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ATM publishes its results for the first quarter of 2014

ATM S.A. has presented its financial report for the first quarter of 2014. According to the companys management board, the results attained in the past quarter were not fully satisfactory. The reason for this was the lower than expected revenue from connection sales.

Warsaw, 14 May 2014 Sales (excluding the OST 112 contract) totalled 30.3 million Polish zlotys (PLN), the margin on sales amounted to PLN 18.1m, and the EBITDA figure was PLN 10.8m. These figures are several percent lower than those for the first quarter of 2013. This also means that the company achieved a lower operating profit than in the corresponding period of last year. However there was a rise over the previous year in the pre-tax profit (PLN 4.5m, up by 16%) and the net profit (PLN 3.7m, up by 22%).

The company maintained a high level of operating profitability, with a margin on sales of around 60%, and an EBITDA margin of 35%. In view of the above-mentioned low value of revenue obtained from delivering new connections and from installation fees, the proportion of ATMs total revenue coming from subscriptions reached the exceptionally high level of 97% in the first quarter of 2014 (historically it has stood at around 90%).

As is traditional, the greatest contribution to ATMs revenue and margin in the last quarter came from data center services, which generated sales of approximately PLN 15m (up by 13.5% year on year). The margin on subscription sales of colocation services accounted for more than 65% of ATMs total subscription margin in the first quarter of the year. The rate of growth in revenue from colocation services would have been noticeably higher had it not been for the negative effect of reduction in the services provided to one large data center client (due to consolidation in the clients industry). Another reason for the slowing of growth was the exceptionally low level of revenue from installation services, particularly in comparison with the fourth quarter of 2013. Nonetheless the company is currently engaged in advanced negotiations with a large number of potential clients, including some interested in taking advantage of the services of the new server rooms that are currently being finished this is expected to lead to contracts being signed in the remaining quarters of this year.

Very rapid growth is continuing in a subcategory of data center services the leasing of ATMAN EcoSerwer dedicated servers. In the first quarter of this year, revenue from this business increased by 2.5 times (year on year), and accounted for approximately 5% of ATMs total revenue (excluding the OST 112 contract). Dedicated server leasing allows clients to make use of servers without the need to invest in hardware, and is paid for in the form of subscriptions.

Sales of data transmission services were markedly lower in the first quarter of this year than in the corresponding period of 2013 (they fell by 21% year on year, to PLN 9.6m). As mentioned above, this is a result of the exceptionally low revenue from new connection sales. The main reasons for this are that some contracts in effect in previous years have come to an end, and that negotiations are still continuing concerning potential new contracts for the provision of fiber-optic cables for telecommunications operators, including to base stations. The delays in this area may be related to the relatively weak results reported by the large operators, as well as turbulence connected with the auctions for LTE frequencies.

A positive factor is the companys reporting of quarterly growth (by 0.5% quarter on quarter) in subscription revenue from transmission services. This is a result of the constantly growing number of business locations connected to the ATMAN network in 2013 this number increased by more than 40%, and in the first quarter of this year it grew by a further 7%. This trend can be expected to continue in the longer term, enabling increasing amounts of revenue to be generated from business customers (outside the category of telecommunications operators).

Growth in interest in ATMs services among smaller customers can also be observed in the field of Internet access services. This meant that, in the first quarter of this year, the decline in revenue from such services that had continued since 2011 was checked the amount of revenue generated was PLN 4.5m, almost the same as the figure for the final quarter of last year. Also encouraging is a further increase in the number of customers being billed, by 4% quarter on quarter.

ATM S.A. is a Polish public company (WSE: ATM) providing innovative ICT solutions for business since 1991. Under the brands of ATMAN and Thinx Poland the company offers telecommunications services based on its own fiber networks and three data centers in Poland, with 10,600 sq m (ca. 114,100 sq ft) of state-of-the-art colocation space. Key elements of ATMs offer include: colocation and hosting, broadband data transmission and Internet access. In particular, carriers, Internet portals, traditional media and financial institutions may be found among the receivers of ATM services.
The company is the only Polish operator present in all four of Europe's largest interconnect nodes: AMS-IX Amsterdam, DE-CIX Frankfurt, LINX London and MSK-IX Moscow.
More information at www.atman.eu and www.thinx.pl.

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