ELISA'S FINANCIAL STATEMENTS 2009
(Thomson Reuters ONE) - ELISA STOCK EXCHANGE RELEASE 12 FEBRUARY 2010 AT 8:30 amYear 2009 * Revenue was EUR 1,430 million (1,485) * EBITDA improved to EUR 484 million (472), EBIT was EUR 267 million (264) * Profit before tax amounted to EUR 235 million (228) * Earnings per share was EUR 1.13 (1.12) * Cash flow after investments was EUR 252 million (260) * Net debt / EBITDA was 1.5 (1.7) and gearing 80 per cent (93) * The Board of Directors proposes a profit distribution of EUR 0.92 per shareFourth quarter 2009 * Revenue was EUR 365 million (372) * EBITDA was EUR 121 million (129), EBIT EUR 64 million (77) * Cash flow after investments was EUR 74 million (84) * Revenue per subscription (ARPU) in the mobile business was EUR 22.9 (23.2 in the third quarter) * Churn was 14.7 per cent (14.5 in the third quarter) * The number of Elisa's mobile subscriptions increased by 111,300 during the quarter, due in particular to the new 3G and 2G customers, as well as mobile broadband customers * The number of fixed broadband subscriptions decreased by 8,500 on the previous quarterKey indicators: EUR million 10-12/2009 10-12/2008 1-12/2009 1-12/2008------------------------------------------------------------------- Revenue 365 372 1,430 1,485 EBITDA 121 129 484 472 EBITDA excluding non- recurring items 121 129 484 478 EBIT 64 77 267 264 Profit before tax 56 70 235 228 Earnings per share, EUR 0.26 0.34 1.13 1.12 Capital expenditures 61 64 171 184-------------------------------------------------------------------Financial position and cash flow: EUR million 31.12.2009 31.12.2008-------------------------------------------- Net debt 719 812 Net debt / EBITDA 1) 1.5 1.7 Gearing ratio, % 79.8 92.8 Equity ratio, % 46.1 43.3-------------------------------------------- EUR million 10-12/2009 10-12/2008 1-12/2009 1-12/2008----------------------------------------------------------- Cash flow after investments 74 84 252 260-----------------------------------------------------------1) (interest-bearing debt - financial assets) / (4 previous quarters' EBITDAexclusive of non-recurring items)The Board of Directors proposes to the General Meeting as profit distribution acapital repayment of EUR 0.92 per share, of which EUR 0.68 is an ordinary profitdistribution and EUR 0.24 anextraordinary distribution. The Board of Directorsalso proposes an authorisation to distribute funds out of the retained earningsaccount or the reserve for invested non-restricted equity to a maximum of EUR100 million. Furthermore, The Board of Directors decided to propose to theGeneral Meeting an authorisation to acquire maximum 10 million treasury shares,which corresponds to 6 per cent of the entire share capital.Additional information regarding the Key Performance Indicators is available onwww.elisa.com/investors , in the section:Financial info, Financial Statements & Interim Reports: Elisa Quarterly Data.CEO Veli-Matti Mattila:"New service launches taking off wellElisa's profitability and result developed favorably in 2009. The steep declinein the Finnish economy had some impact on the use of communications services.The recession was mostly reflected in corporate customer operations, equipmentsales and roaming revenue. In Estonia, the recession had a stronger impact onbusiness operations than in Finland.Financial results developed favorably, which together with a strong cash flowand balance sheet, guarantee an excellent capacity for profit distribution. Thecompetitive environment was keen but stable in 2009. Despite the challengingsituation, we managed to strengthen our competitiveness and market position.In 2009, Elisa exceeded the threshold of three million mobile subscriptions. Asignificant number of the new subscriptions consisted of 3G subscriptions.During the fourth quarter, new subscriptions increased by more than 110,000. Thenumber of traditional fixed network subscriptions decreased in line withprevious years. The fixed broadband market has matured, while the strong growthin mobile broadband subscriptions has continued.We were able to offer more to our customers than traditional network services.The brand new IPTV service, Elisa Viihde, offered to our consumer customers, andthe Internet-based security service, Elisa Vahti, succeeded well. Corporate andpublic sector customers welcomed our productivity-improving ICT services,including outsourcing of customer services, field work control and virtualmeeting services.We continued to invest in the 3G network in order to enhance its coverage andspeed. Elisa's 3G network now covers almost 300 locations and more than 90 percent of Finland's population, delivering a maximum mobile broadband speed up to10 Mbps in all locations. As confirmed by Finland's Market Court, Elisa providesthe widest 3G coverage in the country.Although there have been some signs of recovery, uncertainties still exist inthe development of the general economy. Competition in the Finnishtelecommunications market also continues to be challenging. In 2010, we willdeterminedly continue to develop our operations to improve customer satisfactionand productivity even further. An expanding service offering and our capabilityto invest create a good base for the future."ELISA CORPORATIONVesa SahivirtaDirector, IR and Financial CommunicationsAdditional information:Mr. Veli-Matti Mattila, CEO, tel. +358 10 262 2635Mr. Jari Kinnunen, CFO, tel. +358 10 262 9510Mr. Vesa Sahivirta, Director, IR and Financial Communications, tel. +35850 520 5555Distribution:NASDAQ OMX HelsinkiPrincipal mediawww.elisa.com FINANCIAL STATEMENTS 2009The Financial Statements have been prepared in accordance with the IFRSrecognition and measurement principles but not all of the IAS 34 requirementshave been observed.Market situationThe general economic downturn has had only a marginal impact on the telecomoperator business. The impact has been felt mainly in equipment sales, roamingrevenues and corporate customer business. Elisa's Estonian business has alsosuffered more