Slide 1: Interim Report
Interim Report 1 July 2005 – 30 September 2005 Elisa Corporation Interim Report Q3 2005, 27 October 2005 1
Slide 2: Q3 2005 Report
Q3 2005 Report President and CEO Veli-Matti Mattila
Slide 3: Elisa Q3 2005
Elisa Q3 2005 • Q3 2005 and financial highlights • Review of the mobile and fixed network businesses • Saunalahti transaction • Q4 2005 outlook Elisa Corporation Interim Report Q3 2005, 27 October 2005 3
Slide 4: Elisa Q3 2005 highlights
Q3 2005 financial highlights Elisa Q3 2005 highlights • Elisa further strengthened its market position, with growth continuing in both mobile and broadband subscriptions • Competition authorities approved the Saunalahti deal • EBITDA and EBIT in line with guidance • Competition environment and chang
Slide 5: Profitability in line with guidance
Q3 2005 and financial highlights Profitability in line with guidance Revenue and EBITDA-% • Revenue EUR 326m (333) − sale of non-core businesses 351 reduced revenue 333 333 336 326 − comparable revenue increased slightly • EBITDA EUR 85m (112) • EBIT EUR 33m (57) 33 % 30 % • Pre-tax profit EUR 28m (
Slide 6: Strong financial position
Q3 2005 and financial position Strong financial position Net debt and cash flow • Cash flow EUR 1m (71) − lower profit, seasonality in NWC, interest payment and purchase of 513 489 Tikka Communications shares 462 • Net debt EUR 363m (513) 364 363 • CAPEX EUR 45m (45), 14% of revenue (14) 136 − inves
Slide 7: Growth in subscriptions, lower churn
Market review, mobile business Growth in subscriptions, lower churn Subscriptions* and net adds • Net adds 16,000 in Q3 1465 1481 1 500 1 438 • Total amount of subscriptions in 1 368 1 384 Elisa’s network about 2 million 1 300 • Continued fierce competition 1 100 − churn 27.2% (21.6) − ARPU EUR 31.2
Slide 8: Volume growth compensated for price erosion
Market review, mobile business Volume growth compensated for price erosion Revenue and EBITDA-% • Revenue EUR 183m (179) − growth due to increased Saunalahti traffic 179 180 179 180 183 • EBITDA EUR 46m (60), 25% of revenue (34) − decrease in average minute prices faster than cost adaptation 34 % 32
Slide 9: Market leadership in broadband strengthened
Market review, fixed network business Market leadership in broadband strengthened Broadband subscriptions 400 000 • ADSL subscriptions growth 87% yoy 350 000 345 898 308 183 300 000 • Net adds 38,000 in Q3 269 232 250 000 222 307 • Elisa strengthened its market 200 000 185 136 position 150 000 • Dec
Slide 10: Strong broadband sales, lower profitability
Market review, fixed network business Strong broadband sales, lower profitability Revenue and EBITDA-% • Revenue EUR 166m (161) • EBITDA EUR 40m (50), 24% of 170 166 161 162 revenue (31) 162 − market activities in broadband business − analogue lines decreased by 9% and ISDN channels by 20% • EBIT EU
Slide 11: 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 Q3 2005, 27 October 2005 11
Slide 12: Saunalahti deal accepted
2005 - Elisa - Saunalahti 2003 - New markets Saunalahti deal accepted Strengthening market position Integration in core markets of One Elisa • The decision of the Finnish Competition Authority will provide a solid platform for developing a competitive and financially strong Finnish operator − The Sa
Slide 13: Better services for Finnish customers
Elisa - Saunalahti Better services for Finnish customers • Elisa to invest in Finland and in new services − reliable and extensive network − strong emphasis on new services • All present services of Elisa and Saunalahti will continue • The Saunalahti brand will remain, with its own strong features e
