Jazztel plc Announces First Quarter 2001 Results
Revenue Grows 108%
Apr 26, 2001, 01:00 ET from Jazztel p.l.c.
MADRID, Spain, April 26 /PRNewswire/ -- Jazztel p.l.c. (Nasdaq: JAZZ),
(Easdaq: 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 ended 31st March 2001. Amounts are presented in
Euros and in accordance with US GAAP.
Highlights of the Quarter
Financial
* First quarter revenues grew to Euro 46.6 million, an increase of 30.5%
from the fourth quarter of 2000 and 108% over the same period last year.
* Gross margin improved to positive Euro 7.6 million, an increase of 35.7%
over the fourth quarter and compared to the negative Euro 0.7 over the
first period last year.
* Adjusted EBITDA, improved from negative Euro 34.9 million in the fourth
quarter of 2000 to negative Euro 26.8 million in the first quarter
of 2001. As a percentage of revenue, adjusted EBITDA improved from
negative 88.5% in the fourth quarter of 2000, to negative 57.5% in the
first quarter of 2001. EBITDA break-even continues to be expected for
the second half of 2002.
* In February, Jazztel sold the remaining stake of its T-Online holdings,
received in the sale of Yacom. Total proceeds of this transaction
amounted to Euro 281 million.
* In April 2001, Jazztel entered into a Euro 200 million credit facility
which gives the Company over Euro 840(1) million of available cash and
secures the total financing of Jazztel's business plan until it is cash
flow positive.
Operational
* Total traffic on the Jazztel network rose to 747 million minutes in the
first quarter of 2001, an increase of 24.9% compared to the last period
in 2000 and a 184% increase over the same period of 2000.
* Connection of 362 new sites to Jazztel's fiber network, increasing the
number of provisioned sites to 943, a growth of 62.3% from the previous
quarter, exceeding initial expectations.
* Signing up of 528 new direct access customers bringing the total of
contracted on net customers to 1,786.
* Expansion of the local area network to 2,092 km, an increase of 361 km
from the previous quarter.
* Completion of the Spanish backbone through the deployment of the
Northwest ring with 1,496 km of additional operational fiber. Total
backbone now comprises 5,733 km.
* Agreement with ACEVAS (Spanish Association of Volkswagen, Audi and
Skoda's car dealerships) in order to provide fixed telephony and data
transmission services to the 250 affiliated car dealerships throughout
Spain.
(1) Includes high yield bonds, restricted cash for high yield interest
payments, full drawdown of the Euro 175 million credit facility and
Euro 70 million of vendor financing under negotiation.
Other significant events to date
In January, Jazztel closed the acquisition of 87.2% of Adatel, a
Madrid-based telecom's systems integrator for large and medium-sized
businesses in Spain.
In April, Jazztel closed the acquisition of 99,93% of Centro de Calculo
Sabadell (CCS), a developer and integrator of information systems for
businesses, and completed its new management structure with the appointment of
Joaquim Molins as Chairman, Javier Cuesta as Vice-Chairman, Jordi Malapeira as
CEO and Josep Rof as COO. Joaquim Molins was also appointed board member of
Jazztel Plc.
Financial Statistics
Euro 1st 4th 1st 1st 4th
(Million) quarter quarter quarter quarter % quarter
2000 2000 2001 Growth % Growth
Revenues 22.4 35.7 46.6 108% 30.5%
Gross Margin (-0.7) 5.6 7.6 n.a. 35.7%
% of sales -3.1% 15.6% 16.3% n.a. n.a.
Adjusted
EBITDA (a) (-34.9) (-31.6) (-26.8) 23.2% -15.2%
% of sales -155.8% -88.5% -57.5% n.a. n.a.
Capex 59.5 100.0 54.2 -8.9% -45.8%
(a) Excludes impact of non-cash accounting charges for option assignments
of Euro 1.4 million in the first quarter of 2000, Euro 8.4 million in
the fourth quarter of 2000 and Euro 2.4 million in the first quarter
of 2001
Operational Statistics
1st 4th 1st 1st 4th
quarter quarter quarter quarter % quarter
2000 2000 2001 Growth % Growth
Network Deployment
Local access km
completed 580 1,731 2,092 260.7% 20.9%
Backbone km
completed 4,220 4,237 5,733 35.8% 35.3%
Direct Access
Direct access
human
resources 80 165 165* 106.3% 0%
Contracts
Signed 110 1,258 1,786 1,524% 42.0%
Customer sites
provisioned 30 581 943 3,043.3% 62.3%
Indirect Access
Number of
customers 487,300 694,000 708,763 45.4% 2.1%
Number of
lines 802,900 1,135,716 1,157,383 44.2% 1.9%
Internet & Value Added Services
Active Jazznet
customers 7,400 5,893 7,546 2% 28.1%
ADSL active
customers 52 467 594 1,042.3% 27.2%
Carrier Services
Traffic Termination
contracts 12 28 34 183.3% 21.4%
Wholesale capacity
contracts 6 17 18 200% 5.9%
Minutes of Traffic
(millions) 284 598 747 163% 24.9%
Headcount** 616 738 806 30.8% 9.2%
* Includes sales force (116) and technical staff (49)
** Excluding Adatel
Summary of Operations
The Jazztel Group had total revenues of Euro 46.6 million for the first
quarter of 2001, a growth of 30.5% from the Euro 35.7 million for the last
quarter of 2000. Gross margin was positive Euro 7.6 million in the first
quarter of 2001, a growth of 35.7% from the Euro 5.6 million for the last
quarter. Adjusted EBITDA losses for the first quarter of 2001 have improved
to negative Euro 26.8 million, compared to negative Euro 31.6 million for the
last quarter of year 2000. Adjusted EBITDA as a percentage of sales improved
to negative 57.5% for the first quarter of 2001 up from negative 88.5% in the
last quarter of year 2000.
