer. His previous professional
experience includes work as an auditor for the district court of Pfaffikon,
Zurich and participation in the Foreign Lawyers Program at the law firm
Wilmer, Cutler & Pickering in Washington. Since 2000 Andreas J. Baer has
been a member of the Board of Directors of Julius Baer Investment Funds
Services Ltd.
Paul Embrechts was re-elected for another three-year term as a member of the
Board of Directors.
In addition, the Annual General Meeting also decided, as part of the share
buy-back program, to amend the capital of Julius Baer Holding Ltd. as
follows:
- conversion of 195,460 registered shares into 39,092 bearer shares
- reduction of the share capital from CHF 5,575,111 to CHF 5,470,561.
The new share capital of CHF 5,470,561 is made up of 9,727,665 registered
shares with a par value of CHF 0.10 and 8,995,589 bearer shares, of which 8
421 937 entitled to dividends, with a par value of CHF 0.50.
Results for the 1st quarter of 2003
Assets under management by the Julius Baer Group fell by 3% in the first
quarter of 2003 to CHF 103 billion. The reduction is due almost exclusively
to market developments. In contrast, the flow of net new money in private
banking and institutional asset management improved compared to the second
half of 2002.
As expected, earnings were lower due to a year-on-year decline in assets
under management and the lower transaction volumes. The cost reduction
measures announced earlier are proceeding according to plan.
As indicated at the March press conference, net profit for the current year
will turn out to be considerably lower than that of 2002 if operating
conditions do not soon take a decisive and sustained turn for the better.
The speeches and presentations by Thomas Baer and Walter Knabenhans are
available on the Internet at http://www.juliusbaer.com
The half-yearly results of the Julius Baer Group will be published on 15
August 2003.
CONTACT: JULIUS BAER
Jan A. Bielinski, Chief Communications Officer
Phone: +41 (0)58 888 55 01
SWISS RE: Risk of Deflation Low, Uncertainties Remain -- Survey
---------------------------------------------------------------
Swiss Re's fifth survey of economists' opinions shows that the risk of globa
l deflation is low. The 'Economic Risk Survey' , conducted in April, did
find, however, that the risk to stock markets both in Europe and the US has
increased substantially compared to its last survey in October.
The twice annual 'Economic Risk Survey' takes the opinions of 45 economists
from Europe and the United States and focuses on the probability of economic
performance substantially deviating from the general economic consensus.
In this April's survey the participants considered the risk of deflation to
be small. Respondents rated the risk of falling prices over the next five
years to be around 3% both in the US and Europe. The likelihood of a period
of very low inflation has decreased over the last six months. Inflation
below 1% in the short term has a probability of 8% for the US and 9% for
Europe. In last October's survey estimates were 18% for the US and 12% for
Europe.
According to the economists, the risk of a further stock market crash has,
however, increased both in the US and Europe over the last six months. The
estimated probability of a stock market crash in 2003 - defined as a 25%
decline in a major stock market index - is 21% for the US (up from 16% in
October) and 23% for Europe (up from 17%). The likelihood of a persistent
bear market in 2003 and not recovering to 2002 year-end levels until after
2012, has increased to 6% for the US (from 4%), but remained unchanged at 5%
for Europe.
The global economy has shown some additional signs of weakness over the past
few months, with the military conflict in Iraq contributing to a delay in
the expected recovery. Reflecting this, the 45 survey respondents give a
probability of 14% for US growth being less than 1% during 2003 (unchanged
from October), while the probability of this low growth rate in Europe is
38% (up from 25% in October).
Swiss Re is one of the world's leading reinsurers and the world's largest
life and health reinsurer. The company operates through more than 70 offices
in over 30 countries. Swiss Re has been in the reinsurance business since
its foundation in Zurich, Switzerland, in 1863. Through its three business
groups Property & Casualty, Life & Health and Financial Services, Swiss Re
offers a wide variety of products to manage capital and risk. Traditional
reinsurance products, including a broad range of property and casualty as
well as life and health covers and related services, are complemented by
insurance-based corporate finance solutions and supplementary services for
comprehensive risk management. Swiss Re is rated "AA+" by Standard & Poor's,
"Aa1" by Moody's and "A++" by AM Best.
CONTACT: SWISS RE
Economic Resarch & Consulting:
Zurich
Phone: +41 43 285 2551
Fax: +41 43 285 4749
New York
Phone: +1 212 317 5135
Fax: +1 212 317 5455
Economic Research & Consulting, Zurich
Christian Schmidt
Phone: 41 43 285 2001
Thomas Hess
Phone: + 41 43 285 2297
Economic Research & Consulting, New York
Kurt Karl
Phone: +1 212 317 5564
===========================
U N I T E D K I N G D O M
===========================
AMP LTD.: Trustees of Staff Pension Fund To Sack Asset Manager
--------------------------------------------------------------
The trustees of the AMP staff pension fund are planning to take away the
management of majority of its assets from AMP Henderson, and leave the
latter to care only for its unlisted property investments. The fund has
around AU$793 million in assets under management.
The move was prompted by a poor performance in offshore markets, according
to an unsourced report of Australian Financial Review.
The trustees earlier consulted the opinion of asset consultant JANA, which
is known not to favor AMP Henderson for some time.
According to unspecified documents accessed by the paper, AMP's life funds
in the UK are barely able to meet official solvency requirements. Data in
the documents compare AMP's National Provident Fund with a free asset ratio
of just 1.27% to Pearl with 2.66%, and London Life with 2.58%.
According to the report, even in the current market environment, ratios of
below 5% are considered very weak. Free asset ratios of British insurance
funds historically stood at 15% or higher.
AMP LIMITED: Issues Response to S&P Ratings Announcement
--------------------------------------------------------
AMP notes the ratings actions announced by Standard & Poor's.
AMP Life has been lowered to A+ from AA-; AMP Group Holdings and AMP Bank to
BBB+ from A-; Pearl Assurance and National Provident Life Ltd. (NPLL) to BBB
from BBB+; and NPI Ltd. to BBB+ from A. The outlook for all entities is
negative.
The actions bring AMP into line with the ratings it is targeting for its two
separate businesses, as announced on May 1, 2003.
AMP plans to create two regionally-focused entities through a demerger. The
'new AMP' will consist of Australian Financial Services (which includes New
Zealand), Henderson's Australian and New Zealand operations and
Gordian/Cobalt. The 'new Henderson' will comprise Henderson's northern
hemisphere asset management operations, UK Life Servises, UK Contemporary
hemisphere asset management oeprations, UK Life Services, UK Contemporary
Financial Services, and AMP's stake in Virgin Money.
The new AMP is targeting a strong 'A' rating and new Henderson a 'BBB'
rating.
Chief Executive Officer Andrew Mohl said AMP was targeting these levels as
the most appropriate ratings for the two new entities, given the need to
balance the differing requirements of debt and equity holders.
"We remain confident that the demerger will create two strong companies and
is the best long term solution for shareholders," Mr Mohl said.
"While we understand that S&P has taken execution risk into account in this
ratings action, our focus is now fully on successful implementation.
In the Australian business, AMP has held market share and operating earnings
despite adverse conditions, confirming the underlying strength of this
business.
In the UK businesses, the ratings impact is minimal given the revised status
of the business. Both Pearl and NPLL are in run-off, while AMP is currently
seeking expressions of interest in the NPI business.
The more important measuree for AMP in its UK life businesses is regulatory
solvency. AMP continues to meet all regulatory solvency requirements and
the recently announced actions to reduce equity market risk are further
improving the resilience of the life funds.
CONTACT: AMP LIMITED
Level 24, 33 Alfred Street
Sydney NSW 2000 Australia
ABN 49 079 354 519
Contact: Mark O'Brien, Investor Inquiries
Phone: 9257 7053
AMP LTD: Ratings on U.K. Subsidiaries Lowered, Off CreditWatch
--------------------------------------------------------------
Standard & Poor's Ratings Services said it lowered its counterparty credit
and insurer financial strength ratings on Pearl Assurance PLC (Pearl) and
National Provident Life Ltd. (NPL) to 'BBB' from 'BBB+', and on NPI Ltd.
