ELISA'S OCTOBER-DECEMBER PRE-TAX PROFIT AMOUNTED TO EUR 33 MILLION
ELISA CORPORATION STOCK EXCHANGE RELEASE 9 FEBRUARY 2006 AT 8.30am
ELISA'S OCTOBER-DECEMBER PRE-TAX PROFIT AMOUNTED TO EUR 33 MILLION
October-December pre-tax profit amounted to EUR 33 million (65).
Revenue was EUR 343 million (351). Excluding non-recurring items,
the pre-tax profit amounted to EUR 27 million (50).
Excluding non-recurring items, the EBITDA for the period under
review amounted to EUR 89 million, which is slightly better than
anticipated
Compared with the previous quarter, Elisa's number of mobile phone
subscriptions, exclusive of MVNOs, increased by approximately
2,300 subscriptions, and the churn decreased further from 27.2 per
cent to 22.6 per cent. The total number of subscriptions in
Elisa's network was approximately two million.
During the final quarter the number of broadband subscriptions
increased by 39,000 to 385,000 subscriptions at year-end. Together
with Saunalahti, the total number of subscriptions reached
420,500.
Elisa's key indicators were as follows:
Income statement
EUR million 10-12/05 10-12/04 1-12/05 1-12/04
Revenue 343 351 1,337 1,356
EBITDA 95 1) 122 2) 446 3) 455 4)
EBIT 38 69 233 242
Profit before taxes 33 65 212 213
Earnings per share, EUR 0.18 0.35 1.22 1.10
Capital expenditures 71 59 204 182
1) Comparable EBITDA EUR 89 million
(capital gain on the divestment of Estera, EUR 6 million)
2) Comparable EBITDA EUR 108 million
3) Comparable EBITDA EUR 346 million
4) Comparable EBITDA EUR 441 million
Figures describing the financial position and cash flow:
Financial position 31 Dec 2005 31 Dec 2004
Net debt 293 462
Equity ratio, % 61.7 49.3
Cash flow statement 1-12/05 1-12/04
Cash flow after investments 308 225
The Board of Directors will propose to the AGM that a dividend
of EUR 0.70 per share be distributed for 2005, which corresponds
to approximately 66 per cent of the profit for the financial
period. The Group's distributable equity at year-end amounted
to EUR 276 million. The Board of Directors further proposes
that authorisation be sought to purchase the company's own
shares, a maximum of 10 per cent of the share capital.
CEO Veli-Matti Mattila:
A year of strong market grow for Elisa
The year 2005 was a period of strong market growth for Elisa.
We were highly successful in the fierce competition in both the
mobile communications and the broadband markets.
In the summer we became the market leader in broadband
subscriptions. At year-end, the number of our broadband
subscriptions was approximately 385,000, showing a growth of more
than 70 per cent on the previous year. Our acquisition of
Saunalahti brought us a further 35,000 subscriptions. We improved
services in the broadband market by offering higher speeds at the
same price.
Elisa's mobile phone subscriptions increased by approximately
100,000 during the year, totalling almost 1.5 million
subscriptions at year-end. When Saunalahti became part of Elisa
in autumn 2005, the number of mobile phone subscriptions in
Elisa's network reached almost two million. Together, Elisa and
Saunalahti form a strong Finnish player in the ICT market.
Competition with prices reached its peak in early autumn 2005.
After that the price competition slowed down and the focus has
shifted to competition with new services. The entry into force
of a new Act in April, which will allow service packages including
both handsets and services, gives us good opportunities for
offering new services. Finland will have the opportunity of
regaining its place as top mobile communications services.
Elisa will continue to streamline and boost the efficiency of its
operations in order to be able to offer an even better service. We
also expect to see a marked improvement in revenue and operative
profitability on the previous year.
ELISA CORPORATION
Vesa Sahivirta
Director, IR and Financial Communication
Further information:
Mr Veli-Matti Mattila, President and CEO, tel. +358 10 262 2635
Mr Jari Kinnunen, CFO, tel. +358 10 262 9510
Mr Vesa Sahivirta, Director, IR and Financial Communication,
tel. +358 10 262 3036
Distribution:
Helsinki Stock Exchange
Major media
Financial report 1 January to 31 December 2005
As of 1 January 2005, the Finnish Accounting Standards (FAS) were
replaced by the International Financial Reporting Standards (IFRS)
in Elisa Corporation's consolidated reporting.
This financial statement has been prepared in accordance with the
IFRS booking and valuation principles.
