Slide 1: Interim Report Q2 2016
Slide 2: Agenda
Agenda CEO’s review Veli-Matti Mattila, CEO Financial review Jari Kinnunen, CFO
Slide 3: CEO’s review
CEO’s review • Q2 2016 financial and operational highlights • Segment review • Strategy execution • Outlook and guidance for 2016 3
Slide 4: Q2 2016 highlights
Q2 2016 highlights • Revenue grew by 1% and EBITDA by 2% • Mobile service revenue grew by 7% • 2016 guidance upgraded to “slightly higher” for both revenue and EBITDA • Anvia’s ICT businesses acquisition completed, consolidation has been started 1 July 2016 • Mobile subscriptions base increased, fix
Slide 5: Best ever Q2, revenue and EBITDA improved
Q2 2016 financial highlights Best ever Q2, revenue and EBITDA improved Revenue, €m and YoY change, % 2,8 % 4,8 % 2,5 % • Revenue €393m (390) -2,8 % -3,9 % -0,4 % 1,7 % 0,8 % • EBITDA €134m (131) 394 404 393 384 386 381 390 390 • EBIT €81m (79) • EPS €0.38 (0.38) Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q
Slide 6: Mobile service revenue growth continues
Q2 2016 operational highlights Mobile service revenue growth continues • Mobile service revenue up by 7% Mobile service revenue, €m and YoY change, % 8,3% 11,3% 9,1% 6,9% • Up-selling to higher speeds 3,0% 1,8% 3,8% 6,0% • More smartphones and data bundle subscriptions • Price changes 188 186 190 18
Slide 7: Business segments
Business segments NK
Slide 8: Q2 2016 Consumer Customers: Revenue and EBITDA increased
Q2 2016 Consumer Customers Revenue and EBITDA increased • Revenue €246m (243) Revenue, €m and YoY change, % 0,9 % 1,5 % 3,6 % 6,1 % 3,5 % 1,2 % • Strong growth in mobile service revenue -1,9 % -1,8 % • Growth in digital services • Traditional fixed revenue, interconnection revenue and equipment sale
Slide 9: Q2 2016 Corporate Customers: Revenue and EBITDA at previous year’s level
Q2 2016 Corporate Customers Revenue and EBITDA at the previous year’s level • Revenue €147m (147) Revenue, €m and YoY change, % 2,0 % 1,4 % 2,7 % 0,8 % 0,1 % • Growth in mobile service revenue -4,2 % -7,1 % -2,6 % • Visual communication and equipment sales decreased • Decrease in interconnection rev
Slide 10: Strategy execution
Strategy execution Build value on data Accelerate digital service businesses Improve performance with customer intimacy and operational excellence 10
Slide 11: Growth in 4G smartphones and data bundles continue
Growth in 4G smartphones and data bundles continue • 71% of customers use a smartphone 3G and 4G smartphone penetrations 1), % 70% 71% • 72% of smartphones are 4G-capable 63% 65% 66% 68% 57% 60% 3G • Of all models sold in Q2 • 92% were smartphones, of which all 4G-capable (94% and 99% respectively i
Slide 12: Even faster fixed broadband connections
Even faster fixed broadband connections • Fast fibre connections to single- family dwellings • Saunalahti Broadband 100/100M • Symmetrical loading speed • Ideal for remote working and for several simultaneous video watching • New speed available for approximately 8,000 customers in new single-family
Slide 13: Elisa’s sales channel first in Europe to offer OnePlus phone
Elisa’s sales channel first in Europe to offer trendy OnePlus phone • OnePlus phones have previously been available only by invitation • OnePlus is well known for its stylish design • Top-class design and technical features • Demand exceeds supply – corporates are also interested 13
Slide 14: Elisa was the first in the Nordic countries to test the 700 MHz frequency
Elisa was the first in the Nordic countries to test the 700 MHz frequency • Frequency will be used in mobile broadband • New frequency will improve network coverage and capacity, especially in rural areas • Ficora gave permission for the frequency test • 700 MHz auction at the end of the year • Auct
Slide 15: International recognition for Elisa’s IoT service
International recognition for Elisa’s IoT service • Elisa’s IoT service received an award for best IoT solution • The award was granted at the LiveWorx 2016 business event • Service creates a virtual 3D view from tens of different systems • Improves data understanding, control of processes and equip
Slide 16: Upgraded outlook and guidance for 2016
Upgraded outlook and guidance for 2016 Macroeconomic environment still weak in 2016, competition remains challenging • Revenue slightly higher than in 2015 • EBITDA excluding one-offs slightly higher than in 2015 • CAPEX maximum 12% of revenue 16
Slide 17: Agenda
Agenda CEO’s review Veli-Matti Mattila, CEO Financial review Jari Kinnunen, CFO
Slide 18: Growth continues, best ever Q2
