ELISA?S 1Q OPERATIVE CASH FLOW INCREASED
ELISA CORPORATION STOCK EXCHANGE RELEASE
29 APRIL 2003 AT 8.00am
ELISAS 1Q OPERATIVE CASH FLOW INCREASED AND PTP WAS
NEGATIVE EUR -5 MILLION
January-March revenue amounted to EUR 371 million (384). The key
figures were as follows*):
· EBITDA EUR 85 million (78)
· EBIT EUR 7 million (-13),exclusive of amortisation on Group
goodwill EUR 21 million (1)
· result before extraordinary items and taxes EUR -5 million
(-25), exclusive of amortisation on Group goodwill EUR 9
million (-11).
During the first quarter operative cash flow**) was EUR 44
million. The financial position remains stable.
At the end of the review period:
· net debt amounted to EUR 767 million (757 at the end of
2002),
· operative investments in fixed assets totalled EUR 30
million 48), investments in shares were EUR 1 million
(4) and buy-backs of GSM leasing liability were EUR 9
million (20),
· the Groups equity ratio stood at 38.1 per cent (38.3
at the end of 2002).
Compared to 2002, CEO Matti Mattheiszen expects a moderate
improvement in performance for the rest of this year.
The reduced investment level within the Elisa Group and accurate
timing of projects increased the operative cash flow during the
first quarter. In the present market situation we hold to the 2003
outlook given in the 2002 annual report.ö
Information in this interim report is not audited.
*) Comparison figures (Q1 2002) exclusive of non-recurring items:
EBITDA EUR 85 million, EBIT EUR 11 million, and result before
extraordinary items and taxes EUR -1 million.
**) Operative cash flow = clean EBITDA - operative CAPEX - net
financial items; operative CAPEX = CAPEX excluding GSM network buy-
backs.
ELISA CORPORATION
Jyrki Antikainen, Vice President, Corporate Communications
Additional information:
Mr. Matti Mattheiszen, President & CEO, tel. +358 10 262 2917
Mr. Pekka Perttula, Group Spokesman and Executive Vice President,
tel. +358 50 555 0600
Mr. Vesa-Pekka Silaskivi, CFO, tel. +358 10 262 2606
Mr. Vesa Sahivirta, Vice President, Investor Relations,
tel. +358 10 262 3036
Appendix: Elisa Corporations Interim Report, January-March 2003
Distribution:
Helsinki Exchanges
Major media
ELISA CORPORATIONS INTERIM REPORT FOR JANUARY-MARCH 2003
Revenue
The Groups January-March revenue amounted to EUR 371 million
(384). Revenue decreased by 3 per cent compared with the
corresponding period last year. Disposal of telephone directory
and installation businesses and changes in accounting practices
reduced the revenue by EUR 10 million in total.
Performance
The Groups January-March EBIT was EUR 7 million (-13, exclusive
of non-recurring items the figure is 11). Without amortisation on
consolidated goodwill the January-March EBIT was EUR 21 million
(1). The first quarter did not include substantial non-recurring
items.
Planned depreciation and value adjustments on fixed assets
totalled EUR 65 million (77, exclusive of non-recurring items the
figure is 60). The shortening of write-off periods for mobile
networks in early 2003 and buy-backs of mobile networks Radiolinja
earlier leased were reflected in increased depreciation.
EUR 14 million (14) amortisation was booked on consolidated
goodwill. The Group´s goodwill resulting from the acquisition of
subsidiaries amounted to EUR 569 million (647) at the end of the
period under review.
The Groups financial income and expenses for January-March
totalled EUR -11 million (-11).
The Groups share of associated companies results amounted to EUR
-1 million (-1).
January-March taxes were EUR -4 million (-7). No deferred tax
receivables have been assigned for the losses incurred by German
subsidiaries and associated companies.
January-March performance:
· result before extraordinary items and taxes amounted to EUR -
5 million (-25, exclusive of non-recurring items the figure is
-1)and exclusive of amortisation on Group goodwill EUR 9
million(-11)
· earnings after taxes and minority interests were EUR -8
million (-22)
The Groups January-March earnings per share stood at EUR 0.06
(-0.18).