Market situation
The market situation was tight throughout 2005. Prices continued
to fall for the average call/minute rate in the mobile phone
business, and subscriber usage increased. The year saw several
marketing campaigns offering low-rate voice and SMS services. The
number of Elisa's own mobile phone subscriptions continued to
develop favourably.
The number of broadband subscriptions in the fixed network
business continued to grow strongly, but the decrease in the
number of traditional subscriptions and their usage was even
stronger than before.
Revenue
Financial statements
EUR million 1-12/05 1-12/04
Mobile communications 740 713
Fixed network 671 654
Other businesses 38 111
Sales between segments -112 -121
Total 1,337 1,356
The decrease in Elisa's turnover was due to the sale of Comptel,
Yomi Software and Estera shares, which were not included in
Elisa's core business. The comparable revenue for 2005 improved
slightly on the previous year.
The revenue from the mobile phone business was affected by an
increase in the number of subscriptions in Elisas network, growth
in usage of subscriptions and the increase in traffic generated by
Saunalahtis subscribers. Revenue growth was curtailed by reduced
interconnection fees and consumer prices. Revenue growth in the
fixed network business was attributable to the acquisition of a
new subsidiary, Tikka Communications, and growth in the
broadband business.
Performance
Financial Exclusive of non-
statements recurring items
EUR million 1-12/05 1-12/04 1-12/05* 1-12/2004**
Mobile communications
EBITDA 220 227 190 227
EBITDA, % 30 32 26 32
EBIT 130 138 100 138
Fixed network
EBITDA 160 201 156 201
EBITDA, % 24 31 23 31
EBIT 4 91 41 91
Other business and
corporate functions
EBITDA 66 27 0 13
EBIT 58 12 -8 -2
Total
EBITDA 446 455 345 441
EBITDA, % 33 34 26 33
EBIT 233 242 132 227
* Capital gain on the divestment of Yomi Software, EUR 4 million;
compensations for damage in interconnection traffic, EUR 28
million; capital gain on real estate, EUR 15 million; capital gain
on the disposal of Comptel shares and the related impact on
earnings, EUR 40 million; IFRS adjustment relating to the transfer
of pension liabilities, EUR 13 million; provision for reorganizing
operations, EUR -6 million; and capital gain on the sale of
Estera, EUR 6 million.
** EUR 9 million capital gain on real estate and EUR 5 million
revenue recognition due to a change in the calculating
principles of the pension provision
Elisa's EBITDA decreased by 2 per cent from the previous year, and
relative profitability decreased by one percentage point to 33 per
cent of the revenue. EBITDA for 2005 included a capital gain on
the divestment of Yomi Software Ltd and Estera, a tax-free capital
gain on the disposal of Comptel shares, compensation for damages
received from TeliaSonera and capital gain on real estate. Thus
the relative profitability, excluding non-recurring items,
decreased from 33 to 26 per cent. This was affected by the price
erosion in mobile communications consumer and interconnection
traffic fees and diminished traffic volumes in the fixed network,
frontloading of costs in the broadband business and market
investments.
The Groups other financial income and expenses totalled EUR -22
million (-30). The financing income also included the share of the
associated companies' results, EUR 1.2 million (1.3). The reduced
financing expenses were mainly due to a significant decrease in
interest-bearing liabilities.
Income taxes in the income statement amounted to EUR -34 million
(-53). The Finnish tax base was altered from 29 per cent to 26 per
cent at the beginning of 2005.
The group's January-December results after taxes and minority
interests stood at EUR 176 million (152). The groups earnings per
share (EPS) amounted to EUR 1.22 (1.10). At the end of 2005, the
group shareholders' equity per share stood at EUR 8.06 (6.23 at
the end of 2004).
Changes in corporate structure
Elisa sold the entire share capital of Yomi Software Ltd, a 100
per cent subsidiary of Elisa, to Sysopen Digia Plc. The selling
price was EUR 12.1 million, and Elisa was also released from a EUR
1.5 million debt liability.
Elisa and IBM signed an agreement on the allocation of Elisas
application management services to IBM as of 1 April 2005. On the
same date, 150 Elisa employees transferred to IBM.
The merger of Liedon Puhelin Oy with Lounet Oy was entered in the
trade register on 31 March 2005. Elisa previously owned 16.8 per
cent of Liedon puhelin. Following the merger, Elisa's holding in
Lounet decreased from 50.2 per cent to 46.7 per cent. Lounet is
consolidated in Elisa as a group company based on a rule of vote.
The merger of Kestel Oy and Kesnet Oy with Elisa was entered in
the trade register on 31 March 2005, the merger of Finnet
International Ltd on 31 May 2005 and the merger of Elisa
Matkapuhelinpalvelut Oy on 31 December 2005.
