DNA Plc's Financial Statements Bulletin 2018: DNA's net

DNA PLC STOCK EXCHANGE RELEASE 1 FEBRUARY 2019, 8:30 AM EET

DNA arranges two news conferences today. News conference for media and analysts is held at 10:00 am Finnish time. Conference call for analysts and institutional investors is at 1:00 pm Finnish time. Details of the events can be found at the end of this release.

This is a summary DNA's Financial Statements Bulletin 2018. The complete report is attached to this release and 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.

For 2018, as required by the IFRS standards, the financial tables contain figures reported according to the IFRS 15 and IFRS 9 standards adopted on 1 January 2018. As required by IFRS 15, figures adjusted are disclosed as if they were prepared under 2017 revenue guidance. The comparative analysis between periods in the report section uses comparable figures, where the 2018 figures are disclosed as if they were prepared under 2017 revenue guidance.

October-December 2018

• Net sales increased 1.2% and amounted to EUR 237.5 million (234.6 million).
• EBITDA decreased 4.5% to EUR 62.7 million (65.7 million), or 26.4% (28.0%) of net sales.
• Operating result decreased 6.5% and was EUR 25.1 million (26.9 million). Operating result as a percentage of net sales was 10.6% (11.5%).
• Comparable operating result amounted to EUR 25.1 million (29.9 million).
• Earnings per share decreased to EUR 0.14 (0.16).
• Revenue per user (ARPU) for mobile communications decreased 0.2% and was EUR 18.9 (19.0).
• The mobile communication subscription turnover rate (CHURN) decreased and was 14.8% (18.1%).

January-December 2018

• Net sales increased 3.1% and amounted to EUR 913.5 million (886.1 million).
• EBITDA increased 4.4% to EUR 283.6 million (271.8 million), or 31.0% (30.7%) of net sales.
• Operating result increased 8.3% and was EUR 133.8 million (123.5 million). Operating result as a percentage of net sales was 14.6% (13.9%).
• Comparable operating result amounted to EUR 133.8 million (126.6 million).
• Operating free cash flow increased 7.3% and was EUR 149.0 million (138.9 million).
• Earnings per share increased to EUR 0.74 (0.71).
• The mobile communication subscription base grew 2.3%, totalling 2,877,000 (2,811,000).
• Revenue per user (ARPU) for mobile communications increased 2.3% and was EUR 18.8 (18.4).
• The mobile communication subscription turnover rate (CHURN) decreased and was 16.2% (18.3%).
• The fixed-network subscription base (voice, broadband and cable television) grew to 1,152,000 subscriptions (1,130,000).

Board of Directors' proposal for distributable funds

The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0.70 per share be paid for the financial period ending 31 December 2018. The Board also proposes that an extra dividend of EUR 0.40 per share be distributed. In total, the Board's proposal is to distribute EUR 1.10 per share.

DNA's guidance for 2019

DNA's net sales in 2019, is expected to remain at the same level as in 2018, and EBITDA in 2019 is expected to increase substantially from 2018. DNA's financial position and liquidity are expected to remain at a healthy level.

DNA's guidance for 2019 is disclosed with consideration to the impact of the adoption of IFRS 16. The adoption of IFRS 16 from the beginning of 2019, is estimated to have a positive impact of approximately 17 million euros in EBITDA in 2019. The impact of IFRS 16 on operating result (EBIT) is insignificant. 

Key figures

Figures are unaudited.

* Adjusted figures are disclosed as prepared under 2017 revenue guidance and do not currently incorporate the impact from the adoption of IFRS 15 as of 1 January 2018. **Group key figures

CEO's review

2018 was a record-breaking year for DNA. We achieved our strategic objectives very well: our customer satisfaction developed favourably, our net sales and profitability were at the highest level in the history of DNA and our personnel satisfaction improved yet again. This put us in a good position to start the year 2019.

In 2018, our net sales increased 3.1% to EUR 913.5 million. Our comparable operating result grew 5.7% and, like our net sales, reached a record level: EUR 133.8 million. Comparable operating result as a percentage of net sales increased and was 14.6%. Net sales were driven by the growth of mobile service revenue, which was boosted in particular by the positive development of our mobile subscription base and increased share of high-value 4G subscriptions. Mobile device sales were also at a high level during the year.

