20
Financial
Statements
ELISA ANNUAL REPORT ANNUAL REPORT RESPONSIBILITY FINANCIALS CORPORATE GOVERNANCE REMUNERATION
20
20
ELISA FINANCIAL STATEMENTS 2020
CONTENTS
CONTENTS
THE REPORT OF THE BOARD OF DIRECTORS 1
FINANCIAL STATEMENTS 9
Consolidated Financial Statements 9
Consolidated income statement and statement of
comprehensive income 9
Consolidated statement of nancial position 11
Consolidated cash ow statement 13
Consolidated statement of changes in equity 15
Notes 16
1. General accounting principles 16
1.1 Basic information about the Group 16
1.2 Basis of presentation of nancial statements 16
1.3 Applied new and revised standards 18
2. Operational result 19
2.1 Operating segments and geographical areas 19
2.2 Items aecting comparability 21
2.3 Revenue 24
2.4 Other operating income 26
2.5 Operating expenses 27
2.6 Earnings per share 28
3. Business acquisitions and disposals 28
4. Personnel 35
4.1 Employee expenses 35
4.2 Share-based incentives 38
4.3 Pension obligations 42
5. Tangible and Intangible assets 45
5.1 Depreciation, amortisation and impairment 45
5.2 Property, plant and equipment 46
5.3 Right-of-use assets 49
5.4 Intangible assets 52
6. Inventories, trade and other receivables,
trade and other liabilities 57
6.1 Inventories 57
6.2 Trade and other receivables 57
6.3 Trade and other liabilities 60
7. Capital structure 62
7.1 Financial risk management 62
7.2 Capital management 66
7.3 Equity 67
7.4 Financial assets and liabilities 69
8. Other notes 79
8.1 Taxes 79
8.2 Provisions 82
8.3 Related party details 83
8.4 O-balance sheet leases and other commitments 88
8.5 Events after the end of the reporting period 89
9. Key indicators 90
9.1 Key indicators describing the Group’s nancial
development 90
9.2 Comparable per-share indicators 92
9.3 Per-share indicators 94
PARENT COMPANY FINANCIAL STATEMENTS 96
Parent company operational results 96
Income statement 96
Balance sheet 97
Cash ow statement 98
Notes to the nancial statements of the parent
company 100
Accounting principles 100
Notes to the income statement 100
1. Revenue 101
2. Other operating income 101
3. Materials and services 101
4. Personnel expenses 102
5. Depreciation and amortisation 103
6. Auditor fees 103
7. Financial income and expenses 103
8. Appropriations 104
9. Income taxes 104
Notes to the balance sheet 104
10. Intangible and tangible assets 104
11. Investments 107
12. Inventories 108
13. Non-current receivables 108
14. Current receivables 109
15. Shareholders’ equity 110
16. Provisions 111
17. Non-current liabilities 111
18. Current liabilities 112
19. Lease commitments and other liabilities 113
SHARES AND SHAREHOLDERS 115
BOARD’S PROPOSAL FOR THE PROFITS DISRIBUTION 119
SIGNATURES 119
AUDITOR’S REPORT 120
AUDITOR’S REASONABLE ASSURANCE REPORT ON
ESEF FINANCIAL STATEMENTS 125
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ELISA FINANCIAL STATEMENTS 2020
Market situation
The competitive environment has been active. However,
to impact the market situation to some extent. Mobile
service revenue has been negatively impacted, as traveling
is still non-existent in practice. In the corporate business,
uncertainty still prevails. On the other hand, the usage
of mobile voice and data, as well as IPTV entertainment
services, continued to evolve favourably. Another factor
contributing to domestic mobile market growth has been
the increased network capacity and demand for higher
market has continued to be intense in multi-dwelling
subscriptions is decreasing.
The markets for IT and IPTV entertainment services
have continued to develop favourably. The demand for
other digital services is also growing.
Revenue, earnings and nancial position
EUR million 2020 2019 2018
Revenue 1,895 1,844 1,832
EBITDA 685 661 640
EBITDA-% 36.2 35.8
Comparable EBITDA 685 668
Comparable EBITDA-% 36.2 36.2
EBIT 409 404
EBIT-% 21.6 21.4 22.0
Comparable EBIT
(1
415 402 403
Comparable EBIT-% 21.9 21.8 22.0
Return on equity, % 28.1 26.6
1)
Excluding goodwill write-down of EUR 6 million in 2020.
REPORT OF THE BOARD OF DIRECTORS 2020
THE REPORT OF THE BOARD OF DIRECTORS
THE REPORT OF THE
BOARD OF DIRECTORS
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2
ELISA FINANCIAL STATEMENTS 2020
Revenue increased by 3 per cent, mainly due to the
Polystar acquisition, growth in mobile services, domestic
digital services and equipment sales. A decrease in usage
as well as a decrease in interconnection and roaming,
Comparable EBITDA increased by 3 per cent mainly
write-downs of EUR 3.5 million from Videra and EUR 2.5
million from Banana Fingers.
million (-23). Financial income includes a EUR 6 million
capital gain from the sale of Sulake shares. Income taxes
Financial position
EUR million 2020 2019 2018
Net debt 1,207 1,184 1,068
Net debt / EBITDA
(1
1.8 1.8 1.7
Gearing ratio, % 101.9 103.0
Equity ratio, % 39.1 41.0 42.4
Cash flow
300
257 272
Comparable cash flow
(2
351
323 282
1)
(Interest-bearing debt – financial assets) / (four previous quarters’ comparable EBITDA)
2)
Excluding EUR 57 million investments in shares and business combinations and EUR 6 million sale of shares in 2020.
and undrawn committed credit lines totalled EUR 520
million at the end of the quarter.
Changes in corporate structure
In December, Elisa and camLine Holding AG signed and
cent of camLine GmbH shares. Germany-based camLine
is a software solution provider for the manufacturing
industry with a strong focus on manufacturing execution
systems, quality and operational excellence. The company
has a global customer base, including semiconductor and
electronics manufacturers, and medical devices.
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ELISA FINANCIAL STATEMENTS 2020
Consumer Customers business
EUR million 2020 2019 2018
Revenue 1,183 1,152 1,150
EBITDA 461 433 416
EBITDA-% 38.9 37.6 36.2
Comparable EBITDA 461 435 415
Comparable EBITDA-% 38.9 37.8 36.1
EBIT 291 268 268
EBIT-% 24.6 23.3 23.3
Comparable EBIT
(1
293 271 268
Comparable EBIT-% 24.8 23.5 23.3
CAPEX, % 170 171 166
1)
Excluding goodwill write-down of EUR 2.5 million in 2020.
Revenue increased by 3 per cent. Equipment sales, as well as growth in digital and
Corporate Customers business
EUR million 2020 2019 2018
Revenue 711 681
EBITDA 224 228 224
EBITDA-% 31.6
Comparable EBITDA 224 232 224
Comparable EBITDA-% 31.6 33.6
EBIT 118 127 135
EBIT-% 16.6 18.3
Comparable EBIT
(1
122 131 135
Comparable EBIT-% 17.1
CAPEX, % 96 85 88
1)
Excluding goodwill write-down of EUR 3.5 million in 2020.
equipment sales and domestic digital services. The decrease in mobile services and roaming
Personnel
mainly to acquisitions and insourcing in customer services. Employee expenses totalled EUR
326 million (320). Personnel by segment at the end of the period:
2020 2019 2018
Consumer Customers 2,914 2,736 2,754
Corporate Customers 2,257 2,148 2,033
Total 5,171 4,884 4,787
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ELISA FINANCIAL STATEMENTS 2020
Investments
EUR million 2020 2019 2018
Capital expenditure
1)
, of which
266
256 254
Consumer Customers
170
171 166
Corporate Customers
96
85 88
Shares
70
83 14
Total
336
268
Capital expenditure excluding leasing
245
227 252
1)
2020 includes EUR 7 million investment for 26 GHz frequency licence and EUR 2 million acquisition in business operations.
The main capital expenditures were related to the capacity and coverage increases in the 4G and 5G networks, as well as to other network and IT investments. In 2020, investments in shares
Financing arrangements and ratings
EUR million Maximum amount In use on 31 Dec. 2020
Committed credit limits 300
0
Commercial paper programme (not committed) 350
20
EMTN programme (not committed) 1,500
1,074
Long term credit ratings
Credit rating agency Rating Outlook
Moody’s Investor Services Baa2 Stable
S&P Global Ratings BBB+ Stable
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ELISA FINANCIAL STATEMENTS 2020
Shares
Share trading volumes are based on trades made on the Nasdaq Helsinki and alternative marketplaces. Closing prices are
based on the Nasdaq Helsinki.
Trading of shares 2020 2019 2018
Nasdaq Helsinki, millions 122.5
Other market places, millions
(1
264.3 168.5
Total volume, millions 386.8 265.2 301.7
Value, EUR million 19,803,8 11,145,4
% of shares 231.2 158.5 180.3
Shares and market values 2020 2019 2018
Total number of shares 167,335,073 167,335,073 167,335,073
Tresury shares 7,252,165 7,437,277 7,611,821
Outstanding shares 160,082,908
Closing price, EUR 44.87 36.08
Market capitalisation, EUR million 7,508 8.241 6.037
Tresury shares, % 4.33 4.44 4.55
Number of shares Total Treasury Outstanding
167,335,073 7,437,277
(2
–185,112 185,112
Shares 31 Dec. 2020 167,335,073 7,252,165
1)
Other marketplaces: 2020 based on Bloomberg. 2019 based on Bloomberg and Fidessa Fragmentation Index.
2)
Stock exchange bulletin 3 February 2020.
Research and development
The majority of the service development occurs during
the ordinary course of business and is accounted for as a
in research and development, of which EUR 8 million (6) was
capitalised in 2020, corresponding to 0.5 per cent (0.4) of
revenue.
Annual General Meeting 2020
On 2 April 2020, Elisa’s Annual General Meeting decided to
paid to the shareholders registered in the company’s share
register maintained by Euroclear Finland Ltd on 6 April 2020.
The number of the members of the Board of Directors
Ignatius, Ms Seija Turunen, Mr Anssi Vanjoki and Mr Antti
Vasara were re-elected as members of the Board of
Directors, and Mr Topi Manner and Ms Eva-Lotta Sjöstedt
as new members of the Board of Directors. Mr Anssi Vanjoki
Deputy Chair of the Board of Directors.
The Annual General Meeting decided that the amount
of annual remuneration for the members of the Board of
Directors and remuneration for meeting participation be
changed. The Chair is paid annual remuneration of EUR
EUR 82,000, and other Board members EUR 67,000;
members receive an additional EUR 750 per meeting of the
Board and of a Committee.
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ELISA FINANCIAL STATEMENTS 2020
the company’s auditor. Mr Toni Aaltonen, APA, is the
responsible auditor.
Composition of the Committees of
the Elisa’s Board of Directors
The Board of Directors held its organising meeting
Lotta Sjöstedt and Mr Antti Vasara to the People and
Compensation Committee. Ms Seija Turunen (Chair), Mr
Audit Committee.
Authorisations of the Board of Directors
The Annual General Meeting decided to authorise the
Board of Directors to resolve to repurchase or accept as
pledge the company’s own shares. The repurchase may be
directed. The amount of shares under this authorisation
The Annual General Meeting decided to authorise
the Board of Directors to pass a resolution concerning
the share issue, the right of assignment of treasury
shares and/or the granting of special rights referred
to in the Companies Act. The amount of shares under
Elisa Shareholders’ Nomination Board
The largest shareholders were determined according to
they named the members of the Nomination Board. The
composition of the Nomination Board since September
2020 is as follows:
• Mr Antti Mäkinen, CEO, nominated by Solidium Oy
• Mr Jouko Pölönen, President and CEO, nominated by
Ilmarinen Mutual Pension Insurance Company
• Mr Reima Rytsölä, Deputy CEO, nominated by Varma
Mutual Pension Insurance Company
•
nominated by Elo Mutual Pension Insurance Company
• Mr Anssi Vanjoki, Chair of the Board of Elisa
The Nomination Board elected from amongst its
members Mr Antti Mäkinen as the chair.
Elisa’s Shareholders’ Nomination Board was
Its duty is to prepare proposals for the election and
remuneration of the members of the Board of Directors of
Elisa for the Annual General Meeting.
Signicant legal and regulatory issues
In May 2020, the Estonian Parliament adopted changes
to the Electronic Communications Act concerning the
national security requirements for communications
networks. The amendment will grant the Estonian
Government general authorisation to enforce the detailed
regulation regarding requirements for technology used
by communications companies in networks. The exact
requirements and deadlines will be in the upcoming
Government regulation.
The start date of the Estonian 3.5 GHz spectrum
auction has not yet been announced. The frequencies can
be used for 5G networks.
customers are able to roam at domestic prices in EU and
EEA countries according to the EU roaming regulation’s
reasonable usage principle. This change in roaming prices
In June 2020, the Finnish Government granted a
network licence for the 26 GHz spectrum to Elisa by
auction, and Elisa will pay EUR 7 million for its licence in
can be used for 5G networks.
In July 2020, Tucana Telecom NV initiated legal
proceedings against Polystar OSIX AB in the Corporate
Court of Brussels with a claim of infringement of exclusivity
included in the distribution agreement and also of
wrongful termination of the distribution agreement.
Related to this legal proceeding, an arbitration process
was initiated in December 2020 against Elisa by Emblasoft
Group AB. Elisa estimates that these disputes will have no
The Finnish Communications Regulatory Authority
Administrative Court. In November 2020, the Supreme
In particular, the court decided that Elisa will not have to
for now.
In December 2020, the EU Commission adopted
a delegated act based on the European Electronic
Communications Code directive, which sets out single,
rates and is expected to enter into force during Q2 of
to 0.2 cent per minute on a glide path until 2024. (It is
currently 0.82 cent per minute in Finland and 0.7 cent
will decrease to 0.07 cent per minute on a glide path until
2022 (It is currently 2.8 cents per minute in Finland and
In December 2020, The Finnish Parliament approved
amendments to the Act on Electronic Communication
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ELISA FINANCIAL STATEMENTS 2020
Elisa’s businesses. The legislation relates, among other
things, to frequencies, market regulation, user rights and
mobile phone subscriptions was shortened from the
will be obligated to provide consumer customers with
a free-of-charge opportunity to check the end date of
easy-to-use means. The Act also stipulates that the rate for
calling national subscriber numbers (“business numbers”)
must not be more than the normal mobile phone or local
telephone charge. This change will enter into force in
Elisa.
security in Finnish networks came into force. The new
rules prohibit the use, in the critical parts of a network,
of communications network devices that could endanger
national security. The provision also applies retroactively
to current network devices. The critical parts of a network
precisely the critical parts of a network. An entitlement
to compensation might be possible if a network device is
prohibited.
Substantial risks and uncertainties
associated with Elisa’s operations
Risk management is part of Elisa’s internal control system. It
Strategic and operational risks:
The telecommunications industry is under intense
competition in Elisa’s main market areas, which may have an
impact on Elisa’s business. The telecommunications industry
is subject to heavy regulation. Elisa and its businesses are
monitored and regulated by several public authorities. This
that have long payback times.
protection legislation, especially the General Data Protection
businesses.
The rapid developments in telecommunications
Changes in governmental relationships may increase
the risk that there will be restrictions on network providers’
equipment that is also used in Elisa’s network. This might
Elisa’s main market is Finland, where the number of
mobile phones per inhabitant is among the highest in the
world and growth in subscriptions is therefore limited.
network has decreased during the last years. These factors
may limit opportunities for growth.
Elisa is liable for direct and indirect taxes and
withholding taxes in the countries in which it operates. Tax
authorities have taken a slightly more intense approach to
tax inspection of late. Tax payments may be challenged by
impact for Elisa.
Hazard risks:
The company’s core operations are covered by insurance
against damage and interruptions caused by accidents and
disasters. Accident risks also include litigation and claims.
through customer demand, suppliers’ security of supply
and employee health. Elisa has adapted its operations
pandemic, e.g. more intensive follow-up of customer demand
for existing services, as well as emerging demand for new
business opportunities. Also, the company has moved to
remote working in the duties where it is possible.
Financial risks:
In order to manage the interest rate risk, the Group’s loans
instruments. Interest rate swaps can be used to manage the
interest rate risk.
denominated in euros, the exchange rate risk is minor.
Currency derivatives can be used to manage the currency
risk.
The objective of liquidity risk management is to ensure
reserves, committed credit facilities and a sustainable cash
Credit risk concentrations in accounts receivable are minor,
as the customer base is broad.
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ELISA FINANCIAL STATEMENTS 2020
statements.
COVID-19 situation and impacts
limited. Operations have continued as planned and all
supply chains have operated normally. Elisa has continued
due to the reduced amount of travel and decreased sports
remained strong. Elisa has prepared for various scenarios
Corporate responsibility and
non-nancial reporting
Digital responsibility is a core element in Elisa’s corporate
responsibility in addition to social, environmental and
economical responsibility. Elisa is committed to the
principles of the UN Global Compact and is actively
promoting sustainable business through the UN
Sustainable Development Goals.
The reduction of carbon dioxide emissions has been
set ambitious climate goals aligned with the Paris Climate
agreement and in accordance with the requirements of
the Science Based Targets initiative. The company became
by using renewable energy, with persistent, long-term
by compensating for emissions the company cannot yet
directly impact.
been prepared according to the Global Reporting Initiative
Standard requirements with selected indicators from the
SASB telecom operator standard, and the report meets
includes mid-term targets, performance and metrics.
In recognising Elisa’s material corporate responsibility,
into account. The management’s description of corporate
responsibility is available on the company website.
Corporate Governance Statement
The Group has published a Corporate Governance
Statement and a Remuneration Report on 28 January
Events after the nancial period
Outlook and guidance for 2021
An uncertain macroeconomic environment is still
prevailing in Finland. Competition in the Finnish
telecommunications market remains keen.
Full-year revenue is estimated to be slightly higher
than in 2020. Mobile data and digital services are expected
to increase revenue. Full-year comparable EBITDA is
anticipated to be at the same level or slightly higher than
in 2020. Capital expenditure is expected to be a maximum
Elisa is continuing its productivity improvement
development, for example by increasing automation and
interactions, network operations and delivery. Additionally,
Elisa’s continuous quality improvement measures will
costs.
Elisa’s transformation into a provider of exciting, new
and relevant services for its customers is continuing.
will derive from growth in the mobile data market, as well
as digital online and ICT services.
Prot distribution
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
payment, capital repayment and purchase of treasury
shares.
The Board of Directors proposes to the Annual
Shareholders who are listed in the company’s register
Meeting. The Board of Directors proposes that the
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
which corresponds to 3 per cent of the total shares.
BOARD OF DIRECTORS
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ELISA FINANCIAL STATEMENTS 2020
EUR million Note 2020 2019
Revenue 2.1, 2.3 1,894.6 1,843.5
Other operating income 2.4 4.1 5.7
Materials and services 2.5 –713.7 –693.1
Employee expenses 4.1 –325.7 –320.3
Other operating expenses 2.5 –174.2 –175.0
EBITDA 2.1 685.2 660.8
Depreciation, amortisation and impairment 2.1, 5.1 –276.2 –265.8
EBIT 2.1 409.0 395.0
Financial income 7.4.1. 8.7 6.1
Financial expenses 7.4.1. –21.2 –29.0
Share of associated companies’ profit 1.9 –0.2
Profit before tax 398.3 371.9
Income taxes 8.1.1 –70.2 –68.7
Profit for the period 328.1 303.1
Attributable to
Equity holders of the parent 328.0 303.0
Non-controlling interests 0.1 0.2
Earnings per share (EUR)
Basic 2.6 2.05 1.90
Diluted 2.6 2.05 1.90
Average number of outstanding shares (1,000 shares)
Basic 2.6 160,066 159,881
Diluted 2.6 160,066 159,881
CONSOLIDATED INCOME STATEMENT
FINANCIAL STATEMENTS
Consolidated Financial State-
ments
Consolidated income statement and statement of compre-
hensive income
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ELISA FINANCIAL STATEMENTS 2020
EUR million Note 2020 2019
Profit for the period 328.1 303.1
Other comprehensive income, net of tax
Items which may be reclassified subsequently to profit or loss
Cash flow hedge 0.4 –0.4
Translation differences 3.1 1.2
Items which are not reclassified subsequently to profit or loss
Remeasurements of the net defined benefit liability 4.3 4.5 –1.7
Total comprehensive income 336.1 302.3
Total comprehensive income attributable to
Equity holders of the parent 336.1 302.2
Non-controlling interests 0.0 0.2
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
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ELISA FINANCIAL STATEMENTS 2020
EUR million Note 31 Dec. 2020 31 Dec. 2019
ASSETS
Non-current assets
Property, plant and equipment 5.2 735.1 731.8
Right-of-use assets 5.3 94.6 95.0
Goodwill 5.4.1 1,131.4 1,086.1
Intangible assets 5.4 210.1 202.5
Investments in associated companies 8.3.2 1.4 2.4
Other financial assets 7.4.3 15.6 13.7
Trade and other receivables 6.2.2. 7.4.4 94.9 91.9
Deferred tax assets 8.1.2 11.9 14.4
Current assets
Inventories 6.1 67.9 67.7
Trade and other receivables 6.2.1 457.8 453.5
Tax receivables 0.5 3.3
Cash and cash equivalents 220.1 52.0
TOTAL ASSETS 2.1 3,041.4 2,814.2
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
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ELISA FINANCIAL STATEMENTS 2020
EUR million Note 31 Dec. 2020 31 Dec. 2019
SHAREHOLDERS' EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY
Share capital 83.0 83.0
Treasury shares –128.4 –132.2
Reserve for invested non-restricted equity 90.9 90.9
Other reserves 375.7 370.8
Retained earnings 761.5 737.0
Equity attributable to equity holders of the parent 4.2. 7.3 1,182.7 1,149.6
Non-controlling interests 1.5 0.7
TOTAL SHAREHOLDERS' EQUITY 1,184.2 1,150.3
LIABILITIES
Non-current liabilities
Deferred tax liabilities 8.1.2 26.2 25.6
Interest-bearing financial liabilities 7.4.2. 7.4.3 1,136.8 1,007.4
Lease liabilities, interest-bearing 7.4.2. 7.4.3 78.8 77.6
Trade payables and other liabilities 6.3. 7.4.3. 7.4.4 32.2 36.8
Pension obligations 4.3 11.0 16.7
Provisions 8.2 2.9 2.9
Current liabilities
Interest-bearing financial liabilities 7.4.2. 7.4.3 193.5 133.0
Lease liabilities, interest-bearing 7.4.2. 7.4.3 17.7 18.1
Trade and other payables 6.3. 7.4.3. 356.3 343.2
Tax liabilities 1.2 0.4
Provisions 8.2 0.5 2.1
TOTAL LIABILITIES 1,857.2 1,663.9
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 3,041.4 2,814.2
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
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ELISA FINANCIAL STATEMENTS 2020
EUR million Note 2020 2019
Cash flow from operating activities
Profit before tax
Adjustments
Depreciation, amortisation and impairment 5.1
Financial income (-) and expenses (+) 7.4.1
Gains (-) and losses (+) on the disposal of fixed assets
–1.6
–0.6
Increase (+) / decrease (-) in provisions on the income statement
–1.6
–0.1
Other adjustments
–14.2
–10.3
Change in working capital
Increase (-) / decrease (+) in trade and other receivables
–20.4
Increase (-) / decrease (+) in inventories
–1.2
–1.9
Increase (+) / decrease (-) in trade and other payables
–5.4
Dividends received
Interest received
Interest paid
–17.8
–24.4
Taxes paid
–67.6
–69.0
Net cash flow from operating activities
CONSOLIDATED CASH FLOW STATEMENT
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ELISA FINANCIAL STATEMENTS 2020
EUR million Note 2020 2019
Cash flow from investing activities
Equity investments and business acquisitions 3
–49.0
–61.9
Contingent consideration of subsidiaries
–5.0
–0.7
Other investments
–2.4
–4.5
Capital expenditure
–249.2
–231.6
Proceeds from disposal of subsidiaries and businesses 3
Proceeds from disposal of other investments
Proceeds from disposal of tangible and intangible assets
Net cash flow used in investing activities
–300.0
–296.5
Cash flow before financing activities
Cash flow from financing activities
Proceeds from long-term borrowings
Repayment of long-term borrowings –180.1
Increase (+) / decrease (-) in short-term borrowings
–113.5
Repayment of lease liabilities
–20.8
–22.5
Acquisition of non-controlling interests
–0.1
Dividends paid
–295.7
–279.6
Net cash used in financing activities
–132.4
–288.3
Change in cash and cash equivalents
–30.9
Translation differences
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
CONSOLIDATED CASH FLOW STATEMENT
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ELISA FINANCIAL STATEMENTS 2020
Equity attributable to equity holders of the parent
EUR million
Share
capital
Tresury
shares
Reserve for
invested
non-
restricted
equity
Other
reserves
Retained
earnings Total
Non-
controlling
interests Total equity
Balance at 1 January 2019 83.0 –135.6 90.9 372.8 715.2 1,126.3 0.5 1,126.9
Profit for the period 303.0 303.0 0.2 303.1
Translation differences 1.2 1.2 1.2
Cash flow hedge –0.4 –0.4 –0.4
Remeasurements of the net defined benefit liability –1.7 –1.7 –1.7
Total comprehensive income
–2.0 304.2 302.2 0.2 302.3
Dividend distribution
–279.8 –279.8 –279.8
Share-based compensation
Other changes –2.5 –2.5 –2.5
Balance at 31 December 2019
Profit for the period
Translation differences
Cash flow hedge 0.4 0.4 0.4
Remeasurements of the net defined benefit liability 4.5 4.5 4.5
Total comprehensive income
Dividend distribution
–296.2 –296.2 –0.1 –296.2
Share-based compensation
Acquisition of non-controlling interests 1.0 1.0
Increase in parent’s ownership interest without change of control 0.0 0.0 –0.1 –0.1
Other changes –10.6 –10.6 –10.6
Balance at 31 December 2020 83.0 –128.4 90.9 375.7 761.5 1,182.7 1.5 1,184.2
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
Consolidated statement of changes in equity
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ELISA FINANCIAL STATEMENTS 2020
1 GENERAL ACCOUNTING PRINCIPLES
1.1 Basic information about the Group
Elisa Corporation (“Elisa” or “the Group”) engages in
telecommunications activities and provides ICT and
online services in Finland and in selected international
market areas. The parent company of the Group is Elisa
Corporation (“the parent”) domiciled in Helsinki, and its
registered address is Ratavartijankatu 5. The shares of the
parent company, Elisa Corporation, have been listed on
website at corporate.elisa.com.