On 29 April 2005, Elisa submitted a public tender offer for the
shares of Tikka Communications Oy. In May, Elisa's holding in the
company exceeded 50 per cent, after which Tikka Communications Oy
was consolidated as a subsidiary as of 1 June 2005. Elisa acquired
a 100 per cent holding in the company by mid-December.
Elisa's ownership of Comptel Corporation decreased from 58.1 per
cent to 19.9 per cent after Elisa sold 40,946,000 Comptel
Corporation shares to investors for EUR 65.1 million at the end of
May. Comptel Corporation was consolidated as a subsidiary until 31
May 2005.
On 1 June 2005, Elisa sold its 35 per cent holding of Racap
Solutions Oy to Capgemini Finland Oy.
On 27 June 2005, Elisa sold a 55.1 per cent stake in Lippupiste
Oy's share capital to Interavanti Oyj and a 25 per cent stake to
Cardplus Oy. Elisa still has a 19.9 per cent holding in Lippupiste
Oy, which the buyers have agreed to purchase from Elisa after a
period of two years.
As of 1 July 2005, Elisa transferred its personnels statutory
pension coverage to Varma Mutual Pension Insurance Company and
supplementary pensions to Sampo Life Insurance Company Limited.
On 7 July 2005, Elisa made a public tender offer for all shares
issued by Saunalahti Group Oyj and a bid to Saunalahti option
holders. Elisa's ownership of Saunalahti Group Oyj stood at
approximately 97 per cent at the end of the year. In order to
acquire all Saunalahti shares, Elisa made a redemption offer on
all remaining shares and share options. Simultaneous with the
redemption offer, Elisa initiated compulsory acquisition
proceedings for minority shareholders in accordance with the
Finnish Companies Act. The proceedings ended on 13 January 2006 at
4.30 pm. Elisa has initiated arbitration proceedings in accordance
with the Finnish Companies Act in relation to the redemption of
the Saunalahti Group Oyj shares.
On 4 November 2005, Elisa sold the entire share capital of Estera
Oy, a security business company, to ISS Security Oy. In connection
with the sale, Estera Oy sold part of its business to its operative
management.
On 30 November 2005, Elisa sold the entire share capital of
Kiinteistö Oy Espoon Keilasatama 5, which was formerly used by
Radiolinja, to Local Government Pensions Institution.
The sold property is not included in the holdings that are in
line with Elisa' strategy.
Mobile communication business
9-12/05 9-12/04 1-12/05 1-12/04
Total number of subscriptions
(Finland and Estonia) 2,228,101 1,609,015 2,228,101 1,609,015
Number of subscriptions in
in Finland * 1,962,101 1,383,515 1,962,101 1,383,515
- Network operator in
Finland ** 1,483,129 1,383,515 1,483,129 1,383,515
- Saunalahti subscriptions 478,973 - 478,973 -
Subscriptions in Estonia 266,000 225,500 266,000 225,500
* Elisa's network operator in Finland
** Elisa's network operator in Finland, exclusive of Saunalahti
Operative figures in Finland,
exclusive of Saunalahti
Revenue/subscription***(ARPU), 30.4 37.0 32.5 37.8
Churn***, % 22.6 38.9 28.4 33.7
Usage, million minutes* 1,070 659 3,509 2,498
Usage,
min/subscription/month*** 180 161 172 156
SMS, million msg* 275 154 827 537
SMS,
msg/subscription/month*** 40 38 38 34
Value-added services/revenue, % 17 14 16 14
* Elisa's network operator in Finland
*** Elisa's service operator in Finland, exclusive of Saunalahti
Elisas network operator significantly increased the number of
its subscriptions during the year as Saunalahti shifted its
subscriptions to Elisas network. At the end of 2005 Elisas
network stood at approximately two million subscriptions.
Exclusive of Saunalahti subscriptions, the number of Elisa
subscriptions stood at 1,483,129, showing an increase of 2,335
subscriptions from the previous quarter.
In 2005 the call minutes per subscription of Elisa's own service
operator rose by approximately 10 per cent and the number of SMS
messages increased by approximately 12 per cent on the previous
year. The call minutes of the network operator rose by 40 per cent
and SMS messages by 54 per cent. The increased volume of the
network operator was substantially affected by additional traffic
generated by Saunalahti after 1 September 2005.
Revenue per subscription (ARPU) decreased by approximately 14 per
cent on the previous year. This was mainly due to a fall in
interconnection fees and consumer prices.
