DNA Plc Interim Report January-September 2017: DNA
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DNA PLC STOCK EXCHANGE RELEASE 20 OCTOBER 2017 AT 8:30 AM EEST
DNA arranges two news conferences today. News conference for media and analysts is held at 10:00 am Finnish time at DNA House. Conference call for analysts and institutional investors is at 2:00 pm Finnish time. Details of the events can be found at the end of this release.
This is a summary of DNA's Interim Report for January-September 2017. The complete report is attached to this release and is also available at www.dna.fi/investors .
Summary
Unless otherwise stated, the comparison figures in brackets refer to the corresponding period in the previous year (reference period). Figures are unaudited.
July - September 2017
- Net sales decreased 1.2% and amounted to EUR 218.8 million (221.5 million).
- EBITDA increased 9.3% to EUR 72.6 million (66.4 million), or 33.2% (30.0%) of net sales.
- Comparable EBITDA was EUR 72.6 million (70.9 million).
- The operating result increased 27.2% and was EUR 37.3 million (29.3 million). Operating result as a percentage of net sales increased and was 17.0% (13.2%).
- The comparable operating result amounted to EUR 37.3 million (33.9 million).
- Revenue per user (ARPU) for mobile communications amounted to EUR 18.5 (17.7).
- The mobile communication subscription turnover rate (CHURN) was 19.1% (17.8%).
January-September 2017
- Net sales increased 2.8% and amounted to EUR 651.5 million (633.7 million).
- EBITDA increased 11.4% to EUR 206.1 million (185.0 million), or 31.6% (29.2%) of net sales.
- Comparable EBITDA came to EUR 206.1 million (189.6 million).
- The operating result increased 25.9% and was EUR 96.6 million (76.7 million). Operating result as a percentage of net sales increased and was 14.8% (12.1%).
- The comparable operating result amounted to EUR 96.6 million (81.3 million).
- The mobile communication subscription base grew 2.2%, totalling 2,790,000 (2,731,000).
- Revenue per user (ARPU) for mobile communications amounted to EUR 18.2 (17.0).
- The mobile communication subscription turnover rate (CHURN) was 18.4% (15.5%).
- The fixed-network subscription base (voice, broadband and cable television) grew slightly and was 1,130,000 subscriptions at the end of September (1,115,000).
DNA revised upwards its guidance for 2017 regarding profitability on 13 October, 2017
Revised guidance for 2017: DNA's net sales are expected to remain at the same level and the comparable operating result is expected to improve substantially in 2017 compared to 2016. The Group's financial position and liquidity is expected to remain at a healthy level.
Previous guidance for 2017 (published on 31 January 2017):
DNA's net sales are expected to remain at the same level and the comparable operating result is expected to improve somewhat in 2017 compared to 2016. The Group's financial position and liquidity is expected to remain at a healthy level.
Key figures
Figures are unaudited.
| EUR million | 7-9/2017 | 7-9/2016 | Change, % | 1-9/2017 | 1-9/ 2016 | Change, % | 1-12/2016 |
| Net sales | 218.8 | 221.5 | -1.2% | 651.5 | 633.7 | 2.8% | 858.9 |
| EBITDA | 72.6 | 66.4 | 9.3% | 206.1 | 185.0 | 11.4% | 236.3 |
| - % of net sales | 33.2% | 30.0% | 31.6% | 29.2% | 27.5 % | ||
| Comparable EBITDA* | 72.6 | 70.9 | 2.3% | 206.1 | 189.6 | 8.7% | 247.1 |
| - % of net sales | 33.2% | 32.0% | 31.6% | 29.9% | 28.8% | ||
| Depreciation, amortisation and impairment | 35.3 | 37.0 | 109.5 | 108.3 | 145.0 | ||
| Operating result, EBIT | 37.3 | 29.3 | 27.2% | 96.6 | 76.7 | 25.9% | 91.2 |
| - % of net sales | 17.0% | 13.2% | 14.8% | 12.1% | 10.6% | ||
| Comparable operating result* | 37.3 | 33.9 | 10.1% | 96.6 | 81.3 | 18.9% | 102.1 |
| - % of net sales | 17.0% | 15.3% | 14.8% | 12.8% | 11.9% | ||
| Net result before tax | 34.8 | 26.9 | 29.4% | 89.5 | 69.5 | 28.8% | 81.7 |
| Net result for the period | 27.8 | 21.5 | 29.3% | 71.5 | 55.6 | 28.7% | 65.2 |
| Return on investment (ROI), % | 15.7 | 12.4 | 13.5 | 10.7 | 9.6 | ||
| Return on equity (ROE), % | 19.4 | 16.2 | 16.1 | 13.9 | 11.6 | ||
| Capital expenditure | 24.4 | 30.3 | -19.4% | 70.0 | 84.9 | -17.6% | 143.6 |
| Cash flow after investing activities | 66.3 | 39.4 | 109.8 | 79.7 | 83.5 | ||
| Net debt, EUR million | 302.0 | 373.1 | 302.0 | 373.1 | 321.7 | ||
| Net debt/EBITDA | 1.04 | 1.41 | 1.10 | 1.51 | 1.36 | ||
| Net gearing, % | 51.9 | 69.0 | 51.9 | 69.0 | 53.9 | ||
| Equity ratio, % | 48.6 | 45.8 | 48.6 | 45.8 | 48.4 | ||
| Basic earnings per share, EUR | 0.21 | 0.17 | 0.54 | 0.44 | 0.51 | ||
| Diluted earnings per share, EUR | 0.21 | 0.17 | 0.54 | 0.44 | 0.51 | ||
| Personnel at the end of period | 1,636 | 1,669 | 1,668 |
*Group key figures
CEO's review
DNA had a strong January-September period, and both our net sales and our profitability improved. Our net sales increased 2.8% to EUR 651.5 million, fuelled by the growth in service revenue, which was boosted in particular by the growth of our mobile subscription base and increased share of 4G subscriptions. Our comparable operating result for the January-September period grew 18.9% and was EUR 96.6 million, or 14.8% of net sales (12.8%).