(NPI) to 'BBB+' from 'A'. At the same time, the ratings on the three
companies were removed from CreditWatch, where they were placed on April 30,
2003. The outlook on all three companies is negative.
Pearl, NPL, and NPI, together with London Life Ltd., comprise the AMP U.K.
life assurance group, a subgroup of the Australia-based insurance and fund
management group AMP Ltd. (see separate media release on AMP Life Ltd.
published on May 13, 2003, on RatingsDirect, Standard & Poor's Web-based
credit analysis system). The U.K. operations had total assets of GBP31.3
billion ($50.2 billion) at year-end 2002.
"The rating actions on the U.K. entities reflect the decline in capital
adequacy at both Pearl and NPL prior to AMP's planned equity sale and the
reduced flexibility within the U.K. entities to manage their capital
positions going forward," said Standard & Poor's credit analyst Mark Button.
The downgrade of NPI reflects the change in status to nonstrategic from
strategically important under Standard & Poor's group ratings methodology
and the removal of the rating support this previously provided. The AMP U.K.
companies are now rated on a stand-alone basis.
Nevertheless, Standard & Poor's still expects AMP to provide sufficient
capital to finance new business at NPI in the near term. Pearl, NPL, and
London Life are closed to new business.
"The successful completion of AMP's demerger proposal and associated actions
would reduce equity risk in the U.K. balance sheet, improve earnings and
capital stability, and significantly improve the quality of capital within
the AMP U.K. subgroup," said Mr. Button. Uncertainties remain, however, over
the future persistency of the inforce portfolio, owing to the closure of
Pearl to new business and the revised asset profile.
Standard & Poor's analysis of the U.K. businesses going forward will focus
on the key issues of persistency, expense control, and asset-liability
management of the closed funds.
"The negative outlook on Pearl, NPL, and NPI reflects the inherent
uncertainties surrounding the execution of AMP's plans and the consequent
risks if capital adequacy and capital quality in the U.K. are not improved
in line with expectations," said Mr. Button. If these risks are ameliorated,
the rating could revert to stable from negative.
BRITISH AIRWAYS: Cancels Crews Overnight Stays in Saudi
-------------------------------------------------------
British Airways, the struggling European airlines, has cancelled overnight
stays in Saudi Arabia for crews operating flights between London and Riyadh
and London and Jeddah.
The temporary cancellation of BA crews' overnight stays follows the terror
attacks in Saudi Arabia.
Subsequently, return legs of BA's three-flights-a-week London-Riyadh service
and four-times-a-week London-Jeddah services will touch down at Larnaca, the
report said. This will add about two hours flying time for each return
flight.
According to a BA spokeswoman, there hasn't been any "rush in bookings from
people wanting to get out of Saudi Arabia since the attacks".
She further said: "We're fairly busy on the routes but then we usually are.
These are services mainly used by business executives and expatriates."
British Airways' April passenger load factor was down 0.4 points versus last
year, to 69.0%. The company said "The fall in traffic comprised a 26.4 per
cent reduction in premium traffic and a 2.7 per cent increase in non-premium
traffic."
It also said revenue and forward bookings continue to be impacted by global
economic weakness, SARS, and the situation in Iraq. Forward
visibility on revenue and traffic remains limited."
CONTACT: BRITISH AIRWAYS PLC
Waterside, Harmondsworth
London UB7 0GB, United Kingdom
Phone: +44-20-8562-4444
Fax: +44-20-8759-4314
Toll Free: 800-545-7644
Homepage: http://www.british-airways.com
IMPERIAL CHEMICAL: Investigation Into Fall in Share Value Closed
----------------------------------------------------------------
The investigation into the circumstances surrounding the recent fall in the
shares of Imperial Chemicals Industries is now closed, according to a
company spokesman.
ICI confirmed that the U.K. Financial Services Authority, which requested
for background information to a trading statement released in March, had
informed the company about the matter.
The company warned during that time that profits are expected to fall
24%--prompting a 39% fall in share value in one day. ICI's troubles relate
to Quest, its fragrances and food flavorings division. But contrary to the
warning, the company posted in early May first-quarter pretax profit before
exceptional costs.
Several shareholders have launched lawsuits against the company,
alleging that ICI violated federal securities laws by issuing a
series of materially false and misleading statements to the
market throughout the Class Period which statements had the
effect of artificially inflating the market price of the
Company's securities.
ICI's shares have already recovered, but Brendan O'Neill, its former chief
executive nonetheless resigned from his post.
NTL INC.: Narrows First Quarter Net Loss to $254.4 Million
----------------------------------------------------------
HIGHLIGHTS
-- Revenues of GBP546.5 million and EBITDA of GBP156.5 million, Capital
Expenditures of GBP82.5 million and Operating Cash Flow of GBP74.0 million
-- UK Revenue Generating Units now exceed 5 million
-- NTL Home adds 141,400 RGUs and 27,100 net customers in the quarter
-- UK annualized churn down to 13.0%
-- Exceptional income of GBP4.2 billion ($6.8b) related to emergence from
Chapter 11
Financial Highlights(1) Quarterly Results
(In GBP millions) Q1-2003 Q1-2002
----------------------------------------------------------------
Continuing Operations
Revenues
Home GBP362.1 GBP362.0
Business 75.0 83.0
Broadcast 64.3 64.4
Carriers 27.6 33.0
Ireland 17.5 13.7
-------- --------
Total Revenues GBP546.5 GBP556.1
======== ========
Total EBITDA GBP156.5 GBP154.2
======== ========
EBITDA Margin % 28.6% 27.7%
Capital Expenditures GBP 82.5 GBP103.5
Operating Cash Flow GBP 74.0 GBP 50.7
======== ========
(1) The components of EBITDA as defined by the Company are set forth in the
results summarized under the heading "Financial Results for the three months
ended March 31, 2003". Corporate expenses are now included in selling,
general and administrative expenses and have therefore been deducted from
EBITDA. This definition is consistent across the periods referred to in this
release. Capital Expenditures is defined as the purchase of fixed assets as
measured on an accrual basis. Operating Cash Flow is defined as EBITDA less
Capital Expenditures.
Q1 2002 EBITDA and Capital Expenditures are presented prior to the effect of
changes in certain assumptions relating to allocation of costs between
capital and operating expense that were made in Q4 2002. These changes would
have reduced Q1 2002 EBITDA by approximately GBP10.8 million ($15.4m) to
GBP143.4 million ($204.5m) and reduced EBITDA margin from 27.7% to 25.8% had
they been applied in Q1 2002. These changes also would have reduced Q1 2002
Capital Expenditures by GBP10.8 million ($15.4m) to GBP92.7 million
($132.2m) had they been applied in Q1 2002.
NTL Incorporated (NASDAQ:NTLI) announced today its first quarter 2003
results. Commenting on the results, Barclay Knapp, President and Chief
Executive Officer of NTL, said:
"We are very pleased to get this fast start following the completion of our
reorganization in January. Our financial performance of GBP546.5 million
($875.9m) in Revenues, GBP156.5 million ($250.8m) in EBITDA, and GBP74.0
million ($118.6m) in Operating Cash Flow exceeded the metrics contained in
our 8-K filing of January 10, 2003. In addition, Q1 2003 ending cash, cash
equivalents and marketable securities were approximately GBP303.2 million
($478.8m), approximately GBP26 million ($41.1m) higher than anticipated in
this 8-K filing.
Our Home division is growing again and the customer service improvements we
have been making since last year have dramatically reduced our churn rate to
an annualized 13%. Broadband continues to be a leader with approximately
144,000 new customers, but our telephone products are showing good growth
too with a better-than-expected 15,200 new additions. We're turning the
curve on television with digital showing good growth, and our overall rate
of decline slowing.
