2009-02-13 07:30:00 CET
2009-02-13 07:39:14 CET
REGULATED INFORMATION
Elisa - Financial Statement Release
ELISA'S FINANCIAL STATEMENTS 2008
Year 2008
Revenue was EUR 1,485 million (1,568)
EBITDA exclusive of non-recurring items was EUR 478 million (491)
and EBIT EUR 271 million (294). EBITDA margin increased to 32 per
cent (31)
Profit before tax amounted to EUR 228 million (285)
Earnings per share was EUR 1.12 (1.38)
Cash flow after investments increased to EUR 260 million (114)
Financial position and liquidity are good. Cash and undrawn committed
credit lines totalled EUR 258 million and there are no major
refinancing needs expected before the year 2011.
Net debt / EBITDA was 1.7 (1.5) and gearing 93 per cent (71)
The Board of Directors proposes a dividend of EUR 0.60 per share
Fourth quarter 2008
Revenue was EUR 372 million (402)
EBITDA exclusive of non-recurring items was EUR 129 million (128) and
EBIT EUR 77 million (76). EBITDA margin improved to 35 per cent (31)
Profit before tax amounted to EUR 70 million (65)
Earnings per share were EUR 0.34 (0.32)
Cash flow after investments increased to EUR 84 million (53)
ARPU in the mobile business was at the previous quarter's level EUR
26.3 (Q3: 26.4)
Churn decreased to 12.0 per cent from the previous quarter (Q3: 14.1)
The number of Elisa's mobile subscriptions increased by 49,600 during
the quarter, due in particular to the new 3G customers and mobile
broadband subscriptions
The number of fixed broadband subscriptions decreased by 18,300 on
the previous quarter partly due to divestment of subscriptions
Key indicators:
EUR million 10-12/2008 10-12/2007 1-12/2008 1-12/2007
Revenue 372 402 1,485 1,568
EBITDA 129 126 472 499
EBITDA excluding 129 128 478 491
non-recurring items
EBIT 77 74 264 302
Profit before tax 70 65 228 285
Earnings per share, EUR 0.34 0.32 1.12 1.38
Capital expenditures 64 69 184 206
Financial position and cash flow:
EUR million 31.12.2008 31.12.2007
Net debt 812 738
Net debt / EBITDA 1) 1.7 1.5
Gearing ratio, % 92.8 71.3
Equity ratio, % 43.3 47.9
+-------------------------------------------------------------------+
| EUR million | 10-12/2008 | 10-12/2007 | 1-12/2008 | 1-12/2007 |
|-----------------+------------+------------+-----------+-----------|
| Cash flow after | | | | |
| investments | 84 | 53 | 260 | 114 |
+-------------------------------------------------------------------+
1) (interest-bearing debt - financial assets) / (4 previous quarters'
EBITDA exclusive of non-recurring items)
The Board of Directors proposes to the General Meeting an ordinary
dividend of EUR 0.60 per share. The Board of Directors proposes also
that the Board of Directors be authorised to acquire 15 million
treasury shares, which corresponds to 9 per cent of the entire share
capital. Furthermore, The Board of Directors also decided to propose
to the General Meeting that the Board of Directors be authorised to
distribute funds out of the retained earnings account or the reserve
for invested non-restricted equity to a maximum of EUR 150 million.
CEO Veli-Matti Mattila:"Improved profitability in latter half of year, over 220,000 new
mobile customers in 2008
Strengthened competitiveness in the latter half of the year
translated into good financial performance at Elisa in 2008. Cash
flow was strong although revenue decreased slightly from the previous
year, mainly as a result of lower interconnection and roaming fees,
as well as terminal sales. Elisa's financial position and liquidity
remain good.
Elisa continues to enjoy excellent success in the highly competitive
mobile communication market. Our mobile subscription base increased
by nearly 8 per cent or by over 220,000 new subscriptions, thus
further solidifying our position as the 3G market leader. Our
popularity was further boosted by the market launch of new services
such as the mini laptop. A focus on the profitability of the
broadband business contributed to the decline in the number of fixed
broadband subscriptions.
Our market position in the Corporate Customer sector also grew
stronger. Collaboration solutions are enhancing the productivity and
flexibility of operations for an increasing number of our customers.
Elisa completed several acquisitions to bolster the implementation of
the strategy in the Corporate Customer sector.
In 2008, substantial investment was made in building the 3G network
which enables mobile broadband. At the end of the year, Elisa's 3G
network extended to more than 250 locations and covered over 80 per
cent of Finland's population. An independent survey rated Elisa's 3G
network as having the best coverage in Finland.
Other factors contributing to the material improvement in
competitiveness have been the development of an attractive product
selection and determined measures to streamline operations. The new
customer care and billing system gave rise to additional expenditure
in the first half of the year but functioned well in the latter half.
Our strategy to develop One Elisa, improve our profitability and
provide new services has proven successful. Our strong financial
position and cash flow provide an excellent framework for further
determined implementation of our chosen strategy. The prevailing
general economic uncertainty decreases the predictability of the
business environment, and our industry is not immune to the negative
development of the economy. Nonetheless, we have every confidence
that our business will continue to develop favourably over the next
few years."
ELISA
Vesa Sahivirta
Director, IR and Financial Communications
tel. +35850 520 5555
Additional information:
Mr Veli-Matti Mattila, CEO, tel. +358 10 262 2635
Mr Jari Kinnunen, CFO, tel. +358 10 262 9510
Mr Vesa Sahivirta, Director, IR and Financial Communications, tel.
+358 10 262 3036
Distribution:
Helsinki Stock Exchange
Principal media
www.elisa.com
Financial report 2008
The financial report has been prepared in accordance with the IFRS
recognition and measurement principles but not all of the IAS 34
requirements have been observed.