than the Finnish business. Although there have been some positivesigns in the general economic environment, future development still includesuncertainty. For example, the unemployment rate is expected to increase and thecorporate business environment may deteriorate further, both of which could havea negative impact on the telecom sector.The competitive environment has been keen but stable in Finland. The number ofmobile subscriptions and the use of data services have evolved favourably inFinland with 3G subscriptions comprising a significant proportion of newsubscriptions. The use of data services made available through 3G subscriptionshas also increased. Another factor contributing to the growth has been the useof multiple terminals for different purposes and especially mobile broadbandservices. Churn in mobile subscriptions has been at a normal level, andcompetition has been mainly in services and campaigning.The number and usage of traditional fixed network subscriptions decreased at thesame rate as the previous year. The fixed broadband market has matured, whilethe strong subscription growth in mobile broadband continued.Revenue, earnings and financial positionRevenue and earnings: EUR million 2009 2008 2007---------------------------------------------------------- Revenue 1,430 1,485 1,568 EBITDA 484 472 499 EBITDA-% 33.8 31.8 31.8 EBITDA excluding non-recurring items 484 478 491 EBITDA-% excluding non-recurring items 33.8 32.2 31.3 EBIT 267 264 302 EBIT-% 18.7 17.8 19.3 Return on equity, % 19.9 18.5 18.8 Equity ratio, % 46.1 43.3 47.9----------------------------------------------------------January-December 2009Revenue decreased by 4 per cent on last year mainly due to lower equipmentsales volumes, lower interconnection fees both in Finland and Estonia, and adecrease in traditional fixed business.EBITDA improved by 3 per cent and EBITDA excluding non-recurring items by 1 percent on the previous year. EBITDA margin improved from 31.8 per cent to 33.8 percent. The improvement was mainly due to efficiency improvement measures.Additionally, in 2008 extra implementation costs of the billing and CRM system,as well as revenue correction affected EBITDA negatively.Financial income and expenses totalled EUR -33 million (-37). The decrease infinancial expenses was mainly attributed to a decrease in net debt and lowerinterest rates. Income taxes in the income statement amounted to EUR -58 million(-51). Elisa's earnings after taxes were EUR 177 million (177). The Group'searnings per share (EPS) amounted to EUR 1.13 (1.12).Fourth quarter 2009Revenue decreased by 2 per cent from EUR 372 million to EUR 365 million mainlyfor the same reasons as in January - December.EBITDA decreased by 6 per cent from EUR 129 million to EUR 121 million. This wasmainly due to lower revenue and increased market activities during the fourthquarter, such as sales and marketing costs, and new service launches.Financial income and expenses totalled EUR -8 million (-7). Income taxes in theincome statement amounted to EUR -15 million (-17). Elisa's earnings after taxeswere EUR 41 million (54). The Group's earnings per share (EPS) amounted to EUR0.26 (0.34).Financial position: EUR million 31.12.2009 31.12.2008 31.12.2007------------------------------------------------------- Net debt 719 812 738 Net debt / EBITDA 1) 1.5 1.7 1.5 Gearing ratio, % 79.8 92.8 71.3 Equity ratio, % 46.1 43.3 47.9------------------------------------------------------- EUR million 2009 2008 2007------------------------------------------------------- Cash flow after investments 252 260 114-------------------------------------------------------1) (interest-bearing debt - financial assets) / (4 previous quarters' EBITDAexclusive of non-recurring items)January-December 2009Net debt contracted by 11 per cent due to positive cash flow. Cash flow afterinvestments remained at about the same level as the previous year.Fourth quarter 2009Elisa's financial position and liquidity remained good. October - December cashflow after investments was EUR 74 million (84). The decline was mainly due tolower EBITDA and change in net working capital.Changes in corporate structureJanuary-December 2009In February, Elisa acquired the entire share capital of Xenetic Oy. Xenetic is ahosting service company, the business of which consists of data centres,monitoring, data communications and data security services and equipment, andapplication leasing among other things. In February, Elisa also acquired thebusiness operations of Trackway Oy, which provides e.g., solutions for assettracking.There were no changes in the corporate structure in the fourth quarter 2009.Consumer Customer business EUR million 10-12/2009 10-12/2008 1-12/2009 1-12/2008------------------------------------------------------- Revenue 217 217 848 882 EBITDA 71 72 284 267 EBITDA-% 32.8 33.4 33.5 30.3 EBIT 39 43 161 149 CAPEX 33 36 92 102-------------------------------------------------------January-December 2009Revenue decreased by 4 per cent. The decrease was mainly a result of lowerequipment sales volumes, lower interconnection fees both in Finland and Estonia,and a decline in the traditional fixed voice business. EBITDA grew by 6 percent. It was positively affected by productivity improvement measures anddecreased interconnection costs. The decrease in the Estonian business due tothe general economic downturn had a negative effect on EBITDA.Fourth quarter 2009Both revenue and EBITDA remained at the previous year's level. Revenue wasimpacted by lower equipment sales volumes, lower interconnection fees both inFinland and Estonia and a decline in the traditional fixed voice business. Onthe other hand, the growth in subscriptions and usage affected revenuepositively. EBITDA was negatively affected by increased market activities, butcompensated for by productivity improvement measures. The decrease in theEstonian business due to the general economic downturn had also a negativeeffect on EBITDA.Corporate Customer business EUR million 10-12/2009 