The business operations of Elisa's subsidiary in Estonia were
favourable. Revenue was EUR 88.1 million (75.3), EBITDA EUR 27.9
million (22.5) and EBIT 18.5 million (13.2). The number of
subscriptions stood at 266,000 (225,500) at the end of 2005.
Elisa agreed on new mobile interconnection fees with TeliaSonera
Finland and Finnet Networks. As of 1 June 2005, Elisa's mobile
interconnection fee was reduced to 8.4 cents per minute, compared
to 10 cents per minute prior to this date.
Elisa announced the launch of the Vodafone Push Email service,
which will make sending and receiving email with a mobile phone
easier.
Elisa and Nokia introduced a new mobile communications concept,
which integrates the handset and services into one package.
Elisa's Mobi menu gives users easy access to value-added and
entertainment services as well as the main features of the mobile
phone.
Elisa introduced the citizen certificate on a GSM SIM card for its
customers. The service is provided in collaboration with the
Population Register Centre and offers consumers easy, safe and
user-friendly access to electronic services.
Fixed network business
Number of subscriptions
31 Dec 2005 31 Dec 2004 Change, %
Broadband subscriptions, total 420,465 250,390 68
- Elisa subscriptions 384,909 222,307 73
- Saunalahti subscriptions 35,556 28,083 27
ISDN channels 128,665 159,591 -19
Cable TV subscriptions 214,054 198,447 8
Analogue and other subscriptions 578,002 639,202 -10
Subscriptions, total 1,305,630 1,219,547 7
The demand for Elisa's broadband subscriptions continued briskly
throughout 2005. The number of subscriptions showed an increase of
73 per cent on the previous year. Elisa achieved market leadership
in the Finnish broadband market.
The target set in the national broadband strategy one million
subscriptions was exceeded in June. The number of traditional
subscriptions continued to decrease steadily as voice calls
shifted to the mobile communication networks and data transfers to
broadband subscriptions.
Changes in the pricing principles applied to calls made from the
fixed network to mobile phones took effect at the beginning of
March. This made it possible to reduce the price of these calls
for end customers.
Personnel
The average number of personnel at Elisa was 4,989 (5,590) during
2005. At the end of 2005, the number of personnel stood at 4,681
(5,376).
31 Dec 2005 31 Dec 2004 Change, %
Mobile communications 1,629 1,477 +10
Fixed network 3,001 3,015 -0
Other business operations - 814
Corporate functions 51 70 -27
Total 4,681 5,376 -13
During the year, the disposal of Comptel reduced the number of
personnel by approximately 420, the disposal of Estera by
approximately 160 and the disposal of Yomi Software by
approximately 260. The consolidation of Tikka Communications and
Saunalahti increased the number of personnel by approximately 260
people for each company.
Elisa executed a major business reorganisation in spring and summer
2005. It was further specified at the year-end. As part of these
extensive streamlining measures, Elisa initiated a reorganisation
of operations, aiming at simplifying and rationalising operations.
This led to outsourcing and a need for fewer personnel. Reductions
in the number of personnel were achieved through pension
arrangements and support packages.
Investments
EUR million 1-12/05 1-12/04
Capital expenditures, of which 204 182
- mobile communications business 86 68
- GSM leasing liability buy-backs 4 20
- fixed network business 112 88
- others 2 6
Shares 415 61
- of which achieved through an exchange of shares 361 47
Total 619 243
Financial position
Elisa's financial position and liquidity remained good throughout
the year. At the end of the year cash flow after investments
amounted to EUR 308 million (225). This was particularly affected
by divestment of non-core businesses, loan receivables and fixed
assets, and compensations for damages received.
On 17 June 2005, Elisa entered into a seven-year EUR 170 million
revolving credit facility. The facility replaced a comparable
arrangement that Elisa had entered into in June 2003.
Before shifting Elisa's TEL pension liabilities to Varma Mutual
Pension Insurance Company, Elisa repaid EUR 64 million in pension
loans to the Elisa Group's Pension Fund ahead of schedule.
On 7 November 2005, Elisa updated the EMTN programme in compliance
with the new directive requirements.
Financial key indicators
EUR million 31 Dec 2005 31 Dec 2004
Net debt 293 462
Gearing, % 21.7 50.6
Equity ratio, % 61.7 49.3
1-12/05 1-12/04
Cash flow after investments 308 225
Valid finance arrangements
EUR million Maximum In use on 31
amount December 2005
Committed credit limit 170 0
Commercial paper programme1) 150 0
EMTN programme2) 1,000 452
1) The programme is not committed
2) European Medium Term Note programme,
not committed.