1.2 Basis of preparation of
nancial statements
in accordance with International Financial Reporting
Standards (IFRS), including adherence to IAS and IFRS
standards and SIC and IFRIC interpretations valid as at
the provisions issued pursuant to it, the Inter-national
Financial Reporting Standards refer to standards and
interpretations that have been approved for application
in the EU according to the procedures provided for in EU
Finnish accounting and corporate legislation.
ACCOUNTING PRINCIPLES
prepared under the historical cost convention with the
payments, pension liabilities and derivatives recognised
one decimal place.
1.2.1 Accounting principles, structure
and presentation of the consolidated
The accounting policies and descriptions of management’s
judgment-based conclusions are mainly found in the
table below. Only some general accounting policies are
described in this section.
Summary of notes, related to accounting principles for
Accounting principle Note
Operating segments 2.1
Revenue from contracts with customers 2.3
Other operating income 2.4
Research and development costs 2.5
Earnings per share 2.6
Business acquisitions and disposals 3
Share-based incentives 4.2
Pension obligations 4.3
Property, plant and equipment 5.2
Right-to-use assets, tangible assets 5.3
Intangible assets 5.4
Goodwill 5.4.1
Inventories, trade and other receivables, trade and
other liabilities 6
Financial assets and liabilities 7.4
Derivative instruments 7.4.4
Income taxes 8.1.1
Deferred tax assets and liabilities 8.1.2
Provisions 8.2
Consolidation principles, subsidiaries 8.3.1
Consolidation principles, joint arrangements 8.3.2
Off-balance sheet leases 8.4
Notes
1. General accounting principles
1.1 Basic information about the Group
statements
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ELISA FINANCIAL STATEMENTS 2020
in the notes that match the balances in the income
I/S
= Income Statement
B/S = Balance Sheet
C/F
Consolidation principles
company, Elisa Corporation, subsidiaries, associates and
and 8.3.2.
Foreign currency items
euros, which is the functional and presentation currency of
the parent company.
Transactions in foreign currencies
Foreign currencies transactions are translated into
functional currency using the exchange rates prevailing on
the dates of the transactions. Monetary items have been
translated into the functional currency at the exchange
rates prevailing at the end of the reporting period.
Non-monetary items denominated in foreign currencies
are translated at the exchange rate at the date of the
transaction, excluding items measured at fair value that
are translated at the exchange rates prevailing on the
valuation date. Gains and losses arising from the currency
exchange gains and losses resulting from operating
activities are included in the respective items above
the loans denominated in a foreign currency are included
constitute a part of the net investment made in a foreign
other comprehensive income and accumulated exchange
presented in shareholders’ equity.
Translation of foreign Group
The income statements of foreign subsidiaries that use a
functional currency other than the Group’s presentation
currency have been converted into euro at the average
exchange rate prevailing during the year, and statements
the income statement and balance sheet result in a
recognised in other comprehensive income. Translation
cost of foreign subsidiaries, as well as translation
the acquisition, are recognised in other comprehensive
income. When a subsidiary is divested in full or in part,
income statement as part of the sales gain or loss.
Goodwill arising from the acquisition of foreign entities
and the fair value adjustments made to the book values
of the assets and liabilities of such foreign entities upon
acquisition is treated as assets and liabilities belonging
to the foreign entities. These are converted into euro at
the exchange rate prevailing at the end of the reporting
period.
1.2.2 Accounting principles that require
management’s judgement and key
sources of estimation uncertainty
Group’s management to make certain estimates and
consideration. In addition, judgement in applying the
accounting policies is required. This applies particularly to
cases in which valid IFRS standards provide for alternative
methods of recognition, measurement or presentation.
The estimates made in connection with the
assumptions. Estimates are based on historical experience
and assumptions concerning the future that are believed
Group regularly assesses the realisation of estimates and
assumptions, as well as changes in the underlying factors.
Any changes in estimates and assumptions are recorded
assumption was adjusted, and for all subsequent periods.
are related to business combinations (3), impairment
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ELISA TILINPÄÄTÖS
1.3 Applied new and revised standards
in accordance with the same accounting policies used in
interpretations and revisions to existing standards that
statements.
• Amendments to References to Conceptual Framework
IASB’s thinking adopted in recent standards. It does not
override the requirements of individual IFRSs.
• Amendments to IFRS 3 Business Combinations. The
whether an acquired set is a group of assets rather than
a business.
•
Instruments and IAS 8 Accounting Policies, Changes
in Accounting Estimates and Errors. The amendments
to help improve consistency in the application of that
concept across all IFRS Standards. In addition, the
improved.
•
Instruments: Recognition and Measurement and IFRS
7 Financial Instruments: Disclosures. Amendments
have been issued to address uncertainties related
instruments qualifying for hedge accounting in the lead
up to IBOR reform.
•
the lessees not to account for rent concessions as
certain conditions are met.
standards, providing these are approved by the EU by
the planned date of adoption. Revisions are not expected
statements.
• Interest Rate Benchmark Reform Phase 2 –
Financial Instruments: Recognition and Measurement,
IFRS 7 Financial Instruments: Disclosures, IFRS 4
hedging relationships as a result of interest rate
benchmark reform. Amendments assist companies in
standards, providing these are approved by the EU by
the planned date of adoption. Revisions are not expected
statements.
•
Under the amendments, proceeds from selling items
before the related item of PPE is available for use should
producing those items.
• Amendments to IAS 37 Provisions, Contingent Liabilities
and Contingent Assets. When an onerous contract
contract, the amendments clarify that these costs
comprise both the incremental costs and an allocation
of other direct costs.
•
new standard, providing this is approved by the EU by
the planned date of adoption. Revisions are not expected
statements.
•
Statements. The amendments are to promote
consistency in application and clarify the requirements
on determining if a liability is current or non-current.
1.3 Applied new and revised standards
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ELISA FINANCIAL STATEMENTS 2020
2 Operational result
2.1 Operating segments and geographical areas
The Group has two reporting segments: Consumer Customers and Corporate Customers. The organisational and management structure of Elisa Group is based on a customer-oriented
operating model. The reportable segments are based on the internal reporting provided to management.
The Consumer Customers segment provides consumers with telecommunications and communications services, such as fixed and mobile subscriptions with supplementary digital services,
The Corporate Customers segment provides corporate and public administration organisations with services such as IT and communication solutions for the digital environment as well as
fixed and mobile subscriptions. Internationally The Corporate Customer segment provides services such as video conferencing services, solutions for automation of network management and
operation for mobile operators, and IoT solutions for industry.
Operating segments
2020
EUR million
Consumer
Customers
Corporate
Customers
Unallocated
items
Group
Total
Revenue
1,183.4 711.2 1,894.6
EBITDA
460.8 224.4 685.2
Depreciation, amortisation and
impairment
–169.9 –106.3 –276.2
EBIT
290.8 118.1 409.0
Financial income
8.7 8.7
Financial expenses
–21.2 –21.2
Share of associated companies' profit
1.9 1.9
Profit before tax
398.3
Investments
170.1 96.1 266.2
Assets
1,802.5 989.4 249.5 3,041.4
2019
EUR million
Consumer
Customers
Corporate
Customers
Unallocated
items
Group
Total
Revenue 1,843.5
EBITDA 433.2 227.6 660.8
Depreciation, amortisation and
impairment –164.8 –101.0 –265.8
EBIT 268.3 126.7
Financial income 6.1 6.1
Financial expenses
Share of associated companies' profit –0.2 –0.2
Profit before tax
Investments 170.7 85.3 256.0
Assets 1,748.2 85.8 2,814.2
EBIDTA 2020
Consumer Customers 460.8
Corporate Customers 224.4
Revenue 2020
Consumer Customers 1,183.4
Corporate Customers 711.2
2. Operational result
2.1 Operating segments and geographical areas
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ELISA FINANCIAL STATEMENTS 2020
Geographical areas
2020
EUR million Finland Rest of Europe Other coutries Group total
Revenue
1,639.1 234.1 21.4 1,894.6
Assets
2,584.4 443.8 13.2 3,041.4
2019
EUR million Finland Rest of Europe Other coutries Group total
Revenue 1,605.0 218.3 20.3 1,843.5
Assets 366.6 8.5 2,814.2
Accounting Principles – Operating Segments:
The segments are controlled by segment-specific performance reporting that includes external revenue, EBITDA, EBIT and capital investments. Financial items, share of associated
companies’ profit and income taxes are not allocated to operating segments. The costs of production and support functions are allocated to operating segments on the matching principle.
Operations in Estonia are divided into the Consumer Customers and Corporate Customers operating segments on the basis of customer accounts.
Segment assets consist of intangible and tangible assets, inventories, trade and other non-interest bearing receivables. Deferred tax assets, investments in associated companies, other
investments, interest-bearing receivables, financial items and income tax receivables are not included in segment assets. Liabilities are not allocated to operating segments.
The accounting principles of the segments are the same as those used in the preparation of the financial statements.
The reported geographical areas are Finland, Rest of Europe and Other Countries. Revenues are presented on the basis of customer location. The assets are presented on the basis of their
location.
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ELISA FINANCIAL STATEMENTS 2020
2.2 Items aecting comparability
Elisa uses comparable key figures in its financial reporting to describe the financial development of its business and increase comparability between different periods.
Exceptional transactions outside the ordinary course of business are treated as items affecting comparability. Such items, as identified by the Group, are for example capital gains and losses
from divestments of the assets and businesses, acquisition costs of assets and businesses, impairments, restructuring expenses and costs of legislative changes, damages or litigations.
Income statement
EUR million 2020 2019
Expenses related to acquisitions of subsidiaries and business combinations
Restructuring costs –6.0
Impairment of goodwill
–6.1
Items affecting comparability in EBITDA and EBIT
–6.1
Capital gain
5.6
Items affecting comparability in profit before tax
–0.4
Deferred tax assets for tax losses carried forward
1.0
Income taxes on items affecting comparability 1.2
Items affecting comparability in profit for the period
0.5
–5.7
Items affecting comparability in 2020 include impairment of goodwill of EUR 6.1 million, capital gain of EUR 5.6 million from the disposal of Sulake companies and a recognised deferred tax
asset of EUR 1.0 million of tax losses carried forward.
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ELISA FINANCIAL STATEMENTS 2020
EUR million 2020 2019
Comparable EBITDA
I/S
EBITDA
685.2
660.8
Items affecting comparability in EBITDA
685.2
667.7
Comparable EBIT
I/S
EBIT
409.0
Items affecting comparability in EBIT
6.1
415.0
Comparable profit before taxes
I/S
Profit before taxes
398.3
Items affecting comparability in profit before taxes
0.4
398.8
378.8
Comparable profit for the period
I/S
Profit for the period
328.1
303.1
Items affecting comparability in profit for the period
–0.5
5.7
327.6
308.8
Comparable profit for the period attributable to equity holders of the parent
Comparable profit for the period
327.6
308.8
Non-controlling interests
0.1
0.2
327.5
308.7
Comparable earnings per share, EUR
Comparable profit for the period attributable to equity holders of the parent
327.5
308.7
Average number of outstanding shares, diluted (1,000 shares)
160,066
2.05
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ELISA FINANCIAL STATEMENTS 2020
Cash ow
EUR million 2020 2019
Investment in shares and business combinations
56.5
67.1
Proceeds from disposal of subsidiaries and businesses
–5.1
–1.5
Items affecting comparability in cash flow before financing
51.3
65.6
The most significant items affecting comparability in 2020 are the acquisition of camLine GmbH and its sister companies of EUR 45.4 million, the contingent consideration related to the
acquisition of Polystar Osix AB of EUR 5.0 million and the acquisition of Sutaria Services Inc. of EUR 3.0 million.
Comparable cash flow after investments
C/F Cash flow before financing
300.0
257.4
Items affecting comparability in cash flow before financing
51.3
65.6
351.3
323.0
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ELISA FINANCIAL STATEMENTS 2020
20202019201820172016
Development of revenue, EUR million
0
500
1,000
1,500
2,000
1,636
1,787
1,832
1,844
1,895
2.3 Revenue
Division of Group’s revenue
EUR million 2020 2019
Rendering of services
1,569.1
1,546.6
Equipment sales
325.5
I/S
1,894.6
1,843.5
EUR million 2020 2019
Mobile telecommunications
1,123.3
1,107.0
Fixed-network broadband and others
771.3
736.5
I/S
1,894.6
1,843.5
2.3 Revenue
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ELISA FINANCIAL STATEMENTS 2020
Accounting Principles – Revenue from contracts with customers:
The revenue of consumer customers mainly consists of fixed and mobile subscriptions with supplementary digital services, cable-tv subscriptions, Elisa Viihde entertainment service and
performance obligations, and Elisa may agree on the delivery or rendering of several products, services or access rights (service bundle). In that case, prices specified in the contract are
used as transaction price, which is allocated to performance obligations on a relative stand-alone selling price basis.
The revenue of corporate customers mainly consists of fixed and mobile subscriptions with supplementary digital services, IT and communication solutions for the digital environment,
video conferencing services, solutions for automation of network management and operation for mobile operators and IoT solutions for industry. Contracts with corporate customers
typically meet the criteria laid down for a contract negotiated as a single package, in which case the revenue will be allocated to the goods and services based on the prices agreed with each
customer.
A performance obligation may be fulfilled and revenue recognised over time or at certain points of time. The key criterion for the revenue recognition is the transfer of control. For
performance obligations that are satisfied at a certain point of time, such as equipment, the customer is deemed to gain control at the entry to contract and revenue is recognised when
the equipment is transferred to the customer. Service contracts mainly comprise performance obligations that are satisfied over time. The performance is carried out, and revenue is
recognised over time as the services are provided.
Fixed-term service contracts are recognised over the contract period and the opening fees and related expenses, as well as discounts granted, are allocated to the entire contract
period. Incremental costs of obtaining a fixed-term contract such as sales and represent commissions are capitalised and accrued as an expense during the contract period when these
commissions relate directly to a contract that can be specifically identified. Service contracts valid until further notice are recognised over time. The opening fees and related expenses are
recognised at the time when the service is connected.
The Group provides consumer customers with the various payment methods granting possibility to purchase equipment on 12–36 months credits. Revenue for equipment is recognised
at the time of the sale regardless of whether the customer pays for the device fully at the time of sale or by monthly payments. Based on management’s judgement, the contracts do not
include a significant financing component.
Revenue from prepaid mobile phone cards is recognised over the period of realised use of the cards. Service fees invoiced from a customer on behalf of a third-party content service
provider are not recognised as revenue.
A customer has the right to cancel the service contract and right to return the equipment in 2-4 weeks. In principle, there is no right of cancellation for equipment bought from an Elisa
shop. Based on historical experience the number of refunds is expected to be low due to which the Group has not recognised a refund liability for the amounts expected to be refunded
and revenue has not been adjusted by the estimated number of refunds.
Customers participating in loyalty programmes are entitled to certain discounts on services and products provided by the Group. Discounts earned by the customers are recognised as
reduction of revenue. The Group does not currently have any valid loyalty programmes.
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ELISA FINANCIAL STATEMENTS 2020
2.4 Other operating income
EUR million 2020 2019
Gain on disposals of property, plant and equipment
0.2
1.4
Gain on disposal of subsidiaries and businesses
(1
0.5
Other items
(2
3.4
4.3
I/S
4.1
5.7
1)
Includes a capital gain of EUR 0.5 million from the divestment of remote measurement business for corporate customers.
2)
Other items include rental income from the real estate and other income not associated with ordinary operating activities.
Accounting Principles – Other operating income:
Other operating income includes non-operating income, such as capital gain on the disposal of tangible and intangible assets, subsidiaries and businesses, and rental income from real
estate.
Government grants associated with development projects are recognised as other operating income when the related costs are recognised as expenses. Government grants associated
with capitalised development costs are recorded as a reduction of capital expenditure.
2.4 Other operating income
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ELISA FINANCIAL STATEMENTS 2020
2.5 Operating expenses
Materials and services
EUR million 2020 2019
Purchases of materials, supplies and goods 468.5 446.1
Change in inventories 1.0 –2.2
External services 244.2
I/S
713.7
Gains and losses arising from foreign currency translations are recognised in accordance with their nature either in materials and services or financial income and expenses. Gains and losses
arising from foreign currency translations included in Materials and services have been minor.
Employee expenses
More detailed analysis of employee expenses is included in Note 4.
Auditor fees
EUR million 2020 2019
Auditing 0.3 0.3
Tax advisory services 0.1 0.0
Other services 0.0 0.2
0.4 0.6
Research and development costs
EUR million 2020 2019
Research and development costs recognised as expenses 2.4 1.6
Capitalised development costs 8.0 6.1
10.4 7.7
The focus area for the research and development activities in 2020 was the development of a customer relationship management system, network software solutions for telecommunications
networks offered to international operators, as well as the development of new services.
Accounting Principles – Research and development:
Research costs are recorded as expenses in the income statement. Development costs are capitalised from the date the product is technically feasible, it can be utilised commercially
and the asset is expected to generate future economic benefit and the Group has both intention and the resources to complete the development and use or sell the asset. Capitalised
development costs include those material, labor and testing costs and any capitalised borrowing costs that are directly attributable to bringing the asset to its working condition for its
intended use. Otherwise, development costs are recorded as an expense. Development costs initially recognised as expenses cannot be capitalised subsequently.
2.5 Operating expenses
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ELISA FINANCIAL STATEMENTS 2020
2.6 Earnings per share
Earnings per share, basic 2020 2019
I/S
Net profit for the period attributable to equity holders of the parent (EUR million)
328.0
303.0
Weighted average number of shares outstanding (1,000 shares)
160,066
Earnings/share, basic (EUR/share)
2.05
Accounting principles – Earnings per share:
Basic earnings per share are calculated by dividing the net profit for the period attributable to the parent company’s equity holders by the weighted average number of shares outstanding
during the period.
Diluted earnings per share are calculated on the same basis as earnings per basic share, with the exception of taking into account the dilutive effect of the conversion of all potential dilutive
shares into the basic shares.
3. Business acquisitions and disposals
Acquired businesses in 2020
Acquisition of P-OSS Solutions S.L.U.
On 18 May 2020, Elisa’s subsidiary Polystar OSIX AB acquired a software development company P-OSS Solutions S.L.U. The acquisition strengthens Polystar’s network performance
management and analytics solutions for telecommunications networks offered to international operators.
The debt-free acquisition price paid for the company shares acquired was EUR 1.1 million. An EUR 1.1 million of acquisition price was allocated to software which will be amortised over 5
years. EUR 0.0 million of acquisition-related costs, such as professional fee, is recorded in other operating expenses. The acquisition does not have material impact on the Group.
Acquisition of Sutaria Services Inc.
On 1 October 2020, Elisa acquired 56.5 per cent of Sutaria Services Inc., a U.S.-based supply chain software provider for the electronics manufacturing services. The trade name of the
company is CalcuQuote. The acquisition is consistent with Elisa’s strategy to grow digital businesses internationally and to accelerate the Elisa Industrial Software business.
The price paid for the acquisition carried out as directed share issue was EUR 5.1 million. The acquisition contract includes an option for Elisa to redeem and for non-controlling interests to
sell the remaining 43.5 per cent of the shares in 2023. The liability for the redemption of the remaining shares has been recognised in the financial statements.
An EUR 0.4 million of total acquisition price was allocated to software which will be amortised over 5 years. The acquisition resulted in EUR 3.7 million of goodwill relating to strengthening
Group’s industrial software business. The calculation of the allocation of the acquisition price is preliminary, as the valuation of the acquired net assets has not been fully completed. Possible
adjustments are not expected to have a material impact on the Group.
measured at a proportionate share of the acquiree’s identifiable net assets.
The acquired company has been consolidated from 1 October 2020 onwards. External revenue after the acquisition was EUR 0.3 million and the impact on Group’s profit for the period was
EUR -0.2 million. Had the acquisition been made as of the beginning of the year 2020, the impact on Group revenue would have been EUR 1.1 million and on profit for the period EUR -0.4
million, respectively.
2.6 Earnings per share
3. Business acquisitions and disposals
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ELISA FINANCIAL STATEMENTS 2020
Consideration transferred
EUR million Preliminary
Cash paid 5.1
5.1
Analysis of net assets acquired
EUR million
Intangible assets 0.6
Trade and other receivables 0.1
Cash and cash equivalents 2.1
Deferred tax liabilities –0.1
Trade payables and other liabilities –0.4
2.3
Eects of acquisition on cash ow
EUR million
Purchase price paid in cash –5.1
Cash and cash equivalents of the acquired entity 2.1
–3.0
Goodwill arising from business combination
EUR million
Consideration transferred 5.1
Identifiable net assets of the acquired entity 2.3
Non-controlling interest's proportionate share of identifiable net assets acquired
Goodwill 3.7
An EUR 0.5 million of acquisition-related costs, such as professional fee, is recorded in other operating expenses.
