DNA PLC STOCK EXCHANGE RELEASE 19 OCTOBER 2018, 8:30 AM EEST
DNA arranges two news conferences today. News conference for media and analysts is held at 9:30 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 of DNA's Interim Report, January-September 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 in the report section is disclosed as if the figures were prepared under 2017 revenue guidance.
July-September 2018
- Net sales increased 4.3% and amounted to EUR 228.2 million (218.8 million).
- EBITDA increased 5.4% to EUR 76.5 million (72.6 million), or 33.5% (33.2%) of net sales.
- There were no items affecting the comparability of EBITDA or operating result in the review or reference period.
- Operating result increased 3.4% and was EUR 38.6 million (37.3 million). Operating result as a percentage of net sales was 16.9% (17.0%).
- Earnings per share increased to EUR 0.22 (0.21).
- Revenue per user (ARPU) for mobile communications grew 1.9% and was EUR 18.9 (18.5).
- The mobile communication subscription turnover rate (CHURN) improved and was 15.8% (19.1%).
January-September 2018
- Net sales increased 3.8% and amounted to EUR 676.0 million (651.5 million).
- EBITDA increased 7.2% to EUR 220.9 million (206.1 million), or 32.7% (31.6%) of net sales.
- There were no items affecting the comparability of EBITDA or operating result in the review or reference period.
- Operating result increased 12.4% and was EUR 108.6 million (96.6 million). Operating result as a percentage of net sales was 16.1% (14.8%).
- Operating free cash flow decreased 0.3% and was EUR 140.1 million (140.6 million).
- Earnings per share increased to EUR 0.60 (0.54).
- The mobile communication subscription base grew 2.3%, totalling 2,855,000 (2,790,000).
- Revenue per user (ARPU) for mobile communications grew 3.3% to EUR 18.8 (18.2).
- The mobile communication subscription turnover rate (CHURN) improved and was 16.7% (18.4%).
- The fixed-network subscription base (voice, broadband and cable television) grew to 1,148,000 subscriptions (1,130,000).
DNA revised upwards its guidance for 2018 in 11 October 2018:
DNA's net sales and comparable operating result are expected to improve somewhat in 2018 compared with 2017. DNA's financial position and liquidity are expected to remain at a healthy level.
Previous guidance for 2018 (published on 2 February 2018):
DNA expects both its net sales and comparable operating result in 2018 to remain at the same level as in 2017. DNA's financial position and liquidity are expected to remain at a healthy level.
DNA's guidance for 2018 has been presented in accordance with the 2017 revenue guidance without the effects of IFRS 15, adopted on 1 January 2018.
Key figures
Figures are unaudited.
| EUR million | 7-9/ 2018 Re- ported | 7-9/ 2018 Ad- justed* | 7-9/ 2017 Re- ported | Chan- ge, % | 1-9/ 2018 Re- ported | 1-9/ 2018 Ad- justed* | 1-9/ 2017 Reported | Chan- ge, % | 1-12/ 2017 Re- ported |
| Net sales | 227.5 | 228.2 | 218.8 | 4.3 | 674.8 | 676.0 | 651.5 | 3.8 | 886.1 |
| EBITDA | 76.3 | 76.5 | 72.6 | 5.4 | 219.5 | 220.9 | 206.1 | 7.2 | 271.8 |
| - % of net sales | 33.5 | 33.5 | 33.2 | 32.5 | 32.7 | 31.6 | 30.7 | ||
| Depreciation, amortisation and impairment | 37.0 | 37.9 | 35.3 | 109.1 | 112.3 | 109.5 | 148.2 | ||
| Operating result, EBIT | 39.3 | 38.6 | 37.3 | 3.4 | 110.5 | 108.6 | 96.6 | 12.4 | 123.5 |
| - % of net sales | 17.3 | 16.9 | 17.0 | 16.4 | 16.1 | 14.8 | 13.9 | ||
| Comparable operating result** | 39.3 | 38.6 | 37.3 | 3.4 | 110.5 | 108.6 | 96.6 | 12.4 | 126.6 |
| - % of net sales | 17.3 | 16.9 | 17.0 | 16.4 | 16.1 | 14.8 | 14.3 | ||
| Net result before tax | 37.1 | 36.4 | 34.8 | 4.5 | 101.5 | 99.6 | 89.5 | 11.3 | 114.2 |
| Net result for the period | 29.6 | 29.1 | 27.8 | 4.4 | 81.1 | 79.6 | 71.5 | 11.3 | 93.1 |
| Return on investment (ROI), % | 15.9 | 16.3 | 15.7 | 15.0 | 15.4 | 13.5 | 13.1 | ||
| Return on equity (ROE), % | 20.7 | 21.9 | 19.4 | 17.6 | 18.5 | 16.1 | 15.5 | ||
| Capital expenditure | 34.0 | 34.1 | 24.4 | 39.7 | 84.6 | 85.2 | 70.0 | 21.8 | 144.0 |
| Cash flow after investing activities | 30.0 | 30.0 | 66.3 | 53.0 | 53.0 | 109.8 | 107.7 | ||
| Free cash flow to equity | - | - | - | 57.3 | 57.3 | 114.2 | 118.8 | ||
| Net debt | - | - | - | 389.3 | 389.3 | 302.0 | 304.3 | ||
| Net debt/EBITDA | 1.28 | 1.27 | 1.04 | 1.33 | 1.32 | 1.10 | 1.12 | ||
| Net gearing, % | - | - | - | 66.8 | 72.1 | 51.9 | 50.3 | ||
| Equity ratio, % | - | - | - | 47.6 | 46.3 | 48.6 | 50.6 | ||
| Basic earnings per share, EUR | 0.22 | 0.22 | 0.21 | 0.61 | 0.60 | 0.54 | 0.71 | ||