Market situation
The base of mobile communications subscriptions and the use of data
services have evolved favourably in Finland with 3G subscriptions
comprising a significant proportion of new subscriptions. The use of
services made available through 3G subscriptions has also increased.
Another factor contributing to the growth has been the use of
multiple terminal devices for different purposes, mobile broadband
services and prepaid subscriptions. Churn has been at a normal level
in relation to the market situation, and competition has been mainly
in services and campaigning.
In the fixed network business the number and usage of traditional
subscriptions decreased at a slower pace than in the previous year.
The fixed broadband market is declining slightly, while the
subscription growth is now in mobile broadband.
Revenue, earnings and financial position
EUR million 2008 2007 2006
Revenue 1,485 1,568 1,518
EBITDA 472 499 434
EBITDA-% 31.8 31.8 28.6
EBITDA excluding non-recurring items 478 491 445
EBITDA-% excluding non-recurring items 32.2 31.3 29.3
EBIT 264 302 225
EBIT-% 17.8 19.3 14.8
Return on equity, % 18.5 18.8 12.1
Equity ratio, % 43.3 47.9 63.1
Revenue by segments:
EUR million 2008 2007 2006
Mobile communications 919 980 930
Fixed network 615 642 665
Inter-segment sales -49 -54 -77
Total 1,485 1,568 1,518
Elisa's revenue decreased by 5 per cent in 2008. Reasons contributing
to the reduction included lower mobile interconnection fees both in
Finland and Estonia, as well as declined equipment sales and
decreases in the number of traditional fixed network subscriptions
and the volume of traffic.
Earnings by segment:
+-----------------------------------------------------------+
| EUR million | 2008 | 2007 | 2006 |
|--------------------------------------+------+------+------|
| Mobile communications | | | |
| EBITDA | 266 | 299 | 259 |
| EBITDA-% | 29.0 | 30.5 | 27.9 |
| EBITDA excl. non-recurring items | 269 | 300 | 263 |
| EBITDA-%, excl. non-recurring items | 29.3 | 30.7 | 28.3 |
| EBIT | 151 | 195 | 162 |
|--------------------------------------+------+------+------|
| Fixed network | | | |
| EBITDA | 209 | 206 | 181 |
| EBITDA-% | 33.9 | 32.1 | 27.2 |
| EBITDA excl. non-recurring items | 212 | 197 | 187 |
| EBITDA-%, excl. non-recurring items | 34.5 | 30.7 | 28.1 |
| EBIT | 117 | 113 | 71 |
|--------------------------------------+------+------+------|
| Corporate functions | | | |
| EBITDA | -3 | -6 | -6 |
| EBIT | -4 | -6 | -7 |
|--------------------------------------+------+------+------|
| Total | | | |
| EBITDA | 472 | 499 | 434 |
| EBITDA-% | 31.8 | 31.8 | 28.6 |
| EBITDA excl. non-recurring items * | 478 | 491 | 445 |
| EBITDA-%, excl. non-recurring items | 32.2 | 31.3 | 29.3 |
| EBIT | 264 | 302 | 225 |
+-----------------------------------------------------------+
* 2008: Restructuring costs EUR -7 million. 2007: Capital gains on
real estate EUR 11 million and restructuring costs EUR -3 million.
2006: Restructuring costs EUR -10 million.
EBITDA excluding non-recurring items decreased slightly, but the
EBITDA margin improved. The EBITDA margin improvement was
attributable to factors such as new services in the mobile
communication business, as well as efficiency measures. Also the
decreased mobile interconnect revenue and costs improved
profitability. The improved profitability of the fixed network
business was affected by changes in broadband subscription prices,
withdrawing the broadband offering from some less profitable
geographical areas and improved cost efficiency.
Financial income and expenses totalled EUR -37 million (-17).
Financial income and expenses in 2007 include a EUR 13 million gain
on the sale of Comptel shares. The increase on the previous year was
mainly attributable to increased net debt. Income taxes in the income
statement amounted to EUR -51 million (-65).
Elisa's January-December earnings after taxes were EUR 177 million
(220). The Group's earnings per share (EPS) amounted to EUR 1.12
(1.38). At the end of 2008, the Group's equity per share was EUR 5.61
(6.53).
Financial position:
EUR million 31.12.2008 31.12.2007 31.12.2006
Net debt 812 738 377
Net debt / EBITDA 1) 1.7 1.5 0.9
Gearing ratio, % 92.8 71.3 28.7
Equity ratio, % 43.3 47.9 63.1
EUR million 2008 2007 2006
Cash flow after investments 260 114 118
1) (interest-bearing debt - financial assets) / (4 previous quarters'
EBITDA exclusive of non-recurring items)
The financial position and liquidity remained good. Cash and undrawn
committed credit lines totalled EUR 258 million at the end of the
year and there are no major refinancing needs expected before the
year 2011.
Elisa's net debt increased from EUR 738 million to EUR 812 million
mainly due to the capital repayment of EUR 285 million in March 2008.
Cash flow after investments increased clearly on the previous year to
EUR 260 million (114) mainly due to the change in net working
capital.
Changes in corporate structure
At the end of February, Elisa acquired 51 per cent of Kuntokompassi
Oy. This acquisition had no material impact on Elisa's profit or
balance sheet. The new name for the company is Excenta Oy.
In June, Elisa acquired 100 per cent of Electur Oy. Electur's core
business consists of identity management, one-off registration and
entry management. Elisa will develop new solutions for its corporate
customers' e-businesses by combining Electur's products and Elisa's
ICT-services.
At the end of October, Elisa acquired the business operations of
Dialmedia Oy and merged it to Elisa's fully owned subsidiary Lounet
Call Center Oy and also acquired 100 per cent of Doneto Oy. Both
companies businesses comprise contact centre services.
