Eltel Group Interim report January–June 2015

April - June 2015

  · Net sales EUR 307.8 million (299.8), up 2.7%. Organic net sales* increased
11.8%
  · Operative EBITA** EUR 13.9 million (13.1) or 4.5% of net sales (4.4)
  · EBITA EUR 14.0 million (13.6) or 4.5% of net sales (4.5)
  · Net financial expenses decreased to EUR 1.8 million (4.2)
  · Net result EUR 8.3 million (5.1)
  · Earnings per share EUR 0.13 (0.09)
  · Operative cash flow** EUR 22.7 million (-2.0)

January - June 2015

  · Net sales EUR 546.8 million (558.9), down 2.2%. Organic net sales* increased
7.8%
  · Operative EBITA** EUR 19.2 million (17.9) or 3.5% of net sales (3.2)
  · Non-recurring items EUR -2.6 million (0.1), IPO-related in 2015
  · EBITA EUR 16.7 million (18.0) or 3.0% of net sales (3.2)
  · Net financial expenses affected by a non-cash expense of EUR 3.5 million
(0.0) related to refinancing
  · Net result EUR 0.7 million (1.5)
  · Earnings per share EUR 0.01 (-0.02)
  · Operative cash flow** EUR -37.2 million (22.5), strongly impacted by IPO
-related cash payments

Unless otherwise stated, figures in brackets refer to the same period previous
year
* excluding Norwegian Communication business, which is deconsolidated in 2015
and 2015 Edi.Son acquisition
** see definitions on pages 12, 14 and 17

Comments by the CEO − Continued strong growth for Eltel in the second quarter

Our second quarter as a listed company was solid. We won many new orders in
attractive businesses, such as smart meters and fibre installations. Our
recently acquired Edi.Son in Germany also received an important new order for
the construction of transmission lines.

We see daily signs that the growth in our Infranet market is strong. Telecom
operators are investing more to support consumer demand for faster and more
reliable connections and, in the power business, the need to adapt to changing
power supply and refurbish old networks will continue for many years to come. We
have also noted a rising interest in electrification in Africa. However,
competition remains strong, particularly in project-related businesses. It is
important that we continue to deliver customer value and drive internal
efficiency to stay competitive.

Despite the strong underlying demand for Eltel’s Infranet services, there are
market fluctuations between quarters. For us, as for many Nordic companies with
field operations, seasonality brings a gradual increase in sales throughout the
calendar year.

In 2015 both the first and the second quarters were stronger in terms of sales
compared with the corresponding period in 2014. The growth is attributable to
various contracts and countries. Cabling projects in Finland in Power, the
strong inflow of fibre projects in fixed communication and several major
projects approaching completion in our Norwegian rail business, are contributing
to our overall performance. However, several projects that we announced during
the quarter, for example the smart metering projects in Norway, will not affect
sales until late 2016.

Our results are slightly stronger year-on-year, and now that we are operating
without non-recurring costs and with a lighter balance sheet, more profit is
generated on the bottom line. We were very pleased to announce that we are
buying out our partner from our joint venture Eltel Sønnico in Norway. This is a
deal that will make it possible for us to be more efficient in our entire
Norwegian operations that are growing in Power, Communication and railway
business.

Regarding cash conversion, we are getting back on track and improving although
we have not yet reached the 95-100% medium-term target. In general the second
quarter was stable and provides support to our efforts to achieve our financial
targets.

–Axel Hjärne, CEO

For more information, please contact
Gunilla Wikman, Investor Relations Manager at Eltel AB
Tel: +46 725 843 630, gunilla.wikman@eltelnetworks.se

About Eltel
Eltel is a leading European provider of technical services for critical
infrastructure networks – Infranets – in the segments of Power, Communication
and Transport & Security, with operations throughout the Nordic and Baltic
regions, Poland, Germany, the United Kingdom and Africa. Eltel provides a broad
and integrated range of services, spanning from maintenance and upgrade services
to project deliveries. Eltel has a diverse contract portfolio and a loyal and
growing customer base of large network owners. The number of employees is
approximately 8,600 and in 2014, Eltel net sales amounted to EUR 1,242 million.
Eltel’s share is listed on Nasdaq Stockholm since February 2015.