DNA PLC STOCK EXCHANGE RELEASE 19 JULY 2018, 8:30 AM EEST

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 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 Half-Year Financial Report 2018. 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.

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.

April-June 2018

  • Net sales increased 2.8% and amounted to EUR 225.5 million (219.3 million).
  • EBITDA increased 6.8% to EUR 72.2 million (67.6 million), or 32.0% (30.8%) of net sales.
  • There were no items affecting the comparability of EBITDA or operating result in the review or reference period.
  • Operating result increased 13.1% and was EUR 34.5 million (30.5 million). Operating result as a percentage of net sales was 15.3% (13.9%).
  • Earnings per share increased to EUR 0.20 (0.17).
  • Revenue per user (ARPU) for mobile communications amounted to EUR 18.5 (18.5).
  • The mobile communication subscription turnover rate (CHURN) was 15.4% (15.4%).

January-June 2018

  • Net sales increased 3.5% and amounted to EUR 447.8 million (432.7 million).
  • EBITDA increased 8.2% to EUR 144.5 million (133.6 million), or 32.3% (30.9%) of net sales.
  • There were no items affecting the comparability of EBITDA or operating result in the review or reference period.
  • Operating result increased 18.1% and was EUR 70.1 million (59.4 million). Operating result as a percentage of net sales was 15.6% (13.7%).
  • Operating free cash flow increased 5.8% and was EUR 97.7 million (92.4 million).
  • Earnings per share increased to EUR 0.38 (0.33).
  • The mobile communication subscription base grew 2.7%, totalling 2,827,000 (2,754,000).
  • Revenue per user (ARPU) for mobile communications amounted to EUR 18.7 (18.0).
  • The mobile communication subscription turnover rate (CHURN) was 17.1% (18.1%).
  • The fixed-network subscription base (voice, broadband and cable television) had 1,137,000 subscriptions (1,125,000).

DNA's guidance for 2018 remains unchanged

DNA's net sales and comparable operating result are expected in 2018 to remain at the same level as in 2017. The Group's financial position and liquidity is expected to remain at a healthy level.

DNA's guidance for 2018 is disclosed as it was prepared under 2017 revenue guidance and does not currently incorporate the potential impact from the adoption of IFRS 15 as of 1 January 2018.

Key figures

Figures are unaudited.

EUR million 4-6/ 2018 Re- ported 4-6/ 2018 Ad- justed* 4-6/ 2017 Re- ported Change - % 1-6/ 2018 Re- ported 1-6/ 2018 Ad- justed* 1-6/ 2017 Re- ported Change -% 1-12/ 2017 Re- ported
Net sales 225.0 225.5 219.3 2.8 447.3 447.8 432.7 3.5 886.1
EBITDA 72.6 72.2 67.6 6.8 143.3 144.5 133.6 8.2 271.8
- % of net sales 32.3 32.0 30.8   32.0 32.3 30.9   30.7
Depreciation, amortisation and impairment 36.6 37.7 37.1   72.0 74.4 74.2   148.2
Operating result, EBIT 36.0 34.5 30.5 13.1 71.2 70.1 59.4 18.1 123.5
- % of net sales 16.0 15.3 13.9   15.9 15.6 13.7   13.9
Comparable operating result** 36.0 34.5 30.5 13.1 71.2 70.1 59.4 18.1 126.6
- % of net sales 16.0 15.3 13.9   15.9 15.6 13.7   14.3
Net result before tax 33.8 32.3 28.1 14.9 64.4 63.2 54.7 15.6 114.2
Net result for the period 27.0 25.8 22.5 14.8 51.4 50.5 43.7 15.7 93.1
Return on investment (ROI), % 14.6 14.6 13.2   14.5 14.9 12.5   13.1
Return on equity (ROE), % 20.0 20.8 16.2   17.2 18.1 15.1   15.5
Capital expenditure 30.6 30.9 24.4 26.6 50.5 51.1 45.5 12.3 144.0
Cash flow after investing activities 30.8 30.8 33.2   22.9 22.9 43.5   107.7
Free cash flow to equity - - -   27.3 27.3 47.9   118.8
Net debt - - -   418.9 418.9 358.3   304.3
Net debt/ EBITDA 1.44 1.45 1.32   1.46 1.45 1.34   1.12
Net gearing, % - - -   75.8 82.1 63.6   50.3
Equity ratio, % - - -   45.2 43.8 47.5   50.6
Basic earnings per share, EUR 0.20 0.20 0.17   0.39 0.38 0.33   0.71
Diluted earnings per share, EUR 0.20 0.20 0.17   0.39 0.38 0.33   0.71
Personnel at the end of period         1,611 1,611 1,666   1,601
*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

DNA had a strong first half of 2018. Our net sales increased 3.5% to EUR 447.8 million, and our operating result 18.1% to EUR 70.1 million. Operating result as a percentage of net sales increased and was 15.6%. Both the mobile device sales and mobile service revenue grew. Mobile service revenue was boosted in particular by the positive development of our subscription base.

During the second quarter, both our net sales and operating result increased further. Our mobile communication network subscription volumes were up 73,000 from the reference period, despite intense competition. Our fixed network broadband and cable television subscription base grew in total by 26,000 subscriptions from the reference period.

DNA's revenue per user (ARPU) for mobile communications improved and was EUR 18.7 in the first half of the year, compared to EUR 18.0 a year ago. Our ARPU was strengthened in particular by 3G subscribers switching to high-speed 4G subscriptions. Our mobile communication subscription turnover rate (CHURN) remained at a low level of 15.4% in the second quarter of the year. The CHURN rate for the first six months of the year was 17.1%, which is lower than in the reference period. This was due to high customer satisfaction, and also, while competition remained intense, we were able to secure our customer base by reacting quickly to our competitors' campaign changes.

We have been preparing our mobile network for the 5G era since 2016. During the second quarter, we tested the 5G technology in our production network on a 3.5 Gigahertz (GHz) frequency band. The Ministry of Transport and Communications estimates the auction for the first 5G frequencies to start on 26 September 2018. We estimate that the commercial launch of our 5G services can take place during 2019.

In the second quarter, we announced that our backbone network capacity will be raised to a new level. The work has already begun and once completed, the production capacity of DNA's backbone and regional networks will rise to 5G-network level. This will be of immediate benefit to our mobile and fixed-network customers, as data transmission volumes on our networks have reached yet another record-breaking level.

In the second quarter, we also introduced the new DNA Connectivity IoT service to open global IoT ecosystem opportunities for Finnish companies. Implemented with Cisco Jasper, the service allows companies to develop and grow their IoT services businesses across both national and international markets. We have invested in the IoT service and the expertise of our personnel in order to become a significant operator in the IoT market.

Our guidance remains unchanged and we expect both DNA's net sales and comparable operating result in 2018 to remain at the same level as in 2017. DNA's financial position and liquidity is expected to remain at a healthy level.

Jukka Leinonen President and CEO

DNA's financial publications in 2018:

  • 19 October 2018: Interim Report 1-9/2018

News conferences

A news conference for media and analysts in Finnish at 10:00 am EEST The event is held exceptionally in Pori's SuomiAreena and can be participated only through live webcast. Link to live webcast is available on www.dna.fi/investors before the event.

Conference call for analysts and investors at 2:00 pm EEST, 1:00 pm CEST, 12:00 pm 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)9 7479 0360
  • United Kingdom, +44 (0)330 336 9104
  • United States, +1 929-477-0338
  • Participant passcode: 821508

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, 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.

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