Long-term credit ratings
Credit rating agency Rating Outlook
Moodys Investor Services Baa2 Stable
Standard & Poors BBB Negative
Share
At the end of 2005 the company's total number of shares was
166,066,016 (141,989,109). The market capitalisation on 31
December stood at EUR 2,596 million (1,682).
In 2005 a total of 248.3 million shares were traded on the
Helsinki Stock Exchange for an aggregate of EUR 3,464 million.
The exchange was 171.5 per cent of the number of
outstanding shares.
Elisa did not have any valid warrants on 31 December 2005.
Treasury shares
At the end of 2005 the total number of Elisa's shares owned by the
subsidiaries was 180,000 (210,672 at the end of 2004). The
nominal value of the shares totalled EUR 90,000, and their
proportion of the share capital and voting rights was 0.11 per
cent.
Research and development
The group invested EUR 8 million (17) in research and development
in 2005. Important research trends included IP technologies,
development of terminals and service-oriented architecture.
Customer-centred R&D is of key importance in developing new
services. As a measure of enhancing customer-centeredness,
the R&D unit was relocated into the business units.
Elisas Extraordinary General Meeting
On 5 December 2005, Elisa Corporations Extraordinary General
Meeting resolved to pay an extra dividend of EUR 0.40 per share in
accordance with the Board of Directors proposal. The number of
members at the companys Board of Directors was also increased by
two to eight members. President and CEO Lasse Kurkilahti and
attorney Matti Manner were elected new members. Voting limitation
was removed from the Articles of Association.
The Board of Directors' authorisations
On 14 March 2005 the Annual General Meeting approved the Board of
Directors' proposal authorising the Board of Directors to decide
on increasing the company's share capital. The authorisation is
valid for one year. A maximum aggregate of 28.3 million of the
company's shares can be issued, and the company's share capital
can be increased by a maximum of EUR 14,150,000 in total.
The Annual General Meeting approved the Board of Directors'
proposal concerning the authorisation to acquire and assign own
shares. The authorisation applies to a maximum of 6,888,000 own
shares.
The Annual General Meeting adopted the Board of Directors proposal
concerning the sale of shares in the joint book-entry account in
accordance with Chapter 3a, section 3a of the Finnish Companies
Act.
Directed issue
On 7 July 2005, Elisa made a public tender offer for all shares
issued by Saunalahti Group Oyj. The consideration offered by Elisa
in the tender offer was 1 Elisa share for 5.6 Saunalahti shares.
The calculated total value of the consideration offered by Elisa
was approximately 27 per cent higher than the average volume-
weighted price of the Saunalahti shares traded in the pervious 12
months. Elisa also made an offer to Saunalahti option holders,
offering EUR 1.53 in cash for each share option of the 2002 option
programme, and EUR 1.82 in cash for each share option of the 2003
option programme. The calculated total amount of the consideration
offered by Elisa was approximately EUR 320 million at the time
of the offering.
Following Elisa's tender offer for Saunalahti shares and share
options, which ended on 4 November 2005, Elisa's proportion of
Saunalahti shares and voting rights exceeded two thirds (2/3) of
the voting rights of Saunalahti shares. On 11 November 2005 Elisa
decided to complete the public tender offer, and the right of
ownership to Saunalahti shares was transferred to Elisa on 14
November 2005. By the end of 2005 Elisa held approximately 97 per
cent of Saunalahti shares and voting rights.
On 12 December 2005, Elisa made a redemption offer for Saunalahti
shares and share options. The offer expired on 13 January 2006 at
4.30 pm. Simultaneous with the redemption offer, Elisa initiated
compulsory acquisition proceedings for minority shareholders in
accordance with the Finnish Companies Act to acquire all
Saunalahti shares.
Major legal issues
Elisa and TeliaSonera agreed on abandoning the legal proceedings
regarding the claim for restitution and compensation of mobile
interconnection fees and the patent action brought on by
TeliaSonera. As part of the overall solution, TeliaSonera Finland
paid Elisa EUR 30 million in compensation. Elisa also reached an
agreement over mobile interconnection fees regarding Finnet
Networks, and paid Finnet Networks EUR 2 million in compensation.
In the beginning of 2006, Finnet Verkot initiated arbitration
proceedings concerning Saunalahti interconnection fees.
In the redemption proceeding regarding the merger of Yomi Plc, the
arbitration court set the redemption price at EUR 7.30 per share.
The redemption concerned 636,294 former shares of Yomi Plc. The
handling of the matter with regard to 428,600 shares is continuing
in the district court.
