Elisa’s Financial Statements 2014

ELISA FINANCIAL STATEMENTS RELEASE 30 JANUARY 2015 AT 8:30 A.M.

Fourth quarter 2014

• Revenue amounted to EUR 386 million (401)
• EBITDA was EUR 125 million (122, excluding non-recurring items 134) and EBIT was  EUR 71 million (69, excluding non-recurring items 81)
• Profit before taxes amounted to EUR 63 million (60, excluding non-recurring items 72)
• Earnings per share were EUR 0.31 (0.32, excluding non-recurring items 0.37)
• Cash flow after investments was EUR 42 million (26)
• Result includes extra expenses of approx. EUR 6 million relating brand renewal, outsourcing and visual communications business reorganization

• Mobile ARPU was EUR 15.0 (15.3 in previous quarter)
• Mobile churn was 16.6 per cent (16.9 in previous quarter)
• The number of Elisa’s mobile subscriptions decreased by 26,600 during the quarter. Prepaid decreased by 32,400 and postpaid increased by 5,800.
• The number of fixed broadband subscriptions was at the previous quarter’s level
• Net debt / EBITDA was 1.9 (2.0 end 2013) and gearing 114 per cent (113)

Year 2014

• Revenue was EUR 1,535 million (1,547)
• EBITDA was EUR 520 million (491, excluding non-recurring items 508) and EBIT was  EUR 305 million (281, excluding non-recurring items 298)
• Profit before tax was EUR 278 million (255, excluding non-recurring items 272)
• Earnings per share were EUR 1.41 (1.25, excluding non-recurring items 1.33)
• Cash flow after investments was EUR 185 million (84), excl. acquisitions EUR 224 (177)
• The Board of Directors proposes a dividend of EUR 1.32 per share

Key indicators

¹⁾ Excluding non-recurring items: Q4 2013 EBITDA EUR 134m, EBIT EUR 81m, Profit before tax EUR 72m and EPS EUR 0.37, FY 2013: EBITDA EUR 508m, EBIT EUR 298m, Profit before tax EUR 272m and EPS EUR 1.33

Financial position and cash flow

¹⁾ (interest-bearing debt – financial assets) / (four previous quarters’ EBITDA exclusive of non-recurring items)

²⁾ Full-year cash flow after investments excluding investments in PPO, Sulake and Anvia shares EUR 224m (177)

The Board of Directors proposes to the Annual General Meeting a dividend of EUR 1.32 (1.30) per share. The Board of Directors decided also to propose to the General Meeting an authorisation to acquire max. 5 million treasury shares, which corresponds to 3 per cent of the total shares. Key Performance Indicators: www.elisa.com/investors ›  Elisa Operational Data.xls

CEO Veli-Matti Mattila:

Best result in Elisa's history

Elisa's earnings grew in 2014 and competitiveness improved further. The use of mobile data services continued to increase intensely. The availability of 4G, the widespread use of smartphones and the popularity of mobile apps have already become deeply rooted in the lives of consumers, corporate customers and organisations. Revenue remained at the previous year's level. In the last quarter of the year, extra costs affected our earnings negatively. Divestments, Elisa Videra and lower interconnection prices reduced fourth-quarter revenue. The overall uncertainty in the general economic situation continued.

Our mobile subscription base grew by approximately 33,000 during the year. The decline in the number of fixed broadband subscriptions amounted to 8,000. During the last quarter of the year, the mobile subscription base fell by approximately 27,000 due to the decline in prepaid subscriptions during the summer. The number of fixed broadband subscriptions remained unchanged.

The Elisa Viihde IPTV service gained a number of new functionalities and additional content during the year. Towards the end of the year, Elisa Viihde IPTV was made accessible to smartphones and tablets, whereby the viewing of recordings is possible across 3G, 4G and WLAN connections. Sales of e-books in the Elisa Kirja service doubled during the year. EpicTV, which focuses on outdoor and adventure sports, already reaches 4.4 million visitors each month. We introduced a Square Trade additional protection plan for smartphones and tablets. The service guarantees users a quick replacement for mobile equipment in case of failures. We also introduced MS Office for consumers. It will be possible to get programs through a monthly subscription as part of their operator's invoice.

