DNA Plc's Financial Statements Bulletin 2016: DNA's profitability improved significantly in 2016

Summary

Unless otherwise stated, the comparison figures in brackets refer to the corresponding period in the previous year (reference period).

October-December 2016

• Net sales increased 5.2% and amounted to EUR 225.2 million (213.9 million).
• EBITDA decreased 5.4% to EUR 51.3 million (54.2 million). The EBITDA percentage of net sales was 22.8% (25.3%).
• Comparable EBITDA increased 6.1% and was EUR 57.5 million (54.2 million).
• The operating result decreased 24.8% and was EUR 14.5 million (19.3 million). Operating result as a percentage of net sales decreased and was 6.4% (9.0%).
• The comparable operating result increased 7.6% and was EUR 20.8 million (19.3 million).
• Revenue per user (ARPU) for mobile communications amounted to EUR 17.5 (17.0).
• The mobile communication subscription turnover rate (CHURN) was 17.8% (15.9%).

January-December 2016

• Net sales increased 3.6% and amounted to EUR 858.9 million (828.8 million).
• EBITDA increased 3.8% and was EUR 236.3 million (227.7 million). The EBITDA percentage of net sales was 27.5% (27.5%).
• Comparable EBITDA increased 9.0% and was EUR 247.1 million (226.7 million).
• Operating result increased 24.8% and was EUR 91.2 million (73.1 million). Operating result as a percentage of net sales increased and was 10.6% (8.8%).
• The comparable operating result increased 41.7% to EUR 102.1 million (72.0 million).
• The mobile communication subscription base grew 4.6%, totalling 2,742,000 (2,621,000).
• Revenue per user (ARPU) for mobile communications amounted to EUR 17.1 (17.0).
• The mobile communication subscription turnover rate (CHURN) was 16.1% (16.0%).
• The fixed-network subscription base (voice, broadband and cable television) decreased slightly and was 1,113,000 subscriptions at the end of December (1,120,000).

DNA's outlook for 2017

DNA's net sales are expected to remain at a 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.

*Group key figures

CEO's review

2016 has been a strong year for DNA, in terms of financial development, customer base growth and customer satisfaction. Our net sales increased to EUR 858.9 million. Our profitability improved significantly as our operating result grew 24.8 percent and was EUR 91.2 million, or 10.6 percent of net sales, leading to earnings per share of EUR 0.51. Net sales were driven by the strong growth in service revenue (net sales less sales of goods and interconnection charges) as well as the positive development of mobile device sales. Our service revenue was boosted in particular by the increased sales of mobile subscriptions and growing use of mobile data as 4G subscriptions become more common. Our net sales were burdened by lower interconnection earnings as well as weaker demand for pay-TV services.

Favourable development of our mobile communication subscription base continued in 2016. It grew by 121,000 subscriptions, reaching 2.7 million in total. Our fixed-network subscription base decreased by 7,000 and totalled 1.1 million at the end of the year. This is due to the drop in the number of fixed-network voice subscriptions. The number of fixed-network broadband and cable television subscriptions increased by some 6,000 in total during 2016.

DNA shares were listed on the official list of Nasdaq Helsinki towards the end of 2016. Listing is an important milestone in developing DNA to an even stronger telecommunications company in the Finnish market. The final subscription price was EUR 10.10 per share and our IPO was oversubscribed. After the listing, we have more than 11,000 shareholders. Operating result in fourth quarter was affected by listing related costs, however, net sales and comparable operating profit improved clearly.

We made significant investments in our 4G network in 2016, which has been largely completed by the end of the year. The construction of DNA's and Sonera's shared mobile communication network got under way in the spring of 2015 and was also completed by the end of 2016. During these 18 months, more comprehensive, high-speed telecommunications connections have been made available for more than 760,000 residents in sparsely populated areas. We estimate that our operative capital expenditure will decrease as the focus of our mobile communication network investments shifts from network modernisation and coverage expansion to capacity expansion in the coming years.

In 2016, 4G mobile data traffic volumes in DNA's networks grew some 120 percent. According to a report released by research company Tefficient in December 2016, DNA's customers have the highest mobile data usage in the world per subscription. DNA carried as much as 9.9 gigabytes of data per subscription each month between January and September 2016.

The Finnish economy is slowly returning to growth which is expected to affect positively customer demand. We expect the service revenue to increase also in 2017. However, net sales are expected to remain at the same level than in 2016 because of lower interconnection earnings. Increasing service revenue and continuous improvement in operational efficiency are expected to increase comparable operating result somewhat in 2017 compared to 2016.

We will continue our measures to improve our customer experience further in 2017. We will also continue to focus on employee satisfaction and the employees' professional development with the aim of creating a team of top experts that has a dedicated and qualified person for every task.

Jukka Leinonen
President and CEO

DNA's financial publications and events in 2017:

• Interim Report January-March 2017, 21 April 2017
• Half year Financial Report, 18 July 2017
• Interim Report January-September, 20 October 2017
• DNA Plc's Annual General Meeting, Wednesday 22 March 2017

Additional information:
Jukka Leinonen, CEO, DNA Plc, tel. +358 44 044 1000, [email protected]
Timo Karppinen, CFO, DNA Plc, tel. +358 44 044 5007, [email protected]
Marja Mäkinen, Head of IR, DNA Plc, tel. +358 44 044 1262, [email protected]  
DNA Corporate Communications, tel. +358 44 044 8000, [email protected]

Distribution:
Nasdaq Helsinki
Key media
www.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 the cable and terrestrial networks. For DNA, the key area for growth in the Corporate Business is the new way of working, independent of time and place, facilitated by smart mobile devices, diverse communication services and rapid connections. In 2015, DNA recorded a turnover of EUR 859 million and an operating profit of EUR 91 million. DNA has more than 3.8 million mobile communications and fixed network customer subscriptions. The Group also includes DNA Store, Finland's largest retail chain selling mobile phones. DNA shares are listed on Nasdaq Helsinki. For more information, please visit www.dna.fi, Twitter @DNA_fi, @DNA_Business and @DNA_Palvelu and Facebook.