Telia Lietuva : Quarterly Earnings

TELIA LIETUVA, AB

CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE NINE MONTHS' PERIOD ENDED 30 SEPTEMBER 2021 (UNAUDITED)

Beginning of the financial year	1 January 2021
End of reporting period	30 September 2021
Name of the company	Telia Lietuva, AB (hereinafter - "Telia Lietuva" or "the Company")
Legal form	public company (joint-stock company)
Date of registration	6 February 1992
Code of enterprise	121215434
LEI code	5299007A0LO7C2YYI075
Name of Register of Legal Entities	State Enterprise Centre of Registers
Registered office	Saltoniškių str. 7A, LT-03501 Vilnius, Lithuania
Telephone number	[phone]
Fax number	[phone]
E-mail address	[e-mail]
Internet address	www.telia.lt
Main activities	Integrated telecommunication, IT and TV services to residential and
	business customers in Lithuania

Telia Lietuva, AB Consolidated Interim Financial Statements for the 9 months' period ended 30 September 2021

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TABLE OF CONTENT
MANAGEMENT REPORT ..............................................................................................................................................	4
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME .............................................................................	14
CONSOLIDATED STATEMENT OF FINANCIAL POSITION .......................................................................................	15
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY .......................................................................................	16
CONSOLIDATED STATEMENT OF CASH FLOW.......................................................................................................	17
NOTES TO THE FINANCIAL STATEMENTS ..............................................................................................................	18
Accounting policies ..................................................................................................................................................	18
Property, plant and equipment and intangible assets ..............................................................................................	18
Investments in subsidiaries and associates .............................................................................................................	19
Share capital ............................................................................................................................................................	19
Provisions ................................................................................................................................................................	19
Income tax ...............................................................................................................................................................	20
Earnings per share...................................................................................................................................................	20
Dividends per share .................................................................................................................................................	20
Related party transactions .......................................................................................................................................	21
MANAGEMENT CONFIRMATION OF THE CONSOLIDATED FINANCIAL STATEMENTS .......................................	21

Telia Lietuva, AB Consolidated Interim Financial Statements for the 9 months' period ended 30 September 2021

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MANAGEMENT REPORT

Third quarter of 2021:

• Total revenue amounted to EUR 106.2 million, an increase by 6 per cent over the revenue of EUR 100.2 million in the third quarter of 2020.
• Adjusted EBITDA, excluding non-recurring items, was EUR 38 million, an increase by 7.1 per cent over EBITDA, excluding non-recurring items, of EUR 35.5 million in the third quarter of 2020.
• EBITDA was EUR 37.7 million, an increase by 7.8 per cent over EBITDA of EUR 35 million a year ago.
• Profit for the period was EUR 16.1 million, up by 6.3 per cent over the profit of EUR 15.1 million a year ago.

Nine months of 2021:

• Total revenue amounted to EUR 307.5 million, an increase by 6.2 per cent over the revenue of EUR 289.5 million for the nine months of 2020.
• Adjusted EBITDA, excluding non-recurring items, was EUR 106 million and grew by 4.1 per cent over EBITDA, excluding non-recurring items, of EUR 101.8 million for January-September of 2020.
• EBITDA was EUR 106.5 million, an increase by 5.5 per cent over EBITDA of EUR 100.9 million a year ago.
• Profit for the period was EUR 41.5 million, up by 6.3 per cent over the profit of EUR 39 million a year ago.
• Free cash flow amounted to EUR 62.8 million and was 1.8 per cent lower than free cash flow of EUR 63.9 million a year ago.

Management comment:

The third quarter of 2021 was the good one in terms of revenue growth and profitability in spite of growing pressure from labour and energy markets. The second COVID-19 pandemic caused quarantine in Lithuania was officially over on 1 July 2021. Employees of the Company were enabled to combine work in the office with remote work from home or other locations. Eased restrictions on cross-border travelling revived the revenue stream from roaming services. Still, customers' demand for cloud and remote work solutions, wider range of equipment suitable for work from home persist.

During the quarter number of mobile communication users continued to grow - increased by 40 thousand, while broadband Internet and pay-TV markets are showing signs of saturation. Quarterly intake of new broadband Internet users was 2 thousand, and number of IPTV subscriber remained unchanged. Nevertheless, over the last twelve months:

• number of mobile service subscriptions grew by 4.7 per cent up to 1,449 thousand,
• number of fiber-optic Internet connections went up by 2.4 per cent up to 302 thousand,
• number of TV service users increased by 1.2 per cent up to 254 thousand.