Our Business division has completed its organizational restructuring and is
now right-sized to deliver profitable growth in quarters to come.
Broadcast can always be relied upon for steady performance, and this year we
are continuing that trend with the addition of several impressive contract
wins in a difficult environment.
In the last year, our central teams in Networks, IT, HR, Finance, and other
areas have done a remarkable job in cutting costs, improving service levels
and redirecting essential services to the direct control of the business
units. Thanks to them we have a much leaner and focused company today.
I am also pleased to welcome Jim Mooney (Chairman), Simon Duffy (COO) and
Scott Schubert (CFO) to the NTL team and together with our new board we are
continuing to drive best practice throughout the organization.
And thanks again to all of our associates, suppliers, customers and
stakeholders for the support you've given NTL."
Business Review
During Q1 2003, our first post-restructuring quarter, NTL continued to show
improvement in several key operating metrics.
NTL has successfully returned to growth in its Home division with the
addition in the quarter of 27,100 net new customers and 141,400 net new
revenue generating units, or RGUs. Total RGUs passed the 5 million mark,
ending at approximately 5,125,000 for the quarter. Churn declined to 13%
annualized, the lowest figure in four years.
The Company reported Revenues of GBP546.5 million ($875.9m) and EBITDA of
GBP156.5 million ($250.8m) in Q1 2003. Adjusted for changes in accounting
estimates, Q1 2002 figures would have been GBP556.1 million ($792.9m) in
Revenues and GBP143.4 million ($204.5m) in EBITDA. The decline in revenue
can be attributed mainly to the challenging conditions related to the
Company's restructuring, while the improvement in EBITDA is a result of the
Company's concerted efforts to cut costs.
In Q1 2003, NTL met or exceeded the financial targets provided in its
January 10, 2003 Form 8-K filing, and generated its fifth consecutive
quarter of positive Operating Cash Flow (defined as EBITDA less Capital
Expenditures).
At March 31, 2003, NTL had cash, cash equivalents and marketable securities
of approximately GBP303.2 million ($478.8m).
NTL adopted fresh-start reporting to reflect the Company's emergence from
Chapter 11 as of January 1, 2003. As a result of the adoption of fresh-start
reporting and the gain associated with the discharge of a portion of the
Company's debt, NTL's predecessor company (NTL Communications Corp.)
recognized approximately GBP4.2 billion ($6.8b) of exceptional income in Q1
2003.
In Q1 2003, NTL implemented a reorganization of certain of its business
units. The associated changes included moving the Company's Wholesale
Internet division from NTL Business to NTL Home, its Public Safety division
from NTL Business to NTL Broadcast and creating NTL Carriers by merging its
carriers division with its mobile division and removing both from NTL
Business. These changes better align the expertise in the divisions with the
needs of NTL's customers. In addition, the allocation of certain costs from
NTL Networks and Shared Services to the various business divisions and the
allocation of costs between NTL Home and NTL Business have changed. Finally,
Corporate Expenses are now included in Central Support.
The commentary throughout this release reflects the new divisional structure
and prior financial periods have been restated accordingly.
NTL Home
NTL Home successfully returned to growth in the first quarter of 2003. RGUs
increased by approximately 141,400, led by 143,800 broadband additions and
15,200 new telephone additions. Although TV services in total declined by
17,600 in the quarter, digital services increased, and the overall rate of
loss of TV services slowed to its lowest level in over a year. Overall, the
division recorded 27,100 net new customer connections for the quarter,
reversing five consecutive quarters of decline.
Triple play customers (taking telephone, TV and Internet services) now
represent approximately 17% of our customer base, up from approximately 5%
in Q1 2002.
In Q1 2003, NTL Home reported Revenues of GBP362.1 million ($580.3m), which
is materially unchanged from Q1 2002, and EBITDA of GBP152.7 million
($244.7m), which represents a 7% increase in EBITDA compared to Q1 2002.
Revenue in Q1 2003 was effectively flat versus Q1 2002 in part due to the
decline in the on-net customer base that the Company witnessed throughout
2002. However, this has been offset by the addition of approximately 478,000
broadband RGUs as well as growth in the Company's wholesale Internet
services business. Taking into account the changes in assumptions relating
to the allocation of certain costs from capital to operating expense that
occurred in Q4 2002 (which would have reduced Q1 2002 EBITDA by
approximately GBP4.0 million ($5.7m) had these changes occurred in Q1 2002),
Q1 2003 EBITDA increased by approximately 11% over Q1 2002.
ARPU (Average Revenue Per Unit) increased 4% to approximately GBP40.65 in Q1
2003. As highlighted in the Company's Q4 2002 results, ARPU now reflects the
inclusion of all of the Company's on-net customers, including Master Antenna
Television (MATV) customers and the former customers of BT cable. ARPU
growth continues to be driven by the increased number of broadband
customers, approximately 68% of whom subscribe to three services provided by
NTL.
Annualized churn declined from approximately 17.9% in Q1 2002 to
approximately 13.0% in Q1 2003, which reflects improvements made in customer
services and the intrinsic value of NTL Home's bundled proposition.
NTL continued to increase the number of gross customer additions in the
quarter, with approximately 116,100 gross customer additions in Q1 2003
compared to 54,000 gross customer additions in Q1 2002. Customer disconnects
in Q1 2003 were at their lowest level since Q4 2000, at approximately
89,000. Total RGUs grew to approximately 5.1 million in Q1 2003, a gain of
approximately 141,400 in the quarter and a gain of approximately 232,000
over Q1 2002.
million homes across the UK are enjoying the benefits of Internet access via
cable (of which approximately 691,000 are NTL customers). On May 1, the
speed of NTL's 128K broadband product was increased to 150K and its price
raised to GBP17.99 per month (just GBP2 more than most 56K dial-up services
in the United Kingdom).
Broadband growth was unusually high in the first quarter due to special
circumstances such as carry-over sales from the holiday period and better
than expected conversions from our dial-up customer base. Therefore,
although broadband growth should remain strong for the remainder of the
year, the absolute number of quarterly additions going forward is likely to
be lower than the rate experienced in the first quarter.
Telephony customers increased by approximately 15,200 customers in the first
quarter compared to a loss of approximately 65,000 customers in Q1 2002.
NTL's digital television base increased by approximately 20,000 customers
over Q1 2002 from approximately 1,235,000 to approximately 1,255,000
subscribers. Approximately 62% of NTL's cable television customer base is
now subscribing to digital television as compared to approximately 57% in Q1
2002.
Customer service improvements continue in NTL Home, contributing to a 6%
decline in the average number of calls per customer made to call centers
compared to Q1 2002, and the corresponding improvements in the number of
calls answered (95%) and the average speed of answer (72 seconds).
Provided below are some key customer statistics for NTL Home:
To See NTL Home - Summary Customer Statistics:
http://bankrupt.com/misc/Summary_Customer_Statistics.htm
NTL Business
In Q1 2003, NTL Business reported Revenues of GBP75.0 million ($120.2m) and
EBITDA of GBP21.1 million ($33.8m), which represent a decline of approximate
ly 10% and an increase of approximately 6%, respectively, compared to Q1
2002. Taking into account the changes in assumptions relating to the
allocation of certain costs from capital to operating expense that occurred
in Q4 2002 (which would have reduced Q1 2002 EBITDA by approximately GBP1.7
million ($2.4m) had they occurred in Q1 2002), Q1 2003 EBITDA has increased
by approximately 16% over Q1 2002.
The recapitalization process and the general climate for competitive
telecoms service providers has had a larger impact on the financial
performance of NTL Business than on any other operating division of NTL.
In the first quarter 2003, NTL Business narrowed its focus in order to
concentrate on providing services to the Retail and Enterprise sectors. The
division's main strategy is to sell a core, simplified set of profitable
products to those business customers that are on the network and that are
economically connectable.
