Eltel Group: Full-year report January–December 2015

January - December 2015

  · Net sales EUR 1,254.9 million (1,242.1), at comparable exchange rates up
2.9%*; organic net sales increased 4.5%*
  · Operative EBITA EUR 62.2 million (61.3) or 5.0% of net sales (4.9)
  · Non-recurring items EUR -1.7 million (-22.7), mainly IPO related
  · EBITA EUR 60.5 million (38.6) or 4.8% of net sales (3.1)
  · Net financial expenses decreased to EUR 14.4 million (19.0)
  · Net result EUR 43.2 million (11.1)
  · Earnings per share EUR 0.69 (0.12)
  · Operative cash flow EUR 45.8 million (88.9), negatively impacted by IPO
-related cash payments in 2015
  · The Board proposes a dividend of EUR 0.24 per share for the year 2015

October - December 2015

  · Net sales EUR 397.3 million (352.3), at comparable exchange rates up 15.4%*;
organic net sales increased 4.5%*
  · Operative EBITA EUR 20.5 million (17.7) or 5.2% of net sales (5.0)
  · No non-recurring items (EUR -6.7 million)
  · EBITA EUR 20.5 million (11.0) or 5.2% of net sales (3.1)
  · Net financial expenses decreased to EUR 2.2 million (4.2)
  · Net result EUR 17.3 million (8.7)
  · Earnings per share EUR 0.27 (0.17)
  · Operative cash flow EUR 90.4 million (66.3)

Unless otherwise stated, figures in brackets refer to the same period in the
previous year* Organic net sales do not include Norwegian communication business
and the Edi.Son, Sønnico and Vete acquisitions in 2015 and are presented at
comparable exchange rates. For net sales comparability, see table on page 4 and
Communication segment on page 7.

Comments by the CEO

Strong growth in the fourth quarter ended a record year for Eltel

The positive long-term trends in the Infranet market continued in the last
quarter of 2015. We managed to capitalise on the favourable market conditions
and recorded a clear increase in orders in the fourth quarter in all of Eltel’s
segments – Power, Communication and Transport & Security.

We won a significant amount of contracts, especially in our business related to
major projects, where we had somewhat weaker order bookings in the beginning of
2015 - reflecting the cyclical nature of this part of our operations. Many of
the new project contracts were strategically important smart meter rollout
projects that will be executed in coming years. The year 2015 was also very good
within maintenance and upgrades, which represent approximately two thirds of our
business, as we renewed and signed several new multi-year frame agreements,
including a renewed major five-year contract with TeliaSonera in Sweden. When
closing the books for 2015, Eltel’s committed order backlog was at the highest
level in the company’s history at approximately EUR 920 million an increase of
35% compared to the end of the year 2014. We are now disclosing this figure for
the first time, which will hopefully improve understanding of our long-term
predictability and potential.

Moreover, Eltel showed strong double digit growth in net sales in the fourth
quarter, mainly driven by the successfully completed acquisitions in Germany and
Norway during the year but also by healthy organic growth. For the full year
2015, organic growth amounted to 4.5% and growth from acquisitions to 8.7% -
these combined well exceeded our growth target of 10%. The Group’s profitability
also continued to improve, showing an operative EBITA margin above 5% for the
quarter and 5% for the full year. Our cash generation in the fourth quarter was
again strong and the adjusted cash conversion rate for 2015 was above 120%,
proving our cash efficient and asset-light business model.

In the fourth quarter, our Power segment showed very strong organic growth
mainly as a result of the good performance in the power distribution business.
The Communication segment continued to perform well with the strong performance
in fibre and mobile roll-outs also continuing in the last quarter of 2015. In
the Transport & Security business segment, net sales were impacted by lower
volumes and weaker business performance, although several new orders in the rail
sector were signed in the last months of 2015.

Eltel’s one-year journey as a listed company has been very interesting. We
experience that the listing has improved knowledge and transparency of both
Eltel and the Infranet industry. The Industry is an important contributor to
modern society with growing needs for available and crucial Infranets. By
capitalising on scale and our international platform, combined with great
customer relations, Eltel will continue to be the pioneer in transforming the
Infranet Industry from a domestic technical industry to a dynamic value-creating
global contributor.

In order to deliver on our mid-term targets for profitable growth and cash
generation, our focus in 2016 will be on continued operational efficiency while
at the same time continuing to grow, both organically and through acquisitions.
We still see room for improvements especially in our power transmission and rail
business. Particular focus areas in terms of operational efficiency are health
and safety and people development. Our growth ambitions continue to be well
supported by a strong market outlook combined with attractive M&A alternatives
in all our markets and segments.

–Axel Hjärne, President and CEO

For further information:
Ingela Ulfves
VP – Investor Relations and Group Communications
Tel: +358 40 311 3009, ingela.ulfves@eltelnetworks.com

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. In 2015 Eltel net sales amounted
to EUR 1,255 million. The current number of employees is approximately 9,600.
Since February 2015, Eltel AB is listed on Nasdaq Stockholm.