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Index Year 2015 1 CEO's review 1 DNA in figures 3 Operating environment 9 Mega-trends in the operating environment 11 Consumer market 13 Corporate market 15 Strategy 18 Key measures to achieve strategic goals 19 DNA’s strategic goals and achievements in 2015 20 Financial objectives 21 Business 22 Consumer business 22 Corporate business 24 Network infrastructure 26 Corporate responsibility 29 Corporate responsibility at DNA 29 Customer 31 Society 33 Solutions for changing service needs 35 Stakeholder relations 37 Climate 38 Supply chain 40 Meaningful work 42 Responsible employer 44 Reporting (GRI) 46 Environmental indicators 47 Social responsibility indicators 51 GRI content index 53 Contacts 63 Governance 64 Corporate governance and internal control 64 General meeting 65 Board of Directors 67 Members of the Board 69 Jarmo Leino 70 Jukka Ottela 71 Margus Schults 72 Kirsi Sormunen 73 Tero Ojanperä 74 DNA Annual Report 2015 Anu Nissinen 75 Board committees 76 Audit Committee 77 Remuneration Committee 78 Shareholders’ Nomination Committee 79 CEO and Executive Team 80 Members of the Executive Team 82 Jukka Leinonen 83 Pekka Väisänen 84 Hannu Rokka 85 Timo Karppinen 86 Tommy Olenius 87 Asta Rantanen 88 Marko Rissanen 89 Christoffer von Schantz 90 Janne Aalto 91 Control of the financial reporting process 92 Auditing of the Accounts 94 Insider administration 95 Risks and risk management 96 Significant risks 97 Salary and remuneration report 99 Financial statements 102 Board of directors' report 102 Operating environment 103 Net sales and profit 104 Cash flow and financial position 106 Development per business segment 107 Investments 111 Research and development 112 Network infrastructure 113 Personnel 114 Changes in the Group structure and significant litigation matters 115 Management and governance 116 Shares and shareholders 118 Corporate responsibility 119 Significant risks and uncertainties 120 Events after the reporting period 122 Outlook for 2016 123 Board of Directors’ proposal on the distribution of profits 124 Consolidated Financial Statements 125 Consolidated income statement 125 Consolidated balance sheet 127 DNA Annual Report 2015 Consolidated statement of cash flows 129 Consolidated statement of changes in equity 131 Notes to the consolidated financial statements 133 1. The Group in brief 134 2. Accounting principles 135 3. Financial risk management 144 4. Segment information, IFRS 8 149 5. Net sales 151 6. Other operating income 152 7. Other operating expenses 153 8. Depreciations and amortisations 154 9. Employee benefits and number of personnel 155 10. Financial income 156 11. Financial expense 157 12. Income tax 158 13. Earnings per share 159 14. Property, plant and equipment 160 15. Intangible assets 162 16. Investments in associates 165 17. Available-for-sale financial assets 166 18. Receivables 167 19. Deferred tax assets and liabilities 168 20. Inventories 170 21. Cash and cash equivalents 171 22. Shareholders' equity 172 23. Share-based payments 174 24. Defined benefit plan 176 25. Provisions 179 26. Financial liabilities 180 27. Trade payables and other liabilities 181 28. Fair value of financial liabilities 182 29. Operating lease agreements 183 30. Guarantees and contingent liabilities 184 31. Related party transactions 185 32. Events after the balance sheet date 187 33. Shares and shareholders 188 34. Correction to prior periods 189 Parent Company Financial Statements 192 Parent company income statement 192 Parent company balance sheet 194 Parent company cash flow statement 197 Parent company accounting principles, FAS 199 Notes to the parent company financial statements 201 DNA Annual Report 2015 1. Net sales 202 2. Depreciation and amortisation 203 3. Other operating expenses 204 4. Financial income and expense 205 5. Extraordinary items 206 6. Appropriations 207 7. Direct taxes 208 8. Non-current assets 209 9. Investments 212 10. Receivables from group companies 213 11. Accrued income 214 12. Shareholders' equity 215 13. Obligatory provisions 216 14. Non-current liabilities 217 15. Liabilities to group companies 218 16. Accruals 219 17. Deferred tax liability/asset 220 18. Pledged assets and contingent liabilities 221 19. Group and parent company holdings 223 20. Statement of distributable earnings 224 Consolidated key financial indicators 225 Calculation of key indicators 227 Proposal on the distribution of profits 228 Auditor’s Report 229 DNA Annual Report 2015 Year 2015: CEO's review 1 Stronger position in a competitive market 2015 was a very successful year for DNA despite intense competition and the fragile economic situation in Finland. Our profitability in particular improved, and we reported the largest operating profit in the history of DNA. While our net sales remained steady year-on-year, we can be satisfied with the growth of our service net sales and customer base. Customer satisfaction developed favourably, as did customer loyalty. Personnel satisfaction is at an all-time high at DNA, which is an excellent foundation for our future. Our new brand