Slide 1: Financial statements 2005
Financial statements 2005 Elisa Corporation Financial statements 2005, 9 February 2006 1
Slide 2: Q4 2005 Report
Q4 2005 Report President and CEO Veli-Matti Mattila
Slide 3: Elisa Q4 2005
Elisa Q4 2005 • Q4 2005 and financial highlights • Review of the mobile and fixed network businesses • Execution of the strategy • Outlook for 2006 Elisa Corporation Financial statements 2005, 9 February 2006 3
Slide 4: Elisa Q4 2005 highlights
Q4 2005 financial highlights Elisa Q4 2005 highlights • Elisa further strengthened its market position, more stable competition at year-end • In mobile business usage growth and price erosion continued, churn decreased • Strong growth has continued in broadband subscriptions • EBITDA and EBIT slight
Slide 5: Profitability slightly better than the guidance
Q4 2005 and financial highlights Profitability slightly better than the guidance Revenue and EBITDA-% • Revenue EUR 343m (351) − Consolidation of Saunalahti as of 1 351 December 2005 333 336 326 343 • EBITDA EUR 95m (122) − excluding one-offs EUR 89m (108) • EBIT EUR 38m (69) • Pre-tax profit EUR 33
Slide 6: Financial position strengthened
Q4 2005 and financial highlights Financial position strengthened Net debt and cash flow • Cash flow EUR 145m (57) − One-off items approx. EUR 100m 489 462 • Net debt EUR 293m (462) 364 363 • CAPEX EUR 71m (59), 21% of 293 revenue (17) 136 145 • Equity ratio 62% (49) 57 • Gearing 22% (51) 26 1 • Dist
Slide 7: Less net adds, churn decreasing
Segment review, mobile business Less net adds, churn decreasing Subscriptions* and net adds 2 100 • Organic growth 2 300 in Q4 1 962 1 900 • Total amount of subscriptions in Elisa’s network about 2 million 1 700 1 465 1 481 1 483 1 500 1 438 1 384 • Competition slightly less intensive − churn 22.6%
Slide 8: Saunalahti generated growth
Segment review, mobile business Saunalahti generated growth Revenue and EBITDA-% • Revenue EUR 197m (180) − growth due to increased 197 Saunalahti traffic 180 179 180 183 • EBITDA EUR 52m (57), 26% of revenue (32) − decrease in average minute prices faster than cost adaptation 32 % • EBIT EUR 27m (3
Slide 9: MOU up, churn and ARPU decreasing
Segment review, mobile business MOU up, churn and ARPU decreasing ARPU (EUR) and churn (%) Usage (min/sub/month) 50 190 45 185 40 180 35 175 30 170 25 165 20 160 15 155 10 150 5 145 0 140 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 ARPU Churn Usage Elisa Corporation Financial statements 2005, 9
Slide 10: Market leadership in broadband strengthened
Segment review, fixed network business Market leadership in broadband strengthened Broadband subscriptions 460 000 • ADSL subscriptions growth 70% 420 465 yoy 410 000 384 909 360 000 345 898 • Organic growth 39,000 308 183 subscriptions in Q4 310 000 269 232 260 000 222 307 • Elisa strengthened its
Slide 11: Strong broadband sales lowers the profitability
Segment review, fixed network business Strong broadband sales lowers the profitability Revenue and EBITDA-% • Revenue EUR 173m (162) • EBITDA EUR 37m (48), 21% of 170 166 173 162 revenue (30) 162 − market activities in broadband subscriptions − analogue lines decreased by 10% and ISDN channels by 19
Slide 12: ADSL compensates decrease in traditional lines
Segment review, fixed network business ADSL compensates decrease in traditional lines thousands 1 400 1 200 1 000 800 600 400 200 0 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Traditional analogue ISDN Cable TV Broadband Elisa Corporation Financial statements 2005, 9 February 2006 12
Slide 13: Strategy execution
Strategy execution 2005 - 2003 - New markets and new services Strengthening market position Integration in core markets of One Elisa Elisa Corporation Financial statements 2005, 9 February 2006 13
Slide 14: Integration improved operative effeciency
Strategy execution 2005 Integration improved operative effeciency • Savings in procurement • Reduction in personnel costs Significant profitability • Outsourcing of application management services improvement • Outsourcing of network installation • Sale of real estate • New products and services • M
Slide 15: Market position strengthened in 2005
Strategy execution 2005 Market position strengthened in 2005 2500 • Scale advantage in mobile 2000 business 1500 − organic growth 1000 − Saunalahti deal 500 0 Q1/05 Q2/05 Q3/05 Q4/05 • Market leadership in broadband 450 Elisa Sonera DNA business 400 − competitive offering in own 350 300 network area
Slide 16: Productivity improvement
Strategy execution 2006 Productivity improvement Cost base reduction • New operational model as of 1 January 2006 EUR 48m • Development of processes • Renewal of information systems • Procurement and outsourcing • Personnel reductions 2004 2005 2006 2007 Elisa Corporation Financial statements 2005,