NTL Broadcast
In Q1 2003, NTL Broadcast reported Revenues of GBP64.3 million ($103.1m),
materially unchanged from Q1 2002, and EBITDA of GBP28.6 million ($45.8m),
which represents a slight increase in EBITDA compared to Q1 2002.
The Media Services group's latest contracts include a digital radio network
contract for the MXR group, worth almost GBP8 million ($12.8m) over 12
years, and a GBP10 million ($16.0m) contract renewal for transmission of the
broadcast text service Teletext.
In the Wireless group, average sharers per tower rose year-on-year from
approximately 2.71 to approximately 2.97.
NTL's Public Safety group has been selected by the Metropolitan Police
Authority to supply, install and maintain an Integrated Communications
Platform. This will serve 31 police control rooms across Greater London for
the Metropolitan Police Service and the City of London Police. The
seven-year contract will be worth approximately GBP25 million ($37.6m). The
formal contract for this arrangement is being finalized.
NTL Carriers
In Q1 2003, we inaugurated the new NTL Carriers division. NTL Carriers is
responsible for transporting telecommunications traffic of other
telecommunications service providers over its 13,500 km national network in
the UK, 10,800 km of which is owned by NTL and 2,700 km is leased. The
network connects 100 telephone switches and 400 hub sites, points of
presence and other network sites.
NTL Carriers reported Revenues of GBP27.6 million ($44.2m) and EBITDA of
GBP22.2 million ($35.6m) in Q1 2003, which represent a decline of
approximately 16% and a decline of approximately 18%, respectively, compared
to Q1 2002. The decline in NTL Carriers' EBITDA was principally the result
of the Q1 2002 benefit associated with the release of approximately GBP7.1
million ($10.1m) of deferred revenue related to the financial distress of
one of the division's customers.
NTL Ireland
NTL Ireland reported Revenues of GBP17.5 million ($28.1m) and EBITDA of
GBP4.9 million ($7.8m) in Q1 2003, which represent an increase of
approximately 28% and an increase of approximately 88%, respectively,
compared to Q1 2002.
Residential revenues benefited from the growth in Digital TV customers and a
price increase that became effective in January 2003, while business sector
revenues rose by approximately 50% to GBP2.8 million ($4.5m). Growth in
revenues, together with improved operating cost efficiencies, contributed to
the growth in EBITDA.
NTL Ireland ended the quarter with approximately 366,500 customers. Digital
TV customers grew by approximately 7,000 to 44,800. As noted in prior
results, NTL Ireland has now introduced a more rigorous credit policy that
will lead to the involuntary disconnection of certain customers. As a result
of this, NTL Ireland anticipates that its residential customer base will
continue to decline by approximately 25,000 customers during the remainder
of 2003.
ARPU increased 24% year-on-year to GBP13.38 in the first quarter of 2003.
Cable TV churn was reduced to 8.1% in Q1 2003, down slightly from 8.3% in
the previous quarter.
NTL Ireland has completed technical trials, two months ahead of schedule,
for the planned launch of its Multi-channel Multi-point Distribution System
(MMDS) Digital product. Commercial introduction has commenced during April
2003.
Shared Services
In prior periods, corporate expenses were excluded from the definition of
EBITDA. Shared Service expenses have been restated for 2002 to include
corporate expenses of GBP12.4 million ($18.7m).
Shared Services reported negative EBITDA of GBP73.0 million ($117.0m) in Q1
2003, which represents an increase of approximately 11% compared to Q1 2002.
Taking into account the changes in assumptions relating to the allocation of
certain costs from capital to operating expense that occurred in Q4 2002
(which would have increased Q1 2002 negative EBITDA by approximately GBP5.1
million ($7.3m) had they occurred in Q1 2002), Q1 2003 negative EBITDA has
increased by approximately 3.1% over Q1 2002.
Capital Expenditures
Capital Expenditures were GBP82.5 million ($132.2m) in Q1 2003. Taking into
account the changes in assumptions relating to the allocation of certain
costs from capital to operating expense that occurred in Q4 2002 (which
would have resulted in a reduction of Q1 2002 Capital Expenditures of
approximately GBP10.8 million ($15.4m) had they occurred in Q1 2002), Q1
2003 Capital Expenditures have declined by approximately 23% over Q1 2002.
Capital Expenditures continue to be primarily related to customer premises
equipment (CPE) and scaleable infrastructure. Support capital includes
GBP6.3 million ($10.1m) relating to billing systems integration.
In order to provide comparable data to the US Cable industry, and in
accordance with NCTA (National Cable & Telecommunications Association)
reporting guidelines, NTL has allocated capital expenditures to the standard
reporting categories as follows:(1)
(figures in millions)
As of March 31, 2003
--------------------------
UK Capital Expenditures
NCTA Capital Expenditures
CPE GBP 37.1 $59.5
Scaleable Infrastructure 12.2 19.5
Commercial 3.8 6.1
Line Extensions 0.0 0.0
Upgrade/Rebuild 2.7 4.3
Support Capital 16.2 26.0
------------ ------------
Total NCTA Capital Expenditures 72.0 115.4
Non NCTA Capital Expenditures
Broadcast 3.2 5.1
Other 4.0 6.4
------------ ------------
Total UK Capital Expenditures 79.2 126.9
Ireland 3.3 5.3
------------ ------------
Total Capital Expenditures GBP82.5 $132.2
============ ============
(1) NTL is not a member of the NCTA and is providing this
information solely for comparative purposes.
Exceptional Income and Charges Related to the Emergence from Chapter 11
In Q1 2003, NTL's predecessor company (NTL Communications Corp.) recorded
GBP4.2 billion ($6.8b) of exceptional income related to the emergence from
Chapter 11. The Effective Date of the emergence from Chapter 11 was January
10, 2003. The write-up and write-down of assets to their fair values upon
the adoption of fresh-start reporting is in accordance with SOP 90-7 and has
been applied as of January 1, 2003. These items are detailed below.
Income/(charges) in millions for the
Quarter ended March 31, 2003
Gain on debt discharge $8,452
Fresh-start adoption - intangible assets 1,522
Fresh-start adoption - long term debt 221
Fresh-start adoption - fixed assets (3,195)
Fresh-start adoption - accrued expenses (120)
Fresh-start adoption - deferred tax liability 69)
Recapitalization expense (8)
-------
TOTAL $6,803
=======
Subsequent Events
Brett Wyard joined the NTL Board of Directors effective May 7, 2003. Mr.
Wyard is a Managing Director at Oaktree Capital Management, LLC. With Mr.
Wyard's election, Edwin M. Banks also joined the NTL Board of Directors. Mr.
Banks is a senior portfolio manager at W.R. Huff Asset Management.
To See Financial Review:
http://bankrupt.com/misc/Financial_Review.htm
Discussion of Three Months Ended March 31, 2003 Results
We implemented a reorganization of certain of our business units in the
three months ended March 31, 2003. The associated changes included moving
our Wholesale Internet division from NTL Business to NTL Home, our Public
Safety division from NTL Business to NTL Broadcast and the creation of NTL
Carriers by merging our carriers division with our mobile division and
removing both from NTL Business. These changes better align the expertise in
the divisions with the needs of our customers. In addition, the allocation
of certain costs from Shared Services to the various business units and the
allocation of costs between NTL Home and NTL Business have changed.
Corporate Expenses are now included in the Central Support business unit and
are grouped with selling, general and administrative expenses in our
statement of operations. Finally, NTL Ireland is a separate business unit
for financial reporting purposes effective January 1, 2003. We have
reclassified amounts in prior periods to conform to the current period
presentation.