Slide 14: Progress with the transaction
Elisa - Saunalahti Progress with the transaction • Share Exchange Offer will end on 4 November 2005 • The result of the Share Exchange Offer − preliminary result on or about 7 November − Final result on or about 11 November • Increase in the share capital in the Trade Register on or about 15 Novembe
Slide 15: Outlook for Q4 2005
Outlook for Q4 2005 • Market − Keen competition will continue − Elisa will continue to strengthen its market position • Financial position − Comparable revenue at 2004 level − Q4 2005 comparable EBITDA and EBIT slightly lower than in previous quarters in 2005, taking into account the additional traf
Slide 16: Financial performance
Financial performance CFO Tuija Soanjärvi
Slide 17: Income statement
Income statement EUR million Q3 2005 Q3 2004 2004 Revenue 326 333 1356 Other income from operations 3 1 27 Operating expenses -244 -223 -928 EBITDA 85 112 455 Depreciations -52 -54 -213 EBIT 33 57 242 Share of acc.companies result 0 0 1 Net financial items -5 -7 -30 Pre-tax profit 28 50 213 Taxes -6
Slide 18: Seasonality in cash flow
Seasonality in cash flow Cash flow after investments, EURm • Seasonality in net working capital of160 EUR 19m 140 120 • Annual interest payment of EUR 12m due to EUR 260m 2011 bond 100 80 • Purchase of Tikka Communications 136 shares 60 40 • Positive operative cash flow 71 57 20 26 1 0 Q3 2004 Q4 20
Slide 19: Q3 CAPEX 14% of revenue
Q3 CAPEX 14% of revenue CAPEX, EURm • CAPEX includes 120 − Capacity increase − in mobile network due to 100 increased Saunalahti traffic 53 − in broadband infrastructure 80 − Share acquisitions 31 − Tikka EUR 5m 60 0 5 3 40 • Investments in fixed assets 59 − Mobile EUR 18m 20 45 42 46 45 − Fixed lin
Slide 20: Net debt in Q3
Net debt in Q3 Net Debt, EURm • Cash Flow EUR 1m in Q3 513 • No material changes in debt 462 489 structure − Bond buy-backs EUR 3m 364 363 Q3 2004 Q4 2004 Q1 2005 Q2 2005 Q3 2005 Elisa Corporation Interim Report Q3 2005, 27 October 2005 20
Slide 21: Financial impact of Saunalahti transaction
Financial impact of Saunalahti transaction • Purchase price approx. EUR 357m (if the deal is 100% share exchange with a share price of EUR 14) • Approximate purchase price allocations − amortisable intangible assets EUR 100m − customer relationships − Saunalahti brand − goodwill EUR 270m − deferred
Slide 22: Financial impact of Saunalahti transaction
Financial impact of Saunalahti transaction • Synergy benefits to be at least EUR 70m • Synergies start to take effect in late 2005, and almost reach their peak in 2006 − traffic transferred to Elisa’s network faster than estimated • Cash payments relate to cash redemption of minority shareholdings •
Slide 23: Interim Report
Interim Report 1 July 2005 – 30 September 2005 Elisa Corporation Interim Report Q3 2005, 27 October 2005 23
Slide 24: Consolidated Cash flow statement
Appendix slide Consolidated Cash flow statement CONSOLIDATED CASH FLOW STATEMENT EUR million Q3 2005 Q2 2005 Q1 2005 Q4 2004 Q3 2004 Q2 2004 Cash flow from operating activities Profit before tax 28 113 39 65 50 41 Adjustments to profit before tax 53 -11 47 34 57 46 Change in working capital -19 8 -2
Slide 25: Financial situation
Appendix slide Financial situation FINANCIAL SITUATION (EUR million) 30 Sep 2005 30 Jun 2005 31 Mar 2005 31 Dec 2004 30 Sep 2004 Interest-bearing debt Bonds and notes 455 458 463 467 570 Loans from the Pension fund 0 0 64 75 80 Loans from financial institutions 0 1 0 0 2 Financial leases 59 63 61 68