DNA Plc’s Financial Statements Bulletin 2019

DNA’s net sales and EBITDA reach record levels in 2019, driven by strong mobile service revenue

DNA PLC STOCK EXCHANGE RELEASE 28 JANUARY 2020, 8:30 AM EET

This is a summary DNA’s Financial Statements Bulletin 2019. The complete report is attached to this release and also available at .

Summary

Unless otherwise stated, the comparison figures in brackets refer to the corresponding period in the previous year (reference period). Figures are unaudited. The impact of IFRS 16 on the statement of financial position and income statement is presented in Note 12.

In December 2019, due to redemption of minority shares in DNA by Telenor Finland Holding oy, DNA has applied for the termination of public trading in DNA's shares and for delisting of DNA's shares from the official list of Nasdaq Helsinki. The trading in DNA shares will be terminated after Telenor has obtained title to all outstanding shares in DNA.

October–December 2019

• Net sales increased 2.3% and amounted to EUR 242.4 million (236.9 million).
• Mobile service revenue grew 6.6% and was EUR 123.6 million (116.0 million).
• EBITDA increased 10.7% and was EUR 72.4 million (65.4 million), or 29.9% (27.6%) of net sales.
• The comparability of the operating result in the reference period was affected by a non-recurring expense item of EUR 3.1 million.
• The operating result decreased 8.4% and was EUR 26.1 million (28.4 million). The operating result as a percentage of net sales was 10.8% (12.0%).
• The comparable operating result increased 2.6% and came to EUR 29.2 million (28.4 million).
• IFRS 16 had a positive effect on EBITDA in the quarter and an insignificant impact on the operating result (Note 12).
• Earnings per share was EUR 0.14 (0.16).
• Revenue per user (ARPU) for mobile communications decreased 0.6% and was EUR 18.7 (18.9).
• The mobile communication subscription turnover rate (churn) increased and was 17.5% (14.8%).
• In December, DNA applied to delist its shares from the official list of Nasdaq Helsinki.

January–December 2019

• Net sales increased 3.3% and amounted to EUR 942.1 million (911.8 million).
• Mobile service revenue grew 7.0% and was EUR 486.4 million (454.4 million).
• EBITDA increased 7.2% and was EUR 305.6 million (284.9 million), or 32.4% (31.2%) of net sales.
• Comparable EBITDA increased 8.8% and came to EUR 309.9 million (284.9 million).
• In the review period, the comparability of EBITDA was affected by non-recurring expense items of EUR 4.3 million in relation to business restructuring.
• The comparability of the operating result was affected by non-recurring items of EUR 7.4 million.
• The operating result decreased 3.7% and was EUR 133.7 million (138.9 million). The operating result as a percentage of net sales was 14.2% (15.2%).
• The comparable operating result increased 1.6% and came to EUR 141.1 million (138.9 million).
• IFRS 16 had a positive effect on EBITDA in the review period and an insignificant impact on the operating result (Note 12).
• Operating free cash flow increased 12.3% and was EUR 169.6 million (151.0 million).
• Earnings per share was EUR 0.75 (0.77).
• The mobile communication subscription base shrank 1.9%, totalling 2,822,000 (2,877,000).
• Revenue per user (ARPU) for mobile communications remained constant at EUR 18.7 (18.7).
• The mobile communication subscription turnover rate (churn) also remained constant at 16.2% (16.2%).
• The fixed-network subscription base (voice, broadband, and cable television) grew 7.7% to 1,241,000 subscriptions (1,152,000).
• At the time of the publication of the Financial Statements Bulletin, DNA’s Board of Directors has not made a decision on a proposal to the Annual General Meeting on the possible distribution of a dividend per share.

DNA’s guidance for 2020

DNA has changed the way it issues guidance on future outlook, and it will not issue guidance on its net sales and EBITDA for 2020. DNA expects competition to remain strong in 2020. Nonetheless, DNA’s business is anticipated to develop favourably. DNA’s financial position and liquidity are expected to remain at a healthy level.



Key figures

Figures are unaudited.

CEO’s review

Once again, DNA has fared well in a challenging market environment. Net sales for January–December increased 3.3% and amounted to EUR 942.1 million. The positive development was fuelled in particular by our mobile service revenue, which grew 7.0%, and by robust mobile device sales, which were up 10.3%. Comparable EBITDA developed strongly in 2019, reflecting growth from both business segments. Comparable EBITDA grew 8.8% from the reference period to EUR 309.9 million, or 32.9% of net sales.

Competition intensified further during the last quarter of the year. Even so, both our growth and profitability showed a positive trend. Net sales increased 2.3% year-on-year and amounted to EUR 242.4 million. Positive net sales development was fuelled in particular by strong mobile service revenue, which grew 6.6% from the last quarter of 2018, boosted by favourable development of our customer billing and postpaid subscription base. Mobile device sales were up 3.2%. Comparable EBITDA improved 10.7% in the last quarter and was EUR 72.4 million, or 29.9% of net sales.

Our mobile communication subscription base decreased by 55,000 in the October–December period, due to a decrease in prepaid subscriptions. Our postpaid subscription base increased by 37,000. Revenue per user (ARPU) decreased slightly from the reference period to EUR 18.7, due to a decrease in interconnection charges from the reference period. Our customer churn rate was 17.5%. Our fixed-network subscription base grew by 89,000, boosted by new broadband connections in particular.

We are in the process of launching the sales of 5G subscriptions to consumer and corporate customers. In early 2020, DNA’s 5G network will be available in more than 20 locales. Customers using 5G subscriptions benefit from higher speeds and lower latency. The benefits of 5G and its positive impact on customer experience will become more evident as customers use increasingly rich content, higher resolution videos, and services such as online gaming, where low latency is critical. In December, we launched the sales of our 5G Fixed Wireless Access service. The solution provides super-fast connections in areas where fibre-optic connections are not available or would be very expensive to build. We will continue to improve and expand our 4G network parallel to the 5G investments.

In August, Norwegian telecommunications group Telenor acquired a 54% stake in DNA and became the main shareholder. After the completion of the transaction and the resulting mandatory public tender offer, Telenor’s holding of DNA shares was 97.87%. Telenor then commenced mandatory redemption proceedings for the remaining shares, following which DNA submitted an application to Nasdaq Helsinki in December, requesting the termination of public trading in DNA’s shares and the delisting of DNA’s shares from the official list of Nasdaq Helsinki. Delisting of DNA share is possible once Telenor has the right to obtain title to all DNA’s minority shares, which is expected to take place in early 2020.

We will continue the long-term development of our business, focusing on customer experience, personnel satisfaction, and the resulting profitable growth. We expect our business to develop favourably in 2020.

Jukka Leinonen

CEO

Additional information:

Jukka Leinonen, CEO, DNA Plc, 0,

Timo Karppinen, CFO, DNA Plc, 7,

Marja Mäkinen, Head of IR, DNA Plc, 2,

DNA Corporate Communications, 0,

DNA is one of the leading telecommunications companies in Finland. We want to make our customers' daily lives less complicated. We offer connections, services and devices for homes and workplaces, contributing to the digitalisation of society. DNA’s mobile communication network customers have the highest mobile data usage per subscription in the world. We are Finland's largest cable TV operator. DNA has more than 4 million subscriptions in its fixed and mobile communications networks. The company was ranked the best employer in Finland in the large companies’ category of the 2019 Great Place to Work survey. In 2019, our net sales were EUR 942,1 million and we employ about 1,600 people around Finland. DNA is a part of Telenor Group, the leading ICT company in the Nordics. Additional information: , Twitter @DNA_fi, Facebook @DNA.fi and LinkedIn.

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