Slide 1: Interim Report 1 April 2005 – 30 June 2005
Interim Report 1 April 2005 – 30 June 2005 Elisa Corporation Interim Report Q2 2005, 28 July 2005 1
Slide 2: Contents
Contents • Q2 2005 Report − President and CEO Veli-Matti Mattila • Financial performance − CFO Tuija Soanjärvi Elisa Corporation Interim Report Q2 2005, 28 July 2005 2
Slide 3: Q2 2005 Report
Q2 2005 Report President and CEO Veli-Matti Mattila
Slide 4: Elisa Q2 2005
Elisa Q2 2005 • Q2 2005 and financial highlights • Review on the mobile and fixed network businesses • Development of operations − Integration of One Elisa − Share exchange offer to Saunalahti shareholders • Future Outlook Elisa Corporation Interim Report Q2 2005, 28 July 2005 4
Slide 5: Elisa Q2 2005 highlights
Q2 2005 and financial highlights Elisa Q2 2005 highlights • Elisa continued its success in fierce competition, market position strengthened • Elisa will improve its market position further with the Saunalahti transaction • Fierce competition and price erosion continued • Simplification of company st
Slide 6: Operative result as expected
Q2 2005 and financial highlights Operative result as expected Revenue and EBITDA-% • Revenue EUR 336m (339) 351 339 333 333 336 • EBITDA EUR 170m (102) − One-off items improved EBITDA by EUR 86m • Operative EBITDA EUR 84m − Q1 2005 comparable EBITDA EUR 51 % 86m • EBIT EUR 118m (48) 35 % 33 % 30 % 2
Slide 7: Income statement
Q2 2005 and financial highlights Income statement EUR million Q2 2005 Q2 2004 2004 Revenue 336 339 1356 EBITDA 170 102 455 EBITDA-% 51% 30% 34% EBIT 118 48 242 EBIT-% 35% 14% 18% Pre-tax profit 113 41 213 Pre-tax profit-% 34% 12% 16% Net result 95 29 159 Elisa Corporation Interim Report Q2 2005, 28
Slide 8: Financial position strengthened
Q2 2005 and financial highlights Financial position strengthened Net debt and cash flow • Cash flow EUR 136m (88) − One-off income improved cash flow 580 513 489 462 • Net debt EUR 364m (581) 364 • CAPEX EUR 46m (33), 14% 136 of revenue (10) 88 71 • Equity ratio 55% (43) 57 26 Q2 2004 Q3 2004 Q4 200
Slide 9: Growth in mobile subscriptions continued
Market review, mobile business Growth in mobile subscriptions continued Subscriptions and net change • Net adds 26,600 in Q2 1 500 1 438 1465 − Strengthened market position 1 331 1 368 1 384 1 300 • Continued fierce competition − Churn 32.3% (29.4) − Price erosion continues, ARPU EUR 1 100 33.8 (38.
Slide 10: Volume growth compensated for price erosion
Market review, mobile business Volume growth compensated for price erosion Revenue and EBITDA-% • Revenue EUR 180m (175) 179 180 179 180 175 • EBITDA EUR 74m (47), 41% of revenue (27) − Operative EBITDA EUR 46m, 26% of revenue • EBIT EUR 52m (25), 29% of revenue (14) 41 % − Operative EBIT EUR 24m, 1
Slide 11: Strong broadband sales continued
Market review, fixed network business Strong broadband sales continued Broadband subscriptions 350 000 • ADSL subscription growth 92% 308 183 yoy 300 000 269 232 • Net adds 39,000 in Q2 250 000 222 307 • Stronger market position, especially outside the capital 200 000 185 136 region 160 502 150 000
Slide 12: Broadband connection fees hit profitability
Market review, fixed network business Broadband connection fees hit profitability Revenue and EBITDA-% • Market activities and price erosion affected profitability 166 170 162 162 • Revenue EUR 170m (166) 161 • EBITDA EUR 43m (48), 25% of revenue (29) • EBIT EUR 17m (21), 10% of revenue (13) 29 % 31
Slide 13: Elisa strategy
Development of operations Elisa strategy 2005 - 2003 - New markets Strengthening market position Integration in core markets of One Elisa Elisa Corporation Interim Report Q2 2005, 28 July 2005 13
Slide 14: Operational priorities
2005 - Development of operations – One Elisa integration 2003 - New markets Operational priorities Strengthening market position Integration in core markets of One Elisa • Sale of real estate Significant profitability • Personnel reductions improvement • Ongoing cost cutting programs • Change in ope
Slide 15: New Elisa Mobi
Customer orientation New Elisa Mobi • Handset and services form a seamless product • Services integrated in the handset’s menu functions − Internet, e-mail, news, weather, TV, radio, camera and pictures, messages, ringing tones, … • Currently tailored in Nokia 3230, other terminals will follow • Ope
Slide 16: New services: Vodafone Push Email
