DNA’s excellent financial performance continues 

DNA Ltd Group interim report for January−June 2010

DNA’s excellent financial performance continues

Key figures

* Excluding Welho. Welho business was incorporated into DNA Ltd on 30 June 2010, and the associated business operations were launched on 1 July 2010. For this reason, Welho business is included in the DNA figures in the balance sheet, as well as in the number of subscriptions and employees.

Figures are unaudited.
 
Summary of the second quarter

• DNA's net sales for April–June amounted to EUR 166 million (4–6/2009: EUR 162 million), a three per cent year-on-year increase.
• EBITDA for April to June totalled EUR 47 million, accounting for 28.3 per cent of net sales (4–6/2009: EUR 42 million, 26.3 per cent).
• EBIT came to EUR 20 million, accounting for 12,2 per cent of net sales (4–6/2009: EUR 14 million, 8.7 per cent).
• Profit before tax was EUR 20 million (4–6/2009: EUR 16 million).
• Cash flow after investments was at a good level on account of good financial performance: EUR 20 million (4–6/2009: EUR 5 million).
• The DNA mobile communication subscription base (including mobile broadband) grew in Q2 by 69,000 subscriptions, reaching 2,060,000 in total (6/2008: 1,817,00; 3/2010 1,991,000).
• Revenue per user (ARPU) for mobile communications amounted to EUR 22.3 (4−6/2009: 22.4; 1−3/2010: 21.1).
• The subscription turnover rate (churn) was 17.9 per cent (4–6/2009: 18.9; 1-3/2010: 20.4).
• At the end of June, DNA’s fixed-line network had 1,068,00 telephone, broadband and cable TV subscriptions, without Welho 631,000 (6/2009: 669,000; 3/2010: 638,000).
Summary for January–June
• DNA's net sales for January–June amounted to EUR 328 million (1–6/2009: EUR 320 million), a two per cent increase year on year.
• January–June EBITDA amounted to EUR 94 million, accounting for 28.7 per cent of net sales (1–6/2009: EUR 71 million, 22.2 per cent).
• EBIT amounted to EUR 40 million, accounting for 12.3 per cent of net sales (1–6/2009: EUR 17 million, 5.2 per cent).
• Profit before tax was EUR 37 million (1–6/2009: EUR 15 million).
• Cash flow after investments was EUR 47 million (1–6/2009: EUR 9 million).

Riitta Tiuraniemi, President and CEO:
‘Our profitability and result remain excellent. The Welho acquisition gives a significant boost to our strategic position in the Finnish data communication market.’

During Q2, DNA’s profitability remained at the excellent level reached in Q1. We are closing on our target-level EBITDA of 30 per cent, and our EBIT is already over 12 per cent. Our good financial performance is based on the increase in mobile communication customers, growing use of our services, and the efficiency improvements carried out in 2009. DNA’s net sales showed year-on-year growth of three per cent. The termination charge reduction and introduction of the same level of mobile termination charges for all operators in December 2009 hinder our growth and profitability somewhat.

DNA’s mobile communication subscription base grew by 44,000 subscriptions from January to June, reaching 2,060,000 in total. Compared to this time last year, DNA has 243,000 additional subscriptions. We gained 69,000 new mobile communication subscriptions in April–June, reaching the planned growth rate.  Despite tight competition, we managed to decrease the subscription turnover rate and increase revenue per user (ARPU) in Q2. Both of these elements have a direct positive effect on our result. 
The agreement between Sanoma and DNA for the sales of Welho business operations entered into force in late June. In connection with the business transaction, Sanoma became the second-largest shareholder in DNA. With the transaction, DNA obtains a significant share of the data communication market in the Helsinki Metropolitan Area, gaining both volume and market share for its broadband and cable TV business. Welho’s fibre and local area networks in the Helsinki Metropolitan Area improve DNA’s self-sufficiency as regards the basic mobile network infrastructure, enabling DNA to provide even better connections to customers in and around Helsinki.

After the transaction, DNA will have over three million customers, almost 600,000 of whom have cable television subscriptions. This will make DNA a leading TV operator, with a 43 per cent market share. In fixed-line broadband, the 19 per cent market share acquired after the transaction enables us to further diversify and develop our service portfolio.

In the mobile broadband market, our objective for 2010 remains the same: continued growth and strong investments in our 3G network.  We have constructed hundreds of new base stations, all over Finland. The coverage of DNA’s 3G network has improved in areas including Central Finland, Ostrobothnia, Satakunta, Northern Savo, and Eastern Finland. In the future, the construction of DNA’s 3G network will focus mainly on the improvement of current networks by adding capacity and upgrading base stations. However, we will construct some new base stations, too.

DNA’s year-end outlook is cautiously optimistic. The recession seems to be abating and traffic volumes are reaching slightly higher levels than previously predicted. The rapidly growing use of smartphones and the resulting increase in the use of mobile broadband boost per-user revenue.

INTERIM REPORT, JANUARY–JUNE 2010 >>

Further information from 11 am:
Riitta Tiuraniemi, President and CEO, at tel. +358 44 220 3201, riitta.tiuraniemi@dna.fi
Ilkka Pitkänen, CFO, at tel. +358 44 044 4001, ilkka.pitkanen@dna.fi
Vilhelmiina Wahlbeck, Vice President for Corporate Communications, at tel. +358 44 040 1671, vilhelmiina.wahlbeck@dna.fi