10-12/2008 1-12/2009 1-12/2008------------------------------------------------------- Revenue 148 155 583 603 EBITDA 50 57 200 204 EBITDA-% 33.9 36.6 34.3 33.9 EBIT 25 34 107 116 CAPEX 28 28 79 82-------------------------------------------------------January-December 2009Revenue fell by 3 per cent and EBITDA by 2 per cent. The fall in revenue wasmainly due to lower interconnection fees, decreased equipment sales volumes anda decline in the traditional fixed business. Growth in ICT services increasedrevenue. The decrease in EBITDA was mainly attributable to lower revenue.Fourth quarter 2009Revenue fell by 5 per cent and EBITDA by 12 per cent. The fall in revenue wasmainly due to lower interconnection and roaming revenues, a decrease in mobileusage and a decline in the traditional fixed business. Growth in ICT servicesincreased revenue. EBITDA was negatively affected by decreased revenue inparticular.PersonnelIn January-December, the average number of personnel at Elisa was 3,216 (2008average 2,946 people, 2007 average 3,299 people). Employee benefit expenses in2009 totalled EUR 189 million (2008 EUR 162 million and 2007 EUR 181 million).Personnel at the end of 2009 were 3,331 (3,017). Personnel by segment at the endof the period: 31.12.2009 31.12.2008------------------------------------------- Consumer Customers 1,975 1,522 Corporate Customers 1,356 1,495 Total 3,331 3,017-------------------------------------------In 2009, the number of personnel grew from the corresponding period last yearmainly as a result of increased staffing needs in call centres to meet thegrowing demands in the customer service business.In 2008, Elisa's Board of Directors decided on a new share-based incentive planfor the Elisa Group key personnel. The detailed terms and conditions of the plancan be found in Elisa's 2009 Annual Report. The plan includes three earningperiods, which are the calendar years 2009, 2010 and 2011.On 16 December, Elisa's Board of Directors decided that the potential rewardfrom the earning period 2010 will be based on the Elisa Group's earnings pershare and revenue in 2010. The plan is directed to approximately 50 people. Themaximum reward payable in the earning period 2010 on the basis of the plan is766,000 Elisa shares.Investments EUR million 10-12/2009 10-12/2008 1-12/2009 1-12/2008-------------------------------------------------------------------------- Capital expenditures, of which 61 64 171 184 - Consumer Customers 33 36 92 102 - Corporate Customers 28 28 79 82-------------------------------------------------------------------------- Shares 0 2 6 15-------------------------------------------------------------------------- Total 61 66 178 199--------------------------------------------------------------------------In 2009, the main capital expenditures relate to the mobile network, especially3G, the fixed network including broadband and corporate networks, and ITinvestments.Financing arrangements and ratingsValid financing arrangements: EUR million Maximum amount In use on 31.12.2009------------------------------------------------------------------ Committed credit limits 300 0 Commercial paper program ¹) 250 74 EMTN program ²) 1,000 600------------------------------------------------------------------1) The program is not committed2) European Medium Term Note program, not committedLong-term credit ratings: Credit rating agency Rating Outlook------------------------------------------ Moody's Investor Services Baa2 Stable Standard & Poor's BBB Stable------------------------------------------The Group's cash and undrawn committed credit lines totalled EUR 331 million at31 December 2009 (EUR 258 million at the end of 2008). There are no majorrefinancing needs expected before the year 2011.In connection to the counterparty risk hedging, Elisa provided a maximum USD 60million guarantee for a credit derivative portfolio (CDO) in 2007. The risk ofthe guarantee being called increased due to the credit crisis in 2008 andfurther during 2009. A detailed description is provided in the "Financial risks"section.Share Trading of shares 10-12/2009 10-12/2008 1-12/2009 1-12/2008------------------------------------------------------------------- Shares traded, millions 35.6 76.1 180.6 338.8 Volume, EUR million 508.6 881.4 2,170.0 5,041.1 % of shares 21.4 45.8 116.1 217.7------------------------------------------------------------------- Shares and market values 31.12.2009 31.12.2008------------------------------------------------------------ Total number of shares 166,307,586 166,307,586 Treasury shares 10,688,629 10,688,629 Outstanding shares 155,618,957 155,618,957 Closing price, EUR 15.96 12.30 Market capitalisation, EUR million 2,484 1,914 Treasury shares, % 6.4 6.4------------------------------------------------------------At the end of the year, Elisa's total number of the shares was 166,307,586(166,307,586), all within one share series.In March, Elisa distributed a ordinary dividend of 0.60 euro per share,totalling EUR 93.4 million, in accordance with the decision of the AnnualGeneral Meeting.In June, the Government of Finland transferred its Elisa shares to itsfully-owned company Solidium Oy. Following this transfer, the Government ofFinland has no direct ownership in Elisa. The number of shares transferred toSolidium Oy was 16,006,000, representing 9.62 per cent of the share capital andvotes.In June, Solidium Oy announced that it has exceeded 10 per cent ownership inElisa. Solidium Oy's ownership increased to 16,631,000 shares, or 10.00 per centof the share capital and votes.On 28 September 2009, Elisa was notified of a change in the company's ownershipas follows: DNA Oy, L?en Teletieto Oy and Oulun Puhelin Holding Oyj sold alltheir Elisa shares, and PHP Liiketoiminta Oyj´s, KPY Sijoitus Oy´s, KuopionPuhelin Oy´s aggregate ownership in Elisa shares and votes decreases below 5 percent.On 23 October, Elisa's Board of Directors decided on the extraordinarydistribution of a capital repayment per share of EUR 0.40. This decision wasbased