Elisa’s Financial Statements 2016

ELISA FINANCIAL STATEMENTS RELEASE 27 JANUARY 2017 AT 8:30 AM

Fourth quarter 2016

• Revenue amounted to EUR 434m (404)
• EBITDA was EUR 139m (128) and EBIT was EUR 76m (68)
• Comparable EBIT was EUR 85m (77)
• Earnings per share were EUR 0.37 (0.35) and comparable EPS was EUR 0.41 (0.37)
• Cash flow after investments excluding investments in shares was EUR 53m (30), reported cash flow after investments was EUR -115m (30)

• Mobile ARPU was EUR 17.0 (16.7 in previous quarter)
• Mobile churn was 18.2 per cent (18.0 in previous quarter)
• Mobile service revenue increased by 3.4 per cent to EUR 194m (188)
• The number of Elisa’s mobile subscriptions decreased by 36,600 during the quarter
• The number of fixed broadband subscriptions increased by 3,400 during the quarter

Year 2016

• Revenue was EUR 1,636m (1,569)
• EBITDA was EUR 563m (532) and EBIT was EUR 339m (312)
• Comparable EBITDA and EBIT were EUR 564m (536) and 349m (322), respectively
• Earnings per share were EUR 1.61 (1.52) and comparable EPS was EUR 1.66 (1.54)
• Cash flow after investments excluding investments in shares was EUR 281m (266), reported cash flow after investments was EUR 65m (253).
• Net debt / EBITDA was 2.0 (1.8) and gearing 116 per cent (104)

Key indicators

¹⁾ Comparable figures: Q4 2016 Profit before tax EUR 80m (71) and EPS EUR 0.41 (0.37), full year 2016 Profit before tax EUR 327m (300) and EPS EUR 1.66 (1.54). ²⁾ Includes 700 MHz license fee of EUR 22m.

Financial position and cash flow

¹⁾ (Interest-bearing debt – financial assets) / (4 previous quarters’ EBITDA exclusive of non-recurring items)

²⁾ Q4/16 and full year 2016 EUR 167m loan arrangement relating to the Starman acquisition

The Board of Directors proposes to the Annual General Meeting a dividend of EUR 1.50 per share. The Board of Directors decided also to propose an authorisation to acquire a maximum of 5 million treasury shares, which corresponds to 3 per cent of the total shares.

CEO Veli-Matti Mattila:
Best-ever year again for Elisa

Elisa's competitiveness and result continued to strengthen, despite the challenging situation in the general economy. The revenue and earnings in 2016 were the best ever. Earnings improved thanks to growth in the mobile service revenue and investments in the productivity of Elisa's operations. The acquisition of Anvia's telecom, IT and entertainment services also had a positive impact. The integration of Anvia and Elisa's operations has progressed well.

The convenience and speed of use increased the appreciation of mobile and fixed network broadband subscriptions among consumers, corporate customers and public sector organisations. The number of fixed network broadband subscriptions grew by 61,000, while the base of mobile subscriptions declined by approximately 46,000 during the year. The unlimited data pricing model, increasing use of video services, and investments in the expansion of the 4G network have taken Finland to the top of the world in the use of mobile data.

We introduced several new services and types of content for our consumer customers. Elisa Viihde's popular series Downshiftaajat continued in December, and the season's number of viewers tripled in comparison to the first season. A new original series, Suomen Konttori, is set to begin in February this year. The Watson TV service released a new TV application for Android. We were also the first reseller in Europe to introduce OnePlus phones to consumers and entrepreneurs.

We are strongly involved in the development and digitalisation of Finnish society and the operations of Finnish companies. Elisa's open development and service platform, Elisa IoT, received international recognition. In the Elisa Innovation Challenge competition, Elisa presented the prize to an energy self-sufficient positioning and smart lock solution. In addition, Elisa introduced a new service model for the business sector that allows employees to influence the choice of their company phone by paying part of the costs themselves.

We develop our networks systematically. We broke the world record in Finland's fastest 4G network by achieving a speed of 1.9 Gbit/s, and we were the first operator to test 5G in Finland and the first in the Nordic countries to test the 700 MHz frequency, of which we won 2×10 MHz slot in the auction. This frequency improves the coverage and capacity of the mobile network. In the fixed network, we tested, among other things, G.fast technology, which allows for speeds of up to 1 Gbit/s in the current fixed broadband network in areas of SDU buildings and old MDU buildings.

We invested actively in providing jobs for young people. In cooperation with its subsidiaries and temporary work agencies, Elisa hired 200 young people for summer jobs. We aim to help our customers in the digitalising world, we produce content that increases the convenience of customers online, and we continue to organise popular digital schools for schoolchildren. ShedHelsinki, a musical theatre initiative with a focus on diversity, was realised at Elisa's initiative. 

We focus on the systematic improvement of the customer experience and our operations. Improving our productivity, developing digital services for our customers and maintaining our strong investment ability create a solid foundation for competitive operations in the future.

Outlook and guidance for 2017

The macroeconomic environment in Finland is still expected to be weak in 2017, regardless of some positive developments. Competition in the Finnish telecommunications market also remains challenging.

Full-year guidance does not include the Starman acquisition. Revenue is estimated to be at the same level or slightly higher than in 2016. Mobile data and digital services are expected to increase revenue. Comparable EBITDA is anticipated to be at the same level or slightly higher than in 2016. Capital expenditure is expected to be a maximum of 13 per cent of revenue. The mid-term target of a maximum of 12 per cent is still valid. Elisa’s financial position and liquidity are good.

Elisa is continuing its productivity improvement development, for example by increasing automation in different processes, like network operations and delivery. Additionally, Elisa’s continuous quality improvement measures will increase customer satisfaction and efficiency, and reduce 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 digital 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 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 1.50 per share. The dividend payment corresponds to 93 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 10 April 2017 are entitled to funds distributed by the General Meeting. The Board of Directors proposes that the payment date be 19 April 2017. The profit for the period will be added to retained earnings.

The Board of Directors also decided 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 2016 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