We provide a broad range of communication services, including: (1) consumer
telecommunications and television, (2) business telecommunications, (3)
broadcast transmission and other related services and (4) carrier
telecommunications services. Our consumer telecommunications and television
services comprise broadband services to consumer markets including
residential telephone, analog and digital cable television, Internet access
and interactive services, as well as wholesale Internet access solutions to
UK Internet service providers. Our business telecommunications services
include business data, voice and Internet services. Our broadcast
transmission and other services include digital and analog television and
radio broadcast transmission services, tower site rental, satellite and
media services for programmers, news agencies, sports broadcasters and
production companies, and radio communications services to the public safety
sector. Our carrier services division provides transmission, fiber and voice
services for other telecommunications service providers over the NTL
national network in the UK and Ireland.
In our consumer telecommunications and television segment, known as NTL
Home, we derive revenues principally from monthly fees and usage charges for
(1) telephone service, (2) cable television service and (3) Internet access.
Our packaging and pricing are designed to encourage our customers to use
multiple services such as dual telephone and broadband, dual telephone and
TV or triple telephone, TV and Internet access.
In our business telecommunications segment, known as NTL Business, we derive
revenues principally from monthly fees and usage charges for inbound and
outbound voice, data and Internet services.
In our broadcast transmission and other services segment, known as NTL
Broadcast, we derive revenues principally from charges for (1) site leasing
services, (2) national and regional television broadcasting, (3) national,
regional and local radio broadcasting, (4) satellite up-linking for program
and content distribution and (5) charges for various outstanding
arrangements provided to public safety customers.
In our carrier services segment, known as NTL Carriers, we derive revenues
principally from charges for transmission, fiber and voice services provided
to other telecommunications service providers over our national network in
the UK and Ireland.
The principal components of our expenses include (1) costs to connect our
network to other networks (referred to as interconnection), (2) television
programming costs, (3) payroll and other employee related costs, (4) repairs
and maintenance, (5) facility related costs, such as rent, utilities and
rates, (6) marketing and selling costs and (7) provisions for bad debts.
As expected, our growth in 2002 was curtailed by funding constraints. Cash
constraints present many challenges to the successful execution of our
business plan. We are conserving cash by minimizing capital expenditures
including expenditures to connect new customers to our network. In order to
maintain revenues and cash from operations, we must reduce and limit
customer churn. We continue to focus on improving our customer service and
increasing our service offering to customers in an effort to curtail and
reduce churn. We are in the process of integrating our various billing
systems and customer databases in an effort to improve one of the main tools
we use to provide customer service. This effort is at a relatively early
stage although we have continued to make progress through March 31, 2003.
Although the new system does not yet support our full suite of services, we
expect to substantially complete the project by the third quarter of 2004.
The total project cost is estimated to be approximately GBP75.0 million, of
which we have incurred approximately GBP30.1 million through March 31, 2003.
We cannot be certain that this project will be successful. If the full
integration is not successful, we could experience an adverse effect on
customer service, our churn rate and our costs of maintaining these systems
going forward. We could also experience operational failures related to
billing and collecting revenue from our customers, which, depending upon on
the severity of the failure, could have a material adverse effect on our
business.
Moreover, the integration process has involved a number of internal
reorganizations of our business as we continue to strive for better
performance. These reorganizations have typically involved, among other
things, the termination of employees made redundant as a result of the
process. Although we cannot predict precisely the effect that this has had,
it is likely these internal reorganizations have negatively impacted
employee morale. If we undertake additional internal reorganizations they
will similarly likely negatively impact employee morale. Negative effects on
employee morale can have a negative effect on our operations generally.
Our plan to reduce churn and to increase average revenue per unit (referred
to as ARPU) includes an increase in broadband services to our existing
customers. We believe that our triple play offering of telephony, broadband
access to the Internet and digital television will continue to prove
attractive to our existing customer base, which will result in higher ARPU
as revenues per existing customer increase. However, there is still
significant competition in our markets, through digital satellite and
digital terrestrial television and through alternative Internet access
media, such as DSL offered by BT. If in the future we are unable to charge
the prices for these services that we anticipate in our business plan in
response to competition or if our competition is able to attract our
customers, our results of operations will be adversely affected.
The wholesale national and international telecommunications market saw the
reorganization or bankruptcy of many of the new entrant operators in 2002,
especially those companies whose focus had been on serving carriers. As a
result of this, several customers that had signed contracts with us running
through 2003 are no longer in business. While this will have some effect on
our revenue for 2003, most of our existing contracts are now with
telecommunications companies with high volumes of retail traffic.
Furthermore, our sales focus is on UK telecommunications companies who
service the retail rather than the wholesale markets. We attempt to
structure commercial arrangements to minimize any financial exposure to
another operator.
Media speculation regarding our recent Chapter 11 reorganization and
financial condition could have an adverse effect on parts of our business.
Similarly, negative press about the financial condition of alternative
telecom carriers in general may adversely affect our reputation. One of the
key strategies in our business plan is to increase our penetration of higher
value small to medium size enterprises (or SMEs) and provide increased
retail services of bundled voice, data and Internet services for SMEs.
However, due to the negative publicity surrounding our recent Chapter 11
reorganization and financial condition and the potential effect of that
publicity on our brand name, we may find it difficult to increase market
share. We believe our recapitalization process and the general unfavorable
climate for alternative telecom carriers affected our revenues in 2002 as
prospective customers began deferring orders beginning in the fourth quarter
of 2001. Even though we have successfully completed the recapitalization
process, there is no assurance that such negative publicity will not
adversely impact our results of operations or have a long-term effect on our
brand.
In addition, this uncertainty may adversely affect our relationships with
suppliers. If suppliers become increasingly concerned about our financial
condition, they may demand faster payments or refuse to extend normal trade
credit, both of which could further adversely affect our cash conservation
measures and our results of operations. However, this did not have a
significant effect on results of operations or cash flows in 2002 or in the
three months ended March 31, 2003.
On May 8, 2002, NTL Incorporated (then known as NTL Communications Corp.),
NTL Europe, Inc. (then known as NTL Incorporated) and certain of NTL
Incorporated and NTL Europe, Inc.'s subsidiaries filed a pre-arranged joint
reorganization plan (the "Plan") under Chapter 11 of the U.S. Bankruptcy
Code. Our operating subsidiaries and those of NTL Europe, Inc. were not
included in the Chapter 11 filing. The Plan became effective on January 10,
2003, at which time we emerged from Chapter 11 reorganization.
We operated our business as a debtor-in-possession subject to the
jurisdiction of the U.S. Bankruptcy Court during the period from May 8, 2002
until January 10, 2003. Accordingly, our consolidated financial statements
for periods prior to our emergence from Chapter 11 reorganization were
prepared in accordance with the American Institute of Certified Public
Accountants Statement of Position 90-7, "Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code" ("SOP 90-7"). In addition, we
adopted fresh-start reporting upon our emergence from Chapter 11
reorganization in accordance with SOP 90-7. For financial reporting
purposes, the effects of the consummation of the Plan as well as adjustments
for fresh-start reporting have been recorded in our consolidated financial
statements as of January 1, 2003.
Pursuant to fresh-start reporting, a new entity was deemed created for
financial reporting purposes and the carrying value of assets and
liabilities was adjusted. The carrying value of assets was adjusted to their
reorganization value that was equivalent to their estimated fair value. The
carrying value of liabilities was adjusted to their present value.
Consolidated revenues increased by 10.5% to $875.9 million in the three
months ended March 31, 2003, as compared to $792.9 million in the three
months ended March 31, 2002. Consolidated revenues in UK pounds decreased by
1.7% to GBP546.5 million from GBP556.1 million.
In the three months ended March 31, 2003 and 2002, the United Kingdom
accounted for 96.8% and 97.5%, respectively, and Ireland accounted for 3.2%
and 2.5%, respectively, of total consolidated revenues.