In November, Elisa acquired 100 per cent of Telenor Finland Oy from
Telenor Sverige Ab. Telenor Finland Oy takes care of Telenor Group's
customer service in the Nordic Countries. The new name for the
company is Elisa Links Oy.
Mobile communication business
+---------------------------------------------------------+
| Number of subscriptions | 31.12.2008 | 31.12.2007 |
|-------------------------------+------------+------------|
| Total number of subscriptions | 2,879,600 | 2,657,400 |
|-------------------------------+------------+------------|
| - Subscriptions in Finland | 2,541,900 | 2,334,600 |
|-------------------------------+------------+------------|
| - Subscriptions in Estonia | 337,700 | 322,800 |
+---------------------------------------------------------+
+------------------------------------------------------------------------------+
|User-specific indicators 1) | 10-12/2008| 10-12/2007| 1-12/2008| 1-12/2007|
|----------------------------+------------+------------+-----------+-----------|
|Average revenue/ | | | | |
|subscription, | | | | |
|€/month | 26.3| 30.1| 26.4| 30.0|
|----------------------------+------------+------------+-----------+-----------|
|Annualised churn, % | 12.0| 12.6| 13.3| 12.2|
|----------------------------+------------+------------+-----------+-----------|
|Outgoing calls, | | | | |
|min/subscription/month | 213| 217| 218| 218|
|----------------------------+------------+------------+-----------+-----------|
|SMS, | | | | |
|message/subscription/month | 56| 57| 56| 53|
|----------------------------+------------+------------+-----------+-----------|
|Non-voice services/ | | | | |
|revenue, % | 20| 19| 20| 19|
+------------------------------------------------------------------------------+
+-------------------------------------------------------------------+
| Indicators on | | | | |
| network usage2) | 10-12/2008 | 10-12/2007 | 1-12/2008 | 1-12/2007 |
|-----------------+------------+------------+-----------+-----------|
| Outgoing calls, | | | | |
| million minutes | 1,527 | 1,447 | 6,031 | 5,661 |
|-----------------+------------+------------+-----------+-----------|
| SMS, | | | | |
| million | | | | |
| messages | 434 | 407 | 1,615 | 1,550 |
+-------------------------------------------------------------------+
1) Elisa's service operators in Finland (excluding
prepaid subscriptions)
2) Elisa's network operator in Finland
Elisa's network operator in Finland increased the number of its
subscriptions by some 207,400 in 2008. The increase was markedly due
to the success of 3G service bundles, mobile broadband and prepaid
subscriptions. The number of subscriptions at the end of the year was
approximately 2,541,900. The fourth-quarter increase in Finland was
approximately 54,200 subscriptions. In Estonia the number of
subscriptions increased by 14,900 in 2008, but in the fourth quarter
they decreased by 4,600.
In 2008, the call minutes per subscription of Elisa's own service
operators were at the same level and the number of SMS messages
increased by approximately 6 per cent on the previous year. Due to
the increase in the number of subscriptions of Elisa's service
operators, the total call minutes in the network grew by 7 per cent
and the number of SMS messages 4 per cent.
Mobile communication revenues decreased by 6 per cent mainly due to
reduced interconnection fees both in Finland and Estonia, and
equipment sales. Revenue per subscription declined by 12 per cent on
the previous year due to lower interconnection fees as of the
beginning of the year and lower roaming fees as of September 2007.
Also the increase in mobile broadband subscriptions negatively
affected revenue per subscription.
In May 2008, Elisa decreased the mobile data roaming fee by
approximately 30-50 per cent. The fee reduction concerns internet,
MMS and WAP connections.
Elisa and other Finnish mobile operators have agreed on new
interconnection fees for 1 January 2009 - 30 November 2009. This is
based on an agreement made by the mobile operators on 19 February
2007. According to the agreement, operator interconnection fees will
be gradually equalised during 2007-2009, with the fees being equal
effective 1 December 2009.
From 1 January 2009 - 30 November 2009, Elisa's interconnection fee
for the mobile network will be 4.9 cents per minute, in 2008 the fee
was 5.1 cents per minute. The equal interconnection price enforced by
the operators as of 1 December 2009 will be agreed separately later.
At the end of 2008, Elisa's 3G services covered approximately over 80
per cent of the Finnish population in more than 250 municipalities.
UMTS900 technology allows more cost efficient construction of a 3G
network in rural areas. This will bring 3G services to all of Finland
within a few years. The speed of Elisa's 3G network increased during
2008 and most of the network uses maximum transmission speed of 5
Mb/sec. Mobile broadband will enable remote working almost everywhere
in Finland.
Revenue of the mobile communication business in Elisa's Estonian
subsidiary has been negatively affected by lower interconnection
prices, which were cut in November 2007 and July 2008. These changes
did not have any material impact on the result since the
interconnection costs declined respectively. Revenue decreased to EUR
98.5 million (113.1), EBITDA increased to EUR 36.7 million (36.2) and
EBIT to EUR 25.8 million (25.2). The number of subscriptions stood at
337,700 (322,800) at the end of 2008.
Fixed network business
Number of subscriptions 31.12.2008 31.12.2007
Broadband subscriptions 501,500 521,800
ISDN channels 54,400 70,800
Cable TV subscriptions 244,200 237,100
Analogue and other subscriptions 447,700 471,500
Total number of subscriptions 1,247,800 1,301,300
Elisa's fixed broadband subscriptions decreased throughout 2008,
representing a decline of approximately 20,300 subscriptions or 4 per
cent on the previous year. This was mainly due to withdrawing the
broadband offering from some less profitable geographical areas and
divestment of fixed broadband subscriptions outside of the own
network area. Elisa sold 6,500 broadband subscriptions in the Vaasa
area to Anvia.
