Slide 1: Interim Report 1 January 2004 – 31 March 2004
Interim Report 1 January 2004 – 31 March 2004 29 April 2004 Interim Report 1
Slide 2: Contents
Contents • Q1 2004 Report − President and CEO Veli-Matti Mattila • Key Figures and Financial Position − CFO Tuija Soanjärvi 29 April 2004 Interim Report 2
Slide 3: Q1 2004 Report
Q1 2004 Report President and CEO Veli-Matti Mattila
Slide 4: Elisa Q1 2004
Elisa Q1 2004 • Financial Highlights • Market Review and Highlights per Segment • Strategic Selections • Future Outlook 29 April 2004 Interim Report 4
Slide 5: Favourable Profitability Development
Favourable Profitability Development • Improving profitability − Lower cost structure begins to work • More competition in mobile subscriptions • Development towards One Elisa as planned 29 April 2004 Interim Report 5
Slide 6: Lower Revenue, Improved Result
Lower Revenue, Improved Result • Revenue EUR 333m (371, excluding Germany 339) • EBITDA EUR 119m (85, excl. Germany 86) • EBIT EUR 59m (7, excl. Germany 17) • Pre-tax profit EUR 51m (-5, excl. Germany 6) − Core businesses’ profitability improved − Profitability will improve further 29 April 2004 Int
Slide 7: EBITDA margin 36%
EBITDA margin 36% 140 40 120 35 30 100 EUR million 25 80 20 % 60 15 40 10 20 5 0 0 Q1/02 Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 Q3/04 Q4/03 Q1/04 EBITDA EBITDA margin 29 April 2004 Interim Report 7
Slide 8: Pre-tax Profit EUR 51m
Pre-tax Profit EUR 51m 60 16 14 50 12 40 10 30 EUR million 8 20 6 % 4 10 2 0 0 -10 -2 -20 -4 Q1/02 Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 Q3/04 Q4/03 Q1/04 Pre-tax profit Pre-tax profit margin 29 April 2004 Interim Report 8
Slide 9: Stronger Financial Position
Stronger Financial Position • Cash flow EUR 19m (-10) • Net debt EUR 587m (767) • Operative CAPEX 7% of revenue • Equity ratio 44% (38) 29 April 2004 Interim Report 9
Slide 10: Demanding Market for Mobile Business
Demanding Market for Mobile Business • Growth in usage • Price erosion due to competition • Increased Churn • New low-priced subscriptions in the market − Elisa launched new Kolumbus subscription 29 April 2004 Interim Report 10
Slide 11: Growth in Mobile's Revenue and Result
Growth in Mobile’s Revenue and Result • Revenue EUR 179m (174) • EBITDA EUR 66m (43), 37% of revenue (25) • EBIT EUR 37m (8) • Number of subscriptions decreased by 2% to 1,319,000 − Stable position in full service segment 29 April 2004 Interim Report 11
Slide 12: Fixed Network Market Stable
Fixed Network Market Stable • Strong demand in broadband channels continued • Number of analogue lines decreased • Successful sales in corporate segment 29 April 2004 Interim Report 12
Slide 13: Fixed Network Profitability Improved
Fixed Network Profitability Improved • Revenue EUR 164m (172) • EBITDA EUR 52m (45), 32% of revenue (26) • EBIT EUR 25m (17) • Broadband channels up by 81% to 148,300 (81,900) 29 April 2004 Interim Report 13
Slide 14: Strategic Selections
Strategic Selections • Finland as the main market − Yomi will merge into Elisa • Carefully selected international markets − Vodafone cooperation: − SAP, Philips and Novartis customer agreements − Products: Vodafone Mobile Connect Card − Projects in the Nordic countries: − Letter of Intent: Elisa as
Slide 15: Strategic Selections: Yomi to Merge into Elisa
Strategic Selections Yomi to Merge into Elisa • Merger plan − Stronger and more competitive entity − Clear ownership structure − Yomi’s telecom operations are core business of Elisa − Yomi’s IT business is non-core business for Elisa. Elisa will develop this IT business as a financial investment • N
Slide 16: Strategic Selections: Sale of the Germany-based Business
Strategic Selections Sale of the Germany-based Business • Sale agreement − Sale price EUR 70m − EUR 30m cash, EUR 40m in 2006 – 2008 • Financial consequences − One-off write down and tax credit in 2003 − Transaction has no effect on result in 2004 − Improving profitability − Stronger balance sheet 2
Slide 17: Operational Priorities
Operational Priorities 1. Customer orientation – New security solutions – New marketing director appointed to management team 2. Simplification of structure – One umbrella brand - Elisa – New organisation and operational model in January 3. Significant profitability improvement − projects according
Slide 18: Outlook for 2004
Outlook for 2004 • Comparable revenue slightly down from 2003 − New interconnection tariffs − Price erosion • Operative result will improve significantly • Q2-Q4 profitability clearly lower than Q1 − Market activities − Price competition 29 April 2004 Interim Report 18