Elisa Mobile business area
The Elisa Mobile business areas January-March results were:
· revenue EUR 175 million (174)
· EBITDA EUR 42 million (52)
· EBIT EUR 5 million (6, exclusive of non-recurring items the
figure is 20) and exclusive of amortisation on Group goodwill EUR
15 million (16).
Revenue was affected by: the disconnetion of Telia Mobile Finland
subscriptions from Radiolinjas network in the summer of 2002,
tariff revisions, campaign discounts and loyal customer discount
schemes aimed at existing customers.
In addition to the weakened EBITDA, EBIT was also affected by
planned depreciation, which was EUR 5 million higher compared to
the corresponding period in 2002. Higher depreciation was due to
the shortened write-off periods and buy-backs of the mobile
network.
At the end of March 2003, Radiolinjas network in Finland had
1 348 183 subscriptions (1 348 710). This number includes
Radiolinjas own subscriptions as well as Telias prepaid
subscriptions roaming on Radiolinjas network.
Subscriptions of Radiolinjas service operator in Finland:
· annualised churn for the review period was 14.4 per cent
(18.2)
· ARPU amounted to EUR 38.4 a month (41.4)
· the share of added value services from the revenue was 13
per cent (12).
The decline in ARPU from the corresponding period of the previous
year results from the decline in customer tariffs in the Finnish
mobile market.
Radiolinja and Cubio Communications signed a service operator
agreement in January. According to the agreement, Radiolinja is
providing the start-up mobile operator with network capacity as
well as content and expert services. The services were initiated
during the spring 2003.
In March, Radiolinjas new organisation, based on regional
competition strategy, was adopted. The operating areas, covering
the whole of Finland, are Uusimaa, Western Finland, Häme and
Central Finland, Eastern Finland and Northern Finland.
At the end of March, Radiolinja Eesti, Radiolinjas subsidiary
operating in Estonia, had 157 600 subscriptions (147 500).
Radiolinja Eesti reported the following figures for January-March:
· revenue of EUR 13.6 million (11.2)
· EBITDA EUR 3.7 million (3.0) and
· EBIT EUR 1.5 million (1.0).
Fixed network business (ElisaCom and Elisa Networks business
areas)
Fixed network business results January-March were:
· revenue was EUR 170 million (186)
· EBITDA amounted to EUR 52 million (51)
· EBIT totalled EUR 24 million (23).
The decrease in revenue was due to the divestment of the telephone
directory business, restructuring of the business areas, changes
in accounting practices and price erosion.
EBIT does not include substantial amortisation on Group goodwill.
At the end of March, the Group with its associated companies had
1.18 million fixed subscriptions (1.20) in total.
The number of broadband subscriptions was approximately 81 000
(37 000). There were 172 400 TV cable subscriptions (157 900) at
the end of March.
The availability area of Elisas broadband subscriptions was
expanded in early 2003 to eight new regions. The expansion also
continued after the review period. The geographical expansion of
broadband subscriptions is jointly implemented by ElisaCom, Elisa
Networks and Elisa Mobile.
The harmonisation of local calls pricing structure continued
during the review period. The new broadband price list for
operators came into force on 1 April 2003.
ElisaCom and Hewlett Packard renewed their extensive cooperation
agreement in February. The agreement consolidates Elisas position
as a provider of ICT services for business customers.
Soon Com and Etelä-Satakunnan Puhelin signed an agreement in
February to extend their cooperation.
Riihimäen Puhelin Oy incorporated its service operator business as
of 1 January 2003. The 100% owned subsidiary RPOCom Oy continues
with the service operator business. RPOs corporate sales,
customer sales and shops were also assigned to RPOCom.
During the first quarter Elisa Corporation's holding in Riihimäen
Puhelin Oy exceeded the 90 per cent limit through stock exchange
transactions. The price per share for the transactions was
EUR 1 525. On 20 March 2003, the Group announced its intention to
redeem the remaining shares of Riihimäen Puhelin Oy in compliance
with the Companies Act.
Germany-based business (Elisa Kommunikation business area)
Operations in Germany reported for January-March:
· revenue of EUR 32 million (27)
· EBITDA was EUR -1 million (-15)
· EBIT of EUR -10 million (-27, exclusive of non-recurring
items the figure is -17) and exclusive of amortisation on
Group goodwill EUR -7 million (-24).