The number of traditional subscriptions continued to decrease as
voice calls shifted to the mobile network and data transfers to
broadband subscriptions.
On 1 February 2008, wholesale prices levied by telecommunications
operators on each other declined by approximately one-third of the
previous level.
Elisa launched a full triple-play service called Kotitotaali, under
the Saunalahti brand, which offers customers high-speed broadband,
television and fixed line telephony services with one single monthly
fee.
Cisco granted Elisa the "Service Provider Partner of the Year" prize.
Elisa is one of Cisco's biggest partners in Finland and together are
devoted to the development of innovative communication solutions.
Personnel
Elisa employed 2,946 people on average in 2008 (2007 average 3,299
people and 2006 average 4,086 people). Employee benefit expenses in
2008 totalled EUR 162 million (2007 EUR 181 million, 2006 EUR 214
million). At the end of 2008 the number of personnel was 3,017
(3,015).
Personnel by segments:
31.12.2008 31.12.2007
Mobile communications 1,271 1,252
Fixed network 1,710 1,727
Corporate functions 36 36
Total 3,017 3,015
As of 1 June 2008, Elisa outsourced a part of the planning and
documentation of Elisa's fixed network and material delivery to
Eltel, Empower and Relacom. This arrangement affected 47 employees.
In December, Elisa's Board of Directors resolved a new share-based
incentive plan for the Elisa group key personnel. The aim of the plan
is to combine the objectives of the shareholders and the key
personnel in order to increase the value of the company, to gain key
personnel commitment, and offer them a competitive reward plan based
on Elisa shareholdings.
The Plan is directed to approximately 50 people. The rewards to be
paid on the basis of the plan will correspond to the value of a
maximum total of 2.2 million Elisa shares (including a maximum 1.1
million shares and a portion to be paid in cash).
As part of the incentive programs, Elisa also has a share option
program. Approximately 500,000 series 2007A stock options were
distributed to 150 key personnel, who do not belong to the
share-based incentive plan.
Elisa has a personnel fund for all Elisa employees, except for those
who belong to some other incentive programs. Based on the 2008 result
no contribution was made to the personnel fund.
Investments
EUR million 10-12/2008 10-12/2007 1-12/2008 1-12/2007
Capital expenditures, 64 69 184 206
of which
- mobile communication
business 38 28 103 91
- GSM leasing liability
buy-backs 2 2 2
- fixed network business 26 38 79 113
Shares 2 1 15 12
- of which achieved
through an
exchange of shares 5
Total 66 70 199 218
The primary investment targets were the expansion of the 3G network
and increases in the speed and capacity of the fixed broadband
network.
Financing arrangements and ratings
Valid financing arrangements:
EUR million Maximum amount In use on 31.12.2008
Committed credit limits 300 75
Commercial paper program ¹) 250 55.6
EMTN program ²) 1,000 636
1) The program is not committed
2) European Medium Term Note program, not committed
Long-term credit ratings:
Credit rating agency Rating Outlook
Moody's Investor Services Baa2 Stable
Standard & Poor's BBB Stable
Share
Trading of shares 10-12/2008 10-12/2007 1-12/2008 1-12/2007
Shares traded, millions 76.1 73.0 338.8 316.0
Volume, EUR million 881.4 1,536.2 5,041.1 6,737.0
% of shares 45.8 43.9 217.7 199.7
Shares and market values 31.12.2008 31.12.2007
Total number of shares 166,307,586 166,307,586
Treasury shares 10,688,629 8,049,976
Outstanding shares 155,618,957 158,257,610
Closing price, EUR 12.30 21.00
Market capitalisation, EUR million 1.914 3,323
Treasury shares, % 6.43 4.8
At the end of the year, Elisa's total number of shares was
166,307,586 (166,307,568), all within one share series. The closing
price was EUR 12.30 (21.00), representing a decrease of 41.4 per
cent. The market value of Elisa's outstanding shares at the end of
the year was EUR 1,914 million (3,323).
In accordance with the share based incentive program terms, Elisa
transferred 361,347 own shares to persons involved in the 2006
incentive program on 2 May 2008.
In August 2008, Elisa received a notification pursuant to Chapter 2,
Section 9 of the Securities Markets Act from DNA Oy, Lännen Puhelin
Oy, Oulun Puhelin Holding Oyj, Kuopion Puhelin Sijoitus Oy and PHP
Liiketoiminta Oyj. According to the notification, the parties jointly
held more than one-twentieth (5 per cent) of Elisa's shares and
votes. The companies may use their voting rights in mutual
understanding.
In October 2008, Elisa received the following three notices: 1. Varma
Mutual Pension Insurance Company hold more than 10 per cent of
Elisa's shares and votes. 2. Novator Finland Oy's shareholding in
Elisa has decreased below one-twentieth (5%) to zero (0%). 3. Varma
Mutual Pension Insurance Company hold more than 15 per cent of
Elisa's shares and votes.
In December 2008, Elisa received two notifications according to which
Varma Mutual Pension Insurance Company sold 16,000,000 Elisa's shares
to the Finnish State and their holding in Elisa deceased below 10 per
cent of Elisa's shares and votes, and the ownership of the State was
9.62 per cent of Elisa's shares and voting rights.
Based on the decision of the Board of Directors on 18 December 2007,
approximately 500,000 series 2007A stock options were distributed to
the key personnel in Elisa group. The strike price for series 2007A
options is EUR 19.04.
The distribution of shareholdings by type of shareholder and size of
holding, as well as major shareholders, are presented in section"Shares and shareholders" within the financial statements.