Customer orientation New services: Vodafone Push Email • Real-time, secured services for e-mail, calendar and address book to handset • Operates in all countries, where Elisa has a GPRS or 3G roaming agreement • Operator independent service • Currently available in Nokia 6600, 6630, 6680, SonyEricss
Slide 17: Mobile handset subsidies in 3G
Mobile handset subsidies in 3G • The Ministry of Transport and Communications proposes that the prohibition on bundling 3G mobile phones and subscriptions will be removed • The proposal would enable a 24-month SIM-lock • The law would take effect in early 2006 • Elisa’s strong retail chains and 3G n
Slide 18: Saunalahti transaction
2005 - Development of operations - strengthening market position 2003 - New markets Saunalahti transaction Strengthening market position Integration in core markets of One Elisa • The combination of the businesses creates a bigger and more competitive Finnish operator in all customer segments • Elis
Slide 19: Execution on progress
2005 - Development of operations - strengthening market position 2003 - New markets Execution on progress Strengthening market position Integration in core markets of One Elisa • Preliminary information has been given to the Finnish competition authority • The processing time is from one to three mo
Slide 20: Outlook for 2005
Outlook for 2005 • Keen competition will continue • Elisa continues to strengthen its market position • Comparable revenue at 2004 level – competitiveness will improve and profitability remains good • No major changes in H2 comparable EBITDA and EBIT compared to H1 levels − Assumption: MVNO traffic,
Slide 21: Financial performance
Financial performance CFO Tuija Soanjärvi
Slide 22: Income statement
Q2 2005 financial highlights Income statement EUR million Q2 2005 Q2 2004 2004 Revenue 336 339 1356 Other income from operations 87* 3 27 Operating expenses -253 -241 -928 EBITDA 170 102 455 Depreciations -52 -53 -213 EBIT 118 48 242 Share of acc.companies result 1 0 1 Net financial items -6 -7 -30
Slide 23: Non-recurring items in Q2
Q2 2005 financial highlights Non-recurring items in Q2 EUR million Q2 2005 Q1 2005 Reported EBITDA 170 97 Damage compensation from TeliaSonera 30 Damage compensation to Finnet -2 Capital gain on real estate 15 Effect of Comptel deal* 40 Adjustment to Yomi Software PPA** -4 IFRS adjustment of pension
Slide 24: Comparable revenue of 2004
Q2 2005 financial highlights Comparable revenue of 2004 EUR million 2004 Revenue drivers in 2005 Elisa 1,356 Comptel -60 + Increase in mobile subs + Increasing usage in mobile Yomi Software -17 + Increasing MVNO traffic Internal revenue 20 + Growing broadband business Revenue excluding 1,300 - Price
Slide 25: Positive one-offs increased cash flow
Positive one-offs increased cash flow Cash flow after investments, EURm • Positive one-off items in Q1 and Q2160 2005 140 120 • Positive operative cash flow 100 80 136 60 88 40 71 57 20 26 0 Q2 2004 Q3 2004 Q4 2004 Q1 2005 Q2 2005 Elisa Corporation Interim Report Q2 2005, 28 July 2005 25
Slide 26: Q2 CAPEX 14% of revenue
Q2 CAPEX 14% of revenue CAPEX, EURm • CAPEX includes 120 − Financial leases − Real estate EUR 7m 100 − Share acquisitions 53 − Tikka EUR 31m 80 60 31 • Investments in fixed assets − Mobile EUR 22m 40 0 3 8 − Fixed line EUR 23m 59 − Other EUR 1m 20 45 42 46 33 0 Q2 2004 Q3 2004 Q4 2004 Q1 2005 Q2 200
Slide 27: Net debt in Q2
Net debt in Q2 Net Debt, EURm • Cash Flow EUR 136m in Q2 • Changes in debt structure 580 − Pension loans paid back EUR 513 489 462 64m − Bond buy-backs EUR 6m 364 Q2 2004 Q3 2004 Q4 2004 Q1 2005 Q2 2005 Elisa Corporation Interim Report Q2 2005, 28 July 2005 27
Slide 28: Interim Report April 2005 – June 2005
Interim Report 1 April 2005 – 30 June 2005 Elisa Corporation Interim Report Q2 2005, 28 July 2005 28
Slide 29: Consolidated Cash flow statement
Appendix slide Consolidated Cash flow statement CONSOLIDATED CASH FLOW STATEMENT EUR million Q2 2005 Q1 2005 Q4 2004 Q3 2004 Q2 2004 Cash flow from operating activities Profit before tax 113 39 65 50 41 Adjustments to profit before tax -11 47 34 57 46 Change in working capital 8 -26 18 -16 27 Cash f
Slide 30: Financial situation
Appendix slide Financial situation FINANCIAL SITUATION (EUR million) 30 Jun 2005 31 Mar 2005 31 Dec 2004 20 Sep 2004 30 Jun 2004 Interest-bearing debt Bonds and notes 458 463 467 570 571 Loans from the Pension fund 0 64 75 80 80 Loans from financial institutions 1 0 0 2 2 Financial leases 63 61 68 6