Antonio Carro, Chief Executive Officer of Jazztel, declared: "The first
quarter of year 2001 has seen a steady growth of our business as we have
continued executing successfully on our Strategic Plan. In fact, we are
seeing significantly less competitive pressure in nearly all our business
lines due to difficult financial market conditions, which gives us the chance
to extend our first mover advantage. This factor, paired with the fact that
we have a fully funded business plan, continues to reinforce our competitive
position as the leading alternative provider of high bandwidth data, Internet
and voice services for small and medium size businesses across Spain and
Portugal. The successful signing of new large contracts to offer broadband
telecommunications services to sectorial associations and the continuing
buildout of our local area network coupled with the excellent pace of new
direct customers signed make us feel very confident about the future."
Regarding the financial evolution of the company, Antonio Carro added:
"This first quarter has confirmed the strong growth of our revenues, while at
the same time improving our operating profitability. The continuing positive
evolution of the Gross Margin for the quarter, together with tight control of
the SG&A expenses, allow us to be confident on reaching positive EBITDA in the
second half of 2002 as we have planned."
Major Operational Achievements
In the first quarter of 2001 Jazztel has continued to implement its direct
access strategy. The Group had signed by the end of the quarter a total of
1,786 contracts for direct service provisioning and had connected 943 customer
sites directly to its network, which is ahead of the initial expectations.
Jazztel has obtained excellent results at signing new large clients including
direct access contracts with Ernst & Young Cap Gemini, Zara and Caixa Galicia.
Jazztel has also started the connection of clients as part of its agreement
with ASCER announced in January 2001. At the same time, it has continued
signing important direct access agreements with business associations.
Recently, Jazztel signed an agreement with ACEVAS (Spanish Association of
Volkswagen, Audi and Skoda's car dealership) to provide broadband services to
their 250 affiliated car dealerships throughout Spain.
Antonio Carro commented on these developments: "We are very satisfied
with the evolution of direct access provisioning and the rapid growth of
direct connections. As we anticipated, the further integration of the
recently acquired Adatel is helping us to enhance our direct access service
capabilities and it will have an even greater impact in the near future.
Direct access is already becoming an important part of our revenue stream and
will increase steadily in the future."
As of March 31st 2001, the Group had built 2,092 local access km, a growth
of 260.7% over the km built by the end of the first quarter 2000. The Group
has 1,289 additional km with building permits granted. Jazztel had also
continued to submit applications for construction and had 1,605 additional km
submitted for municipal approval which gives Jazztel enough flexibility to
guarantee the construction of its planned network in 2001. Jazztel had
operational fibre in 15 of the largest Spanish cities and business parks and
continued to execute on its plans to complete its network rollout as rapidly
as possible.
The Group also completed the Spanish backbone through the deployment of
the Northwest ring and put in service 3 additional metropolitan area networks.
Antonio Carro commented: "We are quickly improving our ability to enter new
target markets with our own infrastructure. The completion of our Spanish
backbone and the entry into service of new metropolitan area networks gives us
confidence that we will continue to ramp up our provisioning rates in the
coming quarters."
1st 4th 1st 1st 4th
quarter quarter quarter quarter % quarter
2000 2000 2001 Growth % Growth
Km completed 580 1,731 2,092 260.7% 20.9%
Additional km
with building
permits or which
are under
construction 500 1,298 1,289 157.8% -0.7%
Additional km
with application
for permits
submitted 1,450 1,727 1,605 10.7% -7.1%
Metropolitan Areas
Operational 0 13 16 n.a. 23.1%
Financial Information
Miguel Salis, Chief Financial Officer of Jazztel, commented on the first
quarter 2001 results: "During this quarter we surpassed our initial
expectations. We have increased our revenues to Euro 46.6 million, from
Euro 35.7 million in the last quarter of 2000, a growth of 30.5%. We have
improved our gross margin, reaching Euro 7.6 million in the quarter, due to
the strong increase in the direct access revenues and the positive evolution
of our Internet and Indirect Access businesses. We are very focused on the
continuing growth of high value-added revenues and to efficiently increase our
network reach in order to meet our profitability targets."
Revenues for the quarter, ended on March 31st 2001, increased to
Euro 46.6 million, a growth of 30.5% from the Euro 35.7 million for last
quarter of 2000 and a 108% growth on the first quarter of 2000 revenues.
Direct access activities are becoming an important part of Jazztel's total
revenues and have reached Euro 8.1 million in the quarter, an increase of
107.7% compared to the previous quarter. Indirect access revenues grew 28.3%
from Euro 21.9 million in the fourth quarter of 2000 to Euro 28.1 million in
this first quarter of 2001. Carrier service revenues have represented a
slightly smaller part of our total revenues, reaching Euro 3.7 million in the
quarter.