on the favourable development of the company's result and financialposition as well as maintaining the company's capital structure in line with theset financial targets.Capital repayment also affected the Elisa 2007 stock options by reducing thestrike price of the series 2007A stock options to EUR 18.04 and series 2007Bstock options to EUR 10.89.The listing of the Elisa 2007A stock options on the NASDAQ OMX Helsinki Ltdstarted on 1 December 2009. The total number of outstanding 2007A stock optionsis 850,000. Each 2007A stock option entitles its holder to subscribe for oneElisa share. A total of 372,150 2007A stock options are in the possession ofElisa's subsidiary, which is not permitted to subscribe for shares with thestock options.The present share subscription price of the 2007A stock option is EUR 18.04 pershare. Future dividends and capital repayments will be deducted from thesubscription price upon payment. The share subscription period for 2007A stockoptions began on 1 December 2009 and end on 31 May 2011.On 9 December 2009, Elisa was notified, in accordance with Chapter 2, Section 9of the Finnish Securities Market Act that BlackRock Inc.'s proportion of thetotal number of Elisa shares and voting rights has exceeded 5 per cent (6.64 percent).Elisa's Board of Directors decided to distribute 2007C stock options to ElisaGroup's key personnel. The maximum number of 2007C stock options is 850,000 andof that, 471,500 have been distributed to the Elisa's key personnel. The strikeprice for series 2007C stock options is EUR 13.99 per share and the subscriptionperiod is 1 December 2011 - 31 May 2013.Research and developmentThe Group invested EUR 10 million, of which EUR 2.8 million has been capitalisedin research and development in 2009 (EUR 11 million in 2008 and EUR 8 million in2007), corresponding to 0.7 per cent of revenue (0.7 per cent in 2008 and 0.5per cent in 2007).The Annual General MeetingOn 18 March 2009, and in accordance with the proposal of the Board of Directors,Elisa's Annual General Meeting decided on a dividend to shareholders in theamount of EUR 0.60 per share on the basis of the 31 December 2008 balance sheetapproved by the Annual General Meeting.The Annual General Meeting adopted the financial statements for the period inquestion. The members of the Board of Directors and the CEO were discharged fromliability for 2008.The number of the members of the Board of Directors was confirmed at six (6).The following members were re-elected to the Board of Directors: Mr RistoSiilasmaa, Mr Ossi Virolainen, Mr Pertti Korhonen and Ms Eira Palin-Lehtinen. MrAri Lehtoranta (Executive Vice President, Kone Corporation) and Raimo Lind(Executive Vice President, CFO and Deputy to the President, W?sil?orporation) were elected as new members.KPMG Oy Ab, authorised public accountants was appointed the company's auditor.APA Pekka Pajamo is the responsible auditor.The Annual General Meeting accepted the proposal to amend the Operations of theCompany in the articles of association. The main change was the addition of ICTservices to the Operations of the Company.The Board of Directors' authorisationsThe Annual General Meeting accepted the proposal to authorize the Board ofDirectors to decide on the distribution of funds from the unrestricted equity toa maximum of EUR 150,000,000. The authorization is effective until the beginningof the following Annual General Meeting.The Annual General Meeting decided on the authorization to repurchase or acceptas pledge the company's own shares. The repurchase may be directed. The maximumamount of shares under this authorization is 15,000,000. The authorization iseffective until June 30, 2010.The Annual General Meeting approved the proposal of the Board of Directors onthe issuance of shares as well as the issuance of special rights entitling toshares. The issue may be directed. The authorization is effective until June30, 2013. A maximum aggregate of 50.0 million of the company's shares can beissued under the authorization.Regulatory issuesOn April 2009, Elisa was handed a decision made by the Finnish CommunicationsRegulatory Authority, that Elisa was allocated more frequencies in both the1,800 MHz and 2,100 MHz spectrums. In the 1,800 MHz spectrum, the radio licenseis valid until November 2017 and in the 2,100 MHz spectrum, the licence is validto March 2019. The 1,800 MHz spectrum can be used for the LTE (Long TermEvolution technology, i.e. the fourth generation, 4G mobile network). LTEenables faster than current mobile broadband connections. LTE can be utilizedeither in the auctioned 2.6 GHz or in the lower 1800 MHz spectrum.The auction for the LTE 2.6 GHz spectrum ended on 23 November 2009. Elisa wonthe competitive 50 MHz spectrum. The fee for the license is EUR 834,700 and itis valid until 2029.The Finnish Communications Regulatory Authority has, in its decision on 23December 2009, appointed Elisa to provide universal service obligation servicesfor internet connection covering the area of 25 named municipalities in Finland.The universal service obligation constitutes a provision of internet connectionwith a 1 Mbps speed in the named area from 1 July 2010 onwards.Significant legal issuesElisa and TeliaSonera reached a settlement on the disagreement relating to theclaim of unjust enrichment due to miscoding of traffic.On 28 May 2009, The Helsinki Court of Appeal rendered its verdict in theproceedings concerning the stock exchange disclosures of the Jippii Group in2001. Jippii is Saunalahti Group's predecessor, which Elisa acquired in 2005.The Court has ordered Elisa to pay a corporate fine of EUR 200,000 and aforfeiture of EUR 85,000 concerning the events of 2001. The decision is underappeal.The Finnish Competition Authority has made a decision to remove the matterconcerning the pricing of Elisa's broadband from the agenda.The arbitration processes between Elisa and IBM on disputes relating to theimplementation and maintenance of Elisa´s billing and CRM system has ended inDecember 2009.The