Slide 1: Financial statements 2006
Financial statements 2006
Slide 2: Q4 2006 Report
Q4 2006 Report President and CEO Veli-Matti Mattila
Slide 3: Elisa Q4 2006
Elisa Q4 2006 Q4 2006 and financial highlights Distribution 2006 Review of the mobile and fixed network businesses Execution of the strategy Interconnection fees Outlook for 2007
Slide 4: Elisa Q4 2006 highlights
Q4 2006 and financial highlights Elisa Q4 2006 highlights Sales of 3G service bundles progressed well, growth in broadband increased from Q3 Elisa has more than 50% of 3G service bundles In broadband 17,000 new customers Mobile ARPU improved from the previous quarter to EUR 30.8, churn incre
Slide 5: Revenue up 17%, EBITDA 34%
Q4 2006 and financial highlights Revenue up 17%, EBITDA 34% Revenue and EBITDA-% Revenue EUR 401m (343) 401 382 387 EBITDA EUR 118m (95) 343 348 excluding one-offs EUR 119m (89) EBIT EUR 70m (38) Pre-tax profit EUR 69m (33) 32 % 30 % 30 % 26 % 26 % EPS EUR 0,31 (0,18) Q4 2005 Q1 2006 Q2
Slide 6: Financial position stable
Q4 2006 and financial highlights Financial position stable Net debt and cash flow Cash flow EUR 40m (145) 381 377 Net debt EUR 377m (293) 336 share buy-back EUR 79m 293 293 CAPEX EUR 69m (67), 17% of revenue (20) 145 Equity ratio 63% (62) 29 36 40 13 Gearing 29% (22) Q4 2005 Q1 2006 Q2 2
Slide 7: Dividend proposal EUR 1.50
Dividend proposal EUR 1.50 Distributable equity at the year end EUR 574m The Board proposes to the AGM a dividend of EUR 0.50 per share and extra dividend of EUR 1.00 per share; total EUR 1.50 per share Dividend payment EUR 243m Pay-out ratio 152% Also proposal for authorisation of share b
Slide 8: Growth in customer base, ARPU increased
Segment review, mobile business Growth in customer base, ARPU increased ARPU and value added services Success in 3G subscriptions market share above 50% customer base increased about 30,000 30,4 31,3 30,5 30,8 ARPU EUR 30.8 (30.4*) 28,0 Churn 14.0% (22.6*) Slight increase due to Christma
Slide 9: 3G bundles increase mobile internet usage
Segment review, mobile business 3G bundles increase mobile internet usage Amount of internet access, thousands 6000 5000 Usage of mobile internet more than tripled 4000 3000 2000 1000 0 5 5 5 6 6 6 05 05 05 05 05 05 05 05 06 06 06 06 06 06 06 06 /0 /0 /0 /0 /0 /0 2/ 3/ 4/ 5/ 6/ 7/ 8/ 9/ 2/ 3/ 4/ 5/
Slide 10: 3G terminals and services generate growth
Segment review, mobile business 3G terminals and services generate growth Revenue and EBITDA-% Revenue EUR 253m (197) Increased usage of services and sale of 3G terminals 253 246 239 EBITDA EUR 76m (52), 30% of 197 192 revenue (26) Cost efficiency, volume growth, increase in 3G service bundl
Slide 11: Slight ARPU growth from Q3
Segment review, mobile business Slight ARPU growth from Q3 ARPU (€) and churn (%) annualised MoU (min/sub/month) outgoing traffic 50 240 45 220 40 200 35 180 30 160 25 140 20 120 15 100 10 80 5 60 0 40 Q 1 01 Q 1 01 Q 2 02 Q 2 02 Q 3 03 Q 3 03 Q 4 04 Q 4 04 Q 5 05 Q 5 05 Q 6 06 Q 6 06 0 0 0 0 0 0 0
Slide 12: Broadband growth accelerated
Segment review, fixed network business Broadband growth accelerated Broadband subscriptions Broadband subscriptions growth 600 000 18% y-o-y 479600 496300 500 000 472500 17,000 new subscriptions in Q4 459 800 Elisa market leader 420 500 400 000 Elisa launched IPTV “Viihdekaista” 300 000 onto
Slide 13: Growth in broadband affected profitability
