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ATM published the results for the first half of 2014
28.08.2014

ATM S.A. presented the financial statement for the first half of 2014. The revenue on sales accomplished in this period (ab. 62 million zlotys excluding the OST 112 contract) and the margin on product sales (ab. 36.5 million zlotys) were 3% lower than in the first half of 2013, when the EBITDA profit remained on a similar level year-on-year (ab. 22 million zlotys).

Warszawa, 28 August 2014 The Company accomplished the profit before tax amounting ab. 8.5 million zlotys (drop by 1% year-on-year) and the net profit on continued operations on the level of above 6.5 million zlotys (drop by 18.5% year-on-year).

On one hand, in the next consecutive year ATM consistently executed the assumptions concerning sales of colocation services. On the other hand both the quarterly, as well as the semi-annual results were affected by adverse market changes concerning services in data communication and the Internet access. As a result, the profit accomplished on line sales (without subscription) was lower than anticipated. The total results generated by the Company, and especially its annual growth, did not meet the Management expectations.

The Company maintained the high level of viability on operations (ab. 60% of margin on sales, ab. 35% of margin on the EBITDA profit). The share of the cycle income (on subscriptions) in the total of the ATM income was ab. 94% in the first half of 2014, slightly exceeding the mean value from the previous periods (ab. 90%). The still rapidly growing portfolio of serviced customers is worth noticing for the end of the second quarter their number exceeded 1700 (over 20% year-on-year).

Data center services remain the fundamental service category for the ATM development. In the first half of this year the profit on colocations constituted almost a half of the total income of ATM (excluding the OST 112 contract) and it generated ab. 2/3 of the total subscription margin. Of the total amount over 30.5 million zlotys of income on the data center services, almost 99% constituted the subscription type income in the previous half of the year. The growth dynamics of subscriptions in the first half of 2014 was only 13.5% year-on-year, which was first of all caused by substantial limiting of cooperation with one of the large customers in colocation services (due to consolidation processes in the customers branch) the income on data center services from this customer began diminishing in the end of 2013 and it diminished further on in the first half of 2014. This factor will not appear any more in the second half of 2014. In spite of this, in the second quarter of 2014, the largest quarterly sale of colocation services was accomplished, higher than in the so far record breaking fourth quarter of 2013, which means the return to the path of income growth in this service category.

The growth of sales results both from the sales to large customers, as well as consistent increase of growth of medium and small customer number year-on-year the number of colocation service customers increased by 30%.

The above tendency was reflected in the recipient structure admittedly, still almost half of the income on sales of colocation services is to be attributed to the recipients from telecommunications and finance sectors, nevertheless more and more significant share reaching 26% is noted by the customers from other branches, primarily the representatives of the small and medium business segment.

In the end of the second quarter of this year the first stage of the newest ATMAN Data Center building was commissioned F4 (targeted for ab. 1000 sq m net of colocation area). Also in the previous quarter construction of the next CD ATMAN building was initiated F5 (ab. 1400 sq m net of colocation area), which is planned to be completed in the first half of 2015.

Income on sales of communication services was substantially lower in the first half of this year than in the analogous period of the past year (drop by 17% year-on-year to 20.2 million zlotys). It results, primarily, from the afore mentioned exceptionally low, non-subscription income on sales of new links. The second important cause of this phenomenon are difficulties in breaking downslide tendency on the area of subscription income (drop of unit prices) additionally in this field, the Company felt decrease of cooperation with one of the large customers in colocation services (mentioned above while presenting the results of the data center services).

ATM tries to react against the afore mentioned downslide trend concerning subscriptions by consistent increasing of locations of business links to the ATMAN network in the first half of this year it grew by ab. 10%, while in the end of the second quarter of 2014 it was higher by 20% in year-on-year view. In more distant projections, this tendency should stay, allowing for generation of larger and larger income from business customers (other than telecommunications operators) who have their link endings at business locations connected to the network of the Company. However, still over ab. 70% of income in the field of optical fibers and data communication comes from the telecommunications sector and this income can be exposed to overall weakness of this sector in the quarters to follow.

The result of income on sales of the Internet access services in the second quarter was close to this of the first quarter of this year (ab. 4.5 million zlotys; -1.5% quarter-on-quarter), which translated to ab. 9 million zlotys of income since the beginning of 2014 (4% less than a year before). Thus, still there is a side trend noticeable in this category of services the income remains more or less on the same level with unit price fall, first of all due to servicing of growing number of smaller customers. It is reflected in the structure of customers, where already over 40% of income comes from the remaining customers and the telecommunications sector provides only 1/3 of the income. In the ned of the last half-year the number of invoiced customers increased on this area by ab. 18% year-on-year.



 
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