Business Lines
Euro 1st 4th 1st 1st 4th
(Million) quarter quarter quarter quarter % quarter
2000 2000 2001 Growth % Growth
Indirect Access 17.2 21.9 28.1 63.4% 28.3%
Direct Access 0.1 3.9 8.1 n.s. 107.7%
Carrier services 1.0 4.3 3.7 270% -14%
Internet & Value
Added Services 4.0 5.4 6.5 62.5% 20.4%
Other Revenues 0 0.2 0.2 n.a. 0%
Total Revenues 22.4 35.7 46.6 108% 30.5%
Cost of Sales were Euro 39 million for the first quarter of 2001, or
83.7% of sales, improving from 103.1% of sales in the first quarter of 2000.
Gross margin in the first quarter of 2001 improved to Euro 7.6 million from
Euro 5.6 million in the last quarter of 2000.
Selling, General and Administrative (SG&A) expenses for the first quarter
of 2001 were Euro 34.4 million compared with Euro 37.2 million for the last
quarter of 2000. SG&A expenses as a percentage of sales, have seen a
significant improvement from 104.2% of sales for the fourth quarter of 2000 to
73.8% of sales in the first quarter of 2001, primarily as a consequence of
tighter controls on marketing, customer acquisition costs and call center
operation expenses.
Adjusted EBITDA losses in this quarter were negative Euro 26.8 million,
compared with negative Euro 31.6 million losses in the last quarter of 2000.
Adjusted EBITDA losses as a percentage of sales decreased from negative 88.5%
in the last quarter of 2000 to negative 57.5% in the first quarter of 2001.
This reflects the increase in gross margins and the tight control over SG&A
expenses.
Depreciation and Amortization Expense was Euro 12.3 million for this
quarter, increasing from Euro 9.5 million for the last quarter of 2000 as the
Group continued the construction of its network in Spain and Portugal.
Net Financial Expense for the first quarter of 2001 was Euro 27.6 million
and consisted primarily of accrued interest 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 of the year 2001 amounted to
Euro 62.4 million.
Fully Funded Business Plan
The Company recently successfully completed a senior credit facility
arranged by JP Morgan Chase for its Spanish subsidiary, Jazztel Telecom S.A.,
for Euro 200 million (including a Euro 175 million revolving credit and a Euro
25 million performance bond backstop). The deal was launched at
Euro 125 million but was upsized to Euro 200 million following strong investor
demand.
"Following the completion of the credit facility, Jazztel has more than
Euro 840 million of financial resources available. This is sufficient to fund
our current business plan until cash flow positive," commented Mr. Salis.
During the next several years the Jazztel Group expects to continue to
incur significant net losses and negative cash flows while completing the
deployment of its network, developing a significantly expanded range of
telecommunication services as well as its Internet business and the wireless
local loop business of Banda26. The Group does not anticipate having positive
EBITDA from its telecommunications business in Spain and Portugal until at
least the second half of year 2002. The Group's ability to generate positive
EBITDA is subject to numerous risks and uncertainties, many of which are out
of its control.
Certain statements in this release are forward-looking statements that are
subject to material risks and uncertainties. Actual results could differ
materially from those stated or implied by such forward-looking statements due
to risks and uncertainties associated with our businesses, which include among
others, competitive and technological developments, risks associated with the
Company's growth, construction delays, the development of the Company's
markets, regulatory risks, dependence on its major customers and their
spending patterns and other risks which are presented in the Company's filings
with the US Securities and Exchange Commission, including its annual report on
Form 20-F and reports on Form 6-K, and certain European regulatory
authorities.
JAZZTEL p.l.c. AND SUBSIDIARIES
PROFORMA CONSOLIDATED BALANCE SHEETS
(Excluding the impact of Yacom Internet Factory in year 2000)
In Euro
December 31, March 31,
2000 2001
ASSETS
Current assets:
Cash and cash equivalents 415,835,350 411,695,478
Marketable securities 91,603,403
Restricted funds related to Senior Notes 125,830,007 123,254,909
Accounts receivable, net of allowance
for doubtful accounts of Euro 7,611,137 at
December 31 2000 and Euro 9,016,137 at
March 31, 2001 38,013,448 49,411,202
Prepaid expenses 6,944,344 6,470,651
Taxes receivable 53,675,044 62,489,355
Other current assets 6,801,660 11,808,676
Total current assets 738,703,256 665,130,271
Property and equipment, net 399,932,680 428,102,011
License costs, net 2,199,414 2,178,135
Intangible assets, net 44,782,338 58,598,462
Debt issuance costs, net 26,451,514 25,718,824
Restricted funds related to Senior Notes 81,398,725 66,295,386
Deposits and other assets 6,260,350 5,989,213
TOTAL ASSETS 1,299,728,276 1,252,012,302
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current maturities of long-term debt 27,880,177 40,495,378
Accounts payable 166,974,726 156,578,704
Accrued expenses and other