was launched successfully: research data suggests that DNA is perceived as a more attractive choice in the market. Improved profitability Our EBITDA increased by 12.6 per cent to EUR 227.7 million and our operating profit nearly tripled from 2014. DNA’s profitability was boosted by increased service net sales and improved operational efficiency. While interconnection earnings and mobile devices sales fell from 2014, our service net sales were boosted by the acquisition of TDC’s Finnish operations and mobile communication service sales. Investments remained at a high level in 2015 as planned. Our subscription base continued to grow, boosted in particular by the high demand for broadband services in both mobile and fixed networks. The customer comes first Our rigorous efforts to improve DNA’s customer experience continued to provide good results. DNA Our subscription base continued to grow, boosted in again topped every corporate service category of the particular by the high demand for broadband services EPSI Rating customer satisfaction survey, and also in both mobile and fixed networks. scored the highest customer satisfaction score for mobile broadband in the consumer segment. We placed special emphasis on customer service development, which further improved our customer satisfaction. We will continue the systematic development of customer experience according to our strategy, with the aim of having the most satisfied customers. DNA’S 4G LTE networks expand quickly We continued to make significant investments to expand our 4G networks, which covered 93 per cent of the population at the end of 2015. Total mobile data volumes in our networks doubled again, and even tripled in our 4G networks. Suomen Yhteisverkko started the construction of the shared network in the spring of 2015 and the project proceeded according to plan; the 4G network was completed in Northern Finland according to the planned schedule. The quality of our mobile data service has remained good despite the extremely strong growth of 4G traffic volumes. According to several measurements in 2015, DNA’s 4G was the fastest in almost all most populous cities in Finland. DNA Annual Report 2015 Year 2015: CEO's review 2 DNA TV responds to consumers' changing viewing habits We launched a multi-channel DNA TV service in the first half of 2015, allowing the viewing of TV content in the cable and terrestrial networks as well as the fixed and mobile broadband networks. The service has been well received, boosting the demand for broadband services and improving customer loyalty. 4G-based services have also enjoyed strong growth. New, stronger corporate business Reshaped in 2015, DNA’s Corporate Business was off to a strong start, growing both its subscription and customer base despite intense competition. We became a more competitive provider of enterprise-class corporate network solutions, also on an international scale. An increasing number of organisations are interested in Industrial Internet solutions, and DNA placed special emphasis on the development of its Industrial Internet concept and subscription offering. Revised responsibility strategy We revised our corporate responsibility strategy in 2015 to align it even better with our business and place special emphasis on the responsibility for our customers. As climate change manifests itself, we changed our direct procurement of electricity in 2015 and are now using 100% renewable energy. Positive outlook for 2016 Overall, we managed to achieve our strategic goals well in 2015: our customer satisfaction and customer loyalty improved, the Great Place to Work results signalled that our personnel satisfaction is at an all-time high, our profitability improved significantly, we grew our service net sales and expanded our customer base. The outlook is positive as we start the new year. Net sales are expected to remain at a similar level and operating profit is expected to grow significantly in 2016 compared to 2015. Jukka Leinonen DNA Annual Report 2015 Year 2015: DNA in figures 3 DNA's year 2015 in figures DNA Welho MatkaTV has In excess of Cable-TV customers Smart phones accounted more than 300 per cent totalled for 200,000 more data was transferred 606,000 95 per cent users in the 4G network than in for all phones sold 2014 DNA’s 4G network DNA 4G network is The number of LTE Almost reaches more than available in subscribers 67 per cent 93 per cent increased by of mobile data 244 more than of Finns municipalities was transferred in the LTE 175 per cent network at the end of 2015 Fixed-network subscription Mobile communications The average data speed in More than base up by subscription base up by the 4G/LTE network was 20,396 12,000 113,000 some kilometres 6 times faster of fibre-optic cable than in the 3G network Financial development in 2015 Growth Net sales were fuelled by the growth in service net sales (net sales - sales of goods - Net sales and EBITDA, interconnection). This positive development was fuelled by the acquisition of TDC’s Finnish EUR million operations and the good development of 1000 broadband service sales.