Slide 17: Customer intimacy
Strategy execution 2006 Customer intimacy • Customer satisfaction − further quality improvements • Customer loyalty − focus on existing customers • Customer value − new services Elisa Corporation Financial statements 2005, 9 February 2006 17
Slide 18: New businesses
Strategy execution 2006 – New services New businesses • Mobile broadband product (Saunalahti) − more customer friendly pricing • 3G bundle − new user friendly mobile terminals • IP/internet based services, like VoIP and IPTV • New turnkey solutions for enterprises Elisa Corporation Financial stateme
Slide 19: Outlook for 2006
Outlook for 2006 • Market − Competition remains challenging − More focus on services • Financial position − Revenue will grow clearly − EBITDA and EBIT excluding non-recurring items will improve • CAPEX and cash flow − CAPEX 13-15 per cent of revenue − certain non-recurring items due to IT and produ
Slide 20: Financial performance
Financial performance CFO Jari Kinnunen
Slide 21: Income statement
Income statement EUR milllion Q4 2005 Q4 2004 2005 2004 Revenue 343 351 1 337 1 356 Other income from operations 12 16 114 27 Operating expenses -261 -245 -1 005 -928 EBITDA 95 122 446 455 EBITDA-% 28% 35% 33% 34% EBITDA excluding one-offs 89 108 346 441 EBITDA-% excluding one-offs 26% 31% 26% 33% D
Slide 22: CAPEX increased at year-end
CAPEX increased at year-end CAPEX, EURm • CAPEX includes 120 − capacity increase 100 − in mobile network − in broadband infrastructure 53 80 15 − new billing, CRM and network management systems 60 31 − share acquisitions 5 − in cash EUR 15m 40 3 71 − share exchange EUR 361m 59 20 42 46 45 • Investme
Slide 23: Asset disposals generated cash flow in Q4
Asset disposals generated cash flow in Q4 Cash flow after investments, EURm • Positive operative cash flow 160 140 • Disposals − Real Estate 120 − German receivables 100 − Estera 80 145 136 60 • Change in net working capital EUR 14m 40 57 20 26 1 0 Q4 2004 Q1 2005 Q2 2005 Q3 2005 Q4 2005 Elisa Corpo
Slide 24: Net debt decreased further
Net debt decreased further Net debt, EURm • Cash flow EUR 145m in Q4 • Dividend payment EUR 66m in 462 489 Q4 364 363 293 Q4 2004 Q1 2005 Q2 2005 Q3 2005 Q4 2005 Elisa Corporation Financial statements 2005, 9 February 2006 24
Slide 25: Pro Forma key figures
Pro Forma key figures Sold sub- Bought sub- One-off Elisa Pro EUR million Elisa 2005 sidiaries 1) sidiaries 2) items 3) Elimination Forma 2005 Revenue 1 337 -47 217 -87 1 420 EBITDA 446 -5 4 -100 0 345 Depreciations and 213 -5 8 14 4) 230 amortisations EBIT 233 0 -4 -100 -14 115 1) Comptel, Yomi Sof
Slide 26: Execution of non-core assets' sale
Execution of non-core assets’ sale Estimated Execution Remaining EUR million value in Feb price value 2005 1) Comptel 128 66 2) 36 3) Yomi-IT, Estera and others 20 – 25 23 - Non-core properties 60 – 70 75 Receivables from the sale of German business receivable 40 40 - Total 240 – 260 204 36 1) Estim
Slide 27: Taxes in 2005
Taxes in 2005 • Tax rate in Finland 26% Taxes paid and in P&L, EURm − in Estonia taxes are paid only when profit is distributed 52 • Tax credit 31 December 2005 5 34 15 16 − Elisa parent EUR 19 million − Saunalahti EUR 22 million -60 2003 2004 2005 Paid taxes Taxes in P&L Elisa Corporation Financial
Slide 28: Dividend proposal
Dividend proposal Dividend, EURm • Dividend proposal EUR 0.70/share • Distributable equity EUR 276m − retained earnings and 2005 net 66% profit total EUR 307m 116 pay-out − accumulated depreciation difference, EUR 31m, restricts 176 distributable equity • Proposal for 10% share buy- 60 back authoris
Slide 29: Summary
Summary • Profitability improvement in focus − productivity improvement − synergy benefits • Strong financial position − capability to develop operations • Financial discipline − investment criteria • Distribution capacity − dividend − share buy-backs Elisa Corporation Financial statements 2005, 9 F
Slide 30: Financial statements 2005
Financial statements 2005 Elisa Corporation Financial statements 2005, 9 February 2006 30
Slide 31: Consolidated Cash flow statement
Appendix slide Consolidated Cash flow statement EUR million Q4 2005 Q3 2005 Q2 2005 Q1 2005 Q4 2004 Q3 2004 Q2 2004 Q1 2004 Cash flow from operating activities Profit before tax 33 28 113 39 65 50 41 56 Adjustments to profit before tax 57 53 -11 47 34 57 46 62 Change in working capital 14 -19 8 -26
Slide 32: Financial situation
Appendix slide Financial situation FINANCIAL SITUATION (EUR million) 31 December 2005 30 September 2005 30 June 2005 31 March 2005 31 December 2004 Interest-bearing debt Bonds and notes 446 455 458 463 467 Loans from the Pension fund 0 0 0 64 75 Loans from financial institutions 0 0 1 0 0 Financial