current liabilities 27,779,761 23,348,356
Deferred income 1,369,082 1,369,082
Total current liabilities 224,003,745 221,791,520
Long-term debt 925,428,562 931,278,273
Other Long - Term liabilities 27,642 27,642
Minority interests -- 445,176
Deferred income 6,160,867 5,838,460
Shareholders' equity:
Common stock, Euro 0.08 par value,
77,500,000 authorized shares, 58,987,767 shares
issued and outstanding shares at
December 31, 2000 and Euro 0.08 par value,
77,500,000 authorized shares and 59,523,949 shares
issued and outstanding at March 31, 2001 4,719,020 4,761,915
Non-voting stock, 0.01 pound sterling
(Euro 0.015) par value at December 31, 1998
and 1999, 5,000,000 shares authorized, issued
and outstanding 75,127 75,127
Additional paid in capital 357,196,667 371,641,799
Warrants 20,289,894 20,201,880
Accumulated deficit (238,173,246) (304,049,489)
Total shareholders' equity 144,107,461 92,631,232
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY 1,299,728,276 1,252,012,302
JAZZTEL p.l.c. AND SUBSIDIARIES
PROFORMA STATEMENTS OF OPERATIONS
(Excluding the impact of Yacom Internet Factory in year 2000)
For the quarters ended March 31 2000, December 31, 2000 and March 31 2001
In Euro, except share data
Quarter ended Quarter Ended Quarter ended
March 31, December 31, March 31,
2001 2000 2001
OPERATING REVENUES:
Telecommunications
revenues 22,367,250 35,552,537 46,597,571
Other revenues 186,374
Total operating
revenues 22,367,250 35,739,849 46,597,571
OPERATING EXPENSES:
Cost of sales (23,107,433) (30,160,370) (39,030,620)
Sales, general and
administration (Inclusive
of Euro 1,408,687 million
in non-cash share
compensation expense in
first quarter of 2000,
Euro 8,372,733 in 4Q of
2000 and Euro 2,404,776 in
1Q of 2001) (35,601,143) (45,587,979) (36,826,298)
Depreciation and
amortization (4,689,751) (9,524,269) (12,295,587)
Total operating
expenses (63,398,327) (85,272,618) (88,152,506)
OPERATING LOSS (41,031,077) (49,532,769) (41,554,935)
Other income (expense), net:
Interest income 7,028,679 7,943,480 7,463,759
Interest expense (31,080,433) (26,303,554) (34,872,088)
Other income (expense),
net 181,738,496 7,024,641
Total other income
(expense), net (24,051,755) 163,378,422 (20,383,689)
LOSS BEFORE MINORITY
INTERESTS (65,082,832) 113,845,653 (61,938,623)
Minority interests (13,683) (112,847) (83,962)
NET LOSS FROM CONTINUING
OPERATIONS (65,069,149) 113,732,806 (62,022,586)
Provision for taxes (352,530)
NET LOSS (65,069,149) 113,732,806 (62,375,116)
LOSS PER COMMON SHARE
- basic and diluted (2.74) (1.32) (1.05)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES
OUTSTANDING
- basic and diluted 23,755,970 56,106,617 59,371,910
JAZZTEL p.l.c. AND SUBSIDIARIES
PROFORMA CONSOLIDATED STATEMENTS OF CASH FLOWS
(Excluding the impact of Yacom Internet Factory in year 2000)
In Euro
Quarter Ended Quarter Ended
December 31, March 31,
2000 2001
OPERATING ACTIVITIES:
Net loss (74,282,493) (62,375,116)
Adjustments to reconcile net loss to net
cash used in operating activities:
Minority interests -- --
Amortization of goodwill -- --
Amortization of deferred costs
(inclusive amortization of debt
issuance cost) 13,378,301 732,689
Other depreciation and amortization 34,018,644 12,295,588
Non-cash provisions for losses 3,836,702 1,405,000
Non-cash gain on disposal of subsidiaries (329,401,645)
Non-cash provision for depreciation and
sale of assets 89,574,898
Non-cash compensation associated with
issuance of share options and shares in
subsidiary to employees 12,834,546 2,404,776
Gain on disposal of marketable securities (7,165,512)
Foreign currency adjustments 5,935,176
Changes in operating assets and liabilities:
Accounts receivable (31,709,184) (12,802,754)
Prepaid expenses and other current assets (32,119,895) (13,347,634)
Deposits and other assets (4,932,189) 271,137
Accounts payable and accruals 103,520,807 (14,827,426)
Accrued interest 15,150,953 12,615,201
Net cash used in operating activities (200,130,554) (74,858,876)
INVESTING ACTIVITIES:
Acquisitions of licenses costs (858,912) (49,831)
Purchase of property and equipment (203,057,436) (37,025,016)
Acquisitions, net of cash acquired -- (15,052,919)
Acquisitions of intangible assets (29,801,751) (2,131,998)
Proceeds from the sale of subsidiaries 100,000,000
Cash proceeds from the sale of marketable
securities 54,221,131 98,768,915
Net cash used in investing activities (79,496,967) 44,509,151
FINANCING ACTIVITIES:
Movement in funds held in Escrow 11,503,664 17,678,437
Debt issuance costs (10,238,460)
Proceeds from exercise of share options
and warrants 1,604,280 593,328
Issuance of share capital 42,168,405 7,938,087
Share issuance costs (6,458,776)
Increase in short-term debt, net --
Borrowings of long-term debt 245,117,708
Payments of long-term debt (5,297,769)
Net cash provided by financing activities 278,399,052 26,209,852
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (1,228,468) (4,139,873)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 417,063,817 415,835,350
CASH AND CASH EQUIVALENTS AT END
OF PERIOD 415,835,350 411,695,478
SOURCE Jazztel p.l.c.
