Annual Results February 2008

Transcription

1 Annual Results February 2008

2 Agenda CEO s review Veli-Matti Mattila, CEO Financial review Jari Kinnunen, CFO Annual Results 2007

3 CEO s review Financial and operational highlights Review of the mobile and fixed network businesses Execution of the strategy Progress of 3G services Outlook for Annual Results 2007

4 Financial result at all-time high 2007 HIGHLIGHTS Revenue 1,568m 3% EBITDA* 491m Earnings per share % 42% Net debt / EBITDA % CAPEX 206m Distribution 486m -0.5% 140% * Excluding one-off items Annual Results 2007

5 On track with mid-term targets Annual Results 2007

6 Operational highlights 2007 HIGHLIGHTS Mobile customers 2,657, ,500 Fixed broadband customers 521, ,500 Mobile ARPU ,2 Mobile Churn 12.2% -1.6%unit Mobile network usage, min. 5.7bn +773m Annual Results 2007

7 Capital repayment 1.80 per share The Board s capital repayment proposal of 1.80 per share for improving the capital structure 0.80 according to distribution policy 1.00 as special distribution Capital repayment is paid from the reserve for invested nonrestricted equity Authorisation of 15m share buy-back 9 per cent of the shares Authorisation to distribute funds out of the retained earnings account or the reserve for invested non-restricted equity to a max of 250m Annual Results 2007

8 Q profitability improved further Q FINANCIAL HIGHLIGHTS Solid Q4 result Revenue at the same level, 402m (401) EBITDA excluding one-offs up to 128m (119) EBITDA margin 32% (30) EPS up to 0.32 (0.31) Capital structure in target range Net debt increased to 738m (377) Net debt / EBITDA 1.5 (0.9) Gearing 71% (29) CAPEX at the previous year s level CAPEX 69m (70) 3G networks and services, backbone network, ADSL 2+ upgrade Annual Results 2007

9 Growth in mobile business continues Q SEGMENT REVIEW, MOBILE BUSINESS Growth in customer base ARPU* and non-voice services Good progress in 3G subscriptions continued Elisa s market share about 50% Customer base increased by 25,000 in Finland, 10,000 in Estonia ARPU* EUR 30.1 (30.8) Lower interconnection and roaming prices MoU/sub of own service operator +2% and SMS +6% Churn 12.6% (14.0) 30,8 17 % 29,7 30,2 29,9 30,1 19 % 19 % 19 % 19 % Growth in network usage Total MoU growth +9% and SMS +21% Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 *) Average revenue per subscription Annual Results 2007 ARPU, EUR Share of non-voice services, %

10 3G services generated growth and profitability Q SEGMENT REVIEW, MOBILE BUSINESS Revenue EUR 253m (253) Revenue and EBITDA-% Increase in usage and subscriptions Decrease in interconnection fees, roaming fees and handset sales EBITDA* EUR 81m (76), 32% of revenue (30) Cost efficiency, volume growth, growth in 3G usage EBIT* EUR 53m (54), 21% of revenue (21) 30 % 29 % 29 % 32 % 32 % Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 *) EBITDA and EBIT excluding one-off items Annual Results 2007 Revenue, EURm EBITDA-% excl. one-offs

11 Growth in network usage Q SEGMENT REVIEW, MOBILE BUSINESS ARPU Churn Usage 50 ARPU ( ) and annualised churn (%) Outgoing traffic (million minutes) Q1/02 Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/ Annual Results 2007

12 Clear growth in mobile data usage Q SEGMENT REVIEW, MOBILE BUSINESS Active 3G users Active GPRS users Number of active mobile data users in Elisa s network Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/ Annual Results 2007

13 Growth in broadband continued Q SEGMENT REVIEW, FIXED NETWORK BUSINESS Broadband market growth continued Broadband subscriptions Net adds 3,400 in Q Elisa the market leader Decrease in analogue lines stable Analogue voice lines decreased by 10% and lines including ISDN channels by 9% Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 *) EBITDA and EBIT excluding one-off items Annual Results 2007 Broadband subscriptions Net adds