Consolidated revenues in dollars and UK pounds were comprised of the
following:
Three Months Ended
March 31,
-------------------
2003 2002
--------- --------
(in millions)
Consumer $580.3 $516.2
Business 120.2 118.3
Broadcast 103.1 91.8
Carriers 44.2 47.1
Ireland 28.1 19.5
-------------------
Total Revenues $875.9 $792.9
===================
Consumer GBP362.1 GBP362.0
Business 75.0 83.0
Broadcast 64.3 64.4
Carriers 27.6 33.0
Ireland 17.5 13.7
-------------------
Total Revenues GBP546.5 GBP556.1
===================
In the three months ended March 31, 2003 and 2002, consumer
telecommunications and television revenues were 66.3% and 65.1%,
respectively, business telecommunications revenues were 13.7% and 14.9%,
respectively, broadcast transmission and other revenues were 11.8% and
11.6%, respectively, carriers revenues were 5.0% and 5.9%, respectively, and
Ireland revenues were 3.2% and 2.5%, respectively, of total consolidated
revenues.
Consumer telecommunications and television revenues increased by 12.4% to
$580.3 million from $516.2 million as a result of changes in foreign
currency exchange rates. These revenues in UK pounds increased by less than
1.0% to GBP362.1 million from GBP362.0 million. Consumer telecommunications
and television revenues were effectively unchanged reflecting the decline in
the customer base due to disconnects, which was offset by an increase in
broadband Internet services, the impact of price increases and growth in our
wholesale Internet services business.
Business telecommunications revenues increased by 1.6% to $120.2 million
from $118.3 million as a result of changes in foreign currency exchange
rates. These revenues in UK pounds decreased by 9.6% to GBP75.0 million from
GBP83.0 million. Business telecommunications revenues decreased principally
as a result of uncertainties arising from our Chapter 11 reorganization and
the general climate for competitive telecoms service providers.
Broadcast transmission and other revenues increased by 12.3% to $103.1
million from $91.8 million as a result of changes in foreign currency
exchange rates. These revenues in UK pounds decreased by less than 1.0% to
GBP64.3 million from GBP64.4 million due to modest increases in site sharing
and public safety revenues offset by modest decreases in other revenues.
Carriers revenues decreased 6.2% to $44.2 million from $47.1 million. These
revenues in UK pounds decreased by 16.4% to GBP27.6 million from GBP33.0
million. The primary reason for this decline was the recognition of GBP7.1
million ($10.1 million) of deferred revenue in the three months ended March
31, 2002 related to the termination of a long-term contract upon the
financial distress of one of the division's customers.
NTL Ireland revenues increased 44.1% to $28.1 million from $19.5 million.
These revenues in UK pounds increased 27.7% to GBP17.5 million from GBP13.7
million. The primary reasons for the increase were growth in digital
television customers, a price increase that became effective in January 2003
and an increase in business sector revenues.
Operating expenses (including network expenses) increased 7.3% to $408.6
million from $380.9 million as a result of changes in foreign currency
exchange rates. These expenses in UK pounds decreased 4.5% to GBP255.0
million from GBP267.1 million primarily as a result of decreases in
telephony interconnection and television programming costs. Operating
expenses as a percentage of revenues declined to 46.6% in 2003 from 48.0% in
2002.
Selling, general and administrative expenses increased 12.8% to $216.5
million from $192.0 million primarily as a result of changes in foreign
currency exchange rates. These expenses in UK pounds increased less than
1.0% to GBP135.1 million from GBP134.7 million. Selling, general and
administrative expenses as a percentage of revenues increased to 24.7% in
2003 from 24.2% in 2002. The small change in these expenses in 2003 as
compared to 2002 reflects an increase in marketing and selling costs offset
by various cost savings efforts including restructurings announced in the
fourth quarter of 2002.
Other charges of $2.9 million and $1.6 million in the three months ended
March 31, 2003 and 2002, respectively, were restructuring charges for
employee severance and related costs. These costs were incurred for
approximately 125 employees and approximately 55 employees in the three
months ended March 31, 2003 and 2002, respectively.
Depreciation and amortization decreased to $309.0 million from $337.4
million. Depreciation expense decreased to $259.2 million from $322.5
million primarily due to the $2,498.0 million decrease in the carrying value
of fixed assets subject to depreciation effective January 1, 2003 due to the
adoption of fresh-start reporting. Amortization expense increased to $49.8
million from $14.9 million due to the $1,222.6 million increase in customer
lists that are subject to amortization effective January 1, 2003 due to the
adoption of fresh-start reporting.
Interest expense decreased to $176.5 million from $324.8 million primarily
as a result of the $9,486.9 million cancellation of debt on January 10, 2003
in connection with our emergence from Chapter 11 reorganization. Interest of
$220.7 million and $199.7 million was paid in cash in the three months ended
March 31, 2003 and 2002, respectively.
Recapitalization expense was $32.1 million in the three months ended March
31, 2002. Recapitalization expense includes all transactions incurred as a
result of our Chapter 11 reorganization. Recapitalization expense in the
three months ended March 31, 2002 included $8.8 million for employee
retention related to substantially all of our UK employees and $23.3 million
for financial advisor, legal, accounting and consulting costs.
Foreign currency transaction losses were $3.4 million and $5.0 million in
the three months ended March 31, 2003 and 2002, respectively. These losses
in 2003 are primarily due to the effect of changes in exchange rates on U.S.
dollar denominated debt of our subsidiaries Diamond Holdings Limited and NTL
(Triangle) LLC whose functional currency is not the U.S. dollar. Our results
of operations will continue to be affected by foreign exchange rate
fluctuations.
Income tax (expense) benefit was expense of $16.2 million in the three
months ended March 31, 2003 and benefit of $11.3 million in the three months
ended March 31, 2002. The 2003 expense is composed of $10.5 million U.S.
income tax expense and $5.7 million of deferred foreign income tax expense.
None of the 2003 income tax is expected to be payable in the next year.
Net loss was $254.4 million in the three months ended March 31, 2003 and
$459.9 million in the three months ended March 31, 2002. This change was the
result of the factors discussed above, particularly the reduction in
interest expense of $148.3 million in 2003.
Basic and diluted net loss per common share in the three months ended March
31, 2002 is computed as if the 50.5 million shares issued in connection with
our emergence from Chapter 11 reorganization on January 10, 2003 were
outstanding as of January 1, 2002.
To See Reconciliations:
http://bankrupt.com/misc/Reconciliations.htm
To See Appendix:
http://bankrupt.com/misc/APPENDIX.htm
CONTACT: NTL INCORPORATED
In the US:
Investor Relations:
Tamar Gerber
Phone: (+1) 212 906 8451
E-mail: investor_relations@ntli.com
or
In the UK:
Investor Relations:
Virginia Ramsden
Phone: +44 (0) 207 746 6826
E-mail: investorrelations@ntl.com
BUCHANAN COMMUNICATIONS
Richard Oldworth, Mark Edwards or Jeremy Garcia
Phone: +44 (0)20 7466 5000
PO NA NA GROUP: Joint Administrators Offer Businesses for Sale
--------------------------------------------------------------
Po Na Na Group Plc
Po Na Na Trading Limited
Po Na Na (Hammersmith) Limited
PNN Properties Limited
DP Leisure Group Limited
(All in Administration)
(The Po Na Na Group of Companies)
The Joint Administrators, David Thurgood, Malcolm Shierson and Martin Ellis
offer for sale as a going concern the business and assets of the Po Na Na
Group of Companies.
-- AIM listed Bar and nightclub operator
-- core estate comprises 35 leasehold units throughout the UK
-- circa GBP30 million turnover driven by the established Po Na Na and Fez
brands
-- proven business model generating substantial unit contribution
-- clear growth potential: offers invited for the entire estate or
individual units.
CONTACT: GRANT THORNTON
UK member Grant Thornton International
E-mail: liz.a.watts@gtuk.com
Homepage: http://www.grant-thornton.co.uk
ROYAL DOULTON: Shareholders Okay Sale of Part of Baddeley Green
---------------------------------------------------------------
Royal Doulton announces that at an Extraordinary General Meeting of the
Company held Monday, shareholders approved the sale of part of the Baddeley
Green Site to Redrow Homes (West Midlands) Plc. All conditions to the sale
have now been satisfied and completion is expected to take place shortly.