MADRID, Spain, April 26 /PRNewswire/ -- Jazztel p.l.c. (Nasdaq: JAZZ),
(Easdaq: 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 ended 31st March 2001. Amounts are presented in
Euros and in accordance with US GAAP.
Highlights of the Quarter
Financial
* First quarter revenues grew to Euro 46.6 million, an increase of 30.5%
from the fourth quarter of 2000 and 108% over the same period last year.
* Gross margin improved to positive Euro 7.6 million, an increase of 35.7%
over the fourth quarter and compared to the negative Euro 0.7 over the
first period last year.
* Adjusted EBITDA, improved from negative Euro 34.9 million in the fourth
quarter of 2000 to negative Euro 26.8 million in the first quarter
of 2001. As a percentage of revenue, adjusted EBITDA improved from
negative 88.5% in the fourth quarter of 2000, to negative 57.5% in the
first quarter of 2001. EBITDA break-even continues to be expected for
the second half of 2002.
* In February, Jazztel sold the remaining stake of its T-Online holdings,
received in the sale of Yacom. Total proceeds of this transaction
amounted to Euro 281 million.
* In April 2001, Jazztel entered into a Euro 200 million credit facility
which gives the Company over Euro 840(1) million of available cash and
secures the total financing of Jazztel's business plan until it is cash
flow positive.
Operational
* Total traffic on the Jazztel network rose to 747 million minutes in the
first quarter of 2001, an increase of 24.9% compared to the last period
in 2000 and a 184% increase over the same period of 2000.
* Connection of 362 new sites to Jazztel's fiber network, increasing the
number of provisioned sites to 943, a growth of 62.3% from the previous
quarter, exceeding initial expectations.
* Signing up of 528 new direct access customers bringing the total of
contracted on net customers to 1,786.
* Expansion of the local area network to 2,092 km, an increase of 361 km
from the previous quarter.
* Completion of the Spanish backbone through the deployment of the
Northwest ring with 1,496 km of additional operational fiber. Total
backbone now comprises 5,733 km.
* Agreement with ACEVAS (Spanish Association of Volkswagen, Audi and
Skoda's car dealerships) in order to provide fixed telephony and data
transmission services to the 250 affiliated car dealerships throughout
Spain.
(1) Includes high yield bonds, restricted cash for high yield interest
payments, full drawdown of the Euro 175 million credit facility and
Euro 70 million of vendor financing under negotiation.
Other significant events to date
In January, Jazztel closed the acquisition of 87.2% of Adatel, a
Madrid-based telecom's systems integrator for large and medium-sized
businesses in Spain.
In April, Jazztel closed the acquisition of 99,93% of Centro de Calculo
Sabadell (CCS), a developer and integrator of information systems for
businesses, and completed its new management structure with the appointment of
Joaquim Molins as Chairman, Javier Cuesta as Vice-Chairman, Jordi Malapeira as
CEO and Josep Rof as COO. Joaquim Molins was also appointed board member of
Jazztel Plc.
Financial Statistics
Euro 1st 4th 1st 1st 4th
(Million) quarter quarter quarter quarter % quarter
2000 2000 2001 Growth % Growth
Revenues 22.4 35.7 46.6 108% 30.5%
Gross Margin (-0.7) 5.6 7.6 n.a. 35.7%
% of sales -3.1% 15.6% 16.3% n.a. n.a.
Adjusted
EBITDA (a) (-34.9) (-31.6) (-26.8) 23.2% -15.2%
% of sales -155.8% -88.5% -57.5% n.a. n.a.
Capex 59.5 100.0 54.2 -8.9% -45.8%
(a) Excludes impact of non-cash accounting charges for option assignments
of Euro 1.4 million in the first quarter of 2000, Euro 8.4 million in
the fourth quarter of 2000 and Euro 2.4 million in the first quarter
of 2001
Operational Statistics
1st 4th 1st 1st 4th
quarter quarter quarter quarter % quarter
2000 2000 2001 Growth % Growth
Network Deployment
Local access km
completed 580 1,731 2,092 260.7% 20.9%
Backbone km
completed 4,220 4,237 5,733 35.8% 35.3%
Direct Access
Direct access
human
resources 80 165 165* 106.3% 0%
Contracts
Signed 110 1,258 1,786 1,524% 42.0%
Customer sites
provisioned 30 581 943 3,043.3% 62.3%
Indirect Access
Number of
customers 487,300 694,000 708,763 45.4% 2.1%
Number of
lines 802,900 1,135,716 1,157,383 44.2% 1.9%
Internet & Value Added Services
Active Jazznet
customers 7,400 5,893 7,546 2% 28.1%
ADSL active
customers 52 467 594 1,042.3% 27.2%
Carrier Services
Traffic Termination
contracts 12 28 34 183.3% 21.4%
Wholesale capacity
contracts 6 17 18 200% 5.9%
Minutes of Traffic
(millions) 284 598 747 163% 24.9%
Headcount** 616 738 806 30.8% 9.2%
* Includes sales force (116) and technical staff (49)
** Excluding Adatel
Summary of Operations
The Jazztel Group had total revenues of Euro 46.6 million for the first
quarter of 2001, a growth of 30.5% from the Euro 35.7 million for the last
quarter of 2000. Gross margin was positive Euro 7.6 million in the first
quarter of 2001, a growth of 35.7% from the Euro 5.6 million for the last
quarter. Adjusted EBITDA losses for the first quarter of 2001 have improved
to negative Euro 26.8 million, compared to negative Euro 31.6 million for the
last quarter of year 2000. Adjusted EBITDA as a percentage of sales improved
to negative 57.5% for the first quarter of 2001 up from negative 88.5% in the
last quarter of year 2000.