Estonian Communications Authority has, in 2007, issued a decision on thelevel of interconnection fees. Elisa has appealed against the decision and theproceedings are still pending. Elion Ettev?d AS has presented a claim forrefunding the excess fees of approximately EUR 1.8 million. Elisa disputes therefunding obligation.Substantial risks and uncertainties associated with Elisa's operationsRisk management is part of Elisa's internal control system. It aims to ensurethat risks affecting the company's business are identified, influenced andmonitored. The company classifies risks into strategic, operational, accidentaland financial risks.Strategic and operational risks:The telecommunications industry is under intense competition in Elisa's mainmarket areas, which may have an impact on Elisa's business. Thetelecommunications industry is subject to heavy regulation. Elisa and itsbusinesses are monitored and regulated by several public authorities. Thisregulation also affects the price level of some products and services offered byElisa.The rapid developments in telecommunications technology may have a significantimpact on Elisa's business.Elisa's main market is Finland, where the number of mobile phones per inhabitantis among the highest in the world, and growth in subscriptions is thus limited.Furthermore, the volume of phone traffic in Elisa's fixed network has decreasedin the past few years. These factors may limit the opportunities for growth.The deterioration of the economic environment may impact the demand for Elisa'sservices and products, and therefore growth prospects. However, a good demandfor communication services is expected to continue also during a recession.Accident risks:The company's core operations are covered by insurance against damage andinterruptions caused by accidents. Accident risks also include litigations andclaims.Financial risks:In order to manage interest rate risk, the Group's loans and investments arediversified in fixed- and variable-rate instruments. Interest rate swaps areused to manage interest rate risk.As most of Elisa Group's cash flow is denominated in Euros, the exchange raterisk is minor. Elisa's Estonian business, which is approximately 6 per cent ofthe consolidated revenue is denominated in Estonian crowns.The objective of liquidity risk management is to ensure the Group's financing inall circumstances. The Group's cash and undrawn committed credit lines totalledEUR 331 million at 31 December 2009 (EUR 258 million at the end of 2008). Elisahas cash reserves, committed credit facilities and a sustainable cash flow tocover its foreseeable financing needs.Liquid assets are invested within confirmed limits to investment targets with agood credit rating. Credit risk concentrations in accounts receivable are minoras the customer base is wide.In connection to the counterparty risk hedging, Elisa provided a maximum USD 60millionguarantee for a credit derivative portfolio (CDO) in 2007. The risk ofthe guarantee being called increased due to the credit crisis in 2008 andfurther during 2009. Possible further credit default events in the portfolio mayresult in partial or full demands being made under the guarantee already in2010. There is a dispute between Elisa and the arranger bank as to the extentand scope of Elisa's obligations under the guarantee and legal proceedings havebeen commenced to resolve the dispute. At the year end, no guarantee liabilitywas realised nor expenses accounted. Possible guarantee liability expenserealisation is evaluated constantly and booked if materialised. The guarantee isvalid until 15 December 2012. The maximum liability of USD 60 million, ifrealised, would mean cash payments of USD 33 million in 2011 and USD 27 millionin 2012.A detailed description of the financial risk management can be found in note 34of the Annual Report.Environmental issuesElisa carries out high-quality and environmentally responsibletelecommunications services. The utilisation of these services reduces the needto transport people and goods, which leads to a reduction in traffic.Elisa monitors the environmental impact of its operations and continuouslystrives to improve their environmental friendliness. Elisa evaluates suppliersand subcontractors according to their environmental criteria, and improves theawareness of environmental issues among the personnel by openly and regularlyproviding information on their effects.Elisa's environment group collected data on the environmental load (energy,water and fuel consumption, waste), followed the development in environmentallegislation as well as other areas, and increased environmental awareness amongthe personnel by directing the operations that contribute to the environmentalload.The design and implementation of a standardized environmental management systemcontinued in 2009. Other measures included further development of theenvironmental load data reporting system and improving waste sorting in businesspremises. Consumption of office supplies and paper was reduced to an excellentlevel. The switchover to multi-space solutions in business premises helped cutback electricity consumption considerably.2009 Annual Report and corporate governance statementElisa will publish the 2009 Annual Report, which contains the report by Board ofDirectors and the financial statements for 2009, and a separate CorporateGovernance Statement on week 8 on its website at www.elisa.com.Events after the financial periodThere are no major events after the financial period.Outlook for 2010There have been some positive signs in the general economic environment.However, the unemployment rate is expected to increase and the corporatebusiness environment may deteriorate further. These factors could continue tohave a negative impact on the telecom sector. Competition in the Finnishtelecommunications market remains challenging.The general economic downturn has so far mainly impacted Elisa's Estonianbusiness and the Corporate Customer segment. The main risks still relate to thedevelopment