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Acquisition of camLine group
On 23 December 2020, Elisa acquired a German camLine GmbH with its group of companies. camLine is a software solution provider for manufacturing industry with strong focus on
manufacturing execution systems (MES), quality and operational excellence. The company has a global customer base, including semiconductor and electronics manufacturers, and medical
devices. The transaction is consistent with Elisa’s strategy to grow digital businesses internationally, and it strengthens Elisa’s industrial software business growth.
The acquisition prise paid was EUR 63.8 million including the contingent consideration of EUR 4.4 million. An EUR 7.8 million of total acquisition price was allocated to the customer base which
will be amortised over 5 years. The acquisition resulted in EUR 45.2 million of goodwill relating to the Group’s growth in digital services internationally and strengthening the Group’s Industrial
software business. The calculation of the allocation of the acquisition price is preliminary, as the valuation of the acquired net assets has not been fully completed.
which is included in the Non-controlling interest balance sheet item. The non-controlling interest is measured at a proportionate share of the acquiree’s identifiable net assets.
The preliminary balances at the time of acquisition have been consolidated on 31 December 2020. The financial results will be consolidated as of 1 January 2021.
Consideration transferred
EUR million Preliminary
Cash paid
Contingent consideration 4.4
Total acquisition price 63.8
Analysis of net assets acquired
EUR million
Customer base 7.8
Intangible assets 0.2
Tangible assets 5.1
Inventories 1.0
Trade and other receivables 3.8
Cash and cash equivalents 14.0
Deferred tax liabilities –2.3
Interest-bearing liabilities –2.4
Advances received –1.2
Trade payables and other liabilities –7.2
Tax liabilities –0.1
18.6
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Eects of acquisition on cash ow
EUR million
Purchase price paid in cash
Cash and cash equivalents of the acquired entity 14.0
–45.4
Goodwill arising from business combination
EUR million
Consideration transferred 63.8
Identifiable net assets of the acquired entity 18.6
Non-controlling interest's proportionate share of identifiable net assets acquired –0.1
Goodwill 45.2
An EUR 0.5 million of acquisition-related costs, such as professional fee, is recorded in other operating expenses.
Changes in ownership interests
entire share capital of the company. Due to the acquisition the share of non-controlling interests decreased by EUR 0.1 million and the Group’s retained earnings increased by EUR 0.0 million.
Disposals of businesses in 2020 and 2019
There were no significant disposals during reporting periods.
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Acquired businesses in 2019
Acquisition of Polystar Osix AB group
transaction is consistent with Elisa’s strategy to grow digital businesses internationally and to accelerate the Elisa Automate business.
The acquisition price was EUR 77.6 million, including a contingent consideration of EUR 5.0 million, which was paid during the financial year 2020. An EUR 8.5 million of the purchase price was
allocated to the customer base, which is amortised over four years. The acquisition resulted in EUR 64.2 million of goodwill relating to Elisa’s strategy to grow digital businesses internationally
EUR 41.6 million and EUR 2.1 million, respectively.
Consideration transferred Carrying
EUR million amount
Cash paid 72.6
Contingent consideration 5.0
Total cost of acquisition 77.6
Analysis of net assets acquired
EUR million
Customer base 8.5
Tangible assets
Deferred tax assets 0.1
Inventories 0.7
Trade and other receivables 12.6
Tax receivables 0.2
Cash and cash equivalents 11.8
Deferred tax liabilities –1.8
Provisions –0.1
Lease liabilities –1.7
Trade payables and other liabilities –18.5
Tax liabilities –0.5
13.4
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Eects of acquisition on cash ow
EUR million
Purchase price paid in cash –72.6
Cash and cash equivalents of the acquired entities 11.8
–60.8
Goodwill arising from business combination
EUR million
Consideration transferred 77.6
Net asset acquired 13.4
Goodwill 64.2
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Accounting principles – Business acquisitions and disposals:
Subsidiaries are consolidated from the date the Group obtains control, and divested companies until the loss of control.
Acquisitions are measured at amortised costs. Identifiable assets acquired and assumed liabilities are measured at their fair value on the acquisition date.
Possible investments in non-controlling interests are measured either at a proportionate share of the acquiree’s identifiable net assets or at fair value. The method to be used is selected on
a case-by-case basis. Subsequent changes in non-controlling interests are treated as equity transactions.
In business combinations carried out in stages, previously held equity share in the acquiree is measured at fair value and the resulting gain or loss is recognised through profit or loss.
The acquisition price consists of the fair value of cash and contingent consideration transferred. The amount of the acquisition price that exceeds the fair value of the acquired net assets is
recognised as goodwill. Additional information regarding valuation and impairment testing of goodwill is available under note 5.4.1.
The changes in contingent consideration are expensed through profit and loss. Acquisition-related costs, such as consulting fees and transfer tax, are accounted for as expenses for the
periods, when the costs were incurred and the services received. The costs are presented as Other operating expenses in the income statement.
In connection with loss of control, any investment retained in a former subsidiary is measured at fair value through profit or loss at the date of transaction. Changes in ownership interest
that do not result in a loss of control are accounted for as equity transactions.
Accounting policies that require management’s judgements – Acquisitions:
The identifiable assets and liabilities acquired in a business combination are measured at fair value at the acquisition date. When determining the fair value of the acquired net assets,
consideration and estimates may be required. Estimates and judgement are based on the management’s best view of the situation at the time of the acquisition.
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4 Personnel
4.1 Employee expenses
EUR million 2020 2019
Salaries and wages 267.0 255.1
Share-based payments 6.8
Pension expenses - defined contribution plans 33.6 40.2
Pension expenses - defined benefit plans 0.4 0.4
Other employee costs 18.0 14.8
I/S
325.7 320.3
Number of personnel at the end of the reporting period 2020 2019
Consumer Customers 2,914 2,736
Corporate Customers 2,257 2,148
5,171 4,884
20202019201820172016
2 424 1 877
2 793 1 922
2 754 2 033
2 736 2 148
2 914 2 257
Corporate Customers
Consumer Customers
Number of personnel at the year end
0
1,000
2,000
3,000
4,000
5,000
6,000
1,877
1,922
2,033
2,148
2,257
2,424
2,793
2,754
2,736
2,914
4. Personnel
4.1 Employee expenses
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Employee bonus and incentive schemes
All employees are included in the scope of performance, incentive, commission or provision-based bonus schemes. The Group also has a personnel fund. The costs of the performance-based
bonus scheme and personnel fund are recognised on an accrual basis and the costs are based on the best available estimate of realised amounts.
Performance-based bonus scheme
Rewards are based on financial and operational metrics of Elisa Corporation and its units. Targets are set, and the maximum amount of reward is confirmed semi-annually. Some of the
Group’s key personnel also participated in the share-based compensation plan in 2020.
Personnel fund
The objective of the personnel fund is to secure the commitment of the personnel to Elisa’s long-term objectives and to reinforce their interest in the company’s financial success and its
metrics.
The evaluation metrics for the performance-based bonus schemes are earnings per share (EPS) and achievement of defined strategic goals. The Board of Directors decides on the
performance-based bonus schemes and sets the earning criteria for the profit share award annually.
The members of the personnel fund are the employees of Elisa Group, with the exception of those employees who are part of the share incentive plan. In 2020, the Group’s personnel fund
contribution was EUR 1.6 (1.4) million.
Management remuneration
EUR million 2020 2019
Managing Directors 8.1 6.0
Members and deputy members of Boards of Directors 0.6 0.6
Employment benets for key management
Benets recognised on the income statement
EUR million 2020 2019
Remunerations and other short-term employee benefits 4.6 4.3
Post-employment benefits 0.4 0.5
Share-based compensation
(1
2.1 3.8
7.1 8.6
1)
In 2020, the share-based compensation expenses were EUR 6.8 (9.9) million, of which EUR 0.5 (0.9) million is allocated to the CEO and EUR 1.9 (2.9) million to the Executive Board. The terms and conditions of share-based incentive plans are described
under Note 4.2.
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Benets paid
EUR million 2020 2019
Board of Directors 0.6 0.6
CEO 0.9
Executive Board 3.1 2.8
Share-based compensation
(1
9.8 5.5
14.3
1)
The award paid to the CEO under the share-based compensation plans was EUR 2.3 (0.8) million and to the Executive Board members EUR 7.5 (4.7) million.
If the service contract is terminated by the Group, the period of notice for the CEO is six months, and if the contract is terminated by the CEO, the period of notice is three months. If the
service contract is terminated by the Group, the CEO is entitled to a severance payment equalling the total salary of 24 months less the salary for the period of notice.
The period of notice for members of the Executive Board is six months, if the service contract is terminated by the Group and three months from the member’s side. Should the contract be
terminated by Elisa, the member of the Executive Board entitled to receive a severance payment that equals the total salary of 15 months less the salary for the period of notice.
Managing Directors’ pension commitments
In 2020, the Board of Directors agreed with the CEO of Elisa Corporation Veli-Matti Mattila that he will continue as CEO until further notice. Under previous executive agreement, the Group
CEO would have retired at the age of 60. The defined benefit pension plan includes vested rights. The company is liable for the pension until the age of 63 and the related accumulated liability
of EUR 1.6 million is included in pension obligations on the balance sheet. The pension is accrued annually by 5.1 per cent of the annual earnings under Employees Pensions Act (TyEL), and
annually by EUR 120,000 during the period 2017–2020. In the management’s cash-based supplementary pension insurance, the pension is accrued from 20.7 per cent of the annual earnings
under the Employees Pensions Act (TyEL) starting from the age of 62. The pension arrangement of the CEO is a cash-based plan, and it covers an increase in the statutory retirement age.
The executive agreements of the Group Management Board members appointed before the year 2013 expire mainly at the age of 62, when they have the right to retire. Pension provisions
are cash-based, and they are covered by management supplementary pension insurance, which includes vested rights.
Share-based compensation granted to the management
award will be paid after the publication of the 2020 financial statements.
award will be paid after the publication of the 2021 financial statements.
The maximum award granted to the CEO under the 2017 plan’s 2020–2022 vesting period equals the value of 32,000 shares and for the rest of the Executive Board 114,000 shares. The
award will be paid after the publication of the 2022 financial statements.
Elisa shares held by key members of the management
all shares and votes.
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4.2 Share-based incentives
The Group has share-based incentive plans in place, the aim of which is to align the objectives of the shareholders and key employees in order to increase the value of the company in the
long-term, and to commit key personnel to the company, and to offer them a competitive award plan that is based on receiving the company’s shares. The possible reward is based on the
accomplishment of the goals set.
4.2.1 Share-based incentive plan 2017
On 15 December 2017, Elisa’s Board of Directors decided on the share-based incentive plan for key personnel for 2018–2022.
the plan and required performance levels for each criterion at the beginning of a vesting period. After the end of the vesting period, the award is paid as a combination of company shares and
cash after the completion of financial statements. The cash portion intends to cover the tax obligations resulting from the share-based payment. If the contract of employment is terminated
before the payment of the award, as a rule, no award shall be paid.
The earnings criteria for the vesting period 2020–2022 are based on earnings per share (EPS), on new business development and other key objectives. The total maximum amount to be paid
for the vesting period 2020–2022 equals the value of 407,600 Elisa shares.
The earnings criteria for the vesting period 2018–2020 are based on earnings per share (EPS), on new business development and other key objectives. The total maximum amount to be paid
for the vesting period 2018–2020 equals the value of 550,000 Elisa shares.
The CEO of the Group and the members of the Board of Directors shall own at the minimum 50.0 per cent of the net shares paid under the share-based incentive plan until share ownership
for the CEO reaches 100 per cent of his/her gross yearly income and for the member of the Board of Directors 50 per cent of his/her gross yearly income.
Amount of share incentives and terms and assumptions in the fair value calculation
Vesting period
2020–2022
Vesting period
2019–2021
Vesting period
2018–2020
Maximum number of shares granted, pcs 407,600 536,000 550,000
Grant date 31.12.2018 31.12.2017
Fair value of the share at the grant date, EUR
(1
44.00 31.13 28.22
Share price at the grant date, EUR 36.08 32.72
Estimated realisation of share price after vesting period
(2
54.62 38.63 35.57
Vesting period starts 1.1.2020 1.1.2018
Vesting period ends 31.12.2022 31.12.2021 31.12.2020
Estimated realisation of earnings criteria at the beginning of vesting period, % 61 74 85
Estimated realisation of earnings criteria at the closing date, % 45 33
Number of participants in the plan at the closing date 185 164
1)
The fair value of the share is the share price at the grant date, less estimated dividend. Estimated dividend used in the calculation equals the dividend for the previous period.
2)
The estimated realisation of share price is calculated using the CAP model (Capital Asset Pricing Model). The basic variables in the model are interest rate level, general risk premium and the so-called beta risk on the Elisa share. The assumed dividend
equals the dividend for the previous period.
4.2 Share-based incentives
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4.2.2 Share-based incentive plan 2014
and required performance levels for each criterion at the beginning of a vesting period. After the end of the vesting period, the award is paid as a combination of company shares and cash
after the completion of financial statements. If the contract of employment is terminated before the payment of the award, as a rule no award shall be paid.
million of which EUR 11.2 million was paid in cash. In accordance with the Board’s decision, on 3 February 2020, Elisa transferred 185,112 shares to 147 persons covered by the incentive
The earnings criteria for the vesting period 2016–2018 were based on earnings per share (EPS), revenues from new businesses and other key objectives. The total performance was EUR
scheme, of which 58,113 shares to the Executive Board members and 18,175 shares to the CEO.
The earnings criteria for the vesting period 2015–2017 plan were based on earnings per share (EPS), revenues from new businesses and other key objectives. The total performance was EUR
Amount of share incentives and terms and assumptions in the fair value calculation
Vesting period
2017–2019
Vesting period
2016–2018
Vesting period
2015–2017
Maximum number of shares granted, pcs 448,360 406,450
Grant date 31.12.2016 31.12.2015 31.12.2014
Fair value of the share at the grant date, EUR
(1
26.73 30.83 18.71
Share price at the grant date, EUR 22.61
Estimated realisation of share price after vesting period
(2
34.25 22.34
Vesting period starts 1.1.2017 1.1.2016 1.1.2015
Vesting period ends 31.12.2018 31.12.2017
Estimated realisation of earnings criteria at the beginning of vesting period, % 50 50 50
Estimated realisation of earnings criteria at the closing date, % 83 81 75
Distributed number, pcs 185,112 174,544 228,543
Volume weighted average share price at distribution date, EUR 54.50 37.13 35.30
Distributed number out of the maximum number of share awards granted, % 41 43 40
Number of participants in the plan at the closing date 147 147 143
1)
The fair value of the share is the share price at the grant date, less estimated dividend. Estimated dividend used in the calculation equals the dividend for the previous period.
2)
The estimated realisation of share price is calculated using the CAP model (Capital Asset Pricing Model). The basic variables in the model are interest rate level, general risk premium and the so-called beta risk on the Elisa share. The assumed dividend
equals the dividend for the previous period.
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The awards granted under the plan have a restriction period of 1–3 years. The potential award is based on the validity of the key person’s contract of employment. The maximum number of
awards paid under the plan equals the value of 500,000 Elisa shares.
Amount of share incentives and terms and assumptions in the fair value calculation
Restriction period
2019–2020
Maximum number of shares granted, pcs 22,500
Grant date
Fair value of the share at the grant date, EUR
(1
38.00
Share price at the grant date, EUR 41.50
Estimated realisation of share price after vesting period
(2
43.38
Restriction period started
Restriction period ends 10.6.2021
Estimated realisation of earnings criteria at the beginning of vesting period, % 100
Estimated realisation of earnings criteria at the closing date, % 100
Number of participants in the plan at the closing date 8
1)
The fair value of the share is the share price at the grant date, less estimated dividend. Estimated dividend used in the calculation equals the dividend for the previous period.
2)
The estimated realisation of share price is calculated using the CAP model (Capital Asset Pricing Model). The basic variables in the model are interest rate level, general risk premium and the so-called beta risk on the Elisa share. The assumed dividend
equals the dividend for the previous period.
Expenses of share-based incentive plans
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Accounting principles – Share-based payments:
In the share-based payment scheme, the total award amount is the gross earning of shares granted less the applicable withholding tax, with the remaining net amount being paid to
the award recipient in shares. Compensation costs for the share-based incentive plans are entirely recognised as equity-settled arrangements. As a result, share-based incentive costs,
recognised in equity, also include a cash component that is equal to the value of the shares paid to cover the taxes and tax-like costs incurred under the award. The Group settles a cash
payment of a portion, required to meet withholding tax obligations, to the Tax Administration. The withholding tax paid to the Tax Administration is recognised directly in equity.
Share-based incentive plans are measured at the fair value at the grant date. If the assumption regarding the realised number of shares changes, an adjustment will be recorded through
profit and loss. The share-based incentive plans do not include any other non-market based terms and conditions. Transfer restrictions related to the share-based incentive plans are out of
the scope of the fair value measurement and expense recognition.
Accounting policies that require management’s judgements – Share-based payments:
The expense recognition for the share-based incentive plans is based on an estimate of the fulfilment of the share incentive plan criteria and the development of Elisa Group’s share price.
The fulfilment of the share incentive plan criteria and the development of the share price might deviate from the estimates.
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4.3 Pension obligations
The Group’s pension obligations are classified as either defined contribution plans or defined benefit plans. Under a defined contribution plan, the Group pays fixed contributions to pension
insurance companies. If the pension insurance company does not hold sufficient assets to pay all employees the benefits in question, the Group will have no legal or constructive obligation to
pay further contributions. The contributions for defined contribution pension plans are recognised as expenses during the financial year, in which the payment obligation has arisen. All other
plans not meeting the above criteria are classified as defined benefit plans.
The pension schemes for the Group’s personnel in Finland are covered by the Employees Pensions Act (TyEL) and are arranged through pension insurance companies. The Finnish Employees
Pensions Act (TyEL) is a defined contribution plan. Supplementary pensions are arranged through life insurance companies. Some supplementary pension plans and pension plans under the
responsibility of some group companies have been classified as defined benefit plans. The defined benefit plans are mainly funded by yearly contributions to the insurance companies, based
on actuarial valuation. Local tax and other legislation is applied to the pension plans’ arrangements. Only Elisa Corporation has defined benefit plans. The pension plans in foreign subsidiaries
are defined contribution plans.
Post-employment benefits of key management are described in Note 4.1.
The net dened benet related to pension liability
EUR million 2019 2019
Present value of unfunded obligations
–2.9
Present value of funded obligations
–61.1
–68.4
Fair value of plan assets
52.9
54.6
B/S Net pension liability (-) / receivable (+) in the statement of financial position
–11.0
–16.7
Pension expenses recognised in the statement of comprehensive income
EUR million 2020 2019
Expense recognised in profit or loss
Service cost
0.2
0.1
Net interest
0.1
0.2
0.4
0.4
Remeasurements
–5.7
2.1
Tax effect of the remeasurements
1.1
–0.4
I/S
–4.5
1.7
4.3 Pension obligations
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Reconciliation of the net dened benet obligations in the statement of nancial position
EUR million 2020 2019
Net defined benefit obligation at the beginning of the period
16.7
15.2
Pension expenses recognised in profit or loss
0.4
0.4
Remeasurements
–5.7
2.1
Contributions paid by the employer
–0.4
Net defined benefit obligation at the end of period
11.0
16.7
Changes in the present value of the dened benet obligations
EUR million 2020 2019
Obligation at the beginning of the period
–71.3
–66.5
Current service cost
–0.2
–0.1
Interest expenses
–0.5
–1.0
Remeasurements
Actuarial gain (+) or loss (-) arising from changes in economic assumptions
3.5
–7.4
Gain (+) or loss (-) arising from experience adjustments
–0.3
Benefits paid
4.8
4.7
Obligation at the end of period
–63.9
–71.3
Changes in the fair value of plan assets
EUR million 2020 2019
Fair value of plan assets at the beginning of the period
54.6
51.3
Interest income
0.4
0.8
Remeasurements, gain (+) or loss (-)
2.4
6.2
Benefits paid
–4.8
–4.7
Contributions paid by the employer
0.4
Fair value of plan assets at the end of period
52.9
54.6
The principal actuarial assumptions used 2020 2019
Discount rate, %
0.6
0.7
Future pension increase, %
1.3
Inflation, %
1.0
1.2
Sensitivity analysis of net dened benet obligation
Effect on the net defined benefit
obligation. EUR million
Change in actuarial assumptions 2020 2019
Discount rate + 0.5%
–0.9
–1.5
Future pension increase +0.5%
4.0
Expected mortality +1 year
0.6
1.1
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When calculating a change in one assumption of the sensitivity analysis, the other assumptions are assumed to remain unchanged. In practice, this is not likely to happen, and some changes
in the assumptions may correlate with each other. The figures in the sensitivity analysis have been calculated using the same method which is applied when calculating defined benefit
obligations.
Defined benefit obligations expose the Group to various risks. Decreases in the gain of corporate bonds, higher inflation and higher expected retirement age may predispose the Group to the
growth of defined benefit obligations. On the other hand, since the fair value of assets is calculated using the same discount rate which is used when calculating the obligation, the change in
the discount rate will only affect the net defined benefit obligation. Similarly, a rise in life expectancy will increase the assets and affect the net defined benefit obligation.
Weighted average duration of the obligation is 12.6 (14.0) years.
The Group expects to contribute EUR 0.7 (0.5) million to defined benefit pension plans in 2021.
The assets of the defined benefit obligations are 100 per cent acceptable insurances.
Accounting principles – Pension obligations:
The Group’s defined benefit obligation has been calculated separately from each plan using the projected unit credit method. Pension expenses calculated by authorised actuaries are
recognised in profit or loss over the employees’ working lives. The rate used to discount the present value of the defined benefit obligation is determined by reference to market yields
of high-quality corporate bonds. If such information is not available, the market yields on government bonds are used. The maturity of corporate bonds and government bonds are
substantially consistent with the maturity of pension obligations. The present value of defined benefit obligation is reduced by the fair value of the plan assets at the end of the reporting
period. The net defined benefit pension liability is recognised in the statement of financial position.
Current service cost and net interest of the net defined benefit liability are recorded in employee expenses on the income statement. The remeasurements of the net defined benefit
liability, for example actuarial gains and losses and the return on plan assets, are recognised in other comprehensive income during the financial period in which they incur.
Accounting policies that require management’s judgements – Pension obligations:
The book value of defined pension obligations is based on actuarial valuations. Assumptions and estimates used in the valuations include, among others, the discount rate used on the
valuation of the pension obligation and plan assets as well as the development of inflation and salary levels.
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5 Tangible and intangible assets
5.1 Depreciation, amortisation and impairment
EUR million 2020 2019
Tangible assets
Land and water areas
Right-of-use assets
1.0
Buildings and constructions
Owned buildings and constructions
12.6
12.7
Right-of-use assets
17.1
15.3
Telecom devices, machinery and equipment
Owned telecom devices, machinery and equipment
178.7
176.2
Right-of-use assets
3.9
5.5
Other tangible assets
0.0
0.0
213.2
210.7
Intangible assets
Goodwill
6.1
Customer base
6.6
6.0
Other intangible assets
50.2
63.0
55.1
I/S
276.2
265.8
Impairment losses were EUR 6.1 (2.2) million.