Antonio Carro, Chief Executive Officer of Jazztel, declared: "The first
quarter of year 2001 has seen a steady growth of our business as we have
continued executing successfully on our Strategic Plan. In fact, we are
seeing significantly less competitive pressure in nearly all our business
lines due to difficult financial market conditions, which gives us the chance
to extend our first mover advantage. This factor, paired with the fact that
we have a fully funded business plan, continues to reinforce our competitive
position as the leading alternative provider of high bandwidth data, Internet
and voice services for small and medium size businesses across Spain and
Portugal. The successful signing of new large contracts to offer broadband
telecommunications services to sectorial associations and the continuing
buildout of our local area network coupled with the excellent pace of new
direct customers signed make us feel very confident about the future."
Regarding the financial evolution of the company, Antonio Carro added:
"This first quarter has confirmed the strong growth of our revenues, while at
the same time improving our operating profitability. The continuing positive
evolution of the Gross Margin for the quarter, together with tight control of
the SG&A expenses, allow us to be confident on reaching positive EBITDA in the
second half of 2002 as we have planned."
Major Operational Achievements
In the first quarter of 2001 Jazztel has continued to implement its direct
access strategy. The Group had signed by the end of the quarter a total of
1,786 contracts for direct service provisioning and had connected 943 customer
sites directly to its network, which is ahead of the initial expectations.
Jazztel has obtained excellent results at signing new large clients including
direct access contracts with Ernst & Young Cap Gemini, Zara and Caixa Galicia.
Jazztel has also started the connection of clients as part of its agreement
with ASCER announced in January 2001. At the same time, it has continued
signing important direct access agreements with business associations.
Recently, Jazztel signed an agreement with ACEVAS (Spanish Association of
Volkswagen, Audi and Skoda's car dealership) to provide broadband services to
their 250 affiliated car dealerships throughout Spain.
Antonio Carro commented on these developments: "We are very satisfied
with the evolution of direct access provisioning and the rapid growth of
direct connections. As we anticipated, the further integration of the
recently acquired Adatel is helping us to enhance our direct access service
capabilities and it will have an even greater impact in the near future.
Direct access is already becoming an important part of our revenue stream and
will increase steadily in the future."
As of March 31st 2001, the Group had built 2,092 local access km, a growth
of 260.7% over the km built by the end of the first quarter 2000. The Group
has 1,289 additional km with building permits granted. Jazztel had also
continued to submit applications for construction and had 1,605 additional km
submitted for municipal approval which gives Jazztel enough flexibility to
guarantee the construction of its planned network in 2001. Jazztel had
operational fibre in 15 of the largest Spanish cities and business parks and
continued to execute on its plans to complete its network rollout as rapidly
as possible.
The Group also completed the Spanish backbone through the deployment of
the Northwest ring and put in service 3 additional metropolitan area networks.
Antonio Carro commented: "We are quickly improving our ability to enter new
target markets with our own infrastructure. The completion of our Spanish
backbone and the entry into service of new metropolitan area networks gives us
confidence that we will continue to ramp up our provisioning rates in the
coming quarters."
1st 4th 1st 1st 4th
quarter quarter quarter quarter % quarter
2000 2000 2001 Growth % Growth
Km completed 580 1,731 2,092 260.7% 20.9%
Additional km
with building
permits or which
are under
construction 500 1,298 1,289 157.8% -0.7%
Additional km
with application
for permits
submitted 1,450 1,727 1,605 10.7% -7.1%
Metropolitan Areas
Operational 0 13 16 n.a. 23.1%
Financial Information
Miguel Salis, Chief Financial Officer of Jazztel, commented on the first
quarter 2001 results: "During this quarter we surpassed our initial
expectations. We have increased our revenues to Euro 46.6 million, from
Euro 35.7 million in the last quarter of 2000, a growth of 30.5%. We have
improved our gross margin, reaching Euro 7.6 million in the quarter, due to
the strong increase in the direct access revenues and the positive evolution
of our Internet and Indirect Access businesses. We are very focused on the
continuing growth of high value-added revenues and to efficiently increase our
network reach in order to meet our profitability targets."
Revenues for the quarter, ended on March 31st 2001, increased to
Euro 46.6 million, a growth of 30.5% from the Euro 35.7 million for last
quarter of 2000 and a 108% growth on the first quarter of 2000 revenues.
Direct access activities are becoming an important part of Jazztel's total
revenues and have reached Euro 8.1 million in the quarter, an increase of
107.7% compared to the previous quarter. Indirect access revenues grew 28.3%
from Euro 21.9 million in the fourth quarter of 2000 to Euro 28.1 million in
this first quarter of 2001. Carrier service revenues have represented a
slightly smaller part of our total revenues, reaching Euro 3.7 million in the
quarter.