Revenue growth was ensured by increasing ARPU in our main activities - mobile communication, broadband Internet and TV services; implementation of number of IT projects for business customers as well as better sale of equipment and flagship smart devices. Over the year, comparing the nine months' period of 2021 with the same period a year ago:

• revenue from IT services grew by 26 per cent,
• revenue from TV services increased by 12.6 per cent,
• revenue from broadband Internet services went up by 11.2 per cent,
• revenue from billed mobile services was up by 9.9 per cent.

During the third quarter of 2021, modernisation of the Company's mobile network under strategic partnership with Ericsson has accelerated. More than 250 base stations that support 2G, 3G, 4G and 5G connection are already upgraded with Ericsson equipment and that lays a solid foundation for future 5G deployment. We will be ready to provide commercial 5G services to our customers once the auction of 5G frequencies will take place.

Telia Lietuva has joined the memorandum signed by the main Lithuanian telecommunications operators and state institutions. All parties agreed to cooperate aiming to launch 5G network in Vilnius by 2022, in five largest cities of Lithuania - by 2023 and by 2025 in all towns, international transport routes as well as on the state importance roads, railways and ports. It also sets a goal to ensure Internet speed of 100 Mbps available to at least 95 per cent of Lithuanian households and along all major transport routes.

The Company's customers from the end of 2020 already had a possibility to test non-commercial 5G connection in three largest cities of Lithuania. Currently, the average Internet download speed in Telia Lietuva mobile network is 90.9 Mbps.

The investments into modernisation of the Company's mobile network during January-September of 2021 amounted to EUR 18.8 million which is 2.5 time more than a year ago. The total capital investments including business transformation program were 39.4 per cent higher and amounted to EUR 52 million (EUR 37.3 million for nine months of 2020).

Telia Lietuva, AB Consolidated Interim Financial Statements for the 9 months' period ended 30 September 2021

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(All tabular amounts are in EUR '000 unless otherwise stated)
KEY FIGURES OF THE GROUP
		January-September
Financial figures	2021	2020		Change (%)
Revenue		307,504	289,480		6.2
Adjusted EBITDA excluding non-recurring items	106,040	101,837	4.1
Adjusted EBITDA margin excluding non-recurring items (%)	34.5	35.2
EBITDA		106,460	100,863	5.5
EBITDA margin (%)	34.6	34.8
Operating profit (EBIT) excluding non-recurring items	48,242	48,973	(1.5)
EBIT margin excluding non-recurring items (%)	15.7	16.9
Operating profit (EBIT)	48,662	47,999	1.4
EBIT margin (%)	15.8	16.6
Profit before income tax	47,031	46,105	2.0
Profit before income tax margin (%)	15.3	15.9
Profit for the period	41,453	39,014	6.3
Profit for the period margin (%)	13.5	13.5
Earnings per share (EUR)	0.071	0.067		6.3
Number of shares (thousand)	582,613	582,613	-
Share price at the end of period (EUR)	2.040	1.555	31.2
Market capitalisation at the end of period	1,188,531	905,963		31.2
Cash flow from operations	97,601	99,676	(2.1)
Operating free cash flow	62,769	63,924	(1.8)
Operating figures	30-09-2021	30-09-2020		Change (%)
Mobile service subscriptions, in total (thousand)	1,449	1,384	4.7
-	Post-paid (thousand)	1,164	1,098	6.0
-	Pre-paid (thousand)	285	286		(0.3)
Broadband Internet connections (excl. Wi-Fi), in total (thousand)	419	416	0.7
-	Fiber-optic (FTTH/B) (thousand)	302	295	2.4
-	Copper (DSL) (thousand)	117	121		(3.3)
Fixed telephone lines in service (thousand)	238	270	(11.9)
TV service customers (thousand)	254	251		1.2
Number of personnel (head-counts)	2,116	2,186	(3.2)
Number of full-time employees	1,964	2,014	(2.5)
Financial ratios*	30-09-2021	30-09-2020
Return on capital employed (%)	14.6	14.8
Return on average assets (%)	10.7	10.8
Return on shareholders' equity (%)	18.1	17.6
Operating cash flow to sales (%)	31.3	37.9
Capex to sales (%)	16.5	12.0
Net debt to EBITDA ratio	0.64	0.64
Gearing ratio (%)	28.6	27.5
Debt to equity ratio (%)	50.1	38.0
Current ratio (%)	108.8	108.2
Rate of turnover of assets (%)	68.3	67.0
Equity to assets ratio (%)	50.8	54.7
Price to earnings (P/E) ratio	20.4	16.2

Notes: *Description of financial ratios and their calculation is provided at https://www.telia.lt/eng/investors/financial-results

Telia Lietuva, AB Consolidated Interim Financial Statements for the 9 months' period ended 30 September 2021

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