Elisa shareholders with more than Per cent of the shares and
5 per cent holding votes
The Finnish State 9.62
Elisa 6.43
Varma Mutual Pension Insurance Company 6.10
Research and development
The Group invested EUR 11 million, of which EUR 2.5 million has been
capitalised, in research and development in 2008 (EUR 8 million in
2007 and EUR 6 million in 2006), corresponding to 0.7 per cent of
revenue (0.5 per cent in 2007 and 0.4 per cent in 2006). Due to
changes in the corporate structure, the figures are not fully
comparable with previous years.
Elisa's Annual General Meeting of shareholders
On 18 March 2008, and in accordance with the proposal of the Board of
Directors, Elisa's Annual General Meeting decided on the capital
repayment to shareholders in the amount of EUR 1.80 per share on the
basis of the 31 December 2007 balance sheet approved by the General
Meeting.
The Annual General Meeting confirmed the financial statements for the
period in question. The members of the Board of Directors and the CEO
were discharged from liability for 2007.
The number of the members of the Board of Directors was confirmed at
six (6), and members Risto Siilasmaa and Ossi Virolainen were
re-elected to the Board of Directors and Mr Tomas Otto Hansson
(Director, Novator), Mr Orri Hauksson (Director, Novator Finland), Mr
Pertti Korhonen (CEO Elektrobit Corporation) and Ms Eira
Palin-Lehtinen (prev. Director in Nordea Bank) were elected as new
members.
KPMG Oy Ab, authorised public accountants, with APA Pekka Pajamo as
the responsible auditor, was appointed the company's auditor.
The Board of Directors' authorisations
The Annual General Meeting accepted the proposal to authorise the
Board of Directors to decide on the distribution of funds out of
distributable equity up to a maximum of EUR 250,000,000. The
authorization is valid until the commencement of the next Annual
General Meeting.
The Annual General Meeting approved the proposal of the Board of
Directors to authorise the Board of Directors to issue shares and
special rights. The authorisation is valid until 31 March 2010. A
maximum aggregate of 50.0 million of the company's shares can be
issued under the authorization. A total of 361,347 shares were
issued on 2 May 2008.
The Annual General Meeting decided on the authorisation to acquire
treasury shares. The amount of shares that may be purchased under the
authorisation is maximum 15,000,000 treasury shares. The
authorisation is valid until August 31, 2009.
The share repurchases announced by Elisa on 1st August 2008 was
completed on 16 September 2008. Elisa purchased 3,000,000 of its own
shares on the Helsinki Stock Exchange during 8.8 - 16.9.2008. The
average price per share was EUR 14.43 and the total purchase price
approximately EUR 43 million. Elisa now holds 10,688,629 treasury
shares following these purchases.
Elisa's Extraordinary General Meeting of shareholders
on 21 January 2008
Elisa's Extraordinary General Meeting was concluded on 22 November
2007 at the request of Novator Finland Oy and held on 21 January
2008. The General Meeting turned down Novator's proposal of releasing
the members of Elisa's Board of Directors from office.
Significant legal issues
TeliaSonera's claim for refund of benefit by unjust enrichment due to
price difference based on TeliaSonera's own miscoding of the traffic
worth approximately EUR 4 million will be settled in arbitration.
Elisa has disputed TeliaSonera's claim in its entirety.
The disputes relating to the implementation and maintenance of
Elisa's billing and CRM system between Elisa and IBM is in
Arbitration.
On 31 October 2007, the Helsinki District Court rendered its verdict
concerning the stock exchange disclosures of Jippii Group Oyj in 2001
in which no corporate fine or forfeiture was imposed on the company.
The prosecutor has appealed against the decision and claims for
corporate fine of EUR 800,000 and forfeiture of 215,000.
The Estonian Communications Authority has in 2007 issued a decision
on the level of interconnection fees. Elisa has appealed against the
decision and the proceedings are still pending. Elion Ettevõtted AS
has presented a claim for refunding the excess fees of approximately
EUR 2 million. Elisa disputes the refunding obligation.
The Finnish Competition Authority is investigating Elisa's broadband
pricing.
Substantial risks and uncertainties associated with Elisa's
operations
Risk management is part of Elisa's internal control system. It aims
to ensure that risks affecting the company's business are identified,
influenced and monitored. The company classifies risks into
strategic, operational, insurable and financial risks.
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 business are monitored and regulated by
several public authorities. This regulation also affects the price
level of some products and services offered by Elisa.
The rapid developments in telecommunications technology may have a
significant impact on Elisa's business.
Elisa's main market is Finland, where the number of mobile phones per
inhabitant is among the highest in the world, which means that growth
in subscriptions is limited. Furthermore, the volume of phone traffic
in Elisa's fixed network has decreased in the past few years. These
factors may limit the opportunities for growth.
The deterioration of the economic environment may impact the demand
for Elisa's services and products, and therefore growth prospects.
However, a good demand for communication services is expected to
continue also during a possible recession.
Accident risks:
The company's core operations are covered by insurance against damage
and interruptions caused by accidents. Accident risks also include
litigations and claims.
Financial risks:
In order to manage interest rate risk, the Group's loans and
investments are diversified in fixed- and variable-rate instruments.
Interest rate derivatives are used to manage interest rate risk.
As most of Elisa Group's cash flow is denominated in euros, the
exchange rate risk is minor. Elisa's Estonian business, which is
approximately 7 per cent of the consolidated revenue is denominated
in Estonian crowns.
The objective of liquidity risk management is to ensure the Group's
financing in all circumstances. The Group's cash and undrawn
committed credit lines totalled EUR 258 million at the end of 2008
(317).
Liquid assets are invested within confirmed limits to investment
targets with a good credit rating. The business units are liable for
credit risk associated with accounts receivable. Credit risk
concentrations in accounts receivable are minor as the customer base
is wide.