Segment review, fixed network business Growth in broadband affected profitability Revenue and EBITDA-% Revenue EUR 162m (173) EBITDA EUR 43m (37), 27% of 180 173 revenue (21) 166 156 162 Growth in broadband and seasonality decreased profitability from Q3 EBIT EUR 19m (3), 12% of revenue (2)
Slide 14: Decrease of analogue subs slowed down
Segment review, fixed network business Decrease of analogue subs slowed down Thousands 1 600 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 Q1/06 Q2/06 Q3/06 Q4/06 Traditional analogue ISDN Cable TV Broadband
Slide 15: Strategy execution
Strategy execution 2005 - 2003 - New markets and new services Strengthening market position Integration in core markets of One Elisa
Slide 16: Productivity improvement
Strategy execution Productivity improvement • Outsourcing of order processing and billing Significant profitability • Outsourcing of installation and maintenance improvement • Reduction in personnel costs • 3G service bundles and wider service offering • New roaming pricing Customer orientation • Ne
Slide 17: 3G service bundles success story
Strategy execution 3G service bundles success story Successful sale of 3G service bundles continued Significant amount of new subscriptions are 3G service bundles Heavy users’ ARPU increase 10-15% from 2G to 3G Share of data significant Currently about 350,000 3G service bundle customers i
Slide 18: Terminal base has changed
Strategy execution Terminal base has changed Most internet users have changed to 3G phones January 2006 December 2006 1 Nokia3510i 1 NokiaN70 2 SAMSUNG-SGH-X480 2 NokiaN73 3 Nokia3230 3 Nokia6280 4 Nokia6101 4 Nokia6680 5 SAMSUNG-SGH-X460 5 Nokia6630 6 Nokia5140i 6 NokiaN80 7 Nokia 9300/9500 7 Nokia
Slide 19: Excellent network for 3G services
Strategy execution Excellent network for 3G services The whole 3G network upgraded to fast HSDPA in April 2006 First operator in the world to cover entire network Elisa first to offer up to 3.6 Mbps speed in the HSDPA network in Finland Elisa made the first commercial UMTS900 call in the wor
Slide 20: Most comprehensive 3G network coverage
Strategy execution Most comprehensive 3G network coverage Indoor coverage approx. 40% of population, at the year end approx. 60% About 65 cities Outdoor coverage approx. 60% of population, at the year end approx. 70% About 110 cities Number of base stations about 1,000 Amount will double
Slide 21: Symmetric interconnection fees through legislation
Interconnection fees Symmetric interconnection fees through legislation EU supports the view of Finnish Communications authorities Asymmetry in pricing skews the competition Wholesale price higher than retail price customers treated unequally Frequencies have already been allocated equally
Slide 22: Outlook for 2007
Outlook for 2007 Challenging market Competition remains challenging Focus on services Result will improve from 2006 Revenue will grow EBITDA and EBIT excluding non-recurring items will improve H1/2007 EBITDA and EBIT slightly at the lower level than H2/2006 Stable CAPEX and cash flow
Slide 23: Financial performance
Financial performance CFO Jari Kinnunen
Slide 24: Improved profitability
Improved profitability EUR Million Q4 2006 Q4 2005 2006 2005 Growth Revenue 401 343 1 518 1 337 EUR 181m, Other operating income 2 12 9 114 14% Operating expenses -285 -261 -1 093 -1 005 EBITDA 118 95 434 446 Growth EBITDA excluding one-offs 119 89 445 346 EUR 99m, EBITDA-% 29 % 28 % 29 % 33 % 28% E