Our results continued to develop favourably also in the third quarter, despite intensifying competition. While our net sales decreased slightly, our comparable operating result increased 10.1% and was EUR 37.3 million. Our service revenue grew slightly, but mobile device sales fell short of the strong reference period a year earlier. The result was fuelled by the improved cost-efficiency of our modern network platforms. We expect our operative capital expenditure to increase during the last quarter of 2017 but remain at a somewhat lower level than in 2016.
Our mobile communication network subscription volumes were up 59,000 from the reference period. DNA's corporate mobile subscription base in particular has grown strongly throughout 2017. DNA's revenue per user (ARPU) improved and was EUR 18.2 in the third quarter, compared to EUR 17.0 a year ago. Competition has remained intense throughout 2017, affecting our CHURN rate. Our broadband and cable television subscriptions increased in total by 26,000 subscriptions, adding 15,000 new subscriptions to our fixed-network subscription base (fixed voice, fixed-network broadband and cable television) compared to last year.
Finns are watching more TV content than before, and in more versatile ways. According to the survey* we commissioned in the summer, the increase is particularly noticeable among young people (those aged 15 to 24): up to 42% of them said they had increased their consumption of TV content. The increase is mostly due to content viewed online. We responded by launching a new Android TV device, called "DNA TV-hubi" in the third quarter. The device combines a set-top box, online applications, games and music to one, easy-to-use entertainment system which also has a smart phone-style app store. Sales of the hub took off well, giving a clear signal that Finns are welcoming the new way of watching TV.
We revised upwards our guidance for 2017 regarding profitability. DNA's net sales are expected to remain at the same level and the comparable operating result is expected to improve substantially in 2017 compared to 2016. The Group's financial position and liquidity is expected to remain at a healthy level. DNA's business has developed favourably for the beginning of the year. Especially the first half was strong. The demand for mobile communications services has been good throughout the year and profitability was fuelled by the growth in service revenue and the improved cost-efficiency of modern network platforms. Intense competition might affect DNA's CHURN rate during rest of the year.
We will continue to serve our customers with our strategic objectives in mind.
Jukka Leinonen President and CEO
*DNA's " Digitaaliset Elämäntavat" survey on the digital way of life in Finland (in Finnish)
DNA's Capital Markets Day 2017, financial publications and AGM in 2018:
- 21 November 2017: DNA's Capital Markets Day in Helsinki
- 2 February 2018: Financial Statements Bulletin 2017
- 22 March 2018: Annual General Meeting
- 19 April 2018: Interim Report 1-3/2018
- 19 July 2018: Half Year Financial Report 1-6/2018
- 18 October 2018: Interim Report 1-9/2018
News conferences
DNA will arrange a news conference for media and analysts in Finnish at 10:00 am EEST. The event will take place at DNA House, Läkkisepäntie 21, Helsinki. Registration for the event is requested by email to communications@dna.fi . The news conference will also be webcasted live on www.dna.fi/investors .
Conference call for analysts and institutional investors in English at 2:00 pm EEST
The audience is welcome to participate and ask questions through a conference call. Participants are requested to dial in a couple of minutes before the scheduled time;
- Finland: +358 (0) 9 6937 9543
- UK: +44 (0) 20 3427 1907
- USA: +1 646 254 3366
- confirmation code: 305 2663
The result bulletin and presentation materials as well as a link to the webcast will be available on DNA's website before the event: www.dna.fi/investors . Recordings of the both events will be available on DNA's website, www.dna.fi/investors , later during the day.
Additional information: Jukka Leinonen, CEO, DNA Plc, +358 44 044 1000, jukka.leinonen(at)dna.fi Timo Karppinen, CFO, DNA Plc, +358 44 044 5007, timo.karppinen(at)dna.fi Marja Mäkinen, Head of IR, DNA Plc, +358 44 044 1262, marja.makinen(at)dna.fi DNA Corporate Communications, +358 44 044 8000, viestinta(at)dna.fi
DNA Plc is a Finnish telecommunications group providing high-quality voice, data and TV services for communication, entertainment and working. DNA is Finland's largest cable operator and the leading pay TV provider in both cable and terrestrial networks. For DNA, the key area for growth in corporate business is the new way of working, independent of time and place, facilitated by smart terminal devices, diverse communications services and rapid connections. In 2016, DNA recorded net sales of EUR 859 million and an operating profit of EUR 91 million. DNA has more than 3.8 million subscriptions in its fixed and mobile communications networks. The Group also includes DNA Store, Finland's largest retail chain selling mobile phones. DNA shares are listed on Nasdaq Helsinki Ltd. For further information, visit www.dna.fi or follow us on Twitter @DNA_fi, @DNA_Business and @DNA_Palvelu and Facebook.
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