In connection to the counterparty risk hedging Elisa, provided a
maximum USD 60 million guarantee for a credit derivative portfolio
(CDO). The risk for the guarantee being called has increased due to
the credit crisis. The rating of the portfolio has decreased from Aa3
level to B1 level. The guarantee is valid until 15 December 2012. The
maximum liability USD 60 million, if realised, would mean cash
payments of USD 0.5 million in 2010, USD 33.0 million in 2011 and USD
26.5 million in 2012.
Given the recent financial market turmoil, the banking sector has
suffered and the banks' ability to finance companies have
deteriorated, with some capital market activities not operating
fully. However, Elisa has cash reserves, committed credit facilities
and a sustainable cash flow to cover its foreseeable financing needs.
Environmental issues
Elisa carries out high-quality and environmentally friendly
telecommunications services. The utilisation of these services
reduces the need to move people and goods around, which leads to a
reduction in traffic.
Elisa monitors the environmental impact of its operations and
continuously strives to improve their environmental friendliness.
Elisa evaluates suppliers and subcontractors according to their
environmental criteria, and improves the awareness of environmental
issues among the personnel by openly and regularly providing
information on their effects.
Elisa's environment group collected data on the environmental load
(energy, water and fuel consumption, waste), followed the development
in environmental legislation as well as other areas, and increased
environmental awareness among the personnel by directing the
operations that contribute to the environmental load.
The principal projects in 2008 included: continuing the design of a
standardised environmental management system, further development of
the environmental load data reporting system, improving waste sorting
and developing the production waste processes.
Events after the financial period
Elisa's subsidiary, Tampereen Tietoverkko Oy (TTV), outsourced its
whole personnel (19 people) to Elisa with business transfer effective
1 February 2009. In the future, TTV will buy all the business
services from Elisa. TTV take care of its own customers and
partnerships. Elisa holds approximately 63 per cent of TTV and Alma
Media approximately 35 per cent.
Outlook for 2009
The current economic environment and financial market turmoil creates
uncertainty for the 2009 outlook. Competition in the Finnish
telecommunications market remains challenging.
Our business has so far been impacted only marginally by the
worsening general economy. However, Elisa will not be immune to the
negative economic development. The visibility of the development of
the overall economic situation and its effects to our business is
limited.
Revenue is estimated to be at the same or slightly lower level than
in 2008. The use of mobile communications and mobile broadband
products is continuing to rise. The terminal sales volumes and other
sales in some customer segments may decrease. EBITDA excluding
non-recurring items is also expected to be at the same or slightly
lower level than in 2008. Elisa will determinedly continue to
stimulate demand for its services and continue to drive productivity
improvements of its operations. Likewise, capital expenditure will be
actively controlled to a maximum 12 per cent of revenue, and it may
be reduced clearly, if the general economy deteriorates further.
The contributory factors for long-term growth and profitability
improvement include the 3G market growth and efficiency measures,
which are continuing as expected. Elisa's financial position and
liquidity are good. There are no major refinancing needs expected
before the year 2011.
Dividend
In accordance with Elisa's profit distribution policy, ordinary
profit distribution is 40-60 per cent of the profit for the financial
period. Distribution of profit includes dividend payment, capital
repayment and purchase of treasury shares.
The Board of Directors proposes to the General Meeting an ordinary
dividend of EUR 0.60 per share. The dividend payment corresponds to
53 per cent of the period's earnings.
Shareholders who are listed in the company's register of shareholders
maintained by the Finnish Central Securities Depository Ltd on 23
March 2009 are entitled to funds distributed by the General Meeting.
The Board of Directors proposes that the payment date be 31 March
2009. The profit for the period shall be added to accrued earnings.
Furthermore, the Board of Directors decided to propose to the General
Meeting that the Board of Directors be authorised to acquire 15
million treasury shares, which corresponds to 9 per cent of the
entire stock.
The Board of Directors also decided to propose to the General Meeting
that the Board of Directors be authorised to distribute funds out of
the retained earnings account or the reserve for invested
non-restricted equity to a maximum of EUR 150 million.
The parent company's distributable funds at year-end amounted to EUR
406 million.
BOARD OF DIRECTORS
Elisa Corporation
1.1. - 31.12.2008
Full year 2008 Information
in this release is based on
the company's audited
Financial Statements.
The Auditor's Report
has been given on
12 February 2009.
CONSOLIDATED INCOME STATEMENT
10-12 10-12 1-12 1-12
EUR million Note 2008 2007 2008 2007
Revenue 1 372,1 402,1 1485,0 1568,4
Other operating income 3,0 1,3 6,5 21,0
Materials and services -159,0 -177,3 -652,4 -707,0
Employee expenses -43,2 -50,7 -162,5 -181,2
Other operating
expenses -43,6 -49,3 -205,0 -201,8
EBITDA 1 129,3 126,0 471,6 499,4
Depreciation and
amortisation -52,1 -51,9 -207,1 -197,4
EBIT 1 77,2 74,1 264,5 302,0
Financial income 7,2 3,8 17,1 27,9
Financial expense -14,1 -12,6 -54,0 -44,7
Share of associated
companies' profit 0,0 0,0 0,0 0,0
Profit before tax 70,3 65,4 227,6 285,2
Income taxes -16,6 -15,2 -50,6 -64,9
Profit for the period 53,7 50,2 177,0 220,3
Attributable to:
Equity holders of
the parent 53,3 50,1 176,3 219,8
Minority interest 0,4 0,1 0,7 0,5
53,7 50,2 177,0 220,3
Earnings per share (EUR)
Basic 0,34 0,32 1,12 1,38Diluted 0,34 0,32 1,12 1,38
Average number of outstanding
shares (1000 shares)
Basic 155 619 158 258 157 450 159 417
Diluted 155 619 158 258 157 450 159 417
Elisa Corporation
1.1. - 31.12.2008
Full year 2008 Information
in this release is based on
the company's audited
Financial Statements.