Germany-based business developed as expected despite the countrys
ongoing difficult economic situation. The number of business
customers increased during Q1, to 16 633 at the end of March.
Negative EBITDA of the review period was due to the seasonal
fluctuation, characteristic to Germany-based business.
Other companies
Comptel Corporation disclosed its January-March interim report on
23 April 2003 and Yomi Plc on 28 April 2003. The key figures of
these listed companies in the January-March reports were:
Comptel Corporation
· revenue EUR 12.1 million (11.3)
· EBITDA EUR 0.5 million (-1.7)
· EBIT EUR -0.3 million (-2.6)
Yomi Plc
· revenue EUR 14.0 million (13.9)
· EBITDA EUR 2.2 million (1.8)
· EBIT EUR -0.4 million (-0.8)
Yomi´s subsidiaries Kestel Oy and Kesnet Oy are operatively
associated with the fixed line business.
In addition, Estera Oy, also listed under Other companies
reported:
· revenue EUR 5.4 million
· EBITDA EUR 0.3 million
· EBIT EUR 0.1 million.
Investments
The Groups gross investments in fixed assets in January-March
amounted to EUR 39 million (68), of which operative investments
accounted for EUR 30 million (48) and acquisition of shares 1
million (4).
Investments in fixed assets amounted to:
· EUR 16 million in Radiolinja
· EUR 18 million in the fixed network business and
· EUR 4 million in Germany-based business.
Radiolinjas investments include GSM leasing liability buy-backs
from telcos to the amount of EUR 9 million (20).
Financial position
The Groups financial position and liquidity remained stable. Net
debt amounted to EUR 767 million at the end of review period. The
Groups equity ratio stood at 38.1 per cent (38.3 per cent at the
end of 2002). Consolidated cash flow after investments was EUR -10
million. Negative consolidated cash flow after investments is due
to the timing of interest payments and billing due dates of
business customers. More detailed information on the financial
position is available in the table attached.
On 13 March 2003, the credit rating agency Moodys Investor
Services downgraded the Groups credit rating A3 (review for
downgrade) to Baa2 (stable). Moody´s explained its decision as
being due to the tough competition and price erosion prevailing in
Elisa´s home market. Other factors were: difficult business
environment and losses in German business, difficulties in re-
arranging non-core businesses because of challenging market
situation and risks which might relate for example to
acquisitions.
Shares
The A Share of Elisa Corporation closed at EUR 5.70 on 31 March
2003. The highest quotation in January-March was EUR 6.50 and the
lowest EUR 4.67. The average rate was EUR 5.61.
As of 31 March 2003, the companys number of shares was
138 011 757, all of which were A Shares. Their market
capitalisation was EUR 782 million.
During the period from 1 January 2003 to 31 March 2003, a total of
26.1 million A Shares of the company were exchanged on the
Helsinki Exchanges for an aggregate value of EUR 146.7 million.
The exchange was 19 per cent of the number of A Shares on the
market.
The number of Elisa Corporations A options for the year 2000 is
3 600 000. Between 1 January 2003 31 March 2003, the total
number of A options traded on Helsinki Exchanges was 7 950 at a
total price of EUR 1 443 and their average rate was EUR 0.18. The
highest quotation of the A options in the January-March period was
EUR 0.25, and the lowest EUR 0.03. The closing rate of the A
option was EUR 0.03.
The total number of Elisa Corporations A Shares owned by the
subsidiaries was 781 563. The par value of the shares totalled EUR
390 781.50, and their proportion of the share capital and voting
rights was 0.57 per cent. The book value of these company shares
has been deducted from the distributable assets of the Group.
Moreover, the Elisa Group Pension Fund owns 1 577 763 A shares.
On 14 March 2003, Fidelity International Limited announced that
through the trading of shares, the companys and its subsidiaries
share of Elisa Corporations share capital and votes fell below 5
per cent.
Legal issues
No changes have taken place in the legal processes described in
the companys Report of the Board of Directors for the Year 2002.
No new legal processes have been initiated.
Events after the period under review
On 3 April 2003, the Board of Directors of Elisa Corporation
appointed Veli-Matti Mattila (41) MSc (Eng.), MBA, Chief Executive
Officer of the Group. His employment with the Group commences on 1
May and he will assume his duties as CEO on 1 July 2003. The
present CEO Matti Mattheiszen (60) will continue on special
assignments for the Board until 1 September 2003, at which date
he will retire.