Slide 19: Key Figures and Financial Position
Key Figures and Financial Position CFO Tuija Soanjärvi
Slide 20: Structural Change
Structural Change • New segment reporting − Overlaps removed − Some businesses grouped differently − Previously reported business area figures not comparable • Improved transparency • Germany-based business not consolidated in Group figures 29 April 2004 Interim Report 20
Slide 21: Elisa's Q1 2004 P&L
Elisa’s Q1 2004 P&L Elisa Excl. Germany EURm Q1/04 Q1/03 Q1/03 Revenue 333 371 339 Other operating income 7 4 2 EBITDA 119 85 86 EBITDA margin 36 % 23 % 25 % Depreciation -49 -65 -58 Goodwill depreciation -11 -14 -11 Write-downs - - - EBIT 59 7 17 EBIT margin 18 % 2% 5% Share of assoc. comp. result
Slide 22: Progress by Quarters
Progress by Quarters Elisa EURm Q1/04 Q4/03* Q3/03 Q2/03 Q1/03 Revenue 333 391 385 391 371 Other operating income 7 13 8 9 4 EBITDA 119 118 107 97 85 EBITDA margin 36 % 30 % 28 % 25 % 23 % Depreciation -49 -70 -67 -66 -65 Goodwill depreciation -11 -15 -14 -14 -14 EBIT 59 33 26 17 7 EBIT margin 18 %
Slide 23: New Segment Reporting
New Segment Reporting As reported Revenue Q1/2004 Q1/2003 Q1 2003 Mobile 179 174 175 Fixed network 164 172 170 Germany - 32 32 Other companies 23 24 33 Smaller Internal sales -33 -31 -39 internal Total 333 371 371 sales EBITDA Q1/2004 Q1/2003 Q1 2003 Mobile 66 43 42 Fixed network 52 45 52 Germany -
Slide 24: Operative CAPEX 7% of Revenue
Operative CAPEX 7% of Revenue 100 90 5 80 5 4 2 70 4 5 EUR million 60 20 21 22 8 50 2 1 4 1 40 8 3 76 9 30 19 48 49 55 20 46 39 42 30 23 10 0 Q1/02 Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Investments in shares GSM network buy-backs Investment in fixed assets 29 April 2004 Interim Report 24
Slide 25: Net Debt Decreased
Net Debt Decreased 900 850 825 817 800 757 767 742 722 700 654 587 600 EUR million 500 400 300 200 100 0 Q1/02 Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 29 April 2004 Interim Report 25
Slide 26: Cash Flow
Cash Flow EURm Q1/04 Q1/03 2003 Profit before extraordinary items 51 -5 -74 Depreciation and value adjustments 60 79 418 Other adjustments 5 11 36 Cash inflow before working capital 116 85 381 Change in working capital -32 -13 -21 Cash inflow before taxes and financials 85 72 360 Interests and divid
Slide 27: Good Financial Position
Good Financial Position • Gearing 67% (below 100%) • Equity Ratio 44% (above 40%) • Net Debt/EBITDA* 1.4x (below 2x) • EBITDA/financial expenses* 11.0x (above 8x) *Calculated from last four quarters 29 April 2004 Interim Report 27
Slide 28: Elisa Interim Report
Elisa Interim Report 1 January 2004 – 31 March 2004
Slide 29: Mobile Business Key Figures
Mobile Business Key Figures Mobile business, EURm Q1/04 Q1/03 % 2003 Revenue 179 174 3% 762 Clean EBITDA 66 42 56 % 215 Clean EBITDA-% 37 % 24 % 28 % CAPEX 26 16 61 % 103 CAPEX excl. network buy-backs 7 7 -6 % 75 Oper CAPEX / sales 4% 4% 10 % No. of Subscriptions in Finland * 1 319 007 1 348 183 -2
Slide 30: Elisa's Key Figures (1/2)
Elisa’s Key Figures (1/2) Elisa Group Q1/04 Q4/03 Q3/03 Q2/03 Q1/03 Q4/02 Q3/02 Q2/02 Q1/02 EURm Revenue 333 391 385 391 371 385 388 406 384 EBITDA 119 96 107 97 85 118 51 86 78 EBITDA-% 36 % 25 % 28 % 25 % 23 % 31 % 13 % 21 % 20 % Clean EBITDA 119 118 107 97 85 88 84 86 86 Clean EBITDA-% 36 % 30 %
Slide 31: Elisa's Key Figures (2/2)
Elisa’s Key Figures (2/2) Segments Q1/04 Q4/03 Q3/03 Q2/03 Q1/03 Q4/02 Q3/02 Q2/02 Q1/02 Mobile Revenue 179 203 195 190 175 185 188 192 174 ARPU, EUR 38,6 43,7 42,5 41,7 38,5 41,3 43,0 43,5 41,4 Churn, % 47,4 22,9 24,2 13,4 14,4 21,2 14,0 12,7 18,2 Subscriptions 1 319 007 1 374 146 1 374 847 1 356 8
Slide 32: Q1/04 Key Figures per Segment
Q1/04 Key Figures per Segment Segments Revenue EBITDA EBIT EUR million 1-3/04 1-3/03 1-3/04 1-3/03 1-3/04 1-3/03 Mobile 179 174 66 43 45 17 Group bookings -8 -9 Total 179 174 66 43 37 8 Fixed network 164 172 52 45 26 18 Group bookings -1 -1 Total 164 172 52 45 25 17 Germany - 32 - -1 - -9 Group book
Slide 33: Cash Flow by Quarters
Cash Flow by Quarters CONSOLIDATED CASH FLOW STATEMENT Q1/2004 Q4/2003 Q3/2003 Q2/2003 Q1/2003 Cash inflow from operating activities Profit before extraordinary items 51 -94 17 8 -5 Adjustments: Depreciation and value adjustments 60 179 80 80 79 Other financial income and expenses 7 10 9 10 11 Sales
Slide 34: Comparable Quarters 2003
Comparable Quarters 2003 Interim reports 2003 Pro forma excluding Germany-based business 2003 EUR million Q1/03 Q2/03 Q3/03 Q4/03 2003 EUR million Q1/03 Q2/03 Q3/03 Q4/03 2003 Revenue 371 391 385 391 1538 Revenue 339 356 351 358 1404 Other operating income 4 9 8 13 34 Other operating income 2 6 5 7