The Helsinki District Court issued a ruling in favour of Elisa and
dismissed the action for annulment of the decision taken at Elisa
Matkapuhelinpalvelut Oy's (previously known as Oy Radiolinja Ab)
Annual General Meeting in the spring of 2000. The plaintiffs have
appealed against the decision. The merger of Elisa
Matkapuhelinpalvelut Oy with Elisa was entered in the trade
register on 31 December 2005.
With regard to the redemption procedure of Oy Radiolinja Ab's
shares pursuant to the Finnish Companies Act, the arbitration
court set the redemption price at EUR 7,904.83 in 2001. Processes
related to the redemption price concerning 325 shares are still
pending.
Elisa has initiated arbitration proceedings pursuant to the
Finnish Companies Act aimed at the redemption of Tikka
Communications Oy shares. The right of ownership to the shares to
be redeemed was transferred to Elisa in December 2005.
Elisa has initiated arbitration proceedings pursuant to the
Finnish Companies Act aimed at the redemption of Saunalahti Group
Oyj shares. Elisa demands the redemption price be set at EUR 2.29
per share. The redemption price concerning approximately 3.8
million shares is pending a decision by the arbitration court.
The public authorities are currently conducting investigations
into Elisa concerning the pricing of broadband and fixed network
traffic and interconnection fees.
Substantial risks associated with Elisa
The competition in telecommunication business is extremely tight
in Elisas main markets: The competitive situation may affect
Elisas business.
The rapid developments in telecommunications technology may have a
significant impact on Elisa's business.
Elisa's main market is Finland, where the number of mobile phones
per inhabitant is among the highest in the world. Thus the overall
market of mobile subscriptions in Finland cannot grow
significantly. Furthermore, the share of fixed network, which
utilises Elisa's fixed network, has decreased in the past
few years. These factors may restrict growth potential.
The telecommunications industry is subject to heavy regulation.
Elisa and its business are monitored and regulated by several
public authorities. This regulation also affects the price level
of some products and services offered by Elisa.
Events after the financial period
On 2 January 2006, Elisa and Manpower signed an agreement
concerning the outsourcing of the outbound telemarketing services
of Elisa's Contact Centers to Manpower Business Solutions Oy from
the beginning of February. In connection with the business
transfer, 134 employees transferred from Elisa's Contact Centers
to Manpower as established employees.
Elisa revised its business model, aiming at enhanced customer-
orientation and efficiency in line with Elisa's strategic choices.
As part of this effort, Elisa invited some Saunalahti executives
to its Executive Board, also rotating other members and
redistributing responsibilities.
Outlook for 2006
Competition in the Finnish telecommunications market remains
challenging, while the focus is increasingly shifting to services.
The use of mobile communications and broadband products continues
to increase. Elisa's aim is to further reinforce its position as
the leading service supplier.
Elisa's revenue is expected to increase clearly on the previous
year. Changes in the operating environment are creating uncertainty
concerning the predictability of the company's performance.
However, Elisa expects to see an improvement in EBITDA and
EBIT excluding non-recurring items in 2006. This will be due to
e.g. the synergy benefits created by the Saunalahti deal and
Elisas rationalisation procedures.
Capital expenditures during the year are estimated to total 13 to
15 per cent of the revenue, and cash flow will be clearly positive.
Certain non-recurring items related to IT and production
system reforms, which will support the "One Elisa" operational
model, are scheduled for 2006.
BOARD OF DIRECTORS
Tables
Information in this release is based on the companys audited
financial statements. The auditors report has been given
on 8 February 2006.