5. Tangible and Intangible assets
5.1 Depreciation, amortisation and impair-
ment
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5.2 Property, plant and equipment
2020
EUR million
Land and
water areas
Buildings and
constructions
Telecom devices,
machinery and
equipment
Other
tangible
assets
Tangible assets
under
construction Total
Acquisition cost at 1 Jan. 280.5 35.7 31.7
Business acquisitions 2.7 0.3 0.0 5.0
Additions 0.2 14.2 158.6 0.0 16.4
Business disposals 0.0 0.0
Disposals –13.2 0.1 –13.1
Reclassifications 0.0 1.5 16.8 0.0 –21.5 –3.2
Translation differences 0.0 –0.2 0.0 –0.2
Acquisition cost at 31 Dec. 11.1 35.7 28.5 4,156.1
Accumulated depreciation and impairment at 1 Jan. 0.0 171.2 3,040.3 35.0 3,246.5
Depreciation and impairment 0.0 12.6 178.7 0.0
Accumulated depreciation on business acquisitions 0.0 0.0
Accumulated depreciation on disposals and
reclassifications –0.1 –16.6 0.0 –16.7
Translation differences 0.0 –0.1 0.0 –0.1
Accumulated depreciation and impairment at 31 Dec. 0.0 183.7 3,202.2 35.1 3,421.0
B/S Book value at 1 Jan. 0.6 31.7 731.8
B/S Book value at 31 Dec. 11.1 115.2 0.7 28.5 735.1
5.2 Property, plant and equipment
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2019
EUR million
Land and
water areas
Buildings and
constructions
Telecom devices,
machinery and
equipment
Other
tangible
assets
Tangible assets
under
construction Total
Acquisition cost at 1 Jan. 10.7 268.7 35.7 30.6 3,807.5
Business acquisitions 0.2 0.5 0.7
Additions 0.2 10.5 156.3 0.0 21.5 188.5
Disposals 0.0 –0.1 –18.0 –18.1
Reclassifications 0.0 1.2 18.8 0.0 –20.3 –0.3
Translation differences 0.0 0.1 0.1
Acquisition cost at 31 Dec. 280.5 35.7 31.7
Accumulated depreciation and impairment at 1 Jan. 0.0 158.4 2,880.4 35.1
Depreciation and impairment 12.7 176.3 0.0
Accumulated depreciation on business acquisitions 0.1 0.4 0.5
Accumulated depreciation on disposals and
reclassifications –0.1
Translation differences 0.0 0.1 0.1
Accumulated depreciation and impairment at 31 Dec. 0.0 171.2 3,040.3 35.0 3,246.5
B/S Book value at 1 Jan. 10.7 110.3 581.4 0.6 30.6 733.6
B/S Book value at 31 Dec. 0.6 31.7 731.8
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Accounting principles – Property, plant and equipment:
Property, plant and equipment are recognised in the statement of financial position at the original cost. Property, plant and equipment are valuated at acquisition cost less accumulated
depreciation and impairments. Depreciation is recorded on a straight-line basis over the useful lives of tangible assets. The residual value and the useful life of an asset is reviewed at year-
end and adjusted, if necessary.
Subsequent costs, such as renewals and major renovation projects, are capitalised when it is probable that future economic benefit associated with the item will flow to the Group. Ordinary
repair, service and maintenance costs are recognised as expenses during the financial period in which they incur.
Government grants, such as grants received in connection with the acquisition of fixed assets, are recorded as a deduction from the carrying amount of the fixed assets. Government grants
are recognised in profit and loss in the form of lower depreciation over the useful life of the fixed asset.
Expected useful life of property, plant and equipment:
Buildings and constructions 25–40 years
Machinery and equipment in buildings 10–25 years
Telecommunications network
(line, backbone, area, subscription, cable TV) 8–15 years
Exchanges and concentrators (fixed and mobile core) 6–10 years
Equipment for the network and exchanges 3–8 years
Telecommunication terminals 2–4 years
Other machinery and equipment 3–5 years
Land and water areas are not depreciated.
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5.3 Right-of-use assets
2020
EUR million
Land and
water areas
Buildings
and construc-
tions
Telecom
devices,
machinery and
equipment Total
Acquisition cost at 1 Jan. 12.8 238.4
Business acquisitions 0.1 0.1
Additions 1.2 18.2 2.0 21.5
Reclassifications –0.2 –0.1 –0.3
Translation differences 0.0 0.0 0.0
Acquisition cost at 31 Dec. 14.0 114.0 131.7
Accumulated amortisation and impairment at 1 Jan. 120.6 143.4
Depreciation and impairment 1.0 17.1 22.0
Accumulated amortisation on disposal and reclassifications –0.2 –0.2 –0.3
Translation differences 0.0 0.0 0.0
Accumulated depreciation and impairment at 31 Dec. 38.8 124.4 165.1
B/S Book value at 1 Jan. 74.0
B/S Book value at 31 Dec. 12.1 75.2 7.3
5.3 Right-of-use assets
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2019
EUR million
Land and
water areas
Buildings and
constructions
Telecom
devices,
machinery and
equipment Total
Acquisition cost at 1 Jan. 17.4 122.3
Adoption of IFRS 16 11.5 52.1 6.7 70.3
Acquisition cost at 1 Jan. 11.5 210.0
Business acquisitions 1.7 1.7
Additions 1.3 24.8 3.0
Disposals –2.3 –2.3
Translation differences 0.0 0.0
Acquisition cost at 31 Dec. 12.8 238.4
Accumulated depreciation and impairment at 1 Jan. 6.6 115.1 121.7
Depreciation and impairment 15.3 5.5 21.7
Translation differences 0.0 0.0
Accumulated depreciation and impairment at 31 Dec. 120.6 143.4
B/S Book value at 1 Jan. 11.5 13.8 88.3
B/S Book value at 31 Dec. 74.0
On 31 December 2020, the lease commitments for lease contracts commencing in the future in accordance with IFRS 16 were EUR 1.0 (15.0) million.
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Accounting principles – Right-of-use assets, tangible assets:
A lease agreement is an agreement or a part of an agreement that conveys the right to use the underlying asset for a period of time in exchange for consideration. When a new agreement
is made, Elisa assesses whether the agreement in question is a lease agreement or contains a lease agreement.
The Group’s leases mainly consist of leases for business premises, telecom and equipment premises, retail facilities and vehicles. Last mile rentals from other operators and indefeasible
right to use (IRU) agreements mainly do not fulfil the definition of a lease.
The right-of-use assets and lease liabilities recognised in the balance sheet are measured at present value of future lease payments at the time of initial recognition. The lease payments are
discounted using industry-specific interest rates taking into account the length of the lease contracts. The depreciation costs of the right-of-use assets and the interest portion of the lease
liabilities are expensed. The depreciation of right-of-use assets is recorded on a straight-line basis starting on the commencement of the agreement over the useful life of the right-of-use
asset or over the lease period, depending on which of these is shorter.
The right-of-use asset is adjusted in certain cases with remeasurements of the lease liability. Lease liabilities are mainly remeasured when future payments change due to index or interest
rate changes or when the Group’s assessment of using a possible extension option changes. When a lease liability is remeasured, the book value of the right-of-use asset is usually adjusted
accordingly.
Short term and low value leases are recognised in the income statement and presented as off-balance sheet commitments. Leases with the lease term of 12 months or less are short term
leases and leases for which the underlying asset is of low value are low value leases. Rental expenses for short term and low value leases are described under Note 8.4 Off-balance sheet
leases and other commitments.
The Group separates the service components included in the lease agreements of business premises, retail facilities and vehicles and recognises their share as an expense in the income
statement.
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5.4 Intangible assets
2020
EUR million Goodwill
Customer
base
Other
intangible
assets
Intangible
assets under
construction Total
Acquisition cost at 1 Jan. 1,101.2 118.8 758.3 13.0
Business acquisitions 7.8 3.2 60.0
Additions 47.8
(1
7.7 55.5
Disposals 0.0
Reclassifications –6.6 –10.5 –17.0
Translation differences 2.3 0.4 0.0 2.6
Acquisition cost at 31 Dec. 1,152.5 801.7 10.2
Accumulated amortisation and impairment at 1 Jan. 15.0 103.7 702.6
Depreciation and impairment 6.1 6.6 50.2 63.0
Accumulated depreciation on business acquisitions 1.1 1.1
Accumulated amortisation on disposal and reclassifications
Translation differences 0.0 0.2 0.0 0.2
Accumulated depreciation and impairment at 31 Dec. 21.2 110.5 618.3
Book value at 1 Jan. 1,086.1 15.1 174.4 13.0 1,288.6
Book value at 31 Dec. 1,131.4 16.4 183.4
(2
10.2 1,341.5
5.4 Intangible assets
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2019
EUR million Goodwill
Customer
base
Other
intangible
assets
Intangible
assets under
construction Total
Acquisition cost at 1 Jan. 1,035.7 717.2 12.8 1,875.3
Business acquisitions 64.4 1.2 0.0 74.6
Additions 31.8 40.8
Disposals –0.4 0.0 –0.4
Reclassifications 0.0 8.6 –8.8 –0.2
Translation differences 1.0 0.1 0.0 1.1
Acquisition cost at 31 Dec. 1,101.2 118.8 758.3 13.0
Accumulated depreciation and impairment at 1 Jan. 15.0 535.3 648.0
Depreciation and impairment 6.0 55.1
Accumulated depreciation on disposals and reclassifications –0.5 –0.5
Translation differences 0.0 0.0 0.0
Accumulated depreciation and impairment at 31 Dec. 15.0 103.7 702.6
Book value at 1 Jan. 1,020.7 12.0 12.8 1,227.4
Book value at 31 Dec. 1,086.1 15.1 174.4
(2
13.0 1,288.6
1)
Includes 26 GHz spectrum licence in carrying amount of EUR 7.0 million.
2)
Includes software in carrying amount of EUR 91.3 (87.0) million.
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Accounting principles – Intangible assets:
An intangible asset is recognised only if it is probable that the expected future economic benefits attributable to the asset will flow to the Group and the cost of the asset can be measured
reliably. Subsequent costs related to the intangible assets are capitalised only if the future economic benefits that will flow to the Group exceed the level of performance originally assessed.
In other cases, the costs are recognised as an expense as incurred.
In connection with the business combinations, intangible assets, such as customer base and brand, are measured at fair value. Other intangible assets are measured at original acquisition
cost and amortised on a straight-line basis over their estimated useful life.
Amortisation periods for intangible assets:
Customer base 3–5 years
Brand 10 years
Development expenses 3 years
IT software 5 years
Other intangible assets 3–10 years
Research costs are recorded as expenses in the income statement. Development expenses are recognised on the statement of financial position from the date the product is technically
feasible, it can be utilised commercially and the asset is expected to generate future economic benefit. Otherwise, development costs are recorded as an expense. Development costs
initially recognised as expenses cannot be capitalised subsequently.
Government grants related to the acquisition of property, plant and equipment are recorded as a reduction of the carrying value of property, plant and equipment. The grants are
recognised in income as lower depreciation charges over the useful life of the asset.
The Group assesses at the end of each reporting period whether there is objective evidence that an asset is impaired. If such evidence exists, the recoverable amount of the asset is
assessed. Additionally, regardless of any existence of impairment indications, the recoverable amount of intangible assets under construction is assessed annually. The Group does not have
any intangible assets with an indefinite useful life.
The recoverable amount of the asset is its fair value less cost of disposal or its value in use, if it is higher. Value in use is a discounted present value of future net cash flows expected to be
derived from an asset. An impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount. An impairment loss is recognised immediately in the income
statement. An impairment loss is reversed, if there are indications that a change in circumstances has taken place, and the asset’s recoverable amount has changed since the impairment
loss was recognised. However, the reversal of an impairment loss will never exceed the carrying amount of the asset had no impairment loss been recognised.
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5.4.1 Goodwill
Goodwill is allocated to the Group’s cash generating units as follows:
EUR million 2020 2019
Consumer Customers
641.0
643.5
Corporate Customers
490.4
442.6
B/S
1,131.4
1,086.1
The reported operating segments based on Elisa’s organisational and management structure are Consumer Customers and Corporate Customers.
Recognition of impairment losses:
In addition to the Group’s annual impairment test, a separate impairment test was performed on the businesses of Banana Fingers Ltd and Videra Oy, Corporate Customers segment, as part
of the assessment of strategic alternatives. Based on the separate impairment test, a EUR 6.1 million impairment of goodwill was recognised.
Banana Fingers Ltd was acquired in 2015 and the acquisition resulted in goodwill of EUR 2.7 million. An impairment loss from goodwill and translation differences accumulated after the
acquisition totals EUR 2.5 million. After the recognition of the impairment loss, there is no remaining goodwill.
Videra Oy was acquired in 2010 and the acquisition resulted in goodwill of 3.5 million. An impairment loss recognised was EUR 3.5 million. After the recognition of the impairment loss, there
is no remaining goodwill.
The main cause of the impairment was a lower revenue than previously expected.
Impairment testing:
In annual impairment tests, the recoverable amount of the segments is determined based on the value in use, which is calculated on the basis of projected discounted cash flows (DCF
model). Covering a five-year period, the cash flow projections are based on plans approved by the management. The projections are mostly consistent with information from external
sources and reflect actual development. The used discount rate before taxes is 5.3 per cent (6.3 per cent in comparison period ). Cash flows after five years have been projected by
estimating the change in future cash flows as 2 per cent growth.
As a result of the performed impairment tests, there was no need for impairment of the segments’ goodwill.
Usage of the DCF model requires forecasts and assumptions concerning market growth, prices, volume development, investment needs and general interest rate. The major sensitivities in
the performance are associated with forecast revenue and profitability levels.
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Sensitivity analysis
Projection parameters applied
Consumer
Customers
2020
Corporate
Customers
2020
Consumer
Customers
2019
Corporate
Customers
2019
Amount in excess of CGU carrying value, EUR million
7,497
(2
3,640
(3
5,587
(2
3,005
(3
EBITDA margin on average, %
(1
38.4 30.7
38.2 34.1
Horizon growth, %
2.0 2.0
2.0 2.0
Pre-tax discount rate, %
5.3 5.3
6.3 6.3
1)
On average during a five-year projection period.
2)
After the recognition of impairment of the goodwill relating to the Banana Fingers business, the amount by which the book value of the Consumer Customers unit is exceeded is EUR 7,500 (5,590) million.
3)
After the recognition of impairment of the goodwill relating to the Videra Oy business, the amount by which the book value of the Corporate Customers unit is exceeded is EUR 3,643 (3,008) million.
Change in projection parameters that
makes the fair value equal to book value
Consumer
Customers
2020
Corporate
Customers
2020
Consumer
Customers
2019
Corporate
Customers
2019
EBITDA margin on average, %
–20.0
(4
–15.6
(5
–17.5
Horizon growth, %
–28.7
(4
–28.7
(5
–31.5 –33.8
Pre-tax discount rate, %
22.0
(4
21.7
(5
17.1 17.5
4)
After the recognition of goodwill impairment loss relating to the Banana Fingers business the change in EBITDA margin should be approximately -20.0 per cent, the change in horizon growth -28.8 per cent, and the change in pre-tax discount rate 16.7
per cent.
5)
After the recognition of goodwill impairment loss relating to the Videra Oy business the change in EBITDA margin should be approximately -15.6 per cent, the change in horizon growth -29.0 per cent, and the change in pre-tax discount rate 16.5 per
cent.
Accounting principles – Goodwill:
Goodwill arising from business combinations prior to 2004 is accounted for in accordance with the previous financial statements regulations and the book value is the assumed
Goodwill arising from business combinations incurred after 1 January 2010 represents the excess of the consideration transferred over the Group’s interest in the net fair value of the
identifiable net assets acquired and the amount of non-controlling interest, and in a business combination achieved in stages, the acquisition-date fair value of the equity interest.
Goodwill is not amortised. Goodwill is tested for impairment annually, or more frequently, if there is any indication of a potential impairment. For the purpose of impairment testing,
goodwill is allocated to the cash-generating units (CGU’s) – Consumer Customers and Corporate Customers. Goodwill is carried at its cost less any accumulated impairment losses.
An impairment loss is recognised, when the carrying amount of an asset exceeds its recoverable amount. An impairment loss is recognised immediately in the income statement. If an
impairment loss is allocated to a cash-generating unit, it is first allocated to reduce the carrying amount of any goodwill allocated to the cash-generating unit, and then to the other assets
of the unit on a pro rata basis. An impairment loss recognised for goodwill is never reversed under any circumstances.
Accounting policies that require management’s judgements – Goodwill impairment testing:
The recoverable amount of cash-generating units is determined by calculations based on value in use, the preparation of which requires estimates and assumptions. The main
uncertainties are associated with the estimated levels of revenue and profitability and the discount rate. Any changes may lead to the recognition of impairment losses.
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6 Inventories, trade and other receivables, trade and other liabilities
6.1 Inventories
EUR million 2020 2019
Materials and supplies
21.6
Finished goods
46.4
48.4
B/S
67.9
67.7
An impairment on inventories of EUR 1.5 (0.3) million was recognised during the financial period.
6.2 Trade and other receivables
6.2.1 Current receivables
EUR million 2020 2019
Trade receivables
373.3
386.5
Impaired trade receivables
–13.3
–11.1
Contract assets related to costs
5.7
5.8
Contract assets related to revenue
2.2
1.7
Accrued income
70.5
56.0
Finance lease receivables
9.4
Loan receivables
0.1
0.1
Receivables from associated companies
0.1
0.5
Other receivables
9.9
B/S
457.8
453.5
Accrued income includes interest receivables and cost accruals from the operating activities.
6. Inventories, trade and other
receivables, trade and other lia-
bilities
6.1 Inventories
6.2 Trade and other receivables
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Aging of trade receivables 2020 2019
EUR million
Nominal
value Impairment
Carrying
amount
Nominal
value Impairment
Carrying
amount
Not past due
326.9 –0.3 326.6
326.8 –0.3 326.5
Past due
Past due less than 30 days
26.0 –1.0 24.9
37.2 –0.2 37.0
Past due 31–60 days
5.8 –0.8 5.0
7.4 –0.4
2.6 –0.6 2.0
2.4 –0.4 2.0
3.2 –2.9 0.4
4.3 –2.5 1.8
Past due more than 181 days
8.8 –7.8 1.0
8.4 –7.2 1.2
373.3 –13.3 360.0
386.5 –11.1 375.4
The book value of trade receivables approximates their fair value. The credit risk associated with trade receivables is described in note 7.1. The maximum exposure to credit risk is the carrying
amount of the trade receivables on the closing date, EUR 360.0 million.
6.2.2 Non-current receivables
EUR million 2020 2019
Loan receivables
0.0
0.1
Trade receivables
87.3
Finance lease receivables
3.9
4.6
Accrued income
3.0
2.7
Non-current derivatives
0.4
0.0
Other non-current receivables
0.3
0.6
B/S
94.9
The effective interest rate on receivables (current and non-current) was 0.00 (0.00) per cent.
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Gross finance lease receivables
– maturity of minimum lease receivables
EUR million 2020 2019
Within one year
9.5
Later than one year, not later than five years
4.0
4.7
13.5
14.0
Future finance income
–0.2
–0.2
Present value of finance lease receivables
13.3
13.8
Maturity of present value of future minimum lease receivables
EUR million 2020 2019
Within one year
9.4
Later than one year, not later than five years
3.9
4.6
13.3
13.8
Lease periods vary from one to five years, and conditions vary in terms of index clauses.
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6.3 Trade and other liabilities
EUR million 2020 2019
Non-current
Trade payables
(1
14.7
20.2
Advances received
4.9
5.0
Derivative instruments 0.1
Other liabilities
(2
12.5
11.6
B/S
32.2
36.8
Current
Trade payables
(1
179.3
172.7
Advances received
8.2
5.2
Contract liabilities, from revenue
0.5
0.5
Accrued employee-related expenses
54.3
50.3
Other accruals
34.2
27.1
Liabilities to associated companies
0.0
0.0
Other liabilities
(2
79.8
87.3
B/S
356.3
343.2
388.5
380.0
1)
Non-current trade payables include liabilities of EUR 10.5 (15.8) million for 3540–3670 MHz spectrum licence, EUR 4.2 (0.00) million for 26 GHz spectrum licence and EUR 0.0 (4.4) million for a 700 MHz spectrum licence. Current trade payables inclu-
de liabilities of EUR 5.3 (5.3) million for a 3540–3670 MHz spectrum licence, EUR 1.4 (0.00) million for a 26 GHz spectrum licence and EUR 4.4 (4.4) million for 700 MHz spectrum licence.
2)
Other non-current liabilities include a contingent consideration of EUR 6.9 (5.0) million from the business acquisitions and EUR 0.0 (0.9) million for other current liabilities.
Other accruals consist of accrued interest expenses and other cost accruals.
6.3 Trade and other liabilities
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ELISA FINANCIAL STATEMENTS 2020
Accounting principles – Inventories, trade and other receivables, trade and other liabilities:
Inventories:
Inventories are measured at their acquisition cost or at the net realisable value, if lower than the cost. In ordinary course of business net realisable value is the estimated selling price less
necessary estimated costs associated with the eventual sale. The cost is determined using a weighted average price.
Receivables:
Receivables are valued at amortised cost and recognised at the original invoiced amount. The Group records the provision for the impairment losses arising from trade receivables based
on historical default rates over the expected life and recognises the impairment loss when the trade receivables are stated as lost. The impairment loss is adjusted by the amount of
factored receivables.
Trade receivables and other receivables are classified as non-current receivables, if they mature in more than 12 months. In other cases, they are classified as current receivables.
The Group offers the consumer customers various payment methods granting possibility to purchase equipment on 12–36 months credits. At the time of the sale of the equipment, such
transactions are recorded as revenue and trade receivable. The trade receivables are classified as non-current, if their maturity exceeds 12 months. The non-current trade receivables are
presented on the balance sheet at original invoiced amount.
Finance lease receivables:
The Group acts as a lessor in the lease arrangements for video conferencing and data terminal equipment, which is accounted for as finance leases. At the time of the sale of the
equipment, the proceeds are recorded as revenue and a receivable at present value. Rental income is recorded as financial income and as a reduction of the receivable over the lease
period, reflecting a constant periodic rate of return on the net investment.
Trade payables:
The current value of trade payables and other liabilities is a reasonable estimate of their fair value. The time of payment for the Group’s trade payables corresponds to conventional
corporate terms of payment.
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7 Capital structure
7.1 Financial risk management
Elisa’s central treasury department manages the exchange rate, interest rate, liquidity and refinancing risks for the entire Group. The financing policies, covering funding and investment
principles, are annually discussed and ratified by the Audit Committee of the Board of Directors. Funding risks are monitored as a part of the regular business monitoring procedure.
Market risks
7.1.1 Interest rate risk
Elisa is exposed to interest rate risk mainly through its financial liabilities. In order to manage interest rate risk, the Group’s borrowings and investments are diversified in fixed and variable-
rate instruments. Derivative financial instruments may also be used in managing interest rate risk. The purpose is to minimise the negative effects caused by changes in the interest rate level.
Timing of interest rate changes for interest-bearing financial liabilities (EUR million) 31 Dec. 2020, at nominal value
Time of interest rate change Less than 1 year
Between
1 and 5 years Over 5 years Total
Variable-rate financing instruments
Commercial paper loans
Bank loans 100.7 100.7
Fixed-rate financing instruments
Bonds 174.0 300.0 600.0 1,074.0
Bank loans 150.0 1.7 151.7
Lease liabilities 17.7 32.6 46.2
482.6 1,442.4
On 31 December 2020, the Group’s interest-bearing financial assets consisted of commercial papers and bank deposits amounting to EUR 0.0 million and cash in the bank amounting to EUR
220.1 million.