of the Estonian economy and the corporate customer business.Full year revenue is estimated to be at the same level as last year. The use ofmobile communications and mobile broadband products is continuing to rise. Fullyear EBITDA, excluding non-recurring items, is expected to be at the same levelas last year. Full-year capital expenditure is expected to be 10 to 12 per centof revenue.The ICT and on-line service industry is in a dynamic development phase. Inaddition to its strong position as a network service provider, Elisa istransforming itself to be able to provide its customers with exciting andrelevant new services. Among the factors contributing to long-term growth andprofitability improvement is 3G market growth. Elisa continues determinedly toemploy its efficiency measures. Elisa's financial position and liquidity aregood. There are no major refinancing needs expected before the year 2011.Profit distributionThe Board of Directors proposes to the General Meeting as profit distribution acapital repayment of EUR 0.92 per share, of which EUR 0.68 is an ordinary profitdistribution and EUR 0.24 as extraordinary profit distribution. The paymentcorresponds to 81 per cent of the financial period's earnings.Shareholders who are listed in the company's register of shareholders maintainedby the Finnish Central Securities Depository Ltd on 23 March 2010 are entitledto funds distributed by the General Meeting. The Board of Directors proposesthat the payment date be 31 March 2010. The profit for the period shall be addedto accrued earnings.The Board of Directors also decided to propose to the General Meeting that theBoard of Directors be authorised to distribute funds out of the retainedearnings account or the reserve for invested non-restricted equity to a maximumof EUR 100 million.Furthermore, the Board of Directors decided to propose to the General Meetingthat the Board of Directors be authorised to acquire a maximum of 10 milliontreasury shares, which corresponds to 6 per cent of the entire stock.The parent company's distributable funds at year-end amounted to EUR 339million.BOARD OF DIRECTORS Elisa Corporation 1.1. - 31.12.2009 The annual financial statements figures presented in this release are based on the company's audited financial statements. The auditor's report was issued on 11 February 2010. CONSOLIDATED INCOME STATEMENT-------------------------------------------------------------------- 10-12 10-12 1-12 1-12 EUR million Note 2009 2008 2009 2008-------------------------------------------------------------------- Revenue 1 364,9 372,1 1430,4 1485,0 Other operating income 2,0 3,0 4,2 6,5 Materials and services -144,0 -159,0 -576,3 -652,4 Employee benefit expenses -51,3 -43,2 -188,8 -162,5 Other operating expenses -50,3 -43,6 -185,6 -205,0-------------------------------------------------------------------- EBITDA 1 121,3 129,3 483,9 471,6 Depreciation and amortisation -56,8 -52,1 -216,4 -207,1-------------------------------------------------------------------- EBIT 1 64,5 77,2 267,5 264,5 Financial income 2,3 7,2 10,5 17,1 Financial expense -10,6 -14,1 -43,1 -54,0 Share of associated companies' profit -0,1 0,0 0,0 0,0-------------------------------------------------------------------- Profit before tax 56,1 70,3 234,9 227,6 Income taxes -15,2 -16,6 -57,9 -50,6-------------------------------------------------------------------- Profit for the period 40,9 53,7 177,0 177,0 Attributable to: Owners of the parent 40,7 53,3 176,3 176,3 Non-controlling interests 0,2 0,4 0,7 0,7-------------------------------------------------------------------- 40,9 53,7 177,0 177,0 Earnings per share (EUR) Basic 0,26 0,34 1,13 1,12 Diluted 0,26 0,34 1,13 1,12 Average number of outstanding shares (1000 shares) Basic 155 619 155 619 155 619 157 450 Diluted 155 809 155 619 155 809 157 450 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME-------------------------------------------------------------------- Profit for the period 40,9 53,7 177,0 177,0 Other comprehensive income, net of tax: Available-for-sale investments -0,5 -8,0 1,2 -10,4-------------------------------------------------------------------- Total comprehensive income 40,4 45,7 178,2 166,6 Total comprehensive income attributable to: Owners of the parent 40,2 45,3 177,5 165,9 Non-controlling interests 0,2 0,4 0,7 0,7-------------------------------------------------------------------- 40,4 45,7 178,2 166,6 Elisa Corporation 1.1. - 31.12.2009 The annual financial statements figures presented in this release are based on the company's audited financial statements. The auditor's report was issued on 11 February 2010. CONSOLIDATED STATEMENT OF FINANCIAL POSITION--------------------------------------------------------------- 31.12. 31.12. EUR million 2009 2008--------------------------------------------------------------- Non-current assets Property, plant and equipment 617,9 630,5 Goodwill 782,0 778,6 Other intangible assets 148,2 177,5 Investments in associated companies 0,1 0,1 Available-for-sale investments 30,7 29,0 Receivables 19,4 12,4 Deferred tax assets 25,7 28,3--------------------------------------------------------------- 1624,0 1656,4 Current assets Inventories 31,2 21,7 Trade and other receivables 278,4 319,4 Cash and cash equivalents 31,0 33,0--------------------------------------------------------------- 340,6 374,1 Total assets 1964,6 2030,5 Equity attributable to owners of the parent 899,2 873,4 Non-controlling interests 0,8 1,6--------------------------------------------------------------- Total equity 900,0 875,0 Non-current liabilities Deferred tax liabilities 26,6 30,9 Provisions 4,5 5,6 Interest-bearing debt 592,3 672,3 Other non-current liabilities 13,4 14,0--------------------------------------------------------------- 636,8 722,8 Current liabilities Trade and other payables 263,3 255,5 Tax liabilities 6,4 3,4 Provisions 0,9 1,5 Interest-bearing debt 157,2 172,3--------------------------------------------------------------- 427,8 432,7 Total equity and liabilities 1964,6 2030,5 Elisa Corporation 1.1. - 31.12.2009 The annual financial statements figures presented in this release are based on the company's audited financial statements. The auditor's report was issued on 11 February 2010. