Slide 1: Interim Report July 2004 – September 2004
Interim Report 1 July 2004 – 30 September 2004 Elisa Corporation Q3 Interim Report 28 October 2004 1
Slide 2: Contents
Contents • Q3 2004 Report −President and CEO Veli-Matti Mattila • Key Figures and Financial Position −CFO Tuija Soanjärvi Elisa Corporation Q3 Interim Report 28 October 2004 2
Slide 3: Q3 2004 Report
Q3 2004 Report President and CEO Veli-Matti Mattila
Slide 4: Elisa Q3 2004
Elisa Q3 2004 • Market Review and Financial Highlights • Development of Operations • Future Outlook • Distribution Policy Elisa Corporation Q3 Interim Report 28 October 2004 4
Slide 5: Elisa Q3 2004 Highlights
Elisa Q3 2004 Highlights • Keen competition continued • Growth in mobile subscriptions and lower churn • Strong growth in broadband channels continued • Updated distribution policy Elisa Corporation Q3 Interim Report 28 October 2004 5
Slide 6: Improved Result, Lower Revenue
Improved Result, Lower Revenue • Revenue EUR 333m (385) • EBITDA EUR 105m (107) • EBIT EUR 45m (26) • Pre-tax profit EUR 36m (17) Elisa Corporation Q3 Interim Report 28 October 2004 6
Slide 7: Financial Position Strengthened
Financial Position Strengthened • Cash flow EUR 65m (21) − Sale of non-core assets EUR 32m • Net debt EUR 461m (722) • Operative CAPEX 12% of revenue (11) • Equity ratio 45% (40) Elisa Corporation Q3 Interim Report 28 October 2004 7
Slide 8: Successful Quarter for Mobile Business
Successful Quarter for Mobile Business • Growth in subscriptions continued • Churn decreased further • Growth in subscriber usage, price erosion continued • Growth in Kolumbus subscriptions Elisa Corporation Q3 Interim Report 28 October 2004 8
Slide 9: Mobile Results Improved
Mobile Results Improved • Revenue EUR 179m (194) − Change in revenue booking procedure − Increased usage compensated for price erosion • EBITDA EUR 57m (58), 32% of revenue (30) • EBIT EUR 25m (25), 14% of revenue (13) • Number of Elisa’s own service provider’s subscriptions increased by 34,000 from
Slide 10: Growth in Fixed Network Market
Growth in Fixed Network Market • Strong demand in broadband channels continued, growth 72% • Number of analogue lines decreased • Elisa broadband now in more than 300 municipalities − target to offer nationwide Elisa Corporation Q3 Interim Report 28 October 2004 10
Slide 11: Fixed Network Profit Improved
Fixed Network Profit Improved • Revenue EUR 161m (166) • EBITDA EUR 47m (45), 29% of revenue (27) • EBIT EUR 21m (14), 13% of revenue (8) • Broadband subscriptions up 72% to 185,100 (107,900) Elisa Corporation Q3 Interim Report 28 October 2004 11
Slide 12: Operational Priorities
Operational Priorities 1. Customer orientation – Antivirus program services for the mobile business – Mobile phone-enabled check-in service for airlines 2. Simplification of structure − Improvement in established Elisa brand − Progress of One Elisa 3. Significant profitability improvement − Efficien
Slide 13: Outlook for 2004
Outlook for 2004 • Slow market growth and demanding competition environment • Comparable revenue slightly down from 2003 − Lower interconnection tariffs and price erosion • Operative EBIT and pre-tax profit will improve significantly • Q4 EBITDA at the same level as Q2 − Seasonal costs in the last p
Slide 14: Distribution Policy
Distribution Policy • The board has updated Elisa’s distribution policy: 40 – 60 % of the Group’s net profit • Distribution includes both dividend payment and share buy-backs Elisa Corporation Q3 Interim Report 28 October 2004 14
Slide 15: Key Figures and Financial Position
Key Figures and Financial Position CFO Tuija Soanjärvi
Slide 16: Elisa's Q3 2004 P&L
Elisa’s Q3 2004 P&L Comparable figures Interim report EURm Q3/04 Q2/03* 2003** Q3/04 Q3/03 2003 Revenue 333 347 1384 333 385 1538 Other operating income 2 5 21 2 8 34 EBITDA 105 106 403 105 107 385 EBITDA margin 32 % 30 % 29 % 31 % 28 % 25 % Depreciation -49 -57 -236 -49 -67 -267 Goodwill depreciati
