DNA Ltd’s Financial Statements Release 2011 

DNA’S GROWTH CONTINUES: NET SALES EUR 727.5 MILLION, EBITDA EUR 188.4 MILLION

SUMMARY

October–December

• Net sales increased by 4.5 per cent year-on-year to EUR 190.2 million (182.0 million).
• EBITDA increased by 16.5 per cent to EUR 46.5 million (39.9 million), or 24.4 per cent of net sales. EBITDA for the comparable period was affected, in particular, by a non-recurring provision due to cooperation negotiations. Depreciation for the review period remained high, and net sales increased by 76.9 percent to EUR 13.2 million (7.5 million), or 7.0 per cent of net sales.
• In December, DNA introduced 4G-grade speeds in 130 municipalities.

• The mobile communication subscription base grew by 8.4 per cent year-on-year to 2,285,000 in total.
   -Revenue per user (ARPU) for mobile communications amounted to EUR 20.5 (21.4).
   - Mobile communication subscription turnover rate (CHURN) was 16.5 per cent (19.4 per cent).
• Due to the fall in the number of telephone subscriptions, DNA’s fixed-line subscription base fell by 2.0 per cent year-on-year to 1,039,000 subscriptions (telephone, broadband and cable television).

January–December

• Net sales increased by 5.4 per cent year-on-year to EUR 727.5 million (690.5 million). From 1 July 2010 onwards, net sales growth was fuelled by incorporation of the Welho business in particular. An internal system error necessitated an adjustment of EUR -6.7 million in the net sales and result for the January–September period. It did not affect customer-facing functions, cash flow or the financial result estimate for the year.
• EBITDA improved by 3.5 per cent and totalled EUR 188.4 million (182.1 million), or 25.9 per cent of net sales. Due to an increase in depreciation, operating profit fell by 22.1 per cent and came to EUR 50.8 million (65.2 million), or 7.0 per cent of net sales.
 
Key figures
Figures are unaudited.

 *12-month average
**includes business combinations and financial lease agreements

CEO’s review
“Net sales grew despite challenging market.”

DNA’s net sales for 2011 grew by 5.4 per cent year-on-year to EUR 727.5 million (690.5 million). EBITDA for the review year improved by 3.5 per cent and came to EUR 188.4 million (182.1 million). As anticipated, operating profit was weakened by the increase in depreciation and came to EUR 50.8 million (65.2 million). Our financial position remained very good.

2011 was a challenging year due to the change in the Telecommunications Act and the extensive renewal of our customer information system. After the third quarter, it was confirmed that an internal system error necessitated an adjustment of EUR -6.7 million in the net sales and result for the January–September period. However, this did not affect customer-facing functions, cash flow or DNA’s net sales and financial result estimates for 2011.

Net sales for the last quarter grew by 4.5 per cent year-on-year to EUR 190.2 million (182.0 million). EBITDA for the period grew by 16.5 per cent to EUR 46.5 million (39.9 million), or 24.4 per cent (21.9 per cent) of net sales. Operating profit was EUR 13.2 million (7.5 million), or 7.0 per cent (4.1 per cent) of net sales.

The growth of EBITDA and net sales in October–December was caused by higher net sales and a non-recurring provision in the comparable period due to cooperation negotiations. Subscription turnover rate (CHURN) remained lower year-on-year, but increased slightly from the previous quarter in accordance to normal seasonal fluctuation. Depreciation remained high.

Major investments in the network combined with business acquisitions increased gearing to 24.5 per cent (16.1 per cent). Extremely low gearing will enable strategic investments and business acquisitions also in the future. DNA’s net debt/EBITDA ratio was 0.81 (0.56), remaining at a very healthy level.

In December, we launched 4G services based on LTE (Long Term Evolution) technology in the Helsinki Metropolitan Area and the cities of Turku, Tampere and Hämeenlinna. We will expand the coverage of the 4G network further in 2012. We also significantly expanded the coverage of Dual Carrier technology on our mobile network. By the end of 2011, it enabled the use of 4G-grade speeds on our 3G network in over 130 municipalities.

Fast 4G technology further increases the competitiveness of DNA’s mobile broadband services in comparison with traditional fixed-network broadband services. 4G speeds have only recently become available on the market and have significant potential. The use of smart terminals and entertainment services is increasing at a rapid pace on the mobile network, as a growing number of users prefer to log into social media services from their mobile terminals rather than PCs.

DNA’s comprehensive channel offering on the terrestrial network will grow further in early 2012. According to the new programme licences granted in December, we can significantly increase the offering of HDTV sports coverage.

Although the pay-TV business on the terrestrial network was slow to pick up in 2011, we believe that pay-TV services in the terrestrial and cable networks will grow throughout the market, since the most appealing sports coverage is expected to move to pay-TV.

By the end of 2011, DNA's HD channel offering was the most extensive over both the cable and terrestrial network. Our terrestrial TV network covered some 70 per cent of the population, and our cable-TV network had some 600,000 connected households.

DNA’s renewed customer information system was adopted in the spring, giving us the opportunity to renew our entire subscription product portfolio. Owing to this, we can further develop comprehensive product packages that make product choices easier for customers. Product packaging is introducing a significant change in the market and increases the predictability of invoicing.

Apart from the increasing availability of product packages on the market, key points in 2012 include the expansion of DNA’s TV business to nationwide coverage and the legislative proposal on prohibiting the telemarketing of mobile subscriptions, which DNA is in favour of. If approved, it will change the structure of mobile subscription sales.

The Group’s financial position is expected to remain good in 2012, and net sales are expected to grow. EBITDA (in euro) is estimated to remain at a similar level as in 2011, and operating profit is expected to be lower than in 2011 due to an increase in depreciation.

Riitta Tiuraniemi

Further information (6 February from 1 pm onwards):
Riitta Tiuraniemi, CEO, tel. +358 44 044 1000, riitta.tiuraniemi@dna.fi
Ilkka Pitkänen, CFO, tel. +358 44 044 4001, ilkka.pitkanen@dna.fi
Minna Robertson, Financial Communications Manager, tel. +358 44 044 9877, minna.robertson@dna.fi

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www.dna.fi

ATTACHMENT: DNA Ltd’s Financial Statements Release 2011 (pdf) >>