The Auditor's Report
has been given on
12 February 2009.
CONSOLIDATED BALANCE SHEET
31.12. 31.12.
EUR million 2008 2007
Non-current assets
Property, plant and equipment 630,5 637,3
Goodwill 778,6 773,6
Other intangible assets 177,5 194,5
Investments in associated companies 0,1 0,1
Available-for-sale investments 29,0 30,9
Receivables 12,4 7,3
Deferred tax assets 28,3 31,7
1656,4 1675,4
Current assets
Inventories 21,7 28,5
Trade and other receivables 319,4 454,8
Cash and cash equivalents 33,0 16,9
374,1 500,2
Total assets 2030,5 2175,6
Equity attributable to equity holders of the parent 873,4 1033,4
Minority interest 1,6 2,0
Total equity 875,0 1035,4
Non-current liabilities
Deferred tax liabilities 30,9 34,9
Provisions 5,6 7,3
Interest-bearing debt 672,3 627,3
Other non-current liabilities 14,0 24,6
722,8 694,1
Current liabilities
Trade and other payables 255,5 303,2
Tax liabilities 3,4 10,8
Provisions 1,5 4,1
Interest-bearing debt 172,3 128,0
432,7 446,1
Total equity and liabilities 2030,5 2175,6
Elisa Corporation
1.1. - 31.12.2008
Full year 2008 Information
in this release is based on
the company's audited
Financial Statements.
The Auditor's Report
has been given on
12 February 2009.
CONDENSED CONSOLIDATED
CASH FLOW STATEMENT
1-12 1-12
EUR million 2008 2007
Cash flow from operating activities
Profit before tax 227,6 285,2
Adjustments
Depreciation and amortisation 205,8 197,4
Other adjustments 32,1 3,6
237,9 201,0
Change in working capital
Change in trade and other receivables 132,5 -116,0
Change in inventories 6,7 10,0
Change in trade and other payables -56,2 6,5
83,0 -99,5
Financial items, net -38,8 -18,9
Taxes paid -59,5 -82,2
Net cash flow from operating activities 450,2 285,6
Cash flow from investing activities
Capital expenditure -179,2 -203,7
Purchase of shares -11,6 -6,2
Proceeds from asset disposal 0,8 38,2
Net cash used in investing activities -190,0 -171,7
Cash flow before financing activities 260,2 113,9
Cash flow from financing activities
Purchase of treasury shares -43,3 -85,6
Proceeds from treasury shares 1,7
Proceeds from long-term borrowings 80,0 350,0
Repayment of long-term borrowings -30,0 -44,2
Change in short-term borrowings 38,6 67,0
Repayment of finance lease liabilities -4,0 -6,7
Dividends paid and capital repayment -285,4 -401,4
Net cash used in financing activities -244,1 -119,2
Change in cash and cash equivalents 16,1 -5,3
Cash and cash equivalents at beginning of
period 16,9 22,2
Cash and cash equivalents at end of period 33,0 16,9
Elisa
Corporation
1.1.-31.12.2008
Full year 2008 Information
in this release is based on
the company's audited
Financial Statements.
The Auditor's Report
has been given on
12 February 2009.
STATEMENT OF CHANGES
IN EQUITY
Reserve
for
Trea- invested Retai- Mino-
Share sury non- ned rity
Share pre- sha- Other restricted ear- inte- Total
EUR million capital mium res reserves equity nings rest equity
Balance at
January
1, 2007 83,0 530,4 -81,3 422,1 353,4 4,7 1312,3
Share
premium
reduction and
transfer -530,4 530,4
Available-
for-sale
investments -18,2 -18,2
Other
changes 1,6 1,6
Items
recognised
directly in
equity -530,4 -18,2 530,4 1,6 -16,6
Profit for
the period 219,8 0,5 220,3
Total
recognised
income and
expense for
the period -530,4 -18,2 530,4 221,4 0,5 203,7
Acquisitions
of
subsidiaries 5,3 -0,8 -2,8 1,7
Dividends -401,7 -0,4 -402,1
Purchase of
treasury
shares -85,6 -85,6
Sales of
treasury
shares 1,1 0,4 1,5
Share-based
compensation 3,9 3,9
Balance at
December
31, 2007 83,0 0,0 -165,8 403,9 535,7 176,6 2,0 1035,4
Balance at
January
1, 2008 83,0 -165,8 403,9 535,7 176,6 2,0 1035,4
Available-
for-sale
investments -10,4 -10,4
Items
recognised
directly in
equity -10,4 -10,4
Profit for
the period 176,3 0,7 177,0
Total
recognised
income and
expense for
the period -10,4 176,3 0,7 166,6
Capital
repayment -284,9 -284,9
Dividends -1,1 -1,1
Purchase of
treasury
shares -43,3 -43,3
Share-based
compensation 7,1 -4,8 2,3
Balance at
December
31, 2008 83,0 -202,0 393,5 250,8 348,1 1,6 875,0
Elisa Corporation
1.1. - 31.12.2008
Full year 2008 Information
in this release is based on
the company's audited
Financial Statements.
The Auditor's Report
has been given on
12 February 2009.
NOTES
BASIS OF PREPARATION
Consolidated Financial Statements have been prepared
in accordance with the IFRS recognition and measurement
principles, although all requirements of IAS 34 standard
have not been followed. The consolidated financial
statements have been prepared in accordance with
International Financial Reporting Standards (IFRS)
effective at the time of preparing and adopted for use
by European Union. The accounting principles applied in
the consolidated financial statements are the same as
those applied in the Consolidated financial statements at
December 31, 2007. As at 1 January 2008 International
Accounting Standards Board (IASB) has not issued and
European Union adopted new standards, amendments
and interpretations relevant to the group.