CONSOLIDATED INCOME STATEMENT
EUR million
10-12 10-12 1-12 1-12
2005 2004 2005 2004
Revenue 343,0 350,8 1337,3 1356,0
Other operating income 12,4 16,1 113,9 27,0
Operating expenses -260,9 -244,9 -1005,1 -928,2
EBITDA 94,5 122,0 446,1 454,8
Depreciation and amortisation -56,8 -52,7 -213,2 -213,2
EBIT 37,7 69,3 232,9 241,6
Share of associated companies' profit 0,0 1,4 1,2 1,3
Financial income and expenses -5,1 -5,9 -22,2 -30,4
Profit before tax 32,6 64,8 211,9 212,5
Income taxes -4,6 -13,3 -34,1 -53,2
Profit for the period 28,0 51,5 177,8 159,3
Attributable to:
Equity holders of the parent 27,2 48,5 176,2 151,7
Minority interest 0,8 3,0 1,6 7,6
Profit for the period 28,0 51,5 177,8 159,3
Earnings per share (EUR)
Basic 0,18 0,35 1,22 1,10
Diluted 0,18 0,35 1,22 1,10
Average number of outstanding
shares (1000 shares)
Basic 153822 137570 144807 137321
Diluted 153822 137570 144807 137321
REVENUE BY BUSINESS SEGMENTS
EUR million
10-12 10-12 1-12 1-12
2005 2004 2005 2004
Mobile 197,3 179,9 739,9 712,8
Fixed Network 173,0 162,0 670,9 653,6
Other Companies 1,5 33,5 38,2 108,4
Unallocated 2,4 2,4
Intra-segment sales elimination -28,8 -27,0 -111,7 -121,2
Corporation total 343,0 350,8 1337,3 1356,0
EBITDA BY BUSINESS SEGMENTS
EUR million
10-12 10-12 1-12 1-12
2005 2004 2005 2004
Mobile 51,8 56,7 220,1 227,0
Fixed Network 36,8 48,2 159,6 200,7
Other Companies 5,2 7,5 55,8 20,3
Unallocated 0,7 9,6 10,5 6,8
Corporation total 94,5 122,0 446,1 454,8
EBIT BY BUSINESS SEGMENTS
EUR million
10-12 10-12 1-12 1-12
2005 2004 2005 2004
Mobile 27,1 34,6 129,9 138,1
Fixed Network 3,4 20,8 44,8 91,1
Other Companies 5,2 3,6 47,3 10,2
Unallocated 2,0 10,3 10,9 2,2
Corporation total 37,7 69,3 232,9 241,6
CONSOLIDATED BALANCE SHEET
EUR million
31.12. 31.12.
2005 2004
Non-current assets
Intangible assets 178,7 68,7
Consolidated goodwill 770,6 473,3
Tangible assets 660,6 724,2
Investments in associated companies 0,4 11,7
Available-for-sale investments 44,2 9,3
Deferred tax receivable 42,5 42,5
Other receivables 10,6 47,6
1707,6 1377,3
Current assets
Inventories 20,3 15,1
Trade and other receivables 261,8 308,5
Cash and cash equivalents 212,7 162,8
494,8 486,4
Total assets 2202,4 1863,7
Equity attributable to equity holders of the parent 1337,3 883,5
Minority interest 12,4 31,0
Total equity 1349,7 914,5
Non-current liabilities
Deferred tax liabilities 40,6 29,8
Provisions 9,4 21,4
Interest-bearing debt 393,7 593,4
Other non-current liabilities 12,7 10,3
456,4 654,9
Current liabilities
Provisions 3,4 3,3
Interest-bearing debt 112,4 31,8
Current liabilities 280,4 259,2
396,3 294,3
Total equity and liabilities 2202,4 1863,7
Statement of changes in equity
EUR million
Share Share Treasury Other Retained Minority Total
capital issue shares reser- earnings interest equity
premium ves
Total equity
at 31.12.2003 69,0 516,7 0,0 3,4 110,0 77,4 776,5
Effects of
adopting IFRS -24,7 -4,1 -28,8
Restated
balance
at 1.1.200 69,0 516,7 -24,7 3,4 110,0 73,3 747,7
Investments
in subsidiaries 1,1 -37,1 -36,0
Available for
sale investments -0,4 -0,4
Other changes -12,0 0,3 -11,7
Items recognised
directlyin equity -0,4 -10,9 -36,8 -48,1
Profit for
the period 151,7 7,6 159,3
Total recognised
income and
expence for
the period -0,4 140,7 -29,2 111,1
Dividends -13,1 -13,1
Issue of share
capital 2,0 13,7 31,5 47,2
Sales of
treasury shares 21,6 21,6
Total equity
at 31.12.2004 71,0 530,4 -3,1 34,5 250,8 31,0 914,5
Total equity
at 1.1.2005 71,0 530,4 -3,1 34,5 250,8 31,0 914,5
Sales of
subsidiaries -15,8 -15,8
Investments in
subsidiaries -0,2 -0,2 -0,4
Available for
sale investments 34,7 34,7
Other changes 3,7 3,7
Items recognised
directly in
equity -0,2 34,7 3,7 -16,0 22,2
Profit for
the period 176,2 1,6 177,8
Total recognised
income and expense
for the period -0,2 34,7 179,9 -14,4 200,0
Dividends -123,2 -4,2 -127,4
Issue of share
capital 12,0 349,7 361,7
Sales of
treasury share 0,8 0,8
Total equity
at 31.12.2005 83,0 530,4 -2,5 418,9 307,5 12,4 1349,7
RECONCILIATION OF NET PROFIT FOR COMPARISON PERIODS 2004
EUR million
10-12 1-12
2004 2004
Profit for the period before minority interest
according to FAS 38,3 113,9
Effects of adopting IFRS:
Reversal of goodwill amortisation 10,9 44,6
Employee benefits 7,1 10,7
Finance leases -4,3 -9,6
Financial instruments 0,0 0,5
Income tax -0,5 -0,8
IFRS adjustments, total 13,2 45,4
Profit for the period according to IFRS 51,5 159,3
Attributable to:
Equity holders of the parent 48,5 151,7
Minority interest 3,0 7,6
51,5 159,3
RECONCILIATION OF EQUITY FOR COMPARISON PERIODS 2004
EUR million
1.1. 31.12.