Business Lines
Euro 1st 4th 1st 1st 4th
(Million) quarter quarter quarter quarter % quarter
2000 2000 2001 Growth % Growth
Indirect Access 17.2 21.9 28.1 63.4% 28.3%
Direct Access 0.1 3.9 8.1 n.s. 107.7%
Carrier services 1.0 4.3 3.7 270% -14%
Internet & Value
Added Services 4.0 5.4 6.5 62.5% 20.4%
Other Revenues 0 0.2 0.2 n.a. 0%
Total Revenues 22.4 35.7 46.6 108% 30.5%
Cost of Sales were Euro 39 million for the first quarter of 2001, or
83.7% of sales, improving from 103.1% of sales in the first quarter of 2000.
Gross margin in the first quarter of 2001 improved to Euro 7.6 million from
Euro 5.6 million in the last quarter of 2000.
Selling, General and Administrative (SG&A) expenses for the first quarter
of 2001 were Euro 34.4 million compared with Euro 37.2 million for the last
quarter of 2000. SG&A expenses as a percentage of sales, have seen a
significant improvement from 104.2% of sales for the fourth quarter of 2000 to
73.8% of sales in the first quarter of 2001, primarily as a consequence of
tighter controls on marketing, customer acquisition costs and call center
operation expenses.
Adjusted EBITDA losses in this quarter were negative Euro 26.8 million,
compared with negative Euro 31.6 million losses in the last quarter of 2000.
Adjusted EBITDA losses as a percentage of sales decreased from negative 88.5%
in the last quarter of 2000 to negative 57.5% in the first quarter of 2001.
This reflects the increase in gross margins and the tight control over SG&A
expenses.
Depreciation and Amortization Expense was Euro 12.3 million for this
quarter, increasing from Euro 9.5 million for the last quarter of 2000 as the
Group continued the construction of its network in Spain and Portugal.
Net Financial Expense for the first quarter of 2001 was Euro 27.6 million
and consisted primarily of accrued interest 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 of the year 2001 amounted to
Euro 62.4 million.
Fully Funded Business Plan
The Company recently successfully completed a senior credit facility
arranged by JP Morgan Chase for its Spanish subsidiary, Jazztel Telecom S.A.,
for Euro 200 million (including a Euro 175 million revolving credit and a Euro
25 million performance bond backstop). The deal was launched at
Euro 125 million but was upsized to Euro 200 million following strong investor
demand.
"Following the completion of the credit facility, Jazztel has more than
Euro 840 million of financial resources available. This is sufficient to fund
our current business plan until cash flow positive," commented Mr. Salis.
During the next several years the Jazztel Group expects to continue to
incur significant net losses and negative cash flows while completing the
deployment of its network, developing a significantly expanded range of
telecommunication services as well as its Internet business and the wireless
local loop business of Banda26. The Group does not anticipate having positive
EBITDA from its telecommunications business in Spain and Portugal until at
least the second half of year 2002. The Group's ability to generate positive
EBITDA is subject to numerous risks and uncertainties, many of which are out
of its control.
Certain statements in this release are forward-looking statements that are
subject to material risks and uncertainties. Actual results could differ
materially from those stated or implied by such forward-looking statements due
to risks and uncertainties associated with our businesses, which include among
others, competitive and technological developments, risks associated with the
Company's growth, construction delays, the development of the Company's
markets, regulatory risks, dependence on its major customers and their
spending patterns and other risks which are presented in the Company's filings
with the US Securities and Exchange Commission, including its annual report on
Form 20-F and reports on Form 6-K, and certain European regulatory
authorities.
JAZZTEL p.l.c. AND SUBSIDIARIES
PROFORMA CONSOLIDATED BALANCE SHEETS
(Excluding the impact of Yacom Internet Factory in year 2000)
In Euro
December 31, March 31,
2000 2001
ASSETS
Current assets:
Cash and cash equivalents 415,835,350 411,695,478
Marketable securities 91,603,403
Restricted funds related to Senior Notes 125,830,007 123,254,909
Accounts receivable, net of allowance
for doubtful accounts of Euro 7,611,137 at
December 31 2000 and Euro 9,016,137 at
March 31, 2001 38,013,448 49,411,202
Prepaid expenses 6,944,344 6,470,651
Taxes receivable 53,675,044 62,489,355
Other current assets 6,801,660 11,808,676
Total current assets 738,703,256 665,130,271
Property and equipment, net 399,932,680 428,102,011
License costs, net 2,199,414 2,178,135
Intangible assets, net 44,782,338 58,598,462
Debt issuance costs, net 26,451,514 25,718,824
Restricted funds related to Senior Notes 81,398,725 66,295,386
Deposits and other assets 6,260,350 5,989,213
TOTAL ASSETS 1,299,728,276 1,252,012,302
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current maturities of long-term debt 27,880,177 40,495,378
Accounts payable 166,974,726 156,578,704
Accrued expenses and other
