DNA Plc Half-Year Financial Report 2020: DNA fared well in the January-June period despite exceptional circumstances – EBITDA and operating result increased

DNA PLC STOCK EXCHANGE RELEASE 16 JULY 2020, 8:30 AM EEST

This is a summary DNA’s Half-Year Financial Report 2020. 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.

Due to delisting of DNA’s share from Nasdaq Helsinki on 3 February 2020, DNA is not subject to reporting obligations as an issuer of shares as set out in the Finnish Securities Markets Act. DNA is still subject to reporting obligations as an issuer of senior unsecured fixed rate notes due 2025 (ISIN: FI4000312095) listed in Nasdaq Helsinki stock exchange.

January–June 2020

• Total revenue decreased 1% and came to EUR 459 million (463).

• Mobile revenue grew 5% and amounted to EUR 270 million (258).

• EBITDA increased 5% and was EUR 162 million (154).

• Operating result increased 8% and was EUR 76 million (71).

• Revenue per user (ARPU) for mobile communications increased 5% and was EUR 16.8 (16.0).

• The number of mobile subscriptions* decreased and was 2,676,000 (2,698,000). The number of postpaid subscriptions grew by 7,000 and the number of prepaid subscriptions decreased by 24,000.

• The number of fixed subscriptions (telephony, Internet and TV) decreased 1% and was 880,000 (893,000). The number of broadband subscriptions grew by 33,000.

*) The number of mobile subscriptions includes postpaid, prepaid, Luuri and mobile broadband subscriptions.

Key figures

The calculation method of the key figures presented in this table differs from that of DNA’s previous key figures. The figures in this table are presented the same way as the key figures published by DNA’s parent company Telenor ASA except for the figures for total revenues and EBITDA. The difference in total revenues and EBITDA is due to differences in the classification of certain items. The comparability of the figures and the vocabulary have been described in a press release issued on 28 April 2020, which is available on DNA's website:
https://corporate.dna.fi/press-releases?type=stt1&id=69879917&scrollTo=UJpEOgFgPw1f

EUR million	1–6/2020	1–6/2019	Change, %	1–12/2019
Total revenues	459	463	-1	946
EBITDA	162	154	5	306
- % of total revenues	35	33		32
Comparable EBITDA	162	154	5	310
- % of total revenues	35	33		33
Depreciation and amortisation	86	83		172
Operating result	76	71	8	134
- % of total revenues	17	15		14
Comparable operating result	76	71	8	141
- % of total revenues	17	15		15
Net result before tax	72	66	9	125
Net result for the period	56	51	9	99
Return on investment (ROI), %	13	13		12
Return on equity (ROE), %	19	18		17
Capex	66	57	15	159
Cashflow after investments	19	8	128	61
Net debt	546	608	-10	559
Net debt/EBITDA	1.7	2.0		1.8
Net gearing, %	90	118		101
Equity ratio, %	43	37		39
Basic and diluted earnings per share, EUR	0.42	0.39		0.75
Personnel at the end of period	1,639	1,648	-1	1,624

CEO’s review

As the first half of 2020 closed, there circumstances in Finland improved. It looks like we have passed the peak of the first wave of the coronavirus, and the government has eased restrictions significantly. While the situation seems under control in Finland, the pandemic is worsening worldwide. Under such exceptional circumstances, it is difficult to foresee the outlook for DNA’s operating environment and market. The pandemic may slow down the economic growth in Finland too, which can have a negative impact on the demand for DNA’s services.

The effect of the crisis was apparent at DNA since March in areas such as higher volume of customer service, a slowdown in mobile device sales at DNA stores and a significant increase of data volumes in DNA’s network. Communication networks gain importance under exceptional circumstances. DNA’s network capacity was perfectly capable of managing the increase in data volumes, and we have maintained and built our 5G and 4G network infrastructure continuously. To safeguard operational reliability, our network management is decentralized, and we will continue this approach. At the end of the second quarter, more than 95% of DNA’s personnel continued to work remotely. We continue to follow the development of the pandemic closely and will make decisions on appropriate action based on current situation. According to our personnel survey, remote working has gone smoothly.

Despite the challenging market situation and the exceptional circumstances, DNA mostly fared well in the first half of 2020. Total revenues for the January-June period fell slightly from the reporting period and amounted to EUR 459 million (463). The decrease was mainly due to the sale of the terrestrial pay-TV business and a slowdown in mobile device sales. Nevertheless, DNA’s EBITDA developed positively in the first half of the year, growing 5% to EUR 162 million (154). Operating result also increased 8% in January-June and was EUR 76 million (71). The favourable development was due to increased mobile revenue and improved operational efficiency.

Our mobile communication subscription base decreased by 22,000 in the January-June period from the reference period. This was due to a decrease in prepaid subscriptions as our postpaid subscription base increased by 7,000. Revenue per user (ARPU) for mobile communications increased 5% year-on-year and was EUR 16.8 (16.0). Our fixed-network subscription base shrank by 13,000, but the number of broadband subscriptions grew by 33,000.

The active construction of DNA’s 5G network has continued around Finland. During the first half of 2020, DNA’s 5G services have been made available in more than 20 residential areas. We will continue to improve the capacity of our 4G network parallel to the 5G investments. In June, DNA won the 26 GHz range it was pursuing in the 5G spectrum auction. The new frequency band enables the transfer of higher volumes of data with low latency.

The sales of 5G subscriptions are off to a promising start and mobile device manufacturers have launched several new 5G models during the second quarter. More models are expected to be introduced to lower price points as the year progresses, and demand for subscriptions is expected to pick up once these are available. Installations of DNA’s 5G Fixed Wireless Access service have also started, and feedback from customers has been positive. The benefits of 5G and its positive impact on customer experience will become more evident as our customers use increasingly rich content, higher resolution videos, and services such as online gaming, where low latency is critical.

Jukka Leinonen
CEO

Additional information:

Jukka Leinonen, CEO, DNA Plc, +358 44 044 1000, jukka.leinonen@dna.fi
Timo Karppinen, CFO, DNA Plc, +358 44 044 5007, timo.karppinen@dna.fi
DNA Corporate Communications, +358 44 044 8000, viestinta@dna.fi

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 customers are continuously among the world mobile data usage leaders. 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 million and we employ about 1,600 people around Finland. DNA is a part of Telenor Group, a leading telecommunications company across the Nordics. More information: www.dna.fi, Twitter @DNA_fi, Facebook @DNA.fi and LinkedIn @DNA-Oyj.

Attachment

• DNA Half-Year Financial Report 2020