Lease contracts contain index-linkages which affect the amounts of lease liabilities, right-of-use assets and depreciation.
The sensitivity analysis includes the financial liabilities at the balance sheet date. The change in interest rate level is assumed to be one percentage point and the effect on income is
calculated before taxes. The interest rate position is assumed to include interest-bearing financial liabilities and receivables, as well as interest rate swaps on the balance sheet date,
assuming that all the contracts will be valid and stay unchanged for the entire year.
EUR million 2020 2019
Change in interest rate level +/- 1%
–1.3/+0.1
–2.3/+0.5
7. Capital structure
7.1 Financial risk management
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ELISA FINANCIAL STATEMENTS 2020
7.1.2 Foreign exchange risk
Most of Elisa Group’s cash flows are denominated in euros, which means that the company’s exposure to exchange rate risk (economic risk and transaction risk) is low. Business related
exchange rate risks arise from Polystar Osix Ab and its subsidiaries, international interconnection traffic and, to a minor extent, other acquisitions. The most essential currencies are the US
foreign currency forward contracts. The Group’s financial liabilities do not involve exchange rate risk.
The translation difference exposure from the foreign subsidiaries included in consolidated equity mainly consists of Polystar subgroup. The translation difference exposure has not been
hedged during the reporting period.
Foreign currency position 31.12.2020 31.12.2019
EUR million
Trade receivables Trade payables
Trade receivables Trade payables
USD
3.6 9.0
4.6
3.2 0.3
3.2 0.2
CAD
1.1 0.0
1.5 0.0
GBP
0.4 0.4
1.3 0.5
AUD
0.1 0.0
0.8 0.8
RUB
0.1 0.0
0.5 0.0
CHF
0.3 0.0
0.4 0.0
SGD
0.1 0.1
0.3 0.0
0.3 0.0
0.3 0.1
0.1 0.0
0.2 0.0
The Group level currency exposure is the basis for the sensitivity analysis of foreign exchange risk. Assuming euro to appreciate or depreciate 20 percent against all other currencies, the
impact on cash flows would be:
EUR million 31.12.2020 31.12.2019
USD -/+ 1.1
+/- 0.6 +/- 0.6
CAD +/- 0.2 +/- 0.3
GBP +/- 0.0 +/- 0.2
AUD +/- 0.0 +/- 0.1
RUB +/- 0.0 +/- 0.1
CHF +/- 0.0 +/- 0.1
Other +/- 0.1 +/- 0.1
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7.1.3 Liquidity risk
The objective of liquidity risk management is to ensure the Group’s financing under all circumstances. The Group’s most important financing arrangement is an EMTN programme of EUR 1,500
million, under which the Company issued bonds for EUR 1,074.0 million. Furthermore, the Company has a EUR 350 million commercial paper programme and committed credit limit of
EUR 300 million, out of which EUR 130 million credit limit will fall due on 11 June 2022 and EUR 170 million will fall due on 7 July 2024. Both credits were fully undrawn on 31 December 2020.
The loan margin is determined based on the Company’s credit rating.
As part of ensuring its financing, Elisa has acquired international credit ratings. Moody’s Investor Services have rated Elisa’s long-term commitments as Baa2 (outlook stable). Standard & Poor
Global has rated the company’s long-term commitments as BBB+ (outlook stable) and short-term commitments as A-2.
Cash and undrawn committed limits
EUR million 2020 2019
Cash and cash equivalents
220.1
52.0
Credit limits
300.0
300.0
520.1
352.0
Contract-based cash flows for financial liabilities are presented under Note 7.4.2
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7.1.4 Credit risk
Financial instruments contain an element of risk of the respective parties failing to fulfil their obligations. Liquid assets are invested within confirmed limits in investment targets with good
credit ratings. Investments and the limits specified for them are reviewed annually, or more often, if necessary. Derivative contracts are only signed with Finnish and foreign banks with good
credit ratings.
The business units are liable for credit risk associated with trade receivables. The units have written credit policies that are mainly consistent with uniform principles. The credit ratings
of new customers are always reviewed from external sources when selling products or services invoiced in arrears. In case of additional sales to existing customers, creditworthiness is
reviewed on the basis of the company’s own accounts. The Group may also collect advance or guarantee payments in accordance with its credit policy.
Credit risk concentrations in trade receivables are minor, as the Group’s customer base is wide; the ten largest customers represent approximately 6 per cent of customer invoicing.
EUR 13.3 (11.1) million of uncertain receivables have been deducted from consolidated trade receivables. The Group’s previous experience in the collection of trade receivables
corresponds to the recognised impairment. Furthermore, the Group regularly sells the past due trade receivables of defined customer groups. Based on these facts, the management
is confident that the Group’s trade receivables do not involve any substantial credit risk. The maximum credit risk is the value of trade receivables, which on 31 December 2020 was
EUR 360.6 million. The aging of trade receivables is described in note 6.2.1.
7.1.5 Commodity risks
Elisa hedges electricity purchases with physical purchase agreements and derivatives. The electricity price risk is assessed for a five-year period. Hedge accounting is applied to contracts
hedging future purchases. The effective portion of derivatives that qualify for hedge accounting is recognised in the revaluation reserve of equity and the ineffective portion is recognised
in the income statement under other operating income or expenses. The change in the revaluation reserve, recognised in equity, is presented in the statement of comprehensive income
under Cash flow hedge.
At the end of the year, the ineffective portion of hedge accounting was EUR 0.0 (0.0) million.
The hedging rate for purchases in the following years, % 2020 2019
0–1 years
87.9
1–2 years
64.7
53.3
If the market price of electricity derivatives changed by +/- 10 per cent from the balance sheet date (31 December 2020), it would contribute EUR +0.5/-0.2 (+0.0/-0.1) million to equity. The
impact has been calculated before tax.
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ELISA FINANCIAL STATEMENTS 2020
7.2 Capital management
Elisa’s capital consists of equity and liabilities. To develop its business, Elisa may carry out expansion investments and acquisitions that may be financed through equity or liabilities, directly or
indirectly.
The target for the company’s equity ratio is over 35 per cent and comparable net debt / EBITDA 1.5 to 2.0.
The company’s distribution of profit to shareholders consists of dividends, capital repayment and purchase of treasury shares. Effective profit distribution is 80 per cent to 100 per cent
of profit for the period. Furthermore, additional profit distribution to the shareholders may occur. When proposing or deciding on the profit distribution, the Board takes into account the
company’s financial position, future financing needs, and the set financial objectives.
7.2.1 Capital structure and key indicators
EUR million 2020 2019
Interest-bearing net debt 1,206.8 1,184.2
B/S Total equity 1,184.2 1,150.3
Total capital 2,391.0 2,334.5
Gearing ratio, % 101.9 103.0
Net debt / EBITDA 1.8 1.8
Equity ratio, % 39.1 41.0
With regard to capital financing, the company’s objective is to maintain sufficient flexibility for the Board of Directors to issue shares. The Annual General Meeting 2020 authorised the Board
of Directors to pass a resolution concerning the share issue, the right of assignment of treasury shares and/or the granting of special rights entitling to shares. The authorisation entitles the
Board of Directors to issue the shares in a proportion other than that of the current shareholdings (directed share issue). A maximum aggregate of 15 million of the company’s shares can be
issued under the authorisation. In 2020, the authorisation has been used in executing share-based incentive plans.
Shareholders’ equity 2020 2019
Treasury shares, 1,000 pcs 7,252 7,437
Share issue authorisation, 1,000 pcs 14,815 14,823
On 31 December 2020, the maximum amount of the share issue authorisation at the share closing price was EUR 664.7 (730.0) million.
With regard to capital financing, the company maintains loan programmes and credit arrangements that allow quick issuance. The arrangements are committed and non-committed, and allow
issuances for different maturities.
7.2 Capital management
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7.3 Equity
7.3.1 Share capital and treasury shares
EUR million
Number of
shares
(thousands)
Share
capital
Treasury
shares
167,335 83.0 –135.6
Disposal of treasury shares 3.4
B/S 167,335 83.0 –132.2
Disposal of treasury shares 3.8
B/S 31 Dec. 2020 167,335 83.0 –128.4
At the end of the reporting period, the company’s paid-in share capital registered in the Trade Register was EUR 83,033,008 (83,033,008).
According to its Articles of Association, Elisa Corporation has only one series of shares, each share entitling to one vote. All issued shares have been paid for. Shares do not have a nominal
value.
Treasury shares include the acquisition cost of treasury shares held by the Group, and they are deducted from shareholder’s equity in the consolidated financial statements.
Treasury shares Shares, pcs
Accounting
countervalue,
EUR
Holding, % of
shares and
votes
7,611,821 3,777,047 4.55
Disposal of treasury shares –174,544
7,437,277 4.44
Disposal of treasury shares –185,112
Treasury shares held by the Group at 31 Dec. 2020 7,252,165 4.33
Debt capital 2020 2019
Commercial paper programme (non-committed)
(1
330.5 217.0
Revolving credits (committed)
(2
300.0 300.0
EMTN programme (non-committed)
(3
426.0 726.0
Total, EUR million 1,056.5 1,243.0
1)
The commercial paper programme amounted to EUR 350 million, of which EUR 19.5 million was in use on 31 December 2020.
2)
Elisa has two committed revolving credit facilities of EUR 300 million in total. Both credits were undrawn on 31 December 2020.
3)
Elisa has a European Medium Term Note programme (EMTN) for a total of EUR 1,500 million, of which EUR 1,074.0 million was in use on 31 December 2020. The programme was updated on 23 July 2020, and it is valid for one year as of the update.
7.3 Equity
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7.3.2 Dividends
7.3.3 Other reserves
EUR million
Reserve for
invested- non-
restricted equity
Contingency
reserve
Fair value
reserve
Other
reserves Total
3.4 –11.6 381.0 463.7
Cash flow hedge –0.4 –0.4
Remeasurements of the net defined benefit liability –1.7 –1.7
B/S 3.4 –13.6 381.0 461.7
Cash flow hedge 0.4 0.4
Remeasurements of the net defined benefit liability 4.5 4.5
B/S 31 Dec. 2020 3.4 –8.7 381.0 466.6
The reserve for invested non-restricted equity includes the proportion of share subscription prices that was not recognised as share capital in accordance with the share issue terms.
The contingency reserve includes the amount transferred from distributable equity under the Articles of Association or by General Meeting decision. The fair value reserve includes changes
in the fair value of other investments, the remeasurements of the net defined benefit liability and the effective portion of the changes in the fair values of derivatives designated as cash flow
hedges. Other reserves were formed through share issues in business acquisitions by the amount exceeding the par value of the share received by the Company.
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7.4 Financial assets and liabilities
7.4.1 Financial income and expenses
EUR million 2020 2019
Financial income
Dividend income on other financial assets
0.5
0.6
Interest and financial income on loans and other receivables
2.1
5.1
Gain on disposal of financial assets
(1
5.7
0.0
Foreign exchange gain
0.2
0.3
Other financial income
0.2
0.1
I/S
8.7
6.1
Financial expenses
Interest expenses on financial liabilities measured at amortised cost
–14.5
Interest expenses on lease liabilities
–2.8
–3.0
Other financial expenses on financial liabilities measured at amortised cost
–1.9
–5.8
Other interest expenses
–0.3
–0.1
Foreign exchange loss
–1.4
–0.3
Other financial expenses
–0.2
–0.2
I/S
–21.2
1)
Includes a capital gain of EUR 5.6 million from the sale of the shares in Sulake companies.
Interest income and expenses are recognised using the effective interest rate method, and dividend income is recognised when the right to dividend is incurred.
Foreign exchange rate gains and losses are recognised in accordance with their nature either in materials and services or in financial income and expenses.
7.4 Financial assets and liabilities
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7.4.2 Financial liabilities
2020 2019
EUR million
Balance
sheet values Fair values
Balance
sheet values Fair values
Non-current
Bonds
884.5 927.6
757.4
Bank loans
252.3 252.3
250.0 250.0
Lease liabilities
78.8 78.8
77.6 77.6
B/S
1,215.7 1,258.7
1,085.1
Current
Bonds
174.0 174.2
Bank loans 0.0 0.0
Lease liabilities
17.7 17.7
18.1 18.1
Commercial paper
19.5 19.5
133.0 133.0
B/S
211.2 211.5
151.1 151.1
1,426.9 1,470.2
1,236.2 1,272.1
are neglected.
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ELISA FINANCIAL STATEMENTS 2020
Contract-based cash flows on the repayment of financial liabilities and costs
2020
EUR million 2021 2022 2023 2024 2025 2026– Total
Bonds 185.5 6.8 6.8 306.8 4.1 1,114.7
Financial costs 11.5 6.8 6.8 6.8 4.1 40.8
Repayments 174.0 0.0 0.0 300.0 0.0 600.0 1,074.0
Bank loans 1.0 1.1 151.0 0.4 100.4 1.0
Financial costs 0.8 0.8 0.8 0.1 0.1 0.0 2.5
Repayments 0.2 0.3 150.3 0.3 100.3 252.3
Commercial papers
Financial costs 0.1 0.1
Repayments
Lease liabilities 20.5 15.5 13.6 11.7 10.1 73.0 144.5
Financial costs 2.8 5.4 4.3 3.8 26.8 48.0
Repayments 17.7 10.1 8.7 7.4 6.4 46.2
Derivatives 0.4 0.4
Electricity derivatives 0.4 0.4
Currency derivatives 0.1 0.1
Trade payables
Total
406.2 23.3 171.4 318.9 114.7 678.8 1,713.4
Financial costs
15.6 12.9 12.4 11.2 8.0 31.7 91.8
Repayments
390.6 10.4 159.0 307.7 106.7 647.2 1,621.6
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ELISA FINANCIAL STATEMENTS 2020
2019
EUR million 2020 2021 2022 2023 2024 2025– Total
Bonds 10.8 184.7 6.0 6.0 306.0 306.8 820.3
Financial costs 10.8 10.8 6.0 6.0 6.0 6.8 46.3
Repayments 174.0 300.0 300.0 774.0
Bank loans 0.8 0.7 0.7 150.7 0.1 100.1 253.2
Financial costs 0.7 0.7 0.7 0.7 0.1 0.1 3.2
Repayments 0.0 150.0 100.0 250.0
Commercial papers 133.0 133.0
Financial costs 0.1 0.1
Repayments
Lease liabilities 15.6 11.5 10.5 77.7 146.0
Financial costs 2.8 2.7 2.5 2.4 2.2 37.8 50.3
Repayments 18.1 13.0 8.1 7.6 40.0
Derivatives 0.0 0.0
Electricity derivatives 0.1 0.1
Currency derivatives 0.0 0.0
Trade payables 172.7 172.7
Total costs 338.2 201.1 18.2 167.2 484.6 1,525.2
Financial costs 14.5 14.2 8.3 44.6
Repayments 323.7 158.1 307.6 440.0 1,425.3
Future financial costs of variable-rate financial liabilities as well as interest rate and currency swaps have been calculated at the interest rate prevailing on the period end date.
The company has EUR 300 million in credit facilities, of which EUR 130 million matures in 2022 and EUR 170 million in 2024. Both credits were undrawn on 31 December 2020.
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Bonds
In the framework of its bond programme, the parent company has issued the following bonds:
31 Dec. 2020
Fair value
EUR million
Balance
sheet value
EUR million
Nominal
value
EUR million
Nominal
interest
rate, %
Effective
interest
rate, %
Maturity
date
EMTN programme 2001 / EUR 1,000 million
I/2013 174.2 174.0 174.0 2.750 2.785 22.1.2021
I/2017 300.0 0.875 1.032 17.3.2024
316.4 300.0 1.125 1.236 26.2.2026
I/2020 302.2 300.0 0.250 0.322
1,101.8 1,058.4 1,074.0
The fair value of bonds is based on market quotes.
Maturity of lease liabilities’ cash flows
EUR million 2020 2019
Within one year
17.7
18.1
Later than one year, but not later than five years
32.6
37.7
Later than five years
46.2
40.0
96.5
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7.4.3 Financial assets and liabilities recognised at fair value
Carrying amounts of financial assets and liabilities by category
2020
EUR million
Financial liabilities
measured at fair value
through profit or loss
Financial assets/liabilities
measured at fair value through
other comprehensive income
Financial assets/
liabilities measured at
amortised cost Book values Fair values Note
Non-current financial assets
Other financial assets
(1
15.6 15.6 15.6
Trade and other receivables 0.4
94.5
94.9 94.9 6.2.2
Current financial assets
Trade and other receivables 457.8 457.8 457.8 6.2.1
0.4 567.9 568.3 568.3
Non-current financial liabilities
Financial liabilities 1,215.7 1,215.7 1,258.7 7.4.2
Trade and other payable
(2
6.9 20.4 27.3 27.3 6.3
Current financial liabilities
Financial liabilities 211.2 211.2 211.5 7.4.2
Trade and other payable
(2
348.1 348.1 348.1 6.3
6.9 1,795.4 1,802.3 1,845.6
1)
Other investments contain the Group’s unlisted equity investments
2)
Excluding advances received
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2019
EUR million
Financial liabilities
measured at fair value
through profit or loss
Financial assets/liabilities
measured at fair value through
other comprehensive income
Financial assets/
liabilities measured at
amortised cost Book values Fair values Note
Non-current financial assets
Other financial assets
(1
13.7 13.7 13.7
Trade and other receivables 6.2.2
Current financial assets
Trade and other receivables 0.0 0.0 453.4 453.5 453.5 6.2.1
0.0 0.0
Non-current financial liabilities
Financial liabilities 1,085.1 1,085.1 7.4.2
Trade and other payable
(2
5.0 0.1 26.8 31.8 31.8 6.3
Current financial liabilities
Financial liabilities 151.1 151.1 151.1 7.4.2
Trade and other payable
(2
337.1 338.0 338.0 6.3
0.1 1,600.0 1,606.0
1)
Other investments contain the Group’s unlisted equity investments
2)
Excluding advances received
The fair values of financial asset and liability items are presented in detail under the specified note number.
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Financial assets and liabilities recognised at fair value
EUR million 2020 Level 1 Level 2 Level 3
Financial assets and liabilities measured at fair value through other comprehensive income
Electricity derivatives
0.4
0.4
Currency derivatives
0.1
0.1
Financial assets and liabilities measured at fair value through profit or loss
Contingent considerations in business combinations
–6.9
–6.4
0.4
EUR million 2019 Level 1 Level 2 Level 3
Financial assets and liabilities measured at fair value through other comprehensive income
Electricity derivatives –0.1 –0.1
Currency derivatives 0.0 0.0
Financial assets and liabilities measured at fair value through profit or loss
Currency derivatives 0.0 0.0
Contingent considerations in business combinations
0.0
Items measured at fair value are categorised using a three-level value hierarchy. Level 1 includes financial instruments with quoted prices in active markets, such are listed shares owned by
the Group. Level 2 includes instruments with observable prices based on market data, such are electricity and currency derivatives. Level 3 includes instruments with prices that are not based
on observable market data, but instead, on the company’s internal information, such are Group’s contingent considerations relating to business combinations.
Level 3 reconciliation
Contingent considerations related to business acquisitions
EUR million 2020 2019
At the beginning of the period
5.9
1.6
Increase in contingent consideration
6.9
5.0
Payment of contingent consideration
–5.0
–0.7
Reversals of contingent consideration
–0.9
At the end of the period
6.9
According to the management’s estimation for the financial instruments valued at Level 3, replacing one or more of the pieces of fair value measurement data with a possible alternative
assumption would not significantly change the fair value of the items, considering the small total amount of underlying liabilities.
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Accounting principles – Financial assets and liabilities:
Financial assets:
Acquisition and sale of financial assets are recognised on the settlement date. The Group derecognises financial assets when its contractual rights to the cash flows from the financial asset
expire or when it has transferred substantially all the risks and rewards to an external party.
Cash and cash equivalents include cash at hand and bank deposits as well as highly liquid short-term investments with maturities up to 3 months.
Investments in shares, excluding investments in associated companies and mutual real estate companies, are classified as other financial assets and generally measured at fair value.
Investments in unlisted companies are recognised at original acquisition cost less any impairment. Such investments are measured at fair value either on the basis of the value of
comparable companies, the discounted cash flow method or available market rates. Investments in shares are included in non-current assets. On 31 December 2020, Group’s investments
in shares included investments in shares of unlisted companies.
Financial liabilities:
Financial liabilities are initially recognised at fair value equalling the net proceeds received and subsequently measured at amortised cost, using the effective interest rate method. The
transaction costs are included in the original acquisition cost of financial liabilities. Financial liabilities are recognised in non-current and current liabilities, and they may be non-interest-
bearing or interest-bearing.
In cases where the terms of the financial liability measured at amortised cost are amended in such a way that the change does not result in derecognition of the liability from the balance
sheet, the Group must nevertheless recognise the profit or loss in the income statement. The profit or loss is calculated as the difference between the original contractual cash flows and
the cash equivalents, discounted at the original effective interest rate of amended agreements.
Lease liabilities:
Lease liabilities are initially measured at present value of future lease payments. The estimated lease term includes the non-cancellable period of the lease together with periods covered by
termination and extension options, if exercise of these options is reasonably certain. Company has discounted the future lease payments using the borrowing rate based on duration of the
estimated lease term. The lease liability is initially measured using the actual value of an index at the commencement date. The lease liabilities are remeasured if the changes are reflected in
the cash flow or if the Group reassesses whether it is reasonably certain to exercise a possible option.
Classification of assets and liabilities:
The Group’s financial assets and liabilities are classified as financial assets and liabilities measured at amortised cost, financial assets and liabilities measured at fair value through other
comprehensive income, and financial assets and liabilities measured at fair value through profit or loss. Financial assets and liabilities measured at amortised cost include fixed-term
contracts the cash flow of which include payments of principal and interest on the principal amount outstanding. Financial assets and liabilities measured at fair value through other
comprehensive income include financial items that are expected both to collect contractual cash flows and to sell financial assets/liabilities. Financial assets and liabilities measured at fair
value through profit or loss include items that do not meet the criteria of the other groups.
The Group categorises electricity derivatives that qualify for hedge accounting as financial assets or liabilities measured at fair value through other comprehensive income. Contingent
considerations in the business combinations and listed equity investments are recognised as financial assets or liabilities measured at fair value through profit or loss. Other financial assets
and liabilities are measured at amortised cost.
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7.4.4 Derivative instruments
Nominal values of derivatives
2020 2019
Period of validity Period of validity
EUR million Less than 1 year 1–5 years Over 5 years Less than 1 year 1–5 years Over 5 years
Electricity derivatives
1.1
0.0
Currency derivatives
3.2
4.4
4.2
5.4 0.0
Fair values of derivatives
2020 2019
EUR million Positive fair value Negative fair value Total Positive fair value Negative fair value Total
Electricity derivatives
0.4 0.4
–0.1 –0.1
Currency derivatives
0.1 0.1
0.0 0.0
0.4 0.4
0.0 –0.1 0.0
Determination of fair value and categorisation
The fair value of derivative instruments is determined using quoted prices in active markets, the discounted cash flow method or option pricing models.
The Group recognises the derivative instruments at the fair value hierarchy Level 2. Please see note 7.4.3.