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS-------------------------------------------------------------- 1-12 1-12 EUR million 2009 2008-------------------------------------------------------------- Cash flow from operating activities Profit before tax 234,9 227,6 Adjustments Depreciation and amortisation 216,4 205,8 Other adjustments 29,5 32,1-------------------------------------------------------------- 245,9 237,9 Change in working capital Change in trade and other receivables 36,3 132,5 Change in inventories -9,4 6,7 Change in trade and other payables 10,1 -56,2-------------------------------------------------------------- 37,0 83,0 Financial items, net -29,6 -38,8 Taxes paid -57,2 -59,5-------------------------------------------------------------- Net cash flow from operating activities 431,0 450,2 Cash flow from investing activities Capital expenditure -170,3 -179,2 Purchase of shares -9,7 -11,6 Proceeds from asset disposal 0,9 0,8-------------------------------------------------------------- Net cash used in investing activities -179,1 -190,0 Cash flow before financing activities 251,9 260,2 Cash flow from financing activities Purchase of treasury shares -43,3 Proceeds from long-term borrowings 80,0 Repayment of long-term borrowings -36,1 -30,0 Change in short-term borrowings -56,6 38,6 Repayment of finance lease liabilities -4,5 -4,0 Dividends paid and capital repayment -156,7 -285,4-------------------------------------------------------------- Net cash used in financing activities -253,9 -244,1 Change in cash and cash equivalents -2,0 16,1 Cash and cash equivalents at beginning of period 33,0 16,9-------------------------------------------------------------- Cash and cash equivalents at end of period 31,0 33,0 Elisa Corporation 1.1. - 31.12.2009 The annual financial statements figures presented in this release are based on the company's audited financial statements. The auditor's report was issued on 11 February 2010. STATEMENT OF CHANGES IN EQUITY-------------------------------------------------------------------------------- Reserve for invested non- Share Treasury Other restricted Retained Minority Total EUR million capital shares reserves equity earnings interest equity-------------------------------------------------------------------------------- Balance at January 1, 2008 83,0 -165,8 403,9 535,7 176,6 2,0 1035,4-------------------------------------------------------------------------------- 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 Total comprehensive income -10,4 176,3 0,7 166,6-------------------------------------------------------------------------------- Balance at December 31, 2008 83,0 -202,0 393,5 250,8 348,1 1,6 875,0 EUR million-------------------------------------------------------------------------------- Balance at January 1, 2009 83,0 -202,0 393,5 250,8 348,1 1,6 875,0-------------------------------------------------------------------------------- Capital repayment -62,2 -0,7 -62,9 Dividends and capital repayment -92,7 -0,8 -93,5 Share-based compensation 3,2 3,2 Total comprehensive income 1,2 176,3 0,7 178,2-------------------------------------------------------------------------------- Balance at December 31, 2009 83,0 -202,0 394,7 188,6 434,9 0,8 900,0-------------------------------------------------------------------------------- Elisa Corporation 1.1. - 31.12.2009 The annual financial statements figures presented in this release are based on the company's audited financial statements. The auditor's report was issued on 11 February 2010 NOTES ACCOUNTING PRINCIPLES The financial statements bulletin has been prepared in accordance with the IFRS recognition and measurement principles, although all requirements of IAS 34 standard have not been followed. The information has been prepared in accordance with International Financial Reporting Standards effective at the time of preparing and adopted for use by European Union. Apart from the changes in accounting principles stated below, the financial statements have been prepared following the accounting principles of the 31 December 2008 financial statements. Changes in the accounting principles As of 1 January 2009, the Group has applied the following new or revised standards and new interpretations: - IFRS 8 Operating Segments. The standard requires that segment information be presented on the basis of internal reporting submitted to the management. Elisa's organizational and management structure is based on a customer-oriented operating model. The segment structures and reports presented as a result of the introduction of the standard have been renewed in full. The new operating segments to be presented are Consumer Customers and Corporate Customers. The amendment has also affected the impairment testing of goodwill, as goodwill has been re- allocated to the reported operating segments. The operating segments comprise the lowest unit level producing cash flow at which the company management monitors goodwill. The accounting principles for the new segment reporting system and the 2008 reference information have been published in a stock exchange release on 17.4.2009. - Amendment to IAS 1 Presentation of Financial Statements. The amendments have affected the presentation of the income statement and equity in the consolidated financial statements. - Amendment to IFRS 7 Financial Instruments: Disclosures. The amendment has affected the presentation of the consolidated notes. Items recognized at current value are categorized in the notes using a three level hierarchy for current values. The following revised or amended standards and new interpretations that have been introduced have not had an impact on the information contained in the consolidated financial statements: - Annual improvements to IFRS