*****
In February, Royal Doulton reported operating loss (before exceptionals) of
GBP14.7 million for 2002, which is up from operating loss (before
exceptionals) of GBP12.4 million in 2001.
It's group Chief Executive, Wayne Nubeen, said: "2002 has been a tough year
for the business, with major restructuring and closures, and a deteriorating
market background..."
During 2002 the company completed the closure of factories at Baddeley green
and Beswick, reducing the number of group of factories to three. It also
started reducing the number of group retail outlets.
CONTACT: ROYAL DOULTON
Sir Henry Doulton House
Forge Lane, Etruria
Stoke-on-Trent
ST1 5NN
Phone: (01782) 404040
Telex: 36502
Fax: (01782) 404000
E-mail : ENQUIRIES@royal-doulton.com
Contact:
Wayne Nutbeen, Group Chief Executive Officer
Phone: 01782 404040
Geoff Martin, Group Finance Director
Phone: 01782 404040
Lesley Allan
Hudson Sandler
Phone: 0207 796 4133
ROYAL DOULTON: Preliminary Announcement of Results for 2002
-----------------------------------------------------------
Summary
-- Group turnover GBP138m (2001: GBP166m), with like for like sales down 8%
year on year;
-- Gross margin (before exceptionals) 42.8% (2001: 43.8%)
-- Operating costs (before exceptionals) down 13% to GBP73.8m (2001:
GBP85.1m)
-- Operating loss (before exceptionals) GBP14.7m (2001: GBP12.4m loss)
-- Net exceptional items of GBP9.0m (excluding finance charges), consisting
of GBP13.2m of exceptional charges, partially offset by GBP4.2m of
exceptional credits;
-- Stocks reduced by 21% to GBP34.3m
-- Net indebtedness at year end GBP11.0m, representing balance sheet gearing
of 33% (2001: GBP24.3m - 58%)
-- Group headcount reduced by 23% to 3,600.
Group Chief Executive, Wayne Nutbeen, commented
"2002 has been a tough year for the business, with major restructuring and
closures, and a deteriorating market background, but nevertheless results
for the year were in line with expectations at the time of the rights issue.
Despite an uncertain economic outlook, we look forward to a material
improvement in performance in 2003, as the benefit of measures taken starts
to flow, but it is too early to say whether the group will return to profit
during the course of this year"
Preliminary results for the year to 31 December 2002
At the beginning of 2002, the group set out the second stage of a detailed
plan designed to complete the group's recovery, along with an underwritten
rights issue which raised GBP18.7m (net of costs) to fund the necessary
restructuring measures. Despite testing trading conditions and continuing
pressure on sales and margins, the trading results for 2002 were in line
with expectations at the time of the rights issue. Net debt at the year end
was lower than expected, primarily as a result of being ahead of timetable
on asset disposals and working capital reductions.
During 2002 the transfer of the Royal Albert branded production to the
group's factory in Indonesia was successfully completed and the purchase of
most of the minority interest in the Indonesian subsidiary successfully
carried out, increasing Royal Doulton's interest to 95%; the closure of
factories at Baddeley Green and Beswick were completed, reducing the number
of group factories to three; a start was made in reducing the number of
group retail outlets; costs were reduced at a faster rate than previously; a
substantial sum was realised from the disposal of surplus assets in the UK
and North America; and stocks, net working capital and debt were all
markedly reduced. The benefits of all these measures are expected to
contribute to an improvement in performance in 2003.
Results
In the year to 31 December 2002, group sales totalled GBP138m, a reduction
of 17% over last year, reflecting a planned withdrawal from certain products
and sales channels and a like for like decline in sales of 8%. Gross margin
was 42.8% for the year as a whole, compared with 43.8% in 2001, reflecting
increasingly difficult market conditions as the year progressed and stock
clearance. Group operating costs (excluding exceptionals) were reduced by
13% in 2002, following on from a 12% fall in 2001. Consequent to the
measures taken during 2002, costs are again expected to fall significantly
in 2003.
The group operating loss, before exceptional items, was GBP14.7m.
Exceptional charges totalled GBP13.2m, of which GBP11.5m related to
redundancies, GBP1.6m to lease terminations, and the remainder to other
minor items. This was partially offset by exceptional credits of GBP4.2m,
mainly profits on disposal of surplus assets. Net exceptional charges
therefore amounted to GBP9.0m, resulting in a loss before interest of
GBP23.7m.
Progress on restructuring
At the end of 1998, Royal Doulton operated 11 factories with all but one in
the UK, and had a total workforce of over 7,000, with high fixed costs and
stocks, uncompetitive pricing and a wholly vertically integrated business.
By the end of 2003 the group expects; less than 30% of its products to be
manufactured in the UK with the balance being split between sourced product
and the group's lower cost factory in Indonesia; a much smaller workforce; a
higher proportion of variable cost; competitive pricing and a much more
responsive and flexible business structure. Substantial progress was made
towards these objectives in 2002.
The transfer of Royal Albert production from the UK to Indonesia was
successfully completed in the last quarter of the year, and consequently the
Baddeley Green factory was closed by the year end. The decision to outsource
certain smaller sculptural ranges resulted in the closure of the Beswick
factory at the year end. Average cost of production is now 20% lower than a
year ago. The Regent factory is also in the process of closing. In the
single remaining UK site, Nile Street, approximately GBP0.4m was invested in
new manufacturing technology. The brownfield section of the site at Baddeley
Green has since been sold for housing development for up to GBP6.5m in cash,
generating a profit on disposal of approximately GBP2.5m, which will be
accounted for in 2003.
The warehouse in New Jersey, USA was closed, and operations outsourced,
achieving major reductions in costs. This, and the Canadian warehouse were
sold during 2002 for a total of GBP4.4m in cash, generating a profit on
disposal of GBP2.1m.
A start was made on the planned reduction in the number of under-performing
retail outlets. During the year 42 units were shut, reducing the total to
356 worldwide.
The total workforce at the beginning of the year was approximately 4,700.
During the year the workforce was reduced by 23% to approximately 3,600.
Sales and Marketing
The climate for sales deteriorated during the year, with falls in most
markets, and like for like sales, having been 6% down in the first half,
were 8% down for the year as a whole.
Despite the more difficult climate, sales of the Royal Albert brand grew by
value and by volume. The benefits of lower pricing, and the introduction of
giftware contributed to this. The Royal Doulton and Minton brands both
experienced a fall in sales. As planned, the greatest decline was in non
group brands.
A new range of contemporary glassware was launched, as was the Provence
range of casual tableware to follow the substantial success of the Carmina
range, all at competitive price points. The prestige limited editions and
annual collectable figures did well. Royal Doulton classic bone tableware
had a poor year, but the pricing of group products in this category is
expected to become more competitive in 2003.
Financial position
The group commenced the year with net assets of GBP42.9m and net debt of
GBP24.3m, and balance sheet gearing of 58%. Rights issue proceeds amounted
to GBP18.7m (after expenses) and new three year bank facilities were
successfully completed consequent to the raising of fresh capital. The
following table summarises the cash inflows and outflows and the change in
net debt during 2002.
GBPM GBPM
Opening net debt (24.3)
Rights issue 18.7
Cash outflow from trading (9.9)
Working capital reduction 6.0 (3.9)
Cash outflow from
restructuring costs (6.2)
Disposal of surplus assets 9.5 3.3
Purchase of minority
interest (inc. debt) (2.1)
Capital expenditure (2.5) (4.6)
Interest, currency and other (0.2)
Closing net debt (11.0)
Pensions
Since April 1999, all pensionable service in the group in the UK, and the
substantial majority overseas, has been pensionable on a money purchase
basis only. The group has excellent control over the growth in liabilities
in relation to service prior to that date, which was on a defined benefit
basis. At 31 December 2002, on an MFR basis, the assets of the main UK plan
covered 101% of liabilities.