On 4 April 2003, the Annual General Meeting decided in accordance
with the proposal of the Board of Directors, that no dividend be
paid for 2002. The Annual General Meeting confirmed the parent
company's income statement and balance sheet, and the consolidated
income statement and the balance sheet. The members of the Board
and the CEO were discharged from liability for 2002, and the
proposal of the Board of Directors to amend Articles 1,3,4,7,11
and 13 of the Articles of Association was approved. The amended
Articles of Association as a whole were published as an addendum
to the AGM stock exchange release given on 4 April 2003.
The number of the members of the Board of Directors was confirmed
at six (6), and the following members were elected for the next
one-year term: Keijo Suila, Ossi Virolainen, Matti Aura, Pekka
Ketonen and Jere Lahti, plus a new member Mika Ihamuotila,
Executive Vice President at Sampo Plc. In compliance with
established practice, the monthly compensation of the Board
members is used for the purchases of Elisa shares.
PricewaterhouseCoopers Oy (authorized public accountants, with APA
Henrik Sormunen as the responsible auditor) was appointed the
company's auditor.
The Annual General Meeting approved the proposal of the Board of
Directors to authorize the Board of Directors within one year from
the Annual General Meeting to decide on increasing the company's
share capital. The Board was to achieve this through one or more
new issues, one or more convertible bonds and/or warrants so that
in a new issue or when issuing convertible bonds or warrants, a
maximum aggregate of 27.6 million of the company's A Shares can be
issued for subscription, and the company's share capital can be
increased by a maximum of EUR 13.8 million in total.
The Board of Directors, elected by the Annual General Meeting of
Elisa Corporation, held its organising meeting on 4 April 2003.
Keijo Suila was re-elected the Chairman of the Board and Ossi
Virolainen continues as the Deputy Chairman.
The amendments decided upon at the AGM, including changing the
name to Elisa Corporation, were entered in the Trade Register on
11 April 2003.
A decision was made to incorporate the Finnish service operator
activities of the Elisa Mobile business area to form Radiolinja
Suomi Oy as of 1 May 2003.
On 17 April, the credit rating agency Standard & Poor's announced
that it has lowered its long-term credit rating of Elisa
Corporation to 'BBB+' from 'A-'. At the same time, Standard &
Poor's affirmed its 'A-2' short-term corporate credit rating of
the company. The outlook is negative.
Future outlook
The Board of Directors reiterates its estimate given in the 2002
accounts, of the moderate growth of corporate revenue, EBITDA and
earnings compared with 2002. The positive development of Germany-
based businesses will improve the profitability of the whole
Group.
Operative investments are restricted to 15 per cent of the revenue
at the maximum. Owing to improved profitability and the moderate
investment level the Groups cash flow will remain positive and
net debt will be reduced. Restructuring of non-core businesses
will continue.
EBITDA of the Groups German-based business area is estimated to be
positive in 2003. EBIT is estimated to develop favourably in 2004,
but due to the uncertain outlook of German market it is difficult
to give a more exact guidance.
ELISA CORPORATION GROUP
INTERIM REPORT 1 JANUARY - 31 MARCH 2003
EUR million January- January- January-
CONSOLIDATED INCOME STATEMENT March March December
2003 2002 2002
Revenue 371 384 1 563
Other operating income 4 5 92
Operating expenses -290 -311 -1 322
Depreciation and value adjustments:
On fixed assets -65 -77 -322
On Group's goodwill -14 -14 -59
EBIT 7 -13 -48
Financial income and expenses:
Share of associated companies' profits -1 -1 -5
Other financial income and expenses -11 -11 -50
Profit before extraordinary items -5 -25 -103
Extraordinary items 3 3
Profit after extraordinary items -5 -22 -100
Income taxes -4 -7 3
Minority interest 0 7 26
Net profit -8 -22 -71
January- January- January-
CONSOLIDATED BALANCE SHEET March March December
2003 2002 2002
Fixed assets
Intangible assets 76 81 77
Consolidated goodwill 569 647 583
Tangible assets 930 988 962
Share in associated companies 21 19 21
Other investments 13 21 13
1 609 1 756 1 656
Current assets
Inventories 20 26 21
Deferred tax receivable 28 14
Receivables 344 431 334
Marketable securities 1 5 2
Cash in hand and in banks 84 130 71
477 592 442
Total assets 2 086 2 348 2 098
Shareholders' equity
Share capital 69 69 69
Share premium account 517 517 517
Contingency fund 3 3 3
Retained earnings 127 183 198
Net profit -8 -22 -71
708 750 716
Minority interests 83 127 83
Provisions for liabilities and charges 64 1 71
Liabilities
Deferred tax liability 15
Long-term creditors 714 581 715
Short-term creditors 517 874 513
1 231 1 470 1 228
Total shareholders' equity and
liabilities 2 086 2 348 2 098
Deviating from the year 2002 interim
reports, the Tropolys subgroup has
applied an IAS-compliant procedure
in the acquisition of subsidiaries,
which has affected the Group's goodwill
and minority interest,
since the financial statements
of 31 December 2002.