| Diluted earnings per share, EUR | 0.22 | 0.22 | 0.21 | 0.61 | 0.60 | 0.54 | 0.71 | ||
| Personnel at the end of period | 1,607 | 1,607 | 1,636 | 1,601 |
**Group key figures
CEO's review
DNA's performance has been strong in 2018. In the January-September period, our net sales increased 3.8% to EUR 676.0 million. Our operating result increased 12.4% and was all-time high, EUR 108.6 million. The increase was fuelled 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 January-September period. Operating result as a percentage of net sales increased and was 16.1%.
Both our net sales and operating result continued to grow in the third quarter. Mobile device sales were particularly strong in the third quarter. Operating result increased 3.4% and was EUR 38.6 million. Our mobile communication network subscription volumes were up 65,000 from the reference period, and 28,000 from the end of June, despite intense competition. Our fixed-network broadband and cable television subscription base grew in total by 32,000 subscriptions from the reference period, and by 13,000 from the end of June.
DNA's revenue per user (ARPU) for mobile communications improved and was EUR 18.8 in the January-September period, compared to EUR 18.2 a year ago. Our ARPU was strengthened in particular by our customers switching to faster 4G subscriptions. Our mobile communication subscription turnover rate (CHURN) was 15.8% in the third quarter. Our CHURN rate decreased to 16.7% in the January-September period from 18.4% in the reference period. 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.
On 1 October 2018, we won the 5G frequency band we pursued in the auction organised by the Finnish Communications Regulatory Authority for a price of EUR 21 million. During 2019, we will offer 5G services to our customers who will benefit from more versatile mobile data services of higher quality. During the first phase, we will offer high-quality 5G private and corporate broadband connections. 5G will enable fast and stable connections for many buildings without ready access to a fibre optic connection or where acquiring a fibre optic connection would be considerably expensive.
We have been preparing our mobile network for the 5G era since 2016 with the introduction of 5G-capable technology and increased network capacity. The steady growth of mobile data use has continued in Finland, increasing the need for the 5G network. In the past two years, the data traffic volume in DNA's mobile network has doubled.
According to the report* released by Tefficient in September, DNA's customers have the highest mobile data usage per subscription in the world. For example, in August 2018, an average of 21 gigabytes of mobile data per subscription was used in DNA's network. The new 5G networks and services are likely to further accelerate the use of mobile data and extend it into new areas.
Our operations have developed favorably in 2018, even though competition has remained intense. Low churn and better-than-expected net growth in subscription sales, particularly during the third quarter, have a positive impact on the full-year outlook. On 11 October, in line with our estimate for the end of the year, we raise DNA's guidance for 2018 and we expect both our net sales and comparable operating result to improve somewhat in 2018 compared with 2017. DNA's financial position and liquidity are expected to remain at a healthy level.
Jukka Leinonen
President and CEO
*Tefficient's report: https://tefficient.com/more-data-always-for-more-it-happens/
DNA's financial publications and AGM in 2019:
- Financial Statements Bulletin 2018, 1 February 2019
- Full financial statements for 2018 and an electronic version of the Annual Report for 2018, the week starting on 25 February 2019 (week 9/2018)
- 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 9:30 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 investors at 1:00 pm EEST, 12:00 (noon) CEST, 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 (0)800 523 163
- United Kingdom: +44 333 300 0804
- United States: +1 631 913 1422
- Participant Passcode: 8392 6200#
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: www.dna.fi/investors.
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 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 2017, DNA recorded net sales of EUR 886 million and an operating profit of EUR 124 million. DNA has more than 3.9 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.