As reported previously, assessed on an FRS17 basis, the pension schemes show
a deficit. Had this been reflected in the group balance sheet at 31 December
2002, there would have been a net reduction in net assets of GBP14.7m.
Equities account for under one third of pension scheme assets. The group
continues to make additional contributions to the schemes with a view to
reducing the deficit over time.
Dividends
The Directors do not intend to pay or recommend any interim or final
dividends until the group returns to a position where net free cashflow is
being generated on a consistent basis and the group's financial position
allows such payments to be combined with a continuing reduction in net
indebtedness.
Outlook
Sales in the first few weeks of the current financial year have continued
the pattern established in the second half of last year. The sales climate
remains challenging and overcapacity in the industry continues to exert
pressure on margins. Conversely, there are modestly encouraging signs in
those product categories where lower costs have enabled the group to achieve
more competitive price points whilst maintaining margins.
The weakening economic background and the uncertain international outlook
are likely to result in lower demand from the tabletop and giftware markets
in the immediate future. Notwithstanding this, we expect a material
improvement in performance during 2003 as the benefit of measures already
taken starts to show through in results and cost reductions continue,
although it is too early in the year to predict whether the group will
return to profit during the course of this year.
Hamish Grossart
Chairman
Consolidated Profit & Loss Account
For the year ended 31 December 2002
2002 2001)
GBPm GBPm
Turnover 138.0 165.8
Cost of Sales
- before exceptional items (78.9) (93.1)
- exceptional items (8.2) (5.2)
Total Cost of Sales (87.1) (98.3)
Gross Profit
- before exceptional items 59.1 72.7
- after exceptional items 50.9 67.5
Net operating expenses
- before exceptional items (73.8) (85.1)
- exceptional items (5.0) (0.8)
Total operating expenses (78.8) (85.9)
Operating loss
- before exceptional items (14.7) (12.4)
- exceptional items (13.2) (6.0)
Total Operating Loss (27.9) (18.4)
Profit/(loss) on disposal - exceptional
- (0.9)
Profit on sale of fixed assets 4.2 -
Loss on ordinary activities before interest
- before exceptional items (14.7) (12.4)
- exceptional items (9.0) (6.9)
Total loss on ordinary activities before interest
(23.7) (19.3)
Net interest payable and similar charges
- before exceptional items (1.1) (1.9)
- exceptional items (0.4) -
Total net interest payable and similar charges
(1.5) (1.9)
Loss on ordinary activities before taxation
- before exceptional items (15.8) (14.3)
- exceptional items (9.4) (6.9)
Total loss on ordinary activities before taxation
(25.2) (21.2)
Taxation (0.2) (0.8)
Loss on ordinary activities after taxation
(25.4) (22.0)
Equity minority interests (0.2) (0.4)
Loss for the financial year (25.6) (22.4)
Dividends - -
Loss absorbed for the year (25.6) (22.4)
Loss per share
- before exceptional items (5.6p) (13.0p)
- after exceptional items (8.9p) (18.7p)
Diluted loss per share
- before exceptional items (5.6p) (13.0p)
- after exceptional items (8.9p) (18.7p)
The above results are derived from continuing operations. The results of the
Caithness Glass operation, disposed in 2001, have not been separately
disclosed as they are not material to the results.
To see financials: http://bankrupt.com/misc/ROYAL_DOULTON.htm
CONACT: ROYAL DOULTON
Wayne Nutbeen, Group Chief Executive Officer
Phone: 01782 404040
Geoff Martin, Group Finance Director
Phone: 01782 404040
Lesley Allan
Hudson Sandler
Phone: 0207 796 4133
ROYAL DOULTON: Issues Chairman's Address at General Meeting
-----------------------------------------------------------
The following remarks were made by the Chairman of Royal Doulton, Hamish
Grossart, at today's Annual General Meeting:
"With the year end results we reported firstly, that the second half of last
year had seen a weakening of demand and pressure on margins from industry
overcapacity worldwide, and secondly that this pattern had continued into
the first few weeks of the current financial year.
For the first four months of this year like for like sales were some 8%
lower than the corresponding period last year and overall sales 14% lower.
As a result of continued pricing pressure in the marketplace gross margin
was approximately 1 1/2 points lower. The substantial overhead reductions
which were evident in last year's results have continued Overheads for the
first four months were over £4m lower (16%) than the same period last year.
As a result, operating performance to the end of April is ahead of last
year, although the group continued to make losses. Working capital has
continued to reduce, and the group's debt levels remain below the Board's
expectations.
Looking forward to the rest of the year, the sales climate is expected to
remain challenging and pressure on margins is likely to continue. However,
the benefit of the cost reductions will continue and notwithstanding the
weaker economic background, the Board currently expects useful progress to
be made on last year."
CONTACT: ROYAL DOULTON
Wayne Nutbeen, Chief Executive
Phone: 01782 404040
Geoff Martin, Finance Director
ROYAL & SUNALLIANCE: Shareholders Show Opposition to Pay Package
----------------------------------------------------------------
More than a third Royal & Sun Alliance shareholders opposed the executive
pay package of the struggling insurer during the firm's annual general
meeting.
35% of proxy voters opposed or abstained from supporting the remuneration
package in what is considered "one of the largest corporate governance
rebellions of the AGM season," according to the Financial Times.
The shareholders are particularly opposed to the GBP2.5 million- (US$4
million) pay-off for Bob Mendelson, the company's former chief executive.
He was known to have repeatedly missed performance targets.
Shares in Royal and SunAlliance have fallen almost 60% in the past 12
months. In November, the insurer decided to raise capital to ensure
continuance of its operation.
They were also against the award of share options worth 5 times base salary
to Andy Haste, new chief executive, and a GBP250,000 retention bonus paid to
Julian Hance, finance director, as well as the 9.6% rise in total board
remuneration last year.
Geoffrey Lloyd, another shareholder, told the Financial Times: "We are
increasingly concerned about enormous payments to people who do not deserve
it. It is quite indefensible and borders on the outrageous.
TRINITY MIRROR: Appoints Ellis Watson as New General Manager
------------------------------------------------------------
Trinity Mirror has announced the appointment of Ellis Watson to the new post
of General Manager, MGN Ltd.
Reporting to Chief Executive Sly Bailey, Ellis will take direct
responsibility for MGN's three principal commercial functions: advertising,
circulation and marketing. He will also be a member of the Executive
Committee of the Group.
Ellis, 35, is currently Managing Director of Celador International, which
licenses television formats on and off air around the world. The most well
known is "Who Wants To Be A Millionaire?", the world's most successful TV
format.
Before joining Celador Ellis spent ten years with News Corporation on
commercial operations, most notably as Marketing Director for News Group,
which publishes the Sun and News of the World.
Editors of MGN's national newspapers - Daily Mirror, Sunday Mirror and The
People - will continue to report to Sly Bailey.
"The new role is at the heart of an improved management structure for our
national newspapers. Ellis has enormous commercial experience in media and
in particular national newspapers. He will bring a renewed commercial focus
and vigour to the operation. I am delighted to welcome Ellis to our team,"
said Sly Bailey.
Ellis will take up his appointment on June 5, 2003.
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter -- Europe is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc.,
Washington, DC USA. Kimberly MacAdam, Larri-Nil Veloso, Ma. Cristina Canson,
and Laedevee Gonzales, Editors.
Copyright 2003. All rights reserved. ISSN 1529-2754.
This material is copyrighted and any commercial use, resale or publication
in any form (including e-mail forwarding, electronic re-mailing and
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publishers.
Information contained herein is obtained from sources believed to be
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The TCR Europe subscription rate is US$575 per half-year, delivered via
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the term of the initial subscription or balance thereof are US$25 each. For
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