14 Cost efficiency improves profitability Q SEGMENT REVIEW, FIXED NETWORK BUSINESS Revenue EUR 162m (162) Growth through broadband and internet services EBITDA* EUR 49m (44), 30% of revenue (27) Efficiency programs Revenue and EBITDA-% EBIT* EUR 25m (19), 15% of revenue (12) 27 % 30 % 28 % 34 % 30 % Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 *) EBITDA and EBIT excluding one-off items Annual Results 2007 Revenue, EURm EBITDA-% excl. one-offs

15 Growth in broadband and cable TV Q SEGMENT REVIEW, MOBILE BUSINESS Traditional analogue ISDN Cable TV Broadband 800 Thousands Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/ Annual Results 2007

16 Elisa strategy STRATEGY EXECUTION 2003 Integration of One Elisa 2005 Strengthening market position in core markets New services and new markets Annual Results 2007

17 Productivity improvement STRATEGY EXECUTION INTEGRATION OF ONE ELISA Personnel reduction in Consumer customers unit Personnel reduction in administration MultiSim services, same number for several mobile handsets UMTS900 for commercial use first in the world New 10 and 30 Mbit/s broadband connections in cable network Integration of Saunalahti employees into Elisa Outsourcing of contact center in Tampere Significant profitability improvement Customer orientation Simplification of structure Annual Results 2007

18 3G success story continued STRATEGY EXECUTION STRENGTHENING MARKET POSITION Sale of 3G services continued well Significant amount of new subscriptions are 3G service bundles Elisa s market share in 3G service bundles about 50% In Q4 65,000 new service bundles in Finland Cumulative amount of 3G terminals sold since 2006 more than one million ARPU increase still 10-15% from 2G to 3G 3G subscriptions and services 3G service bundle market (cumulative, 000) 3G subscription market (cumulative, '000) Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 Source: Elisa estimates, Matkaviestintoimittajat ry (MVT) Annual Results 2007

19 Elisa has the best 3G network in Finland* STRATEGY EXECUTION STRENGTHENING MARKET POSITION Best network both in quality and coverage Highest signal levels Quality in voice and data services Important in 1 Mb/s and higher speeds Highest number of base stations Dense network improves quality 3G network coverage, best = 100% 3G voice 3G data Elisa Sonera DNA Elisa Sonera DNA * Based on ECE (European Communications Engineering) research in January Annual Results 2007

20 ICT services offering gaining momentum STRATEGY EXECUTION STRENGTHENING MARKET POSITION Success in Elisa Office and Elisa Customer solutions Nordic IT spend growth rates, % yoy Good demand for Elisa Office s mobile collaboration solutions, driven by corporate applications and switchboards going mobile Customer service centre business for corporate customers best-inclass according to TNS Gallup (Dec 2007) 4,2 4,3 4,6 4,7 Elisa Production Elisa Office Elisa Customer Source: IDC, January Annual Results 2007

21 Outlook for 2008 Competition remains challenging Focus on service competition Result will improve from 2008 Revenue will grow EBITDA and EBIT excluding non-recurring items will improve Stable CAPEX CAPEX per cent of revenue Significant improvement in cash flow Annual Results 2007

22 Agenda CEO s review Veli-Matti Mattila, CEO Financial review Jari Kinnunen, CFO Annual Results 2007

23 Profitability improved clearly in 2007 EUR million Q4/07 Q4/ Growth Revenue EUR 50m Other operating income % Operating expenses EBITDA EBITDA excluding one-offs EUR 46m EBITDA-% 31 % 29 % 32 % 29 % 10 % EBITDA-% excluding one-offs 32 % 30 % 31 % 29 % Depreciation and amortisation EBIT EBIT excluding one-offs EUR 57m EBIT-% 18 % 17 % 19 % 15 % 24 % EBIT-% excluding one-offs 19 % 18 % 19 % 16 % Profit before tax Income taxes Profit for the period EUR 0,41 EPS, EUR/share 0,32 0,31 1,38 0,97 42% Annual Results 2007

24 Revenue growth through customer billing EUR million Analogue lines and volumes Broadband, Corporate services Termination, roaming and handset sales Usage, subscriptions, 3G services, prices and Estonia Fixed decrease Fixed growth Mobile decrease Mobile growth Annual Results 2007

25 Change in cost structure Other operating expenses Employee benefit expenses Materials and services Materials and services Employee benefit expenses 1Q 07 2Q 07 3Q 07 4Q FY Percentage of total expenses 22 % 22 % 17 % 18 % 20 % 17 % 27 % 22 % Other operating expenses % 56 % 63 % 65 % Total costs Depreciation Annual Results 2007