2004 2004
Total equity according to FAS 699,1 851,0
Effects of adopting IFRS:
Reversal of goodwill amortisation 44,6
Employee benefits -24,0 -13,5
Finance leases 4,7 -4,9
Reversal of revaluations -11,1
Financial instruments 0,9 1,1
Other adjustments 1,7 1,6
Income tax 3,2 3,6
IFRS adjustments, total -24,6 32,5
Equity holders of the parent 674,5 883,5
Minority interest according to FAS 77,4 33,6
IFRS adjustments -4,1 -2,6
Minority interest 73,3 31,0
Total equity according to IFRS 747,8 914,5
CONSOLIDATED CASH FLOW STATEMENT
EUR million
1-12 1-12
2005 2004
Cash flow from operating activities
Profit before tax 211,9 212,5
Adjustments to profit before tax 146,9 199,7
Change in working capital -23,7 4,9
Cash flow from operating activities 335,1 417,1
Received dividends and interests and interest paid -20,4 -45,8
Taxes paid -5,1 -16,0
Net cash flow from operating activities 309,6 355,3
Cash flow in investments
Capital expenditure -194,9 -171,4
Investments in shares and other investments -4,1 -10,4
Proceeds from asset disposal 197,4 51,4
Net cash used in investment -1,6 -130,4
Cash flow after investments 308,0 224,9
Cash flow in financing
Sales of treasury shares 0,8 6,4
Change in interest-bearing receivables 0,8 24,3
Repayment of long-term debt -102,4 -110,7
Change in short-term debt -18,6 -15,3
Repayment of financing leases -16,7 -21,0
Dividends paid -122,0 -13,0
Cash flow in financing -258,1 -129,3
Change in cash and cash equivalents 49,9 95,6
Cash and cash equivalents at beginning of period 162,8 67,2
Cash and cash equivalents at end of period 212,7 162,8
LIABILITIES
EUR million
31.12. 31.12.
2005 2004
Mortgages, pledges and guarantees
Mortgages
For own and group companies 18,7 27,6
Pledges given
Pledges given as surety 0,9 0,2
Guarantees given
For others 3,1
Mortgages, pledges and guarantees total 22,6 27,8
Derivative contracts
Forward contracts and swap agreements
Nominal value of underlying instrument 13,5
Leasing contracts and
other commitments
Leasing commitments 14,3 18,3
Repurchase commitments 0,7 1,2
Real estate leases 63,3 77,2
Lease liabilities total 78,3 96,7
Other commitments
Lease-leaseback agreement (QTE facility)
Termination risk 23,5 22,8
Total value of the arrangement 171,5 149,8
Other commitments 0,6 9,1
KEY FIGURES
EUR million
10-12 10-12 1-12 1-12
2005 2004 2005 2004
Shareholders' equity/share, EUR 8,06 6,23
Net debt 293,5 462,2
Gearing 21,7 % 50,6 %
Equity ratio 61,7 % 49,3 %
Gross investments in fixed asse 71,3 59,2 204,4 181,8
of which finance lease investme 0,3 4,9 9,5 10,4
Gross investments as % of revenue 20,8 % 16,9 % 15,3 % 13,4 %
Investments in shares 374,7 52,6 414,8 61,1
of which paid in equity issue 361,2 47,2 361,2 47,2
Average number of personnel 4989 5590
Formulae for financial indicators
Gearing %
Interest-bearing debt - cash and cash equivalents
-------------------------------------------------x 100
Total equity
Equity ratio %
Total equity
-------------------------------------------------x 100
Balance sheet total - advances received
Net debt
Interest-bearing debt - cash and cash equivalents
Shareholders' equity/share
Equity attributable to equity holders of the parent
----------------------------------------------------
Number of shares outstanding at end of period
Earnings/share
Profit for the period attributable to equity holders of parent
--------------------------------------------------------------
Average number of outstanding shares