Our profitability in the last quarter was affected by higher sales and marketing costs. As a result, our comparable operating result decreased 16.1% and amounted to EUR 25.1 million in the last quarter. Our efforts to secure our current customer base bore fruit and CHURN was at a low level of 14.8% in October-December.

Our mobile network subscription volumes were up 66,000 year-on-year and totalled 2,877,000 at the end of the year, despite intense competition. Our fixed-network broadband subscription base grew in total by 23,000 subscriptions and our cable television subscription base by 11,000 subscriptions in 2018. Our subscription base exceeded four million in the third quarter. During the summer, we increased our share of the fixed broadband market to 28% and became the second-largest fixed broadband service provider in Finland.

Our revenue per user (ARPU) for mobile communications amounted to EUR 18.8 in 2018, while in 2017, it was EUR 18.4. Our ARPU was strengthened in particular by our customers switching to faster 4G subscriptions. Our CHURN rate developed favourably and decreased from 18.3% in 2017 to 16.2%. While competition remained intense, we have been able to maintain a low level of CHURN thanks to high customer satisfaction and our ability to react quickly to competitors' campaigns.

5G is an important step forward for mobile data services and we have been systematically preparing our mobile network for 5G with the introduction of 5G-capable technology and increased network capacity. At the turn of the year, we launched a 5G network in Helsinki. Initially, the network will cover the very centre of the city, but will be expanded once 5G-capable mobile devices become widely available. We are also in the process of piloting 5G Fixed Wireless Access (FWA) technology in the city of Vantaa. First to benefit from the 5G network are detached-home residents and businesses without access to a fibre optic connection.

DNA will continue to improve its 4G network in parallel to the 5G investments. In our view, 4G will remain the primary mobile communication network technology for a long time still.

Our focus on improving our working environment was again recognised in November as we received the Great Place to Work® certificate for the second consecutive year. Our personnel satisfaction improved for the fourth consecutive year.

We will continue to develop our business in 2019 according to our strategic objectives, focusing on customer experience, personnel satisfaction and profitable growth. In 2019, we expect DNA's net sales to remain at the same level as in 2018, and EBITDA, including the impact of IFRS 16 standard, is expected to increase substantially from 2018. The Group's financial position and liquidity are expected to remain at a healthy level.

Jukka Leinonen President and CEO

DNA's financial publications and AGM in 2019:

• Full financial statements for 2018 and an electronic version of the Annual Report for 2018, the week starting on 25 February 2019 (week 9/2019)
• DNA's Annual General Meeting, 28 March 2019
• Interim Report January-March 2019, 25 April 2019
• Half-year financial report (January-June), 19 July 2019
• Interim Report January-September 2019, 22 October 2019

News conferences

DNA will arrange a news conference for media and analysts in Finnish at 10:00 am EET. 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: https://www.dna.fi/result-conferences .

Conference call for analysts and investors at 1:00 pm EET, 12:00 (noon) CET, 11:00 am BST

The audience is welcome to participate and ask questions through a conference call by dialing in a couple of minutes before the scheduled time;

• Finland: +358 9 8171 0310
• United Kingdom: +44 333 300 0804
• United States: +1 631 913 1422
• Participant Passcode: 6963 5673#

The result bulletin, presentation materials as well as a link to the webcast and audiocast will be available on DNA's website before the event:  https://www.dna.fi/result-conferences .

Recordings of the both events will also be available on www.dna.fi/investors , later during the result day.

Additional information:

Jukka Leinonen, CEO, DNA Plc, tel. +358 44 044 1000, jukka.leinonen(at)dna.fi Timo Karppinen, CFO, DNA Plc, tel. +358 44 044 5007, timo.karppinen(at)dna.fi Marja Mäkinen, Head of IR, DNA Plc, tel. +358 44 044 1262, marja.makinen(at)dna.fi DNA Corporate Communications, tel. +358 44 044 8000, viestinta(at)dna.fi  

DNA 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. Our mission is to provide products and services that make our private and corporate customers' lives simple. As a telecommunications operator, DNA plays an important role in society by providing important communication connections and by enabling digital development. In 2018, our net sales were EUR 912 million and our operating profit EUR 139 million. DNA has more than 4 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 and Facebook.

Attachment

• DNA's Financial Statements Bulletin 2018.pdf