standards - Amendment to IFRS 2 Share-based Payment. The amendment applies to the vesting conditions and cancellations of rights. - Amendment to IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial Statements. The amendments applies to financial instruments with a mandatory redemption feature and obligations created when dissolving a community. - Amendment to IAS 23 Borrowing Costs. According to the amended standard, borrowing costs that are directly related to the acquisition, creation or production of a property item that takes a significantly long time to set it to an operating or or selling condition can no longer be recognized directly as expenses. As of the closing date, Elisa has not had any activated borrowing costs that meet these conditions. - IFRIC 12 Service Concession Arrangements. The interpretation applies to service concession arrangements from a public to a private party in the maintaining party's accounting. - IFRIC 13 Customer Loyalty Programs. The application of the interpretation has not changed the Group's recognition practices. - IFRIC 15 Agreements for the Construction of Real Estate. - IFRIC 16 Hedges of a Net Investment in a Foreign Operation. The interpretation provides guidelines for the hedging calculation of a net investment in a foreign operating unit. Elisa Corporation 1.1. - 31.12.2009 The annual financial statements figures presented in this release are based on the company's audited financial statements. The auditor's report was issued on 11 February 2010. 1. SEGMENT INFORMATION 10-12/2009 Consumer Corporate Unallocated Group EUR million Customers Customers Items Total------------------------------------------------------------------------------ Revenue 217,1 147,8 364,9 EBITDA 71,2 50,1 121,3 Depreciation and amortisation -32,0 -24,8 -56,8 EBIT 39,2 25,3 64,5 Financial income 2,3 2,3 Financial expense -10,6 -10,6 Share of associated companies' profit -0,1 -0,1 Profit before tax 56,1 Investments 33,2 27,7 60,9 10-12/2008 Consumer Corporate Unallocated Group EUR million Customers Customers Items Total------------------------------------------------------------------------------ Revenue 216,9 155,2 372,1 EBITDA 72,5 56,8 129,3 Depreciation and amortisation -29,8 -22,3 -52,1 EBIT 42,7 34,5 77,2 Financial income 7,2 7,2 Financial expense -14,1 -14,1 Share of associated companies' profit 0,0 0,0 Profit before tax 70,3 Investments 35,7 28,0 63,7 1-12/2009 Consumer Corporate Unallocated Group EUR million Customers Customers Items Total------------------------------------------------------------------------------ Revenue 847,8 582,7 1430,5 EBITDA 283,8 200,1 483,9 Depreciation and amortisation -123,1 -93,3 -216,4 EBIT 160,7 106,8 267,5 Financial income 10,5 10,5 Financial expense -43,1 -43,1 Share of associated companies' profit 0,0 0,0 Profit before tax 234,9 Total assets 1059,5 766,3 138,8 1964,6 Investments 91,9 79,5 171,4 1-12/2008 Consumer Corporate Unallocated Group EUR million Customers Customers Items Total------------------------------------------------------------------------------ Revenue 881,5 603,5 1485,0 EBITDA 267,3 204,3 471,6 Depreciation and amortisation -118,7 -88,4 -207,1 EBIT 148,6 115,9 264,5 Financial income 17,1 17,1 Financial expense -54,0 -54,0 Share of associated companies' profit 0,0 0,0 Profit before tax 227,6 Total assets 1143,3 780,8 106,4 2030,5 Investments 101,8 82,1 183,9 Elisa Corporation 1.1. - 31.12.2009 The annual financial statements figures presented in this release are based on the company's audited financial statements. The auditor's report was issued on 11 February 2010. 2. OPERATING LEASE COMMITMENTS 31.12. 31.12. EUR million 2009 2008------------------------------------------------------------------ Due within 1 year 19,2 22,2 Due after 1 year but within 5 years 34,8 36,8 Due after 5 years 13,5 15,2------------------------------------------------------------------ Total 67,5 74,2 3. CONTINGENT LIABILITIES 31.12. 31.12. EUR million 2009 2008------------------------------------------------------------------ Mortgages For own and group companies 0,4 Pledges given Pledges given as surety 0,7 0,8 Guarantees given For others (* 42,4 44,3------------------------------------------------------------------ Mortgages, pledges and guarantees total 43,1 45,5 Other commitments Repurchase commitments 0,0 0,1 *) EUR 41.6 million is related to the guarantee given on a CDO portfolio. 4. DERIVATIVE INSTRUMENTS 31.12. 31.12. EUR million 2009 2008------------------------------------------------------------------ Interest rate swaps Nominal value 150,0 150,0 Fair value recognised in the balance sheet 1,5 1,0 Credit default swaps (* Nominal value 44,0 47,4------------------------------------------------------------------ *) CDS is related to hedging of the guarantor bank in the QTE-arrangement. In 2008 Elisa wrote down t he fair value of the CDS agreement. Elisa Corporation 1.1. - 31.12.2009 The annual financial statements figures presented in this release are based on the company's audited financial statements. The auditor's report was issued on 11 February 2010. KEY FIGURES--------------------------------------------------------------- 1-12 1-12 EUR million 2009 2008--------------------------------------------------------------- Shareholders' equity per share, EUR 5,78 5,61 Interest bearing net debt 718,5 811,6 Gearing 79,8% 92,8% Equity ratio 46,1% 43,3% Return on investment (ROI) *) 16,0% 15,6% Gross investments in fixed assets 171,4 183,9 of which finance lease investments 1,1 4,7 Gross investments as % of revenue 11,9% 12,4% Investments in shares 6,3 14,8 Average number of employees 3216 2946 *) 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 the end of period Earnings/share Profit for the period attributable to equity holders of parent ---------------------------------------------- Average number of outstanding shares[HUG#1383821] Elisa's Financial Statements 2009: http://hugin.info/130630/R/1383821/342677.pdf
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