Accounting principles – Derivative instruments:
Derivatives are recognised at fair value as financial assets or liabilities on the date of acquisition. Gains and losses arising from the fair value remeasurements are recognised in accordance
with the nature of derivative contracts. Outstanding derivatives that do not qualify for hedge accounting are measured at fair value at the end of the reporting period and the fair value
changes are immediately recognised in financial items on the income statement. The fair value of derivatives is expected to approximate the quoted market prices or, if the quoted market
prices are not available, the value is estimated using commonly used valuation methods.
The Group applies hedge accounting for electricity price risk and treats electricity derivative contracts as cash flow hedges. The change in fair value of effective portion of derivatives
that qualify for hedge accounting is recognised in other comprehensive income and presented in the equity hedge revaluation reserve (as a part of “Other reserves”). Gains or losses on
derivative instruments accumulated in equity are expensed when any hedged item affects profit or loss. The ineffective portion of the derivatives is recognised in other operative income
and expenses on the income statement. The hedge accounting is discontinued when the hedge contract is expired, sold, terminated or completed. Any cumulative gain or loss arising from
the hedge instrument remains in equity until the expected transaction is realised.
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8 Other notes
8.1 Taxes
8.1.1 Income taxes
EUR million 2020 2019
Taxes for the period –71.0 –68.5
Taxes for previous periods –0.1 0.1
Deferred taxes 0.8 –0.4
I/S
–70.2 –68.7
Income taxes recognised directly in comprehensive income:
2020 2019
EUR million
Before
taxes
Tax
effect
After
taxes
Before
taxes
Tax
effect
After
taxes
Remeasurements of the net defined benefit liability 5.7 –1.1 4.5 –2.1 0.4 –1.7
Cash flow hedge 0.5 –0.1 0.4 –0.4 0.1 –0.4
6.1 –1.2 4.9 –2.6 0.5 –2.0
Translation differences do not include a tax effect.
Reconciliation of the tax expense on the income statement and taxes calculated at the Group’s domestic statutory tax rate 20 (20):
EUR million 2020 2019
I/S
Profit before tax 398.3
Tax according to the domestic tax rate –79.7 –74.4
Tax effects of the following:
Tax-free income 1.5 0.5
Non-deductible expenses –1.7 –0.5
Tax effect related to the foreign subsidiaries 8.6 7.6
Usage of tax losses, for which no deferred tax was recognised 0.8 0.2
Deferred tax assets from previously unrecognised tax losses 1.0
Taxes for previous periods –0.1 0.1
Other items –0.6 –2.3
I/S
Taxes on the income statement –70.2 –68.7
Effective tax rate, % 17.6 18.5
Accounting principles – Income taxes for the period and deferred taxes:
Taxes recognised on the income statement include current and deferred taxes. Income taxes for the financial year are calculated on the net profit for the period at the current tax rate and
are adjusted by taxes for the prior periods.
The reporting period as well as prior reporting periods may be subject to a tax audit, which may subsequently result in a change in tax decisions, additional tax payments or
refunds.
Deferred taxes are calculated from all temporary differences arising between the tax bases of assets and liabilities and their carrying values in the consolidated financial statements. Please
refer to the next note 8.1.2 for details.
8. Other notes
8.1 Taxes
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8.1.2 Deferred tax assets and liabilities
The change in deferred tax assets and liabilities during 2020
Deferred tax assets
EUR million
1 Jan.
2020
Recognised
on the income
statement
Recognised on
consolidated
statement of
comprehensive
income
Translation
diffrences
31 Dec.
2020
Provisions 1.0 –0.4 0.7
Confirmed losses 1.0 1.0
Right-of-use assets 1.4 0.2 1.5
Internal margins 2.4 0.1 2.6
Share-based incentive plans 4.7 –2.2 2.5
Pension obligations 3.7 –1.1 2.6
Other temporary differences 1.1 0.1 –0.1 0.0 1.0
B/S 14.4 –1.2 –1.2 0.0
Deferred tax liabilities
EUR million
1 Jan.
2020
Recognised
on the income
statement
Business
combinations
Translation
diffrences
31 Dec.
2020
Fair value measurement of tangible and intangible assets in business combinations 3.3 –1.0 2.6
Accumulated depreciation differences 17.1 –1.1 16.0
Finance lease agreements 0.6 0.2 0.8
Customer contracts 1.8 0.1 1.8
Bonds 1.0 –0.1
Other temporary differences 1.8 –0.1 0.0 1.7
B/S 25.6 –2.0 2.6 0.0 26.2
Deferred income tax assets recognised for tax losses are carried forward to the extent that the realisation of the related tax benefit through future profits is probable. On 31 December 2020,
EUR 1.0 (0.0) million deferred tax asset was recognised for confirmed losses, that will expire in 2025–2026. At the end of the reporting period, the Group had EUR 12.6 (8.5) million of unused
tax losses for which no tax assets have been recognised.
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The change in deferred tax assets and liabilities during 2019
Deferred tax assets
EUR million
1 Jan.
2019
Recognised
on the income
statement
Recognised on
consolidated
statement of
comprehensive
income
31 Dec.
2019
Provisions 1.0 0.0 1.0
Right-of-use assets 1.3 0.0 1.4
Internal margins 2.7 –0.3 2.4
Share-based incentive plans 7.0 –2.3 4.7
Pension obligations 3.4 –0.1 0.4 3.7
Other temporary differences 1.1 0.0 0.1 1.1
B/S 16.5 –2.7 0.5 14.4
Deferred tax liabilities
EUR million
1 Jan.
2019
Recognised
on the income
statement
Business
combinations
31 Dec.
2019
Fair value measurement of tangible and intangible assets in business combinations 2.1 2.1 3.3
Accumulated depreciation differences 18.6 –1.5 17.1
Finance lease agreements 0.6 0.0 0.6
Customer contracts –0.1 1.8
Bonds 0.8 0.2 1.0
Other temporary differences 1.8 0.1 1.8
B/S 25.7 –2.3 2.1 25.6
Accounting principles – Deferred tax assets and liabilities:
Deferred taxes are calculated from the temporary differences arising between carrying amount and the tax base. The temporary tax liabilities are not recognised if they arise from initial
recognition of goodwill or from the initial recognition of an asset/liability other than in a business combination which, at the time of the transaction, does not affect either the accounting or
the taxable profit. No deferred tax is recognised on valuation differences of shares for which the sales profit would be tax-deductible.
Deferred income tax assets are recognised only to the extent that it is probable that they can be utilised against future taxable income. Deferred tax liabilities are recognised on the balance
plans for profit distribution exist for the time being.
Deferred tax liabilities and assets are not offset.
Accounting policies that require management’s judgements – Deferred tax assets:
Particularly at the end of each financial period, the Group assesses the probability of subsidiaries generating taxable income against which unused tax losses can be utilised. The
appropriateness for recognising other deferred tax assets is also determined at the end of each financial period. Changes in the estimates may lead to the recognition of significant tax
expenses.
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8.2 Provisions
EUR million
Termination
benefitst Others Total
3.4 1.7 5.0
Increases in provisions
Business acquisitions 0.1 0.1
Release of unused provisions –1.3 –0.1 –1.4
Utilised provisions –4.6 –4.6
3.3 1.7 5.0
Increases in provisions 0.7 0.7
Release of unused provisions –0.2 –0.2
Utilised provisions –2.1 –2.1
31 Dec. 2020 1.7 1.7 3.4
EUR million 2020 2019
B/S Long-term provisions
2.9
B/S Short-term provisions
0.5
2.1
3.4
5.0
Termination benets
As a part of the Group’s rationalisation, Elisa has carried out statutory employee negotiations leading to personnel reductions in 2020. The restructuring provision includes provisions for
both unemployment pensions and other expenses due to redundancies. The provisions associated with redundancies will be realised during 2021–2022 and the provision associated with
unemployment pensions will be realised in 2021–2023.
Other provisions
Other provisions include environmental provisions made for telephone poles.
Accounting principles – Provisions and contingent liabilities:
A provision is recognised when the Group has a legal or constructive obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation,
and the amount of the obligation can be reliably estimated.
Contingent liabilities are potential liabilities arising from past events that may occur depending on the outcome of uncertain future events which are beyond the control of the Group. Also
a present obligation that is unlikely to require settlement of a payment obligation or the amount of which cannot be reliably measured is a contingent liability. Contingent liabilities are not
recognised in the statement of financial position. Contingent liabilities are presented in note 8.4.
8.2 Provisions
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8.3 Related party details
The Group’s related parties include the parent company, subsidiaries, associates and joint ventures. The related parties also include Elisa’s Board of Directors, the CEO, the Executive Board as
well as entities controlled by them and close members of their family.
Transactions carried out with related parties:
2020
EUR million Revenue Purchases Receivables Liabilities
Associates and joint arrangements
0.7 0.9 0.1 0.0
2019
EUR million
Associates and joint arrangements 0.7 0.5 0.0
The employee benefits of the Group’s related parties are presented in Note 4.1.
8.3.1 Group companies
The parent company of the Group is Elisa Corporation.
Subsidiaries Domicile
Group’s
ownership, %
Banana Fingers Limited Bristol 100
Digiset Oy Helsinki 100
Ekaso Oy Helsinki 100
Petershausen 100
camLine GmbH Petershausen 100
camLine Dresden GmbH Dresden 100
camLine Solutions S.r.l. 100
camLine USA Inc. Atlanta 100
Szombathely 60
camLine Pte. Ltd. Singapore 100
camLine Taiwan New Taipei City 100
camLine sdn. Bhd. Bayan Lepas 100
Elisa Deutschland GmbH Aachen 100
Elisa Finance Oü Tallinn 100
100
Elisa Santa Monica Oy Helsinki 100
Elisa Teleteenused AS Tallinn 100
Elisa Eesti AS Tallinn 100
Santa Monica Networks AS Tallinn 100
8.3 Related party details
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Subsidiaries Domicile
Group’s
ownership, %
Elisa Videra Oy Helsinki 100
Elisa Videra Inc. Los Angeles, CA 100
Elisa Videra Italy S.r.l San Genesio 100
Elisa Videra Norge As Oslo 100
Elisa Videra Singapore PTE Ltd. Singapore 100
Elisa Videra Spain S.L Madrid 100
London 100
Elistar AB Stockholm 100
Polystar Instruments Canada Inc. Toronto 100
Polystar Instruments Inc. Frisco.,TX 100
Polystar Osix AB Stockholm 100
Polystar Asia Private Ltd. Singapore 100
Polystar Australia Pty Sydney 100
Polystar Egypt LLC Cairo 100
P-OSS Solutions S.L.U. Bilbao 100
Polystar Ryssland LLC Moscow 100
Enia Oy Helsinki 100
Epic TV SAS Sallanches 100
Fenix Solutions Oy Turku 100
Fonum Oy Helsinki 100
Joensuu 100
Vaasa 70
Espoo 100
100
Espoo 100
Stockholm 100
Preminet Oy Helsinki 100
OOO LNR St. Petersburg 100
Sutaria Services Inc. Murphy, TX 57
Watson Nordic Oy Vaasa 100
Joint arrangements
Turku 60
Significant changes in ownership of subsidiaries are presented in note 3.
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Accounting principles – Consolidation principles, subsidiaries:
The consolidated financial statements include the parent company, Elisa Corporation, and those subsidiaries over which the Group has control. The group controls an entity when the group
is exposed to, or has rights to, variable returns from its involvement with the entity, and has the ability to affect those returns through its power over the entity.
Subsidiaries are consolidated from the date the Group obtains control and divested companies until the loss of control. Acquisition method is used in the accounting for the elimination of
internal ownership. All intra-group transactions, gains on the sale of inventories and fixed assets, intra-group receivables, payables and dividends are eliminated.
Profit for the period attributable to the equity holders of the parent and non-controlling interests is presented separately in the consolidated income statement. Non-controlling interests
are presented separately from the equity of the owners of the parent in the consolidated statement of financial position. Losses of subsidiaries are allocated to non-controlling interests
even if they exceed their share of ownership.
Accounting principles – Consolidation principles, joint arrangements:
Joint arrangements are arrangements over which the Group exercises joint control with one or more parties. A joint arrangement is either a joint venture or a joint operation. A joint venture
is a joint arrangement, where the Group has rights to the net assets of the arrangement. A joint operation is a joint arrangement where the Group has rights to the assets and obligations
for the liabilities relating to the arrangement.
assets, liabilities, income and expenses of the joint operation are consolidated to the Group’s financial statements. The company owns and manages a building and a site in Turku. Elisa is
mainly entitled to manage office and telecom facilities with the shares owned.
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8.3.2 Investments in associated companies
Aggregated financial information of associates
EUR million 2020 2019
I/S
Group’s share of profit
1.9
–0.2
B/S Transactions carried out with related parties
1.4
2.4
EUR million 2020 2019
Balance at the beginning of the period
2.4
2.7
Translation diffrences
0.0
0.0
Share of profits for the period
1.9
–0.2
Dividends received
–0.2
0.0
Disposals
–2.6
Impairments
–0.1
B/S Balance at the end of the period
1.4
2.4
On 18 December 2020, Elisa divested its holdings in Sulake companies. The sale profit of EUR 5.6 is included in other financial income.
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Associates Domicile
Group’s
ownership,%
FNE-Finland Oy 46
Helsinki 50
Tampere 50
Helsinki 42
Lapua
Riihimäki 35
Helsinki 30
Helsinki 40
Suomen Numerot NUMPAC Oy Helsinki 33
Tele Scope Oy Espoo 22
Accounting principles – Consolidation principles, associated companies
Associated companies are entities over which the Group exercises significant influence. Significant influence is presumed to exist when the Group owns over 20 per cent of the voting rights
of the company or when the Group otherwise exercises significant influence, but does not exercise control. Associated companies are consolidated in accordance with equity method.
If the Group’s share of losses of an associated company exceeds its interest in the associated company, the investment is recognised on the balance sheet at zero value and the Group
discontinues recognising its share of further losses unless the Group has other obligations for the associated company. Associated companies are consolidated from the date the Group
obtains significant influence and divested associated companies are consolidated until the loss of significant influence.
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8.4 O-balance sheet leases and other commitments
Leases
Group as a lessee
Lease payments related to off-balance sheet lease commitments:
EUR million 2020 2019
Lease payments associated with short-term leases
31.6 32.2
Lease payments associated with low-value assets
3.5 3.2
35.1 35.4
Future minimum lease payments under non-cancellable off-balance sheet leases:
EUR million 2020 2019
Within one year
11.7
11.4
Later than one year, but not later than five years
5.1
2.8
Later than five years
1.1
0.8
17.9
15.0
Group as a lessor
Future minimum lease receivables under non-cancellable operating leases:
EUR million 2020 2019
Within one year
2.4
2.5
Later than one year, but not later than five years
0.7
1.0
3.1
3.4
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Accounting principles – Leases:
The group as a lessee
The Group recognises rental expenses for short-term leases and low-value assets in the income statements and presents such contracts as off-balance sheet liabilities.
Rental liabilities are exclusive of value added tax.
The group as a lessor
The Group acts as a lessor in two different types of lease arrangements that are accounted for as operating leases: rental income from telecom premises and carrier services is recognised
as revenue over the lease period, and rental income from real estate is recognised as other operating income. The lease contract periods are mainly short with durations of 1–6 months.
Rental income is recognised over the lease period.
Collateral, commitments and other liabilities
EUR million
2020 2019
On behalf of own commitments
Mortgages
1.2
Guarantees
0.1
Deposits
0.4 0.4
0.4
1.6
Other contractual obligations
Venture Capital investment obligation
1.3 2.2
Repurchase obligations
0.0 0.0
Letter of credit
0.1
Real estate investments
VAT refund liability for real estate investments indicates the amount that may become completely non tax-deductible if the intended use of the property was to change.
On 31 December 2020, VAT refund liability for real estate investments was EUR 31.7 (30.7) million.
8.5 Events after the end of the reporting period
There were no significant events after the balance sheet date.
8.5 Events after the end of the reporting period
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9 Key Indicators
The key indicator tables are unaudited.
9.1 Key indicators describing the Group’s nancial development
2020 2019 2018 2017 2016
INCOME STATEMENT
Revenue, EUR million 1,895 1,844 1,832 1,787 1,636
Change of revenue, % 2.8 0.7 2.5 4.2
EBITDA, EUR million 685 661 640 608 563
EBITDA as % of revenue 36.2 35.8 34.0 34.4
EBIT, EUR million 409 404 378
EBIT as % of revenue 21.6 21.4 22.0 21.2 20.7
Profit before tax, EUR million 398 372 381 403 320
Profit before tax as % of revenue 21.0 20.2 20.8 22.6
Return on equity (ROE), % 28.1 26.6 33.5 27.1
Return on investment (ROI), % 16.7 17.2 18.3 17.0
Research and development costs, EUR million 10 8 8 10 11
Research and development costs as % of revenue 0.5 0.4 0.5 0.6 0.7
BALANCE SHEET
Gearing ratio, % 101.9 103.0 103.2 115.7
Current ratio 1.3 1.2 1.0 1.0 1.0
Equity ratio, % 39.1 41.0 42.4 40.5 38.5
Non-interest bearing liabilities, EUR million 430 428 423
Interest bearing net debt 1,207 1,184 1,068 1,073 1,124
Balance sheet total, EUR million 3,041 2,814 2,580 2,533
INVESTMENTS
Investments in shares and business combinations, EUR million 70 83 14 104 108
CAPITAL EXPENDITURE
Gross investments, EUR million 266 256 254 246 226
Gross investments as % of revenue 14.1 13.8 13.8
PERSONNEL
Average number of employees during the period 5,097 4,882 4,814 4,614 4,247
Revenue/employee, EUR 1,000 372 378 380 387 385
The order book is not presented, as the information is not relevant due to the nature of the Group’s business.
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FORMULAE FOR FINANCIAL SUMMARY INDICATORS
EBITDA EBIT + depreciation, amortisation and impairment
EBIT
Profit for the period + income taxes + financial income and expenses + share of associated companies’ profit
Return on equity (ROE), %
Profit for the period
X 100
Total shareholders’ equity on average
Return on investment (ROI), %
Profit before taxes + interest and other financial expenses
X 100
Total equity + interest-bearing liabilities on average
Gearing ratio, %
Interest-bearing liabilities - cash and cash equivalents and financial assets at
fair value through profit or loss
X 100
Total shareholders’ equity
Current ratio
Current assets
Current liabilities - advance payments received
Equity ratio, %
Total shareholders’ equity
X 100
Balance sheet total - advance payments received
THE REPORT OF THE
BOARD OF DIRECTORS
SHARES AND
SHAREHOLDERS
CONSOLIDATED
FINANCIAL STATEMENTS
PARENT COMPANY
FINANCIAL STATEMENTS
AUDITOR’S REPORT
BOARD’S PROPOSAL FOR
PROFIT DISTRIBUTION
92
ELISA FINANCIAL STATEMENTS 2020
9.2 Comparable per-share indicators
(1
2020 2019 2018 2017 2016
INCOME STATEMENT
Comparable EBITDA, EUR million
685
668 613 564
Comparable EBITDA as % of revenue
36.2
36.2 34.3 34.5
Comparable EBIT, EUR million
415
402 403 384
Comparable EBIT as % of revenue
21.9
21.8 22.0 21.5 21.4
Comparable profit before tax, EUR million
399
380 364 327
Comparable profit before tax as % of revenue
21.0
20.5 20.8 20.4 20.0
Comparable return on equity (ROE), %
28.1
27.1 28.8
Comparable return on investment (ROI), %
16.7
17.5 18.3 18.0 17.3
Comparable earnings per share (EPS)
2.05
1.86 1.66
1)
other than the financial indicators defined by IFRS
-
tors
THE REPORT OF THE
BOARD OF DIRECTORS
SHARES AND
SHAREHOLDERS
CONSOLIDATED
FINANCIAL STATEMENTS
PARENT COMPANY
FINANCIAL STATEMENTS
AUDITOR’S REPORT
BOARD’S PROPOSAL FOR
PROFIT DISTRIBUTION
93
ELISA FINANCIAL STATEMENTS 2020
FORMULAE FOR COMPARABLE PER-SHARE INDICATORS
Comparable EBITDA EBIT + depreciation, amortisation and impairment +/- items affecting comparability
Comparable EBIT
Profit for the period + income taxes + financial income and expenses +
share of associated companies’ profit +/- items affecting comparability
Comparable profit for the period Profit for the period +/- items affecting comparability
Profit attributable to owners of the parent company
+/- items affecting comparability
Comparable EPS
Average number of shares during the period adjusted for share issues
Comparable return on equity (ROE), %
Profit for the period +/- items affecting comparability
X 100
Total shareholders' equity on average
Comparable return on investment (ROI), %
Profit before taxes + interest and other financial expenses
+/- items affecting comparability
X 100
Total equity + interest-bearing liabilities on average
Comparable cash flow after investments
Net cash flow from operating activities - net cash used in investing activities
+/- items affecting comparability
THE REPORT OF THE
BOARD OF DIRECTORS
SHARES AND
SHAREHOLDERS
CONSOLIDATED
FINANCIAL STATEMENTS
PARENT COMPANY
FINANCIAL STATEMENTS
AUDITOR’S REPORT
BOARD’S PROPOSAL FOR
PROFIT DISTRIBUTION
94
ELISA FINANCIAL STATEMENTS 2020
9.3. Per-share indicators
(1
2020 2019 2018 2017 2016
Share capital, EUR
83,033,008
83,033,008 83,033,008 83,033,008 83,033,008
Number of shares at year-end
160,082,908
Average number of shares
160,065,712
Number of shares at year-end, diluted
160,082,908
Average number of shares, diluted
160,065,712
Market capitalisation, EUR million
(2
7,508
8,241 6,037 5,475 5,176
Earnings per share (EPS), EUR
2.05
2.11 1.61
Dividend per share, EUR
1.95
(6
1.85 1.75 1.65 1.50
Payout ratio, %
95.1
88.5 78.2
Equity per share, EUR
7.39
7.05 6.52 6.08
P/E ratio
21.9
26.0 18.2 15.5
Effective dividend yield, %
(3
4.3
3.8 5.0 4.8
Share performance on Nasdaq Helsinki
Mean price, EUR
51.08
42.26 36.34 33.74 32.27
Closing price at year-end, EUR
44.87
36.08 32.72
Lowest price, EUR
40.79
35.51 31.68 30.42 28.40
Highest price, EUR
58.88
35.80
Trading of shares on Nasdaq Helsinki
(4
Total trading volume, 1,000 shares
122,497
104,467 105,663
Percentage of shares traded %
(5
73
58 63 62 63
1)
The numbers of shares are presented without treasury shares held by Elisa Group.
2)
Calculated on the basis of the closing price on the last trading day of the year and the total number of shares at the end of the period (167 335 073).
3)
Calculated on the basis of the closing price on the last trading day of the year.
4)
Elisa share is also traded in alternative marketplaces. According to Bloomberg and the Fidessa Fragmentation report, the trading volumes in these markets in 2020 were approximately 216 (174) per cent of Nasdaq Helsinki’s volumes.
5)
Calculated in proportion to the total number of shares at the end of the period.
6)
The Board of Directors proposes a dividend payment of EUR 1.95 per share.
THE REPORT OF THE
BOARD OF DIRECTORS
SHARES AND
SHAREHOLDERS
CONSOLIDATED
FINANCIAL STATEMENTS
PARENT COMPANY
FINANCIAL STATEMENTS
AUDITOR’S REPORT
BOARD’S PROPOSAL FOR
PROFIT DISTRIBUTION
95
ELISA FINANCIAL STATEMENTS 2020
FORMULAE FOR PER-SHARE INDICATORS
Earnings per share (EPS)
Profit for the period attributable to the equity holders of the parent
Average number of shares during the period adjusted for share issues
Dividend per share
(1
Dividend adjusted for share issues
Number of shares at the balance sheet date adjusted for share issues
Effective dividend yield, %
(1
Dividend per share
X 100
Share price at the balance sheet date adjusted for share issues
Payout ratio, %
(1
Dividend per share
X 100
Earnings per share
Equity per share
Equity attributable to equity holders of the parent
Number of shares at the balance sheet date adjusted for share issues
P/E ratio (price/earnings)
Share price on the balance sheet date
Earnings per share
1)
The calculation formulae apply also to the capital repayment indicators.