current liabilities 27,779,761 23,348,356
Deferred income 1,369,082 1,369,082
Total current liabilities 224,003,745 221,791,520
Long-term debt 925,428,562 931,278,273
Other Long - Term liabilities 27,642 27,642
Minority interests -- 445,176
Deferred income 6,160,867 5,838,460
Shareholders' equity:
Common stock, Euro 0.08 par value,
77,500,000 authorized shares, 58,987,767 shares
issued and outstanding shares at
December 31, 2000 and Euro 0.08 par value,
77,500,000 authorized shares and 59,523,949 shares
issued and outstanding at March 31, 2001 4,719,020 4,761,915
Non-voting stock, 0.01 pound sterling
(Euro 0.015) par value at December 31, 1998
and 1999, 5,000,000 shares authorized, issued
and outstanding 75,127 75,127
Additional paid in capital 357,196,667 371,641,799
Warrants 20,289,894 20,201,880
Accumulated deficit (238,173,246) (304,049,489)
Total shareholders' equity 144,107,461 92,631,232
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY 1,299,728,276 1,252,012,302
JAZZTEL p.l.c. AND SUBSIDIARIES
PROFORMA STATEMENTS OF OPERATIONS
(Excluding the impact of Yacom Internet Factory in year 2000)
For the quarters ended March 31 2000, December 31, 2000 and March 31 2001
In Euro, except share data
Quarter ended Quarter Ended Quarter ended
March 31, December 31, March 31,
2001 2000 2001
OPERATING REVENUES:
Telecommunications
revenues 22,367,250 35,552,537 46,597,571
Other revenues 186,374
Total operating
revenues 22,367,250 35,739,849 46,597,571
OPERATING EXPENSES:
Cost of sales (23,107,433) (30,160,370) (39,030,620)
Sales, general and
administration (Inclusive
of Euro 1,408,687 million
in non-cash share
compensation expense in
first quarter of 2000,
Euro 8,372,733 in 4Q of
2000 and Euro 2,404,776 in
1Q of 2001) (35,601,143) (45,587,979) (36,826,298)
Depreciation and
amortization (4,689,751) (9,524,269) (12,295,587)
Total operating
expenses (63,398,327) (85,272,618) (88,152,506)
OPERATING LOSS (41,031,077) (49,532,769) (41,554,935)
Other income (expense), net:
Interest income 7,028,679 7,943,480 7,463,759
Interest expense (31,080,433) (26,303,554) (34,872,088)
Other income (expense),
net 181,738,496 7,024,641
Total other income
(expense), net (24,051,755) 163,378,422 (20,383,689)
LOSS BEFORE MINORITY
INTERESTS (65,082,832) 113,845,653 (61,938,623)
Minority interests (13,683) (112,847) (83,962)
NET LOSS FROM CONTINUING
OPERATIONS (65,069,149) 113,732,806 (62,022,586)
Provision for taxes (352,530)
NET LOSS (65,069,149) 113,732,806 (62,375,116)
LOSS PER COMMON SHARE
- basic and diluted (2.74) (1.32) (1.05)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES
OUTSTANDING
- basic and diluted 23,755,970 56,106,617 59,371,910
JAZZTEL p.l.c. AND SUBSIDIARIES
PROFORMA CONSOLIDATED STATEMENTS OF CASH FLOWS
(Excluding the impact of Yacom Internet Factory in year 2000)
In Euro
Quarter Ended Quarter Ended
December 31, March 31,
2000 2001
OPERATING ACTIVITIES:
Net loss (74,282,493) (62,375,116)
Adjustments to reconcile net loss to net
cash used in operating activities:
Minority interests -- --
Amortization of goodwill -- --
Amortization of deferred costs
(inclusive amortization of debt
issuance cost) 13,378,301 732,689
Other depreciation and amortization 34,018,644 12,295,588
Non-cash provisions for losses 3,836,702 1,405,000
Non-cash gain on disposal of subsidiaries (329,401,645)
Non-cash provision for depreciation and
sale of assets 89,574,898
Non-cash compensation associated with
issuance of share options and shares in
subsidiary to employees 12,834,546 2,404,776
Gain on disposal of marketable securities (7,165,512)
Foreign currency adjustments 5,935,176
Changes in operating assets and liabilities:
Accounts receivable (31,709,184) (12,802,754)
Prepaid expenses and other current assets (32,119,895) (13,347,634)
Deposits and other assets (4,932,189) 271,137
Accounts payable and accruals 103,520,807 (14,827,426)
Accrued interest 15,150,953 12,615,201
Net cash used in operating activities (200,130,554) (74,858,876)
INVESTING ACTIVITIES:
Acquisitions of licenses costs (858,912) (49,831)
Purchase of property and equipment (203,057,436) (37,025,016)
Acquisitions, net of cash acquired -- (15,052,919)
Acquisitions of intangible assets (29,801,751) (2,131,998)
Proceeds from the sale of subsidiaries 100,000,000
Cash proceeds from the sale of marketable
securities 54,221,131 98,768,915
Net cash used in investing activities (79,496,967) 44,509,151
FINANCING ACTIVITIES:
Movement in funds held in Escrow 11,503,664 17,678,437
Debt issuance costs (10,238,460)
Proceeds from exercise of share options
and warrants 1,604,280 593,328
Issuance of share capital 42,168,405 7,938,087
Share issuance costs (6,458,776)
Increase in short-term debt, net --
Borrowings of long-term debt 245,117,708
Payments of long-term debt (5,297,769)
Net cash provided by financing activities 278,399,052 26,209,852
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (1,228,468) (4,139,873)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 417,063,817 415,835,350
CASH AND CASH EQUIVALENTS AT END
OF PERIOD 415,835,350 411,695,478
SOURCE Jazztel p.l.c.
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