Growth continues, best ever Q2 EUR million, excl. • Revenue growth 1% one-offs Q2/16 Q2/15 Δ 1) Δ% H1/16 H1/15 Δ 1) Δ% 2015 Revenue 393 390 3 1 783 771 12 2 1,569 • EBITDA growth 2% EBITDA 134 131 2 2 270 260 10 4 536 • Mobile service revenue growth EBITDA-% 34 34 35 34 34 • Productivity improvement
Slide 19: Revenue growth in both business segments
Revenue growth in both business segments • Consumer Customers • Growth in mobile and digital services • Decrease in fixed services • Corporate Customers • Growth in mobile services and IT services • Decrease in visual communications Revenue change Q2 YoY, €m 1 8 -2 -5 390 393 Q2/15 Consumer Corporat
Slide 20: Growth continues in Estonia
Growth continues in Estonia • Revenue €24.3m (23.3) Revenue, €m and YoY change, % • Growth in mobile service revenue and equipment sales 1,2% 4,6% 5,5% 4,3% -1,2% -2,4% -2,7% -2,1% • MTR cut to €0.01 (-10%) 1 July 2015 • Subscription base down by 3,400 25,1 23,9 25,4 25,0 24,3 21,7 23,3 22,9 Q3/14 Q
Slide 21: Total expenses at the same level
Total expenses at the same level • Total OPEX €260m (259) Material and services (blue), employee (yellow) and other expenses (orange), €m, YoY change (black line) • OPEX increased -5,6% -6,0% -1,9% -0,5% 3,4% 6,2% 0,7% 0,2% • Anvia acquisition costs €1.5m 45 43 44 43 39 41 39 43 • Increase in employ
Slide 22: CAPEX slightly higher, full year guidance intact
CAPEX slightly higher, full year guidance intact • CAPEX €56m (49) Consumer (blue), Corporate (yellow), shares (orange) and licences (green) €m, CAPEX/sales (black line) % * • Consumer €31m (27) • Corporate €25m (21) 12% 14% 12% 14% 11% 12% 12% 11% • CAPEX / sales Q2 14.2%, H1 12.8% 15 28 14 13 1 1
Slide 23: Strong cash flow generation continues
Strong cash flow generation continues • Cash flow YoY change -€1m, excluding Cash flow change, €m -4 share purchases +€5m 3 -6 -6 11 • Growth excl. share purchases 6% 2 -3 • EBITDA cash conversion 62% * 70 69 • Positive NWC change Q2/15 EBITDA NWC Financials Taxes CAPEX Shares Adjust- ments Q2/16 •
Slide 24: Solid liquidity position
Solid liquidity position Bonds and bank loan maturities 30 June 2016 • Cash and undrawn committed credit Bonds (blue), loans (green), RCF (orange) and EIB loan (red), €m facilities €425m (270) • From €300m RCF €80m drawn • €130m RCF extended by 2 years to 2021 in Q2 130 • EIB €150m loan commitment u
Slide 25: Capital structure on target and return ratios improved
Capital structure on target and return ratios improved • Net debt at target level Net debt (blue, €m), Net debt /EBITDA (orange line) • Net debt / EBITDA 1.9× 2,0 2,0 1,9 1,9 1,9 • Gearing 128%, equity ratio 37% 1,8 1,8 1,7 • Target setting • Net debt / EBITDA 1.5–2× 1 043 1 001 934 1 075 991 962 1
Slide 26: Competitive remuneration continues
Competitive remuneration continues • Dividend €1.40 per share paid in April Dividend and pay-out ratio • Dividend growth 6% 126% 135% • Total €223m 101% 104% 98% 94% 92% • Payout ratio 92% 88% 1,42 1,30 1,30 1,30 1,30 1,32 1,40 1,00 2009 2010 2011 2012 2013 2014 2015 2016 • Dividend yield 4.0% 1) Di
Slide 27: Anvia transaction
Anvia transaction • Elisa acquired Anvia’s ICT businesses • Including telecom, IT, hosting and entertainment service • 2015 revenue of acquired businesses €82m and EBITDA €15m • Anvia operates fixed networks in Ostrobothnia, western Finland • Acquisition price approx. €107m • Approx. €76m paid in An
Slide 28: Financial effects
Financial effects • Estimated synergy benefit sources Fixed subscriptions • Networks • Overlapping functions and systems Elisa Anvia Subs ’000 Q2/2016 2015 Total Change • Procurement PSTN 144 43 187 +30% • CAPEX synergies Broadband 524 62 586 +12% Cable TV 341 80 421 +23% • Preliminary synergy benef
Slide 29: Contact
Contact: Mr. Vesa Sahivirta vesa.sahivirta@elisa.fi | +358 102 623 036 Elisa IR app
Slide 30: Cash flow YoY comparison
APPENDIX Cash flow YoY comparison € million Q2/16 Q2/15 Δ1) Δ% H1/16 H1/15 Δ1) Δ% 2015 EBITDA 134 131 2 2% 270 260 10 4% 532 Change in receivables 19 15 21 10 -2 Change in inventories 3 -2 10 3 -6 Change in payables -2 -3 -7 9 7 Change in NWC 21 9 11 23 22 1 -0 Financials (net) 2 -1 3 -8 -11 3 -18 T
Slide 31: Cash flow by quarters
APPENDIX Cash flow by quarters € million Q2/16 Q1/16 Q4/15 Q3/15 Q2/15 Q1/15 Q4/14 Q3/14 EBITDA 134 137 128 145 131 129 125 142 Change in receivables 19 2 10 -22 15 -5 9 0 Change in inventories 3 6 -12 4 -2 5 -4 0 Change in payables -2 -6 -20 18 -3 12 4 -22 Change in NWC 21 3 -22 0 9 13 8 -22 Financ
Slide 32: Debt structure
APPENDIX Debt structure € million, at the end of the quarter Q2/16 Q1/16 Q4/15 Q3/15 Q2/15 Q1/15 Q4/14 Q3/14 Bonds and notes 593 593 592 592 592 591 591 590 Commercial papers 215 146 171 229 219 169 210 200 Loans from financial institutions 195 195 200 200 205 205 211 211 Financial leases 26 27 28 2