1. BUSINESS SEGMENT INFORMATION
10-12/2008 Fixed Unallocated Group
EUR million Mobile Network items Eliminations Total
External sales 227,5 144,6 372,1
Inter-segment sales 3,2 8,9 -12,1 0,0
Revenue 230,7 153,5 -12,1 372,1
EBITDA 73,6 57,2 -1,5 129,3
EBIT 44,6 34,1 -1,5 77,2
Financial
income and
expense -6,9
Share of associated
companies' profit 0,0
Profit before
tax 70,3
Investments 37,6 26,1 63,7
10-12/2007 Fixed Unallocated Group
EUR million Mobile Network items Eliminations Total
External sales 247,7 154,4 402,1
Inter-segment sales 5,1 7,3 -12,4 0,0
Revenue 252,8 161,7 -12,4 402,1
EBITDA 79,6 46,7 -0,3 126,0
EBIT 51,7 22,8 -0,3 74,2
Financial
income and
expense -8,8 -8,8
Share of associated
companies' profit 0,0
Profit before
tax 65,4
Investments 30,2 38,4 68,6
Elisa Corporation
1.1. - 31.12.2008Full year 2008 Information
in this release is based on
the company's audited
Financial Statements.
The Auditor's Report
has been given on
12 February 2009.
1-12/2008 Fixed Unallocated Group
EUR million Mobile Network items Eliminations Total
External sales 904,6 580,4 1485,0
Inter-segment sales 14,7 34,8 -49,5 0,0
Revenue 919,3 615,2 -49,5 1485,0
EBITDA 266,3 208,7 -3,4 471,6
EBIT 150,5 117,5 -3,5 264,5
Financial
income and
expense -36,9
Share of associated
companies' profit 0,0
Profit before
tax 227,6
Investments in
associated
companies 0,1 0,1
Total assets 1398,7 528,5 103,3 2030,5
Total liabilities 141,6 137,2 876,7 1155,5
Investments 105,1 78,8 183,9
1-12/2007 Fixed Unallocated Group
EUR million Mobile Network items Eliminations Total
External sales 959,7 608,7 1568,4
Inter-segment sales 20,2 33,5 -53,7 0,0
Revenue 979,9 642,2 -53,7 1568,4
EBITDA 299,5 206,0 -6,1 499,4
EBIT 194,8 113,4 -6,2 302,0
Financial
income and
expense -16,8 -16,8
Share of associated
companies' profit 0,0
Profit before tax 285,2
Investments in
associated
companies 0,1 0,1
Total assets 1516,6 571,9 87,1 2175,6
Total liabilities 174,9 162,3 803,0 1140,2
Investments 92,8 113,6 206,4
Elisa Corporation
1.1. - 31.12.2008
Full year 2008 Information
in this release is based on
the company's audited
Financial Statements.
The Auditor's Report
has been given on
12 February 2009.
2. OPERATING LEASE COMMITMENTS
31.12. 31.12.
EUR million 2008 2007
Due within 1 year 22,2 20,6
Due after 1 year but within 5 years 36,8 42,6
Due after 5 years 15,2 21,1
Total 74,2 84,3
3. CONTINGENT LIABILITIES
31.12. 31.12.
EUR million 2008 2007
Mortgages
For own and group companies 0,4
Pledges given
Pledges given as surety 0,8 1,3
Guarantees given
For others (* 44,3 42,3
Mortgages, pledges and guarantees total 45,5 43,6
Other commitments
Repurchase commitments 0,1 0,2
Contingent liabilities in QTE-arrangement
Lease-leaseback agreement (QTE facility)
Total value of the arrangement - 137,9
Termination risk - 14,5
*) EUR 43,1 million is related to the
guarantee given on a CDO portfolio
4. DERIVATIVE INSTRUMENTS
31.12. 31.12.
EUR million 2008 2007
Interest rate swaps
Nominal value 150,0 150,0
Fair value recognised in the balance sheet 1,0 -3,0
Credit default swaps (*
Nominal value 47,4 45,6
Fair value recognised in the balance sheet - 1,0
*) CDS is related to hedging of the guarantor bank
in the QTE-arrangement
5. REAL ESTATE INVESTMENTS
VAT refund liability of real estate investments is
EUR 16,8 million at 31 December 2008.
Elisa
Corporation
1.1. - 31.12.2008
Full year 2008 Information
in this release is based on
the company's audited
Financial Statements.
The Auditor's Report
has been given on
12 February 2009
KEY FIGURES
1-12 1-12
EUR million 2008 2007
Shareholders' equity per /share, EUR 5,61 6,53
Interest bearing net debt 811,6 738,4
Gearing 92,8% 71,3%
Equity ratio 43,3% 47,9%
Return on investment (ROI) *) 15,6% 18,3%
Gross investments in fixed assets 183,9 206,4
of which finance lease investments 4,7 2,7
Gross investments as % of revenue 12,4% 13,2%
Investments in shares, 14,8 12,4
Average number of employees 2946 3299
*) rolling 12 months profit preceding
the reporting date
Formulae for financial indicators
Gearing %
Interest-bearing debt -
cash and cash equivalents
------------------------------------ x 100
Total equity
Equity ratio %
Total equity
-------------------------------x 100
Balance sheet total -
advances received
Return on investment % (ROI)
Profit before taxes +
interest and other
financial expenses
-----------------------------------------x 100
Total equity +
interest bearing liabilities (average)
Net debt
Interest-bearing debt - cash and
cash equivalents
Shareholders' equity per share
Equity attributable to equity holders
of the parent
------------------------------------------------
Number of shares outstanding
at end of period
Earnings/share
Profit for the period attributable to
equity holders of parent
---------------------------------------------------
Average number of outstanding shares
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