January- January- January-
CONSOLIDATED CASH FLOW STATEMENT March March December
2003 2002 2002
Cash inflow from operating activities
Net profit for the financial period -8 -22 -71
Adjustments:
Depreciation and value adjustments 79 90 381
Reduction in value of investments 1
Sales profits from business operations -48
Sales profits from the disposal of fixed
assets and shares 0 0 -5
Expense booking for GSM leasing liability 70
Other adjustments 0 -6 -21
Change in deferred tax
liability/receivable -14 -3 -34
Change in working capital and other
items -28 25 32
37 106 376
Cash inflow from operating activities 29 84 305
Cash flow in investments
Investments in fixed assets -39 -69 -268
Disposal of fixed assets 1 1 6
Investments in shares -1 -4 -7
Disposal of shares and business
operations 0 3 53
Cash flow in investments -39 -69 -216
Cash flow after investments -10 15 89
Cash flow in financing
Change in long-term loans -6 -34 75
Change in short-term loans 27 51 -209
Dividends paid -1 -4
Sale of own shares 18
Cash flow in financing 21 16 -120
Change in financial assets 11 31 -31
Financial assets at the end of the
financial period 85 135 74
January- January- January-
KEY FIGURES March March December
2003 2002 2002
Earnings/share (EPS), EUR -0.06 -0.18 -0.54
Shareholders' equity/share, EUR 5.16 5.53 5.21
Gross investments in fixed assets 39 68 269
Gross investments as % of revenue 10.5 17.7 17.2
Purchase of shares 1 4 16
Non-interest-bearing debts 379 510 396
Personnel on average 7 365 8 673 8 115
January- January- January-
LIABILITIES March March December
2003 2002 2002
Mortgages
For own
Pledges given 75 70 67
Deposits given as surety 10 38 10
Guarantees given
For others 11 1 11
Leasing commitments 79 76 72
Repurchase commitments 3 5 3
Lease-leaseback agreement commitment
(QTE facility) 186 233 194
Other commitments 58 53 52
Total liabilities 422 476 409
GSM and data network lease agreement
liabilities outside the Group on
31 March 2003 amounted to approximately
EUR 209 million (EUR 216 million at the
end of 2002). For the future redemption
of the relevant GSM network financial
agreements, obligatory reserve has been
formed in the balance sheet, which covers
around EUR 65 million of the remaining
lease agreement liability.
Derivative contracts
Forward contracts
Market value of underlying security 16 5 13
Market value 1 0 1
Interest and currency swaps
Market value of underlying security 0 8 0
Market value 0 0 0
January- January- January-
ADJUSTED GROUP KEY FIGURES March March December
(exclusive of non-recurring items) 2003 2002 2002
Revenue 371 384 1 563
EBITDA 85 85 342
EBITDA, % 22.9 22.1 21.9
EBIT 7 11 32
EBIT, % 1.9 2.9 2.0
Profit before extraordinary items -5 -1 -23
Adjusted key figures have been calculated
without the following non-recurring items:
Sales profits 73
Expense booking for GSM network leasing liability -77
Writedowns of the GSM network -14 -51
Writedowns of Cityphone and
submarine cable networks -8
Other writedowns in Finland -4
Rundown costs of Mäkitorppa GmbH -10 -8
Other writedowns in Germany -5
Non-recurring items, total -24 -80
Impact on EBITDA -7 -9
Impact on EBIT -24 -80
Impact on profit before extraordinary items -24 -80
Items presented in the interim report tables
have been rounded up.