THE REPORT OF THE
BOARD OF DIRECTORS
SHARES AND
SHAREHOLDERS
CONSOLIDATED
FINANCIAL STATEMENTS
PARENT COMPANY
FINANCIAL STATEMENTS
AUDITOR’S REPORT
BOARD’S PROPOSAL FOR
PROFIT DISTRIBUTION
96
ELISA FINANCIAL STATEMENTS 2020
EUR million Note 2020 2019
Revenue 1
1,604.4
1,555.5
Other operating income 2
3.3
24.1
Materials and services 3
–617.6
Personnel expenses 4
–235.4
–237.1
Depreciation and amortisation 5
–267.0
–265.5
Other operating expenses
–162.0
–162.2
Operating profit
325.7
Financial income and expenses 7
–16.5
–26.6
Profit before tax and appropriations
309.2
Appropriations 8
5.0
22.2
Income taxes
–69.0
–67.8
Profit for the period
245.2
251.6
INCOME STATEMENT, PARENT COMPANY, FAS
PARENT COMPANY FINANCIAL STATE-
MENTS
Parent company operational
results
Income statement
THE REPORT OF THE
BOARD OF DIRECTORS
SHARES AND
SHAREHOLDERS
CONSOLIDATED
FINANCIAL STATEMENTS
PARENT COMPANY
FINANCIAL STATEMENTS
AUDITOR’S REPORT
BOARD’S PROPOSAL FOR
PROFIT DISTRIBUTION
97
ELISA FINANCIAL STATEMENTS 2020
EUR million Note 31 Dec. 2020 31 Dec. 2019
ASSETS
Fixed assets
Intangible assets 10 354.1
Property, plant and equipment 10 661.3 662.2
Investments 11 860.4 858.4
1,875.8
Current assets
Inventories 12 48.1 47.8
Non-current receivables 13 112.4 107.6
Current receivables 14 367.3
Cash and bank receivables 181.9
709.7 561.2
TOTAL ASSETS 2,585.5 2,471.2
SHAREHOLDERS’ EQUITY AND LIABILITIES
Shareholders’ equity 15
Share capital 83.0 83.0
Treasury shares –128.2 –132.0
Reserve for invested non-restricted equity 77.8 77.8
Contingency reserve 3.4 3.4
Retained earnings 403.3
Profit for the period 245.2 251.6
684.5 734.8
Accumulated appropriations 75.2 80.2
Provisions for liabilities and charges 16 4.1 5.7
Liabilities
Non-current liabilities 17 1,170.4 1,050.6
Current liabilities 18 651.3
1,821.7 1,650.5
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 2,585.5 2,471.2
BALANCE SHEET, PARENT COMPANY, FAS
Balance sheet
THE REPORT OF THE
BOARD OF DIRECTORS
SHARES AND
SHAREHOLDERS
CONSOLIDATED
FINANCIAL STATEMENTS
PARENT COMPANY
FINANCIAL STATEMENTS
AUDITOR’S REPORT
BOARD’S PROPOSAL FOR
PROFIT DISTRIBUTION
98
ELISA FINANCIAL STATEMENTS 2020
EUR million 2020 2019
Cash flow from operating activities
Profit before appropriations and taxes 309.2
Adjustments:
Depreciation and amortisation 267.0 265.5
Other income and expenses with no payment relation 1.4 –17.2
Other financial income (-) and expenses (+) 22.0 26.6
Gains (-) and losses (+) on the disposal of fixed assets 0.0 –1.5
Gains (-) and losses (+) on the disposal of investments –5.5 0.1
Change in provisions in the income statement –1.6 0.1
Cash flow before changes in working capital 592.5
Change in working capital
Increase (-) / decrease (+) in current non-interest-bearing trade receivables 3.4 –25.3
Increase (-) / decrease (+) in inventories –1.6
Increase (+) / decrease (-) in trade and other payables –0.7 18.3
Cash flow before financial items and taxes 593.5 562.0
Dividends received 0.9 0.6
Interests received 1.7 1.6
Interests paid –21.7 –25.3
Income taxes paid –66.2 –66.2
Net cash flow from operating activities 508.1 472.7
CASH FLOW STATEMENT, PARENT COMPANY, FAS
THE REPORT OF THE
BOARD OF DIRECTORS
SHARES AND
SHAREHOLDERS
CONSOLIDATED
FINANCIAL STATEMENTS
PARENT COMPANY
FINANCIAL STATEMENTS
AUDITOR’S REPORT
BOARD’S PROPOSAL FOR
PROFIT DISTRIBUTION
99
ELISA FINANCIAL STATEMENTS 2020
EUR million 2020 2019
Cash flow from investing activities
Capital expenditure –236.6 –223.3
Proceeds from disposal of property, plant and equipment and intangible assets 0.0 5.7
Investments in shares and business acquisitions –25.6 –72.0
Proceeds from disposal of financial assets 20.6 0.3
Loans granted –3.5 –10.2
Repayment of loan receivables –0.5
Net cash flow used in investing activities –245.5
Cash flow after investing activities 262.6 178.1
Cash flow from financing activities
Increase in long-term borrowings (+) 300.0 243.5
Decrease in long-term borrowings (-) –255.6
Increase (+) / decrease (-) in short-term borrowings –122.2
Group contributions received (+) / paid (-) –1.8
Dividends paid –295.7
Net cash flow used in financing activities –119.7 –265.1
Change in cash and cash equivalents 142.9 –87.0
Cash and cash equivalents at the beginning of the period 39.0
Cash from business transfers and mergers 56.3
Cash and cash equivalents at the end of the period 181.9
CASH FLOW STATEMENT, PARENT COMPANY, FAS
THE REPORT OF THE
BOARD OF DIRECTORS
SHARES AND
SHAREHOLDERS
CONSOLIDATED
FINANCIAL STATEMENTS
PARENT COMPANY
FINANCIAL STATEMENTS
AUDITOR’S REPORT
BOARD’S PROPOSAL FOR
PROFIT DISTRIBUTION
100
ELISA FINANCIAL STATEMENTS 2020
Accounting principles
prepared in accordance with the accounting principles
based on Finnish accounting legislation..
Foreign currency items
Transactions denominated in foreign currencies are
recorded at the exchange rates prevailing on the
dates of transactions. At year-end, assets and liabilities
denominated in foreign currencies are valued at the
exchange rates quoted by the European Central Bank at
the closing date.
Fixed assets
The carrying value of intangible and tangible assets is
stated at cost less accumulated depreciation, amortisation
measured at variable costs.
and total depreciation is presented under appropriations
of the parent company’s income statement and the
accumulated appropriations in shareholders’ equity and
liabilities on the balance sheet. Depreciation according to
plan is recognised on a straight-line basis over the useful
life from the original acquisition cost.
groups:
Intangible rights 3–5 years
Goodwill 5–20 years
Buildings and constructions 25–40 years
Telecommunication terminals 2–4 years
Other machines and equipment 3–5 years
Inventories
Inventories are stated at the lowest of variable cost,
acquisition price or the likely disposal or repurchase price.
Cost is determined using a weighted average price.
Marketable securities
Investments in money market funds are recognised at the
commercial paper are recognised at the acquisition cost,
Revenue recognition principles
Revenue from deliverables is recognised at the time of
ownership transfer and revenue from services is recognised
when the services have been performed.
Interconnection fees that are invoiced from the
customers and paid as such to other telecommunication
companies are presented as an adjustment to revenue
assets, subsidies received and rental income from premises
are presented under other operating income. The loss from
Research and development
Research costs are expensed as they incur, with the
exception of development costs, which are capitalised. The
capitalisation criteria are met when the product is technically
and commercially feasible, and it is expected to generate
recognised as expenses cannot be capitalised subsequently.
Government grants associated with development
projects are recognised as other operating income when
the related costs are recognised as expenses. Government
grants, associated with capitalised development costs, are
recorded as a reduction of cost.
Future expenses and losses
Probable future expenses and losses related to the reported
are recognised on the income statement. Such items are
recognised on the balance sheet under provisions, if a
reliable estimate of the amount or timing of the obligation
cannot be made. Otherwise the obligation is recognised as
accrual.
Income taxes
income statement. No deferred tax liabilities or receivables
NOTES TO THE FINANCIAL STATEMENTS OF THE PARENT COMPANY
-
ments of the parent company
Accounting principles Notes to the income
statement
THE REPORT OF THE
BOARD OF DIRECTORS
SHARES AND
SHAREHOLDERS
CONSOLIDATED
FINANCIAL STATEMENTS
PARENT COMPANY
FINANCIAL STATEMENTS
AUDITOR’S REPORT
BOARD’S PROPOSAL FOR
PROFIT DISTRIBUTION
101
ELISA FINANCIAL STATEMENTS 2020
1. Revenue
EUR million 2020 2019
Revenue
1,667.7
1,620.1
Interconnection fees and other adjustments
–63.3
–64.6
1,604.4
1,555.5
Geographical distribution
Finland
1,582.5
1,528.0
Rest of Europe
20.1
24.8
Other countries
1.8
2.7
1,604.4
1,555.5
2. Other operating income
EUR million 2020 2019
Gain on disposals of fixed assets
0.0
1.5
Profit from mergers and acquisitions
Other items
(1
3.3
4.7
3.3
24.1
1)
Other operating income items mainly include rental income from the real estate, management fee income charged from subsidiaries and other income not associated with ordinary operating activities.
3. Materials and services
EUR million 2020 2019
Materials, supplies and goods
Purchases
299.1
273.3
Change in inventories
–0.3
–1.1
298.9
272.2
External services
318.8
318.8
617.6
1. Revenue
2. Other operating income 3. Materials and services
THE REPORT OF THE
BOARD OF DIRECTORS
SHARES AND
SHAREHOLDERS
CONSOLIDATED
FINANCIAL STATEMENTS
PARENT COMPANY
FINANCIAL STATEMENTS
AUDITOR’S REPORT
BOARD’S PROPOSAL FOR
PROFIT DISTRIBUTION
102
ELISA FINANCIAL STATEMENTS 2020
4. Personnel expenses
EUR million 2020 2019
Salaries and wages
203.4
Pension costs
27.2
34.4
Other social security costs
4.8
4.3
235.4
237.1
Personnel on average
3,242
3,185
CEO remuneration, EUR 2020 2019
Fixed salaries
661,180.00
665,418.00
Performance-based bonus
198,238.35
264,431.48
Fringe benefits
22,965.81
Share-based payments
(1
2,269,493.25
1,708,354.16
3,151,877.41
2,656,484.57
1)
The maximum award allocated to the CEO under the share-based compensation plans equals the value of 110,650 shares. For more details, please refer to Note 4.1.
In 2020, the Board of Directors agreed with the CEO of Elisa Corporation Veli-Matti Mattila that he will continue as CEO until further notice. Under previous executive agreement, the Group
CEO would have retired at the age of 60. The defined benefit pension plan includes vested rights. See Note 4.1 of the consolidated financial statements.
The remuneration of the Board members, EUR 2020 2019
91,600.00
77,600.00
78,100.00
74,800.00
2,100.00
Raimo Lind 2,800.00
Topi Manner
76,000.00
Leena Niemistö
2,100.00
77,600.00
Eva-Lotta Sjöstedt
73,750.00
Seija Turunen
93,100.00
Anssi Vanjoki
130,400.00
Antti Vasara
76,600.00
77,600.00
623,750.00
624,000.00
For year 2020, following compensations were determined by the Annual General Meeting to the Members of the Board: remuneration fee for the Chair EUR 123,000, for Vice Chair and the
Chair of the Committees EUR 82,000, and other Board members EUR 67,000; and additionally EUR 750 per meeting of the Board and of a Commetee. According to the decision of the Board
on 2 April 2020, the annual remuneration was paid in Company shares on 27 April 2021. The outstanding remuneration amounts were paid net of tax, 60 per cent.
4. Personnel expenses
THE REPORT OF THE
BOARD OF DIRECTORS
SHARES AND
SHAREHOLDERS
CONSOLIDATED
FINANCIAL STATEMENTS
PARENT COMPANY
FINANCIAL STATEMENTS
AUDITOR’S REPORT
BOARD’S PROPOSAL FOR
PROFIT DISTRIBUTION
103
ELISA FINANCIAL STATEMENTS 2020
6. Auditor fees
EUR million 2020 2019
Auditing 0.1 0.1
Tax advisory services 0.1 0.0
Other services 0.0 0.2
0.2 0.4
7. Financial income and expenses
EUR million 2020 2019
Interest income and other financial income
Dividends received
From the Group companies 0.2 0.1
From associated companies 0.2 0.0
From others 0.5 0.6
0.9 0.6
Other interest and financial income
From the Group companies 0.1 0.2
Capital gains from investments
(1
7.0 0.0
From others 2.0 1.7
9.1
10.0 2.5
Interest costs and other financial expenses
To the Group companies –5.5 –4.1
Impairment of investments in subsidiaries –3.0
To others –18.1 –25.1
–26.6
–16.5 –26.6
1)
In 2020, the gains on disposals mainly consisted of divestments of shares in Sulake companies.
5. Depreciation and amortisation
EUR million 2020 2019
Intangible assets
88.3
88.0
Property, plant and equipment
178.7
177.5
267.0
265.5
Specification of depreciation by balance sheet items is included in note 10.
5. Depreciation and amortisation
6. Auditor fees
7. Financial income and
expenses
THE REPORT OF THE
BOARD OF DIRECTORS
SHARES AND
SHAREHOLDERS
CONSOLIDATED
FINANCIAL STATEMENTS
PARENT COMPANY
FINANCIAL STATEMENTS
AUDITOR’S REPORT
BOARD’S PROPOSAL FOR
PROFIT DISTRIBUTION
104
ELISA FINANCIAL STATEMENTS 2020
9. Income taxes
EUR million 2020 2019
Income taxes on ordinary activities
–68.9
Taxes for previous periods
0.0
0.1
–69.0
–67.8
10. Intangible assets and property,
plant and equipment
Intangible assets
2020
EUR million
Development
costs
Intangible
assets Goodwill
Other
intangible
assets
Intangible
assets under
construction Total
Acquisition cost at 1 Jan. 45.3 142.2 886.3 505.4 12.3
1 591.5
Additions 4.7 11.2 7.7
52.9
Disposals 0.0
0.0
Reclassifications 3.6 0.6 5.7
0.0
Acquisition cost at 31 Dec. 53.5 154.0 886.3 540.4 10.2
1 644.4
Accumulated depreciation and amortisation at 1 Jan. 38.6 70.5 673.2
1 202.1
Amortisation and depreciation for the period 5.4 7.7 42.7 32.4
88.3
Accumulated depreciation and amortisation at 31 Dec. 44.0 78.3 716.0 452.2
1 290.4
Book value at 31 Dec. 75.8 170.3 88.2 10.2
354.1
8. Appropriations
EUR million 2020 2019
Change in appropriations 5.0
Group contributions received 4.2 20.6
Group contributions paid –4.3 –5.3
5.0 22.2
8. Appropriations
Notes to the balance sheet
10. Intangible and tangible assets
THE REPORT OF THE
BOARD OF DIRECTORS
SHARES AND
SHAREHOLDERS
CONSOLIDATED
FINANCIAL STATEMENTS
PARENT COMPANY
FINANCIAL STATEMENTS
AUDITOR’S REPORT
BOARD’S PROPOSAL FOR
PROFIT DISTRIBUTION
105
ELISA FINANCIAL STATEMENTS 2020
Property. plant and equipment
2020
EUR million
Land and
water areas
Buildings and
constructions
Machinery and
equipment
Other
assets
Assets under
construction Total
Acquisition cost at 1 Jan. 204.1 3,604.4 35.1 30.0
3,883.5
Additions 0.1 11.4 154.1 0.0
179.6
Disposals 0.1
-9.7
Reclassifications 0.0 1.0 18.0 0.0
0.0
Acquisition cost at 31 Dec. 216.6 3,766.6 35.1 25.1
4,053.3
Accumulated depreciation at 1 Jan. 34.5
3,221.3
Accumulated depreciation on disposals and reclassifications -8.0
-8.0
Depreciation for the period 0.0
178.7
Accumulated depreciation at 31 Dec. 135.0 3,222.4 34.5
3,392.0
Book value at 31 Dec. 81.5 544.1 0.6 25.1
661.3
THE REPORT OF THE
BOARD OF DIRECTORS
SHARES AND
SHAREHOLDERS
CONSOLIDATED
FINANCIAL STATEMENTS
PARENT COMPANY
FINANCIAL STATEMENTS
AUDITOR’S REPORT
BOARD’S PROPOSAL FOR
PROFIT DISTRIBUTION
106
ELISA FINANCIAL STATEMENTS 2020
Intangible assets
2019
EUR million
Development
costs
Intangible
assets Goodwill
Other
intangible
assets
Intangible
assets under
construction Total
Acquisition cost at 1 Jan. 42.5 880.5 473.0 12.6 1,548.0
Transferred in a merger 1.5 1.5
Additions 3.0 1.8 5.8 24.5 44.0
Disposals –1.0 –1.0 –0.5 –2.6
Reclassifications 0.8 0.4 –8.7 0.5
Acquisition cost at 31 Dec. 45.3 142.2 886.3 505.4 12.3
Accumulated depreciation and amortisation at 1 Jan. 34.2 62.5 1,116.6
Transferred in merger 0.1 0.1
Accumulated depreciation of disposals and reclassifications –0.2 –0.4 –0.7
Amortisation for the period 4.6 8.3 43.3 86.0
Accumulated amortisation at 31 Dec. 38.6 70.5 673.2 1,202.1
Book value at 31 Dec. 6.6 71.7 213.1 85.7 12.3
Property. plant and equipment
2019
EUR million
Land and
water areas
Buildings and
constructions
Machinery and
equipment
Other
assets
Assets under
construction Total
Acquisition cost at 1 Jan. 3,448.6 35.1 3,718.0
Additions 0.2 8.3 153.7 0.0 18.1 180.3
Disposals 0.0 –0.1 –14.1 –0.1 –14.4
Reclassifications 0.4 16.2 0.0 –17.1 –0.5
Acquisition cost at 31 Dec. 204.1 3,604.4 35.1 30.0 3,883.5
Accumulated depreciation at 1 Jan. 116.6 34.5
Accumulated depreciation on disposals and reclassifications –0.1 –10.0
Depreciation for the period 168.0 0.0 177.4
Accumulated depreciation at 31 Dec. 34.5 3,221.3
Book value at 31 Dec. 78.3 543.5 0.6 30.0 662.2
THE REPORT OF THE
BOARD OF DIRECTORS
SHARES AND
SHAREHOLDERS
CONSOLIDATED
FINANCIAL STATEMENTS
PARENT COMPANY
FINANCIAL STATEMENTS
AUDITOR’S REPORT
BOARD’S PROPOSAL FOR
PROFIT DISTRIBUTION
107
ELISA FINANCIAL STATEMENTS 2020
11. Investments
Investments in Receivables from
2020
EUR million Subsidiaries Associates
Other
investments
Group
companies Others Total
Acquisition cost at 1 Jan. 831.5 7.5 22.3 1.6 0.1
862.9
Additions 2.4 0.0
27.4
Disposals –1.2 –2.2
–22.3
Acquisition cost at 31 Dec. 837.5 6.2 22.5 1.6 0.1
867.9
Impairment at 1 Jan. –0.4 –4.1
–4.5
Additions –0.1
–3.0
Impairment at 31 Dec. –3.3 –0.1 –4.1
–7.5
Book value at 31 Dec. 834.2 6.1 18.4 1.6 0.1
860.4
A list of the Group and associated companies is available under Note 8.3 of the consolidated financial statements.
Investments in Receivables from
2019
EUR million Subsidiaries Associates
Other
investments
Group
companies Others Total
Acquisition cost at 1 Jan. 6.2 18.0 6.7 0.1 821.2
Transferred in a merger 1.2 –5.2 –2.0
Additions 65.6 4.7 70.2
Disposals –26.1 –0.4 0.0 –26.5
Acquisition cost at 31 Dec. 831.5 7.5 22.3 1.6 0.1
Impairment at 1 Jan. –0.4 –4.1 –4.5
Impairment at 31 Dec. –0.4 –4.1 –4.5
Book value at 31 Dec. 831.1 7.5 18.1 1.6 0.1 858.4
11. Investments
THE REPORT OF THE
BOARD OF DIRECTORS
SHARES AND
SHAREHOLDERS
CONSOLIDATED
FINANCIAL STATEMENTS
PARENT COMPANY
FINANCIAL STATEMENTS
AUDITOR’S REPORT
BOARD’S PROPOSAL FOR
PROFIT DISTRIBUTION
108
ELISA FINANCIAL STATEMENTS 2020
12. Inventories
EUR million 2020 2019
Materials and supplies
13.3
13.1
Finished goods
34.8
34.7
48.1
47.8
13. Non-current receivables
EUR million 2020 2019
Receivables from the Group companies
Loan receivables 14.5 11.2
Receivables from others
Trade receivables 80.7 78.1
Prepayments and accrued income
(1
17.2 18.0
Other receivables 0.3
97.9
112.4 107.6
1)
Breakdown of prepayments and accrued income
Rent advances 7.6
Transaction costs and losses related to loan issuance 9.5
Others 0.1 0.2
17.2 18.0
12. Inventories 13. Non-current receivables
THE REPORT OF THE
BOARD OF DIRECTORS
SHARES AND
SHAREHOLDERS
CONSOLIDATED
FINANCIAL STATEMENTS
PARENT COMPANY
FINANCIAL STATEMENTS
AUDITOR’S REPORT
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109
ELISA FINANCIAL STATEMENTS 2020
14. Current receivables
EUR million 2020 2019
Receivables from the Group companies
Loan receivables 3.0 2.0
Trade receivables 2.4 1.5
Prepayments and accrued income 0.6 0.3
Other receivables 4.8 3.5
10.7 7.2
Receivables from the associated companies
Trade receivables 0.1 0.5
0.1 0.5
Receivables from others
Trade receivables 293.7 307.0
Loan receivables 0.0
Prepayments and accrued income
(1
53.6 48.0
Other receivables 9.2 4.2
356.5
367.3
1)
Breakdown of prepayments and accrued income
Interests 0.0 0.1
Rent advances 1.4 1.7
Transaction costs and losses related to loan issuance 3.0 2.7
Taxes 2.6
Other business expense advances paid 49.2 41.0
53.6 48.0
14. Current receivables
THE REPORT OF THE
BOARD OF DIRECTORS
SHARES AND
SHAREHOLDERS
CONSOLIDATED
FINANCIAL STATEMENTS
PARENT COMPANY
FINANCIAL STATEMENTS
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110
ELISA FINANCIAL STATEMENTS 2020
15. Shareholders’ equity
EUR million 2020 2019
Share capital at 1 Jan.
83.0
83.0
Share capital at 31 Dec.
83.0
83.0
Treasury shares at 1 Jan.
–132.0
–135.4
Disposal of treasury shares
3.8
3.4
Treasury shares at 31 Dec.
–128.2
–132.0
Reserve for invested non-restricted equity at 1 Jan.