The uncertainty in the economic situation is creating demand for ICT services. Companies and organisations have been investing in innovative new practices that improve productivity and bring value to their customers. The Elisa Etämittaus (remote measurement) mobile app received an award in the Best Mobile Service in Finland 2014 competition. The app accelerates the diagnosis of various diseases, asthma, for example. We strengthened our selection of information and cybersecurity services for corporate customers. The Elisa Kilpi service offers help during denial-of-service attacks, and the Elisa Aisti service’s security view provides operator-level monitoring for the use of companies.

During the year, we expanded Elisa 4G to cover almost all Finns. A significant part of our EUR 200 million annual investments in Finland are directed towards enabling 4G LTE speeds, which already cover 95 per cent of Finns. We were also the first company in Europe to test new technologies improving coverage, double 4G LTE network transmission speeds at large public events, and use a mini base station augmenting indoor coverage for companies.

For schoolchildren, Elisa organised a number of digital schools, as well as helping senior citizens to get acquainted with new technologies and the opportunities they provide. Elisa's climate report again received an excellent grade in the CDP index. The result is an indication of our long-term work to measure emissions.

We will continue our determined work to improve both customer satisfaction and our operational productivity. Improving our productivity, developing new services for our customers, and maintaining our strong investment ability create a solid foundation for competitive operations in the future.

Outlook and guidance for 2015

The macroeconomic environment in Finland is still expected to be weak in 2015. Competition in the Finnish telecommunications market also remains challenging.

Full-year revenue is estimated to be at the same level as in 2014. Mobile data, ICT and new online services are expected to increase revenue. Full-year EBITDA, excluding non-recurring items, is anticipated to be at the same level as in 2014. Full-year capital expenditure is expected to be a maximum of 12 per cent of revenue. Elisa’s financial position and liquidity are good.

Elisa is continuing its productivity improvement measures, for example by streamlining the product portfolio and IT systems and operations. Additionally, Elisa is continuing to increase customer service and sales efficiency, as well as to reduce general administrative costs.

Elisa's transformation into a provider of exciting, new and relevant services for its customers is continuing. Long-term growth and profitability improvement will derive from mobile data market growth, as well as new online and ICT services.

Profit distribution

According to Elisa’s distribution policy, profit distribution is 80–100 per cent of the previous fiscal year’s net profit. In addition, any possible excess capital can be distributed to shareholders. When making the distribution proposal or decision, the Board of Directors will take into consideration the company's financial position, future financial needs and financial targets. Profit distribution includes dividend payment, capital repayment and purchase of treasury shares.

The Board of Directors proposes to the Annual General Meeting a dividend of EUR 1.32 per share. The dividend payment corresponds to 94 per cent of the financial period’s net profit.

Shareholders who are listed in the company’s register of shareholders maintained by Euroclear Finland Ltd on 30 March 2015 are entitled to funds distributed by the General Meeting. The Board of Directors proposes that the payment date be 8 April 2015. The profit for the period shall be added to retained earnings.

The Board of Directors decided also to propose to the General Meeting that the Board of Directors be authorised to acquire a maximum of 5 million treasury shares, which corresponds to 3 per cent of the total shares.

Disclosure procedure

Elisa is adopting the disclosure procedure enabled by the Standard 5.2b published by the Finnish Financial Supervision Authority. This is a summary of Elisa’s Financial Statements 2014 and the complete report is attached as a pdf-file to this release and is also available on our website at www.elisa.com/investors.

ELISA CORPORATION

Additional information:

Mr. Veli-Matti Mattila, CEO, tel. +358 10 262 2635
Mr. Jari Kinnunen, CFO, tel. +358 10 262 9510
Mr. Vesa Sahivirta, IR Director, tel. +358 10 262 3036

Distribution:

Nasdaq Helsinki
Principal media
www.elisa.com