__________________________________________________
The Group's revenue, EBITDA and EBIT by Business Area (BA),
1 Jan - 31 March 2003
EUR million
Fixed network* Revenue EBITDA EBIT
1-3/03 1-3/02 1-3/03 1-3/02 1-3/03 1-3/02
Services 159 173 8 8 -3 -2
Network 71 80 44 43 27 25
Intra-BA sales -60 -67
Group bookings
Total 170 186 52 51 24 23
*)Owing to corporate structural changes, the figures are not
comparable with the previous year in all respects.
Elisa Mobile Revenue EBITDA EBIT
1-3/03 1-3/02 1-3/03 1-3/02 1-3/03 1-3/02
Radiolinja
(operator business)165 166 41 53 14 18
Retail companies 16 12 1 -1 1 -2
Intra-BA sales -6 -4
Group bookings -10 -9
Total 175 174 42 52 5 7
Germany*) Revenue EBITDA EBIT
1-3/03 1-3/02 1-3/03 1-3/02 1-3/03 1-3/02
Carrier business 32 26 -1 -8 -7 -14
Mäkitorppa GmbH 1 -7 -10
Group bookings -3 -3
Total 32 27 -1 -15 -10 -27
*)Shares of profits of German associated companies
in 1-3/03 was MEUR 0 (-1).
Other companies Revenue EBITDA EBIT
1-3/03 1-3/02 1-3/03 1-3/02 1-3/03 1-3/02
Comptel 12 11 1 -2 0 -3
Other companies*) 13 9 -2 1 -2 0
Intra-BA sales -1
Group bookings -1 -1
Total 24 20 -1 -1 -3 -4
*)Includes Yomi IT companies and the parent company of Yomi Group
Group functions 9 8 -7 -9 -9 -12
Group, total 371 384 85 78 7 -13
Revenue, EBITDA and EBIT by Business Area
(exclusive of non-recurring items)
Business Area (BA) Revenue EBITDA EBIT
(adjusted) (adjusted) (adjusted)
1-3/03 1-3/02 1-3/03 1-3/02 1-3/03 1-3/02
Fixed network 170 186 52 51 24 23
Elisa Mobile 175 174 42 52 5 21
Germany 32 27 -1 -8 -10 -17
Other functions 33 28 -8 -10 -12 -16
Sales between BAs -39 -31
Group, total
(adjusted) 371 384 85 85 7 11
______________________________________________________________
FINANCIAL SITUATION AS AT 31 MARCH 2003
EUR million 31Mar03 31Dec02 30Sep02 30Jun02 31Mar02
Long-term loans
Bonds and notes 572 572 472 472 423
Loans from
the Pension Fun 80 80 83 83 83
Loans from
financial institutions 48 54 38 38 68
Total 699 705 593 593 575
Short-term loans
Bonds and notes 0 52 52 152 153
Loans from
financial institutions 2 2 34 34 23
Committed credit line 1) 0 0 40 0 50
Commercial papers 2) 124 44 128 106 100
Others 27 3) 28 50 59 60
Total 153 126 304 351 385
Interest-bearing debt,
total 852 831 897 944 960
Securities 1 3 3 3 5
Cash and bank 84 71 77 92 130
Interest-bearing
receivables 85 74 80 95 135
Net debt 4) 767 757 817 849 825
1) The committed credit line is a joint EUR 170 million revolving
credit facility with seven banks, which Elisa Group may
flexibly use on agreed. The loan arrangement is valid until
26 November 2003.
2) Elisa Group has agreed on a joint program with six banks on
issuing commercial papers. The arrangement is not committed.
The maximum amount of the arrangement is EUR 150 million.
3) Radiolinja's redemption liability for minority shareholders
(EUR 16m) and deposits in the Financial Services Office
(EUR 11m).
4) Net debt is interest-bearing debt less interest-bearing
receivables.
Key financial
indicators 31Mar03 31Dec02 30Sep02 30Jun02 31Mar02
Gearing 97 % 95 % 105 % 102 % 94 %
Equity ratio 38 % 38 % 35 % 38 % 38 %