77.8
77.8
Reserve for invested non-restricted equity at 31 Dec.
77.8
77.8
Contingency reserve at 1 Jan.
3.4
3.4
Contingency reserve at 31 Dec.
3.4
3.4
Retained earnings at 1 Jan.
702.5
733.8
Dividend distribution
–296.2
Withdrawal of dividend liabilities
0.7
0.3
Disposal of treasury shares
–3.8
–3.4
Retained earnings at 31 Dec.
403.3
Profit for the period
245.2
251.6
Total shareholder's equity
684.5
734.8
Distributable earnings
Retained earnings
403.3
Treasury shares
–128.2
–132.0
Reserve for invested non-restricted equity
77.8
77.8
Development costs
–12.6
–11.0
Profit for the period
245.2
251.6
585.6
637.4
15. Shareholders’ equity
THE REPORT OF THE
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111
ELISA FINANCIAL STATEMENTS 2020
16. Provisions
EUR million 2020 2019
Provision for unemployment pensions
3.6
3.6
Other provisions
(1
0.5
2.1
4.1
5.7
1)
Other provisions consist of salaries, including related statutory employee costs for employees not required to work during their severance period and a provision for other operating expenses.
Provisions of EUR 2.1 (4.6) million were used and EUR 0.2 (1.3) million were reversed as unused in 2020.
17. Non-current liabilities
EUR million 2020 2019
Interest-bearing
Liabilities to others
Bonds
900.0
774.0
Loans from the financial institutions
250.0
250.0
1,150.0
1,024.0
Non-interest bearing
Liabilities to others
Trade payables
14.7
20.2
Accruals and deferred income
(1
5.7
6.5
20.4
26.7
1,170.4
1,050.6
Liabilities maturing after five years
Bonds
600.0
300.0
Loans from the financial institutions 100.0
600.0
400.0
1)
Breakdown of accruals and deferred income
Rent advances
5.7
6.5
16. Provisions
17. Non-current liabilities
THE REPORT OF THE
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ELISA FINANCIAL STATEMENTS 2020
18. Current liabilities
EUR million 2020 2019
Interest-bearing
Liabilities to the Group companies
Cash Pool account 169.0 177.7
169.0 177.7
Liabilities to others
Bonds 174.0
Commercial paper 19.5 133.0
193.5 133.0
362.4 310.7
Non-interest bearing
Liabilities to the Group companies
Trade payables 7.2 5.5
Other liabilities 4.5 5.5
11.6
Liabilities to the associates
Trade payables 0.0 0.0
0.0 0.0
Liabilities to others
Advances received 4.4 3.1
Trade payables 152.3 147.4
Accrued liabilities
(1
53.0 52.2
Other liabilities 67.6 75.5
277.2 278.3
288.8
651.3
1)
Breakdown of accrued liabilities
Salaries, wages and social security costs 41.1
Interests 9.8
Direct taxes 0.3
Rent advances 1.2 1.3
Income received in advance 0.5 0.4
Others 0.1
53.0 52.2
18. Current liabilities
THE REPORT OF THE
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ELISA FINANCIAL STATEMENTS 2020
19. Leases and other commitments
Collateral
EUR million
2020 2019
On behalf of own commitments
Bank deposits 0.3 0.3
0.3 0.3
Lease commitments
EUR million
2020 2019
Lease commitments on telecom networkst
(1
Within one year 0.1 0.1
Later that one year, but not later that five years 0.1
0.1 0.2
Other lease commitment
(2
Within one year 4.3 3.6
Later that one year, but not later that five years 3.7
8.0 7.5
Venture Capital investment obligation 1.3 2.2
Repurchase obligations 0.0
Letter of credit
0.1
Real estate leases
(3
Within one year 23.7
Later that one year, but not later that five years 46.1 53.1
Later than five years 70.2 57.8
140.0 137.8
Total leases 148.0 145.5
1)
Consist of certain individualised mobile network equipment and access fees for backbone connections.
2)
Lease liabilities consist mainly of car and IT equipment leases.
3)
Real-estate leases comprise rental agreements relating to business, oce and telecom premises.
Real-estate leases are presented at nominal values.
Rental liabilities are exclusive of value added tax, except vehicle leasing liabilities.
THE REPORT OF THE
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ELISA FINANCIAL STATEMENTS 2020
Derivative instruments
EUR million 2020 2019
Currency derivatives
Nominal value
3.2
Fair value
0.1
Electricity derivatives
Nominal value
1.1
1.0
Fair value
0.4
–0.1
Elisa hedges electricity purchases through physical purchase agreements and derivatives. The electricity price risk is assessed at a five-year period. Electricity derivatives are subject to hedge
accounting.
The hedging rate for purchases in the following years,% 2020 2019
0–1 years
87.9
1–2 years
64.7
53.3
If the market price of electricity derivatives changes by +/- 10 per cent from the balance sheet date of 31 December 2020, it would contribute EUR +0.5/- 0.2 (+0.0/-0.1) million to 2021 equity.
The impact has been calculated before tax.
Real-estate investments
On 31 December 2020, the VAT refund liability of real-estate investments was EUR 31.7 (30.7) million.
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ELISA FINANCIAL STATEMENTS 2020
1. Share capital and shares
The company’s paid-up share capital registered in the Trade
year.
series
2. Authorisations of the Board of Directors
On 2 April 2020, the Annual General Meeting authorised
the Board of Directors to decide on a new share issue,
transfer of treasury shares owned by the company and/or
The authorisation allows the Board of Directors to issue a
share issue and shares granted by virtue of special rights
are included in the aforementioned maximum number. The
stock. The share issue can be free or for consideration
and can also be directed to the Company itself. The
authorisation entitles the Board to make a directed issue.
The authorisation may be used for making acquisitions or
implementing other arrangements related to the Company’s
Board of Directors. The Board of Directors shall have the
right to decide on all other matters related to the share
and it annuls the authorisation given by the Annual General
On 2 April 2020, the Annual General Meeting also
authorised the Board of Directors to decide on the
acquisition of treasury shares subject to the following: The
Board of Directors may decide to acquire or pledge on non-
restricted equity a maximum of 5,000,000 treasury shares.
The acquisition may take place as one or several blocks of
shares. The consideration payable for the shares shall not
be more than the ultimate market price. In purchasing the
Company’s own shares derivative, share lending and other
contracts customary in the capital market may be concluded
pursuant to law and the applicable legal provisions. The
authorisation entitles the Board of Directors to pass a
resolution to purchase the shares by making an exception
to the purchase of shares relative to the current holdings
of the shareholders. The treasury shares may be used for
making acquisitions or implementing other arrangements
as part of the incentive compensation plan, or for the
purpose of otherwise assigning or cancelling the shares.
The Board of Directors shall have the right to decide on all
other matters related to the purchase of the Company’s
and it annuls the authorisation given by the Annual General
3. Treasury shares, share
issues and cancellations
treasury shares.
The Annual General Meeting held on 2 April 2020
authorised the Board of Directors to acquire and assign
treasury shares. The authorisation applies to a maximum of
5,000,000 treasury shares. On the basis of the authorisation,
Elisa has not acquired any treasury shares.
treasury shares.
The treasury shares held by Elisa Corporation do not have
any substantial impact on the distribution of holdings and
votes in the Company. They represent 4.33 per cent of all
shares and votes.
4. Management interests
The aggregate number of shares held by Elisa’s Board of
shares and votes.
5. Share performance
The highest quotation of the year was EUR 58.88 and
Information is based on the share trades made on Nasdaq
Helsinki stock exchange.
of Elisa’s total number of shares was EUR 7,508.3 million.
6. Quotation and trading
The Elisa share is quoted on the Main List of the Nasdaq
Helsinki with the ticker ELISA. The aggregate volume of trading
6,257 million. The trading volume represented 73.0 per cent
SHARES AND SHAREHOLDERS
SHARES AND SHAREHOLDERS
THE REPORT OF THE
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SHARES AND
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116
ELISA FINANCIAL STATEMENTS 2020
7. Distribution of holding by shareholder groups at 31 December 2020
Number of
shares
Proportion of all
shares, %
1 Private companies 3,848,841 2.30
2 Financial and insurance institutions 4,500,208
3 Public corporations 30,681,075 18.34
4 Non-profit organisations 3.46
5 Households 38,378,252
6 Foreign 1,458,131 0.87
7 Nominee registered 75,426,776 45.08
Elisa Group, treasury shares 7,252,165 4.33
167,335,073 100.00
8. Distribution of holding by amount at 31 December 2020
Size of holding
Number of
shareholders %
Number of
shares %
1–100 24.41 1.21
131,456 17.18
4,240 2.36 10,107,710 6.04
217 0.12 5,445,501 3.25
28 0.02 7,452,523 4.45
7 0.00 18.37
Nominee registered 75,426,776 45.08
100.00
Elisa Common Clearing account
(1
142,877
Elisa Corporation, treasury shares 7,252,165 4.33
Issued amount 167,335,073 100.00
1)
Shares on the Common Clearing account include shares that had not been transferred to the share owners’ book-entry accounts at the time of, or subsequent to, entering the shares into the Finnish book-entry system.
THE REPORT OF THE
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ELISA FINANCIAL STATEMENTS 2020
9. Largest shareholders at 31 December 2020
Name Number of shares %
1 Solidium Oy 16,802,800 10.04
2 Ilmarinen Mutual Pension Insurance Company 4,784,118 2.86
3 Varma Mutual Pension Insurance Company
4 Elo Mutual Pension Insurance Company 2,114,065 1.26
5 Swiss National Bank 1,137,330 0.68
6 City of Helsinki 0.67
7 State Pension Fund 1,100,000 0.66
8 OP-Finland mutual fund 0.57
700,000 0.42
10 Åbo Akademi University Foundation sr 0.36
11 Nordea Pro Finland Fund 0.30
12 Nordea Abp 423,162 0.25
13 Sigrid Juselius Foundation 348,800 0.21
14 Samfundet Folkhälsan i Svenska Finland R F 315,263
15 Seligson & Co Equity Fund 0.18
16 Nordea Finnish Passive Fund 276,440 0.17
17 City of Vantaa 258,738 0.15
18 Fjarde Ap-Fonden 252,580 0.15
0.14
20 Seb Finlandia Optimized Low Carbon 0.14
36,138,747 21.60
Elisa Corporation, treasury shares 7,252,165 4.33
Elisa Personnel Fund 85,120 0.05
Elisa Common Clearing account
1)
142,877
Nominee registered
2)
75,426,776 45.08
Shareholders not specified above 28.86
167,335,073 100.00
1)
Shares in Common Clearing account include shares which have not been transferred to the share owners’ book-entry accounts at the time of, or subsequent to, entering the shares into the Finnish book-entry system.
2)
On 27 February 2017, BlackRock, Inc gave a notice in accordance with Chapter 9, Section 5 of the Finnish Securities Market Act, that the direct share ownership of Elisa Corporation shares owned by BlackRock, Inc. was 8,533,440 and by its funds 1,232,577
shares, totaling 9,766,017 shares, which was 5.84 per cent of Elisa Corporation’s entire stock.
THE REPORT OF THE
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ELISA FINANCIAL STATEMENTS 2020
Share trading volumes are based on the trades made on Nasdaq Helsinki.
Elisa share is also traded in alternative marketplaces.
11. Trading volume
Shares per month (million)
10. Daily price development
Closing price in EUR
1)
Rebalanced to Elisa share.
30
40
50
60
1/2020
2/2020
3/2020
4/2020
5/2020
6/2020
7/2020
8/2020
9/2020
10/2020
11/2020
12/2020
Elisa
OMX Helsinki 25 -indeksi
(1
Kurssikehitys päivittäin
Päätöskurssi, euroa
1)
Suhteutettuna Elisan osakekurssiin
0
5
10
15
20
1/2020
2/2020
3/2020
4/2020
5/2020
6/2020
7/2020
8/2020
9/2020
10/2020
11/2020
12/2020
Osakevaihto
milj. kpl/kk
7,6
8,6
19,7
12,1
10,3
12,0
9,1
5,7
8,4
10,1
8,5
10,3
THE REPORT OF THE
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119
ELISA FINANCIAL STATEMENTS 2020
SIGNATURES TO THE BOARD OF DIRECTORS’ REPORT AND FINANCIAL STATEMENTS
Anssi Vanjoki Clarisse Berggårdh Kim Ignatius
Chairman of the Board of Directors
Topi Manner Eva-Lotta Sjöstedt Seija Turunen
Antti Vasara Veli-Matti Mattila
President and CEO
According to the consolidated balance sheet of
BOARD’S PROPOSAL FOR PROFIT DISTRIBUTION
The Board of Directors proposes to the General Meeting
of Shareholders that the distributable funds be used as
follows:
•
• no dividend shall be paid on shares in the parent
company’s possession
• EUR 273,404,045.73 shall be retained in shareholders’
equity.
BOARD’S PROPOSAL FOR THE PROFITS DISRIBUTION
SIGNATURES
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ELISA FINANCIAL STATEMENTS 2020
To the Annual General Meeting
of Elisa Corporation
Report on the Audit of the
Financial Statements
Opinion
comprise the consolidated balance sheet, income
statement, statement of comprehensive income,
policies, as well as the parent company’s balance sheet,
In our opinion
•
International Financial Reporting Standards (IFRS) as
adopted by the EU
•
position in accordance with the laws and regulations
Finland and comply with statutory requirements.
Our opinion is consistent with the additional report
submitted to the Audit Committee.
Basis for Opinion
We conducted our audit in accordance with good auditing
practice in Finland. Our responsibilities under good
auditing practice are further described in the Auditor’s
Responsibilities for the Audit of the Financial Statements
section of our report.
We are independent of the parent company and of
the group companies in accordance with the ethical
requirements that are applicable in Finland and are
ethical responsibilities in accordance with these
requirements.
In our best knowledge and understanding, the non-audit
services that we have provided to the parent company
and group companies are in compliance with laws and
regulations applicable in Finland regarding these services,
and we have not provided any prohibited non-audit
have been disclosed in note 2.5 to the consolidated
We believe that the audit evidence we have obtained
opinion.
Materiality
of materiality. The materiality is determined based on
our professional judgement and is used to determine
the nature, timing and extent of our audit procedures
materiality we set is based on our assessment of the
magnitude of misstatements that, individually or in
aggregate, could reasonably be expected to have
misstatements and/or possible misstatements that in our
opinion are material for qualitative reasons for the users
AUDITOR’S REPORT
AUDITOR’S REPORT
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ELISA FINANCIAL STATEMENTS 2020
Key Audit Matters
We have also addressed the risk of management override of internal controls. This includes consideration of whether there was evidence of management bias that represented a risk of
material misstatement due to fraud.
THE KEY AUDIT MATTER HOW THE MATTER WAS ADDRESSED IN THE AUDIT
Valuation of goodwill, € 1 131.4 million
(Consolidated accounting principles 1.2 and note 5.4)
•
to the acquisitions carried out in the previous years. As regard to the amount, the goodwill
balance is comparable to the consolidated equity.
• Goodwill is tested for impairment annually and the company prepares impairment
sensitivity analyses.
•
discount rates.
• Due to management judgments about the estimates used in the impairment tests, as well
audit matter.
• We assessed critically those management judgments and the assumptions made, which
compared previous years’ estimates to the actual amounts to be able to evaluate the
reliability of the estimating methods applied.
•
discount rate used and the technical correctness of the calculations, as well as comparing
• In addition, we assessed the adequacy of the sensitivity analyses and the appropriate
statements.
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ELISA FINANCIAL STATEMENTS 2020
Revenue recognition, € 1 894.6 million
(Consolidated accounting principles 1.2 and note 2.3)
• Revenues are recognized once the service has been rendered to the customer or once
transferred to the buyer.
• The IT system environment related to billing transactions is complex and the volume
marked by price and contract changes in the short run.
• Due to large volumes of data, revenue recognition involves the risk of revenue being
recognized in an incorrect period as well as the risk that all transactions are not recorded
as complete.
• Revenue recognition accrual is partially based on estimates from the management’s past
experience.
• We evaluated the sales-related IT control environment and the key controls in the billing
process over the completeness and accuracy of revenue.
• The majority of the company’s billing data is processed in a single IT system. We evaluated
the reliability of the associated IT control environment by assessing, among others, the
processes related to the user authorization management and back-up and recoveries, as
well as by testing the key application controls over the billing process.
• We also evaluated the company’s internal control procedures over the control
environment in the billing process, as well as assessed the company’s monthly revenue
monitoring procedures at business unit level.
• In addition to control testing, we performed substantive procedures to sales accruals to
assess the completeness and the accuracy of the recognized revenues.
Capital expenditures
(Consolidated accounting principles 1.2 and note 5)
• The company invests heavily especially in its own telecommunication network and IT
environments as well as new technology to remain competitive.
• The company’s capital expenditures (investments) amount to € 266 million in 2020, and
• We observed the company’s investment budget for the year 2020 and followed up
developments quarterly.
• We evaluated the company’s internal control environment. We also tested the controls
over the approval of investment projects; over the authorization process when placing
individual orders under an investment project; over the associated approval process when
approving purchase invoices; and over recording transactions in the asset register (for
property, plant and equipment and intangible assets).
• Our substantive procedures focused on assessing the appropriateness of the accounting
whether the assets under construction met the capitalization requirements and assessed
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ELISA FINANCIAL STATEMENTS 2020
Responsibilities of the Board of
Directors and the Managing Director
for the Financial Statements
The Board of Directors and the Managing Director are
statements that give a true and fair view in accordance
with International Financial Reporting Standards (IFRS)
give a true and fair view in accordance with the laws
statements in Finland and comply with statutory
requirements. The Board of Directors and the Managing
Director are also responsible for such internal control as
they determine is necessary to enable the preparation
misstatement, whether due to fraud or error.
Directors and the Managing Director are responsible for
assessing the parent company’s and the group’s ability
to continue as going concern, disclosing, as applicable,
matters relating to going concern and using the going
prepared using the going concern basis of accounting
unless there is an intention to liquidate the parent
company or the group or cease operations, or there is no
realistic alternative but to do so.
Auditor’s Responsibilities for the
Audit of Financial Statements
Our objectives are to obtain reasonable assurance on
material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance
with good auditing practice will always detect a material
misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually
or in aggregate, they could reasonably be expected to
As part of an audit in accordance with good auditing
practice, we exercise professional judgment and maintain
professional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of
design and perform audit procedures responsive to
and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of
internal control.
• Obtain an understanding of internal control relevant
to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the
of the parent company’s or the group’s internal control.
• Evaluate the appropriateness of accounting policies
used and the reasonableness of accounting estimates
and related disclosures made by management.
• Conclude on the appropriateness of the Board of
Directors’ and the Managing Director’s use of the going
concern basis of accounting and based on the audit
evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast
ability to continue as a going concern. If we conclude
that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related
disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained
up to the date of our auditor’s report. However, future
events or conditions may cause the parent company or
the group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content
statements give a true and fair view.
•
activities within the group to express an opinion on the
for the direction, supervision and performance of the
group audit. We remain solely responsible for our audit
opinion.
We communicate with those charged with governance
regarding, among other matters, the planned scope and
identify during our audit.
We also provide those charged with governance with a
statement that we have complied with relevant ethical
requirements regarding independence, and communicate
with them all relationships and other matters that may
reasonably be thought to bear on our independence, and
where applicable, related safeguards.
From the matters communicated with those charged with
governance, we determine those matters that were of
of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report
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AUDITOR’S REPORT
BOARD’S PROPOSAL FOR
PROFIT DISTRIBUTION
124
ELISA FINANCIAL STATEMENTS 2020
unless law or regulation precludes public disclosure about
the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in
our report because the adverse consequences of doing
so would reasonably be expected to outweigh the public
Other Reporting Requirements
Information on our audit engagement
represents a total period of uninterrupted engagement
Other Information
The Board of Directors and the Managing Director
are responsible for the other information. The other
information comprises the report of the Board of Directors
and the information included in the Annual Report, but
report thereon. We have obtained the report of the Board
of Directors prior to the date of this auditor’s report, and
the Annual Report is expected to be made available to us
does not cover the other information.
our responsibility is to read the other information
other information is materially inconsistent with the
audit, or otherwise appears to be materially misstated.
With respect to the report of the Board of Directors,
our responsibility also includes considering whether the
report of the Board of Directors has been prepared in
accordance with the applicable laws and regulations.
In our opinion, the information in the report of the
Board of Directors is consistent with the information
of Directors has been prepared in accordance with the
applicable laws and regulations.
If, based on the work we have performed on the other
information that we obtained prior to the date of this
auditor’s report, we conclude that there is a material
misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.
Toni Aaltonen
THE REPORT OF THE
BOARD OF DIRECTORS
SHARES AND
SHAREHOLDERS
CONSOLIDATED
FINANCIAL STATEMENTS
PARENT COMPANY
FINANCIAL STATEMENTS
AUDITOR’S REPORT
BOARD’S PROPOSAL FOR
PROFIT DISTRIBUTION
125
ELISA FINANCIAL STATEMENTS 2020
To the Board of Directors for Elisa Oyj
We have undertaken a reasonable assurance
engagement on the iXBRLmarking up of the
in accordance with the requirements of Article 4 of EU
The Responsibility of the Board of
Directors and Managing Director
The Board of Directors and Managing Director are
responsible for preparing the report of the Board
statements) that comply with the requirements of ESEF
RTS. This responsibility includes:
•
format in accordance with Article 3 of the ESEF RTS
•
in accordance with Article 4 of the ESEF RTS; and
•
The Board of Directors and the Managing Director are
also responsible for such internal control as they deem
accordance with the requirements of the ESEF RTS.
Auditor’s Independence and Quality Control
We are independent of the company in accordance with
the ethical requirements applicable in Finland, which apply
to the engagement we have performed, and we have
these requirements.
The auditor applies International Standard on Quality
system of quality control including documented policies
and procedures regarding compliance with ethical
requirements, professional standards and applicable legal
and regulatory requirements.
Auditor’s Responsibility
In accordance with the Engagement Letter our
responsibility is to express an opinion on whether the
material respects with the Article 4 of the ESEF RTS. We
conducted our reasonable assurance engagement in
accordance with International Standard on Assurance
Engagements 3000.
The engagement involves procedures to obtain evidence
whether;
•
marked up with iXBRL tags in accordance with Article 4
of the ESEF RTS, and;
•
statements are consistent with each other.
The nature, timing and the extent of procedures selected
depend on practitioner’s judgement. This includes the
assessment of the risks of material departures from the
requirements set out in the ESEF RTS, whether due to
fraud or error.
and appropriate to provide a basis for our opinion.
Opinion
up, in all material respects, in compliance with the ESEF
Regulatory Technical Standard.
2020 is set out in our Auditor’s Report. In this report, we
do not express an audit opinion, review conclusion or any
statements.
Toni Aaltonen
INDEPENDENT AUDITOR’S REASONABLE ASSURANCE REPORT
ON ELISA OYJ’S ESEF FINANCIAL STATEMENTS
This document is an English translation of the Finnish Independent Auditor’s Reasonable Assurance report. Only the Finnish version of the report is legally binding.
INDEPENDENT AUDITOR’S REASONABLE ASSURANCE REPORT ON ELISA OYJ’S ESEF FI-
NANCIAL STATEMENTS
THE REPORT OF THE
BOARD OF DIRECTORS
SHARES AND
SHAREHOLDERS
CONSOLIDATED
FINANCIAL STATEMENTS
PARENT COMPANY
FINANCIAL STATEMENTS
AUDITOR’S REPORT
BOARD’S PROPOSAL FOR
PROFIT DISTRIBUTION