Slide 25: Revenue growth y-o-y
Revenue growth y-o-y EUR million 1600 -3 1500 1400 190 -6 1300 Decrease in Saunalahti analogue lines acquisition 1 518 1200 Increase in 3G bundling 1 337 broadband Growth in 1100 Estonia 1000 2005 Fixed line Mobile Other and group 2006 elimination
Slide 26: Comparable figures 2005 and 2006
Comparable figures 2005 and 2006 Elisa Elisa 2005 2006 Elisa EUR million 2005 1) 2) 3) 4) excl. Change % Pro one-offs Forma 5) Revenue 1 337 -47 217 -87 1 420 1 518 98 7% + other oper. income 114 -93 21 9 -12 - operative expenses -1005 42 -213 -7 87 -1 096 -1 082 14 -1% EBITDA 446 -5 4 -100 0 345 44
Slide 27: Strong EPS growth in H2-2006
Strong EPS growth in H2-2006 450 0,45 401 382 387 400 0,40 343 348 333 336 326 0,32 350 0,32 0,35 300 0,30 250 0,21 0,25 0,19 200 0,17 0,20 0,15 150 0,13 0,15 0,06 123 119 103 100 89 84 85 88 100 73 72 0,10 48 44 50 37 32 33 31 0,05 0 0,00 Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 2
Slide 28: Change in cost structure
Change in cost structure Q1 Q2 Q3 Q4120 % 2006 2006 2006 2006 100 % 22 % 22 % 17 % Revenue 348 382 387 401 Other income 3 1 3 1 80 % 20 % 27 % 22 % 60 % Materials and services -149 -179 -178 -181 Employee benefit expenses -57 -60 -43 -54 40 % Other operating expenses -47 -49 -45 -48 63 % Total -253
Slide 29: CAPEX higher in Q4
CAPEX higher in Q4 CAPEX includes 100 CAPEX, EURm 40 % New broadband infrastructure 3G capacity and coverage increase 90 35 % Billing and customer care system 80 15 1 30 % 70 Investments in fixed assets 60 21 % 1 25 % Mobile EUR 27m 50 17 % 20 % Fixed network EUR 42m 7 40 14 % 12 % 15
Slide 30: Cash flow
Cash flow Cash flow and Positive cash flow EUR 41m in 160 operative cash flow*, EURm Q4 140 120 Increase in net working capital 100 EUR 9m 83 Sales receivables increased trough 3G 80 bundling 145 60 Increase in inventories 60 50 46 40 18 20 36 41 13 31 0 Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 20
Slide 31: Net debt increased to EUR 377m
Net debt increased to EUR 377m Net debt, EURm and Net debt/EBITDA Cash flow EUR 41m in Q4 381 Share buybacks EUR 79m in Q4 377 336 293 293 1,02 0,90 0,80 0,66 0,65 Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 2006 Net Debt, EUR million Net debt/EBITDA
Slide 32: Distribution proposal
Distribution proposal Dividend, EURm Distributable equity EUR 574m Dividend proposal EUR 1.50 share Ordinary dividend EUR 0.50 Extra dividend EUR 1.00 Total dividend payment EUR 243m 152% pay-out € 1.50/share Dividend yield 7.2% (as 31.12.06) 243 Proposal for 8 million shares buy- 161
Slide 33: Financial statements 2006
Financial statements 2006
Slide 34: Consolidated Cash flow statement
Appendix slide Consolidated Cash flow statement CONSOLIDATED CASH FLOW STATEMENT EUR million Q4 2006 Q3 2006 Q2 2006 Q1 2006 Q4 2005 Q3 2005 Q2 2005 Q1 2005 Cash flow from operating activities Profit before tax 69 69 34 39 33 28 113 39 Adjustments to profit before tax 46 50 63 59 57 53 -11 47 Change
Slide 35: Financial situation
Appendix slide Financial situation Financial situation (million euros) 31 December 2006 30 September 2006 30 June 2006 31 March 2006 31 December 2005 Interest-bearing debt Bonds and notes 327 327 326 326 446 Commercial Paper 25 0 35 0 0 Loans from financial institutions 0 0 0 0 0 Financial leases 46