26 CAPEX in line with guidance CAPEX / Sales 13% in 2007 CAPEX includes CAPEX, EURm 1 1 3G networks and services ADSL 2+ upgrade IT systems Backbone network Q4 CAPEX by segments Mobile EUR 31m Fixed network EUR 38m 17 % % 12 % % 17 % Q4/06 Q1/07 Q2/07 Q3/07 Q4/ Annual Results 2007 Fixed Line Mobile Shares CAPEX/Sales

27 Cash Flow affected by taxes, NWC and interests EUR million change EBITDA Change in receivables Change in inventories Change in payables 7 37 Change in NWC Sale of Comptel shares Interest paid and received Financials (net) Taxes for the year Taxes for the previous year Taxes CAPEX Investments in shares Sale of assets and adjustments Cash flow after investments Annual Results 2007

28 Cash flow improved in Q4 Cash flow EUR 53m in Q4 Change in net working capital EUR 19m q-o-q Increase in receivables EUR 16m Postponement in invoicing due to the new CRM system On schedule in Q1/08 Increase in payables EUR 41m Decrease in inventories EUR 5m Cash flow and operative cash flow, EURm Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 *) Operative cash flow = EBITDA excl. one-offs - CAPEX Annual Results 2007 Cash Flow after investments EBITDA-Capex

29 Capital structure in target level Capital structure in target level Net debt / EBITDA 1.5 Gearing 71% Balance sheet KPIs Target setting Net debt / EBITDA 1.5 2x Gearing % 1,3 1,4 1,2 1,5 0,9 52 % 60 % 65 % 71 % 29 % Q4/06 Q1/07 Q2/07 Q3/07 Q4/ Annual Results 2007 Net Debt, EURm Gearing, % Net Debt/EBITDA

30 Distribution above long-term policy 40-60% Capital repayment proposal April 2008 EUR 1.80 per share 0.80 according to distribution policy 1.00 as a special distribution Total EUR 285m Yield 9.4% ( ) Payout Ratio 130% Proposals for 15 million shares buy-back authorisation Distribution 304 % Dividend yield ~9.4% % % Proposal for dividend and capital repayment authorisation EUR 250m 39 % 9 81 % * Buy back Dividend or capital repayment Pay-out ratio Annual Results 2007 *) Distribution proposal

31 Capital repayment Parent company Capital repayment After capital repayment Reserve for invested non-restricted equity Retained earnings (./. treasury shares) Distributable equity in parent Capital repayment is paid from the reserve for invested non-restricted equity (transfer of the share premium fund in 2007 EUR 530m) Generally as tax effective as dividend No withholding tax for Finnish shareholders, but lowers purchase price in taxation Withholding tax for foreign shareholders depends on the tax treaty between Finland and shareholder s domicile Annual Results 2007

32 Annual Results February 2008

33 APPENDIX SLIDE Consolidated Cash flow statement EUR million Q Q Q2/2007 Q1/2007 Q Q Q Q Cash flow from operating activities Profit before tax Adjustments to profit before tax Change in working capital Cash flow from operating activities Received dividends and interests and interest paid Taxes paid Net cash flow from operating activities Cash flow in investments Capital expenditure Investments in shares and other investments Proceeds from asset disposal Net cash used in investment Cash flow after investments Cash flow in financing Share Buy Backs and sales (net) Change in interest-bearing receivables Change in long-term debt Change in short-term debt Repayment of financing leases Dividends paid Cash flow in financing Change in cash and cash equivalents Annual Results 2007

34 APPENDIX SLIDE Financial situation Financial situation EUR Million 31 Dec Sep Jun Mar Dec 2006 Interest-bearing debt Bonds and notes Commercial Paper Loans from financial institutions Financial leases Committed credit line 1) Others 2) Interest-bearing debt, total Security deposits Securities Cash and bank Interest-bearing receivables Net debt 3) ) The committed credit line is a joint EUR 170 million and EUR 130 million revolving credit facilities with five banks, which Elisa Corporation may flexibly use on agreed pricing. The loan arrangements are valid until 17 June 2012 and 23 November ) Redemption liability for minorities 3) Net debt is interest-bearing debt less cash and interest-bearing receivables Annual Results 2007