Slide 17: Progress by Quarters
Progress by Quarters EURm Q3/04 Q2/04 Q1/04 Q4/03* Q3/03 Q2/03 Q1/03 Revenue 333 339 333 391 385 391 371 Other operating income 2 4 7 13 8 9 4 EBITDA 105 95 119 118 107 97 85 EBITDA margin 32 % 28 % 36 % 30 % 28 % 25 % 23 % Depreciation -49 -49 -49 -70 -67 -66 -65 Goodwill depreciation -11 -11 -11 -
Slide 18: Operative CAPEX 12% of Revenue
Operative CAPEX 12% of Revenue 100 90 5 80 5 4 2 70 4 EUR million 60 5 22 20 21 8 50 2 1 4 1 8 40 8 3 76 9 30 19 1 48 49 55 20 46 39 42 41 30 32 10 23 0 Q1/02 Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Investments in shares GSM network buy-backs Investments in fixed assets Elisa Cor
Slide 19: Net Debt and Net Debt / EBITDA
Net Debt and Net Debt / EBITDA 900 825 850 817 3,0 757 767 742 722 750 654 2,5 587 Net Debt, EUR million Net Debt / EBITDA 600 513 2,0 461 450 1,5 300 1,0 150 0,5 0 0,0 Q1/02 Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Elisa Corporation Q3 Interim Report 28 October 2004 19
Slide 20: Debt Maturity Profile
Debt Maturity Profile 300 260 250 200 EUR million 150 109 100 80 53 40 50 30 5 2 0 0 0 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Elisa Corporation Q3 Interim Report 28 October 2004 20
Slide 21: Net Result, Cash Flow and Dividend
Net Result, Cash Flow and Dividend 150 Cash flow 100 Dividend Net result 50 EUR million 17 9 0 0 0 0 1999 2000 2001 2002 2003 1-3Q/04 -50 -100 -150 Elisa Corporation Q3 Interim Report 28 October 2004 21
Slide 22: Distribution Policy
Distribution Policy • The board has updated Elisa’s distribution policy: 40 – 60 % of the Group’s net profit • Distribution includes both dividend payment and share buy-backs • Share buy-backs − Authorisation from AGM to the board − Maximum 5% of shares (Finnish Company Act) − Restricted by the dist
Slide 23: Cash Flow by Quarters
Cash Flow by Quarters CONSOLIDATED CASH FLOW STATEMENT, EURm 3Q/2004 2Q/2004 1Q/2004 4Q/2003 3Q/2003 2Q/2003 1Q/2003 Cash inflow from operating activities Profit before extraordinary items 36 28 51 -94 17 8 -5 Adjustments: Depreciation and value adjustments 61 60 60 179 80 80 79 Other financial inco
Slide 24: Stronger Financial Position
Stronger Financial Position • Gearing 56% (88) • Equity ratio 45% (40) • Net debt / EBITDA* 1.1 x (1.9 x) • EBITDA / financial expenses* 12.5 x (10.0 x) * Calculated from last four quarters Elisa Corporation Q3 Interim Report 28 October 2004 24
Slide 25: Interim Report July 2004 – September 2004
Interim Report 1 July 2004 – 30 September 2004 Elisa Corporation Q3 Interim Report 28 October 2004 25
Slide 26: Mobile Business' Key Figures
Mobile Business’ Key Figures Q3/04 Q3/03 % 2003 Revenue, EURm 179 194 -8 % 762 EBITDA, EURm 57 58 -2 % 215 EBITDA-% 32 % 30 % 28 % CAPEX, EURm 18 22 -18 % 103 CAPEX excl. netw. buy-backs, EURm 18 19 -5 % 75 Oper CAPEX / sales 10 % 10 % 10 % No. of Subscriptions in Finland * 1 368 515 1 374 847 0% 1
Slide 27: Cash Flow
Cash Flow EURm Q1-Q3/04 Q1-Q3/03 2003 Profit before extraordinary items 115 20 -74 Depreciation and value adjustments 180 239 418 Other adjustments -1 10 31 Cash inflow before working capital 294 269 376 Change in working capital -13 -23 -16 Cash inflow before taxes and financials 281 246 360 Intere
Slide 28: Elisa's Quarterly Reported Key Figures (1/2)
Elisa’s Quarterly Reported Key Figures (1/2) Elisa Group Q3/04 Q2/04 Q1/04 Q4/03 Q3/03 Q2/03 Q1/03 Q4/02 Q3/02 EURm Revenue 333 339 333 391 385 391 371 385 388 EBITDA 105 95 119 96 107 97 85 118 51 EBITDA-% 32 % 28 % 36 % 25 % 28 % 25 % 23 % 31 % 13 % Clean EBITDA 105 95 119 118 107 97 85 88 84 Clea
Slide 29: Key Figures (2/2)
Key Figures (2/2) Segments Q3/04 Q2/04 Q1/04 Q4/03 Q3/03 Q2/03 Q1/03 Q4/02 Q3/02 Mobile Revenue 179 175 179 203 195 190 175 185 188 ARPU, EUR 37,5 38,2 38,6 43,7 42,5 41,7 38,5 41,3 43,0 Churn, % 21,6 29,4 47,4 22,9 24,2 13,4 14,4 21,2 14,0 Subscriptions 1 368 515 1 330 901 1 319 007 1 374 146 1 374