Annual report 2008, 1.19 MB - Telenor

outlook for 2008 as outlined in the Annual Report for 2007. The
increase in revenues was mainly related to growth in the Asian
operations and Broadcast, in addition to the acquisitions of Tele2
in Denmark and IS Partner in EDB Business Partner. Furthermore,
there were increased revenues related to projects in Telenor Cinclus,
which is included in Other units. On average, for the full year 2008,
compared to 2007, the Norwegian Krone appreciated against most
currencies. In total, this has led to a negative effect on revenues,
reducing the revenue growth by approximately 1.5 percentage point.
EBITDA before other income and expenses increased by NOK 1.3
billion to NOK 30.3 billion, while the corresponding EBITDA margin
of 31.2% was in line with 2007. Considerable margin improvements
in the operations in Serbia and Pakistan were offset by margin
deterioration in other operations. The EBITDA margin before other
income and expenses for 2008 was in line with the expectations as
outlined in the Annual Report for 2007.
Operating profi t was NOK 15.2 billion compared to NOK 15.0 billion
in 2007. Operating profi t was negatively affected by non-recurring
items of NOK 0.9 billion including loss contracts in Telenor Cinclus
and Broadcast, loss on disposal of fi xed and intangible assets related
to a failed project with IBM in Fixed Norway and costs related to
headcount reductions in the Nordic operations.
Profi t before taxes was NOK 19.0 billion compared to NOK 20.0 billion
in 2007. Profi t from associated companies increased by NOK
0.4 billion and also included gain of NOK 1.6 billion from disposal
of the shares in Golden Telecom. Net fi nancial items decreased by
NOK 1.5 billion, which was mainly related to a negative change in
fair value of fi nancial instruments in 2008 compared to a positive
change in 2007. In addition, operating profi t increased as mentioned
above. Telenor’s net income in 2008 was NOK 14.8 billion, NOK 7.83
per share. The corresponding fi gures for 2007 were NOK 19.2 billion
and NOK 10.72 per share, respectively. In addition to the explanations
given above the reduction of NOK 4.4 billion in net income was
due to a higher effective tax rate for 2008 compared to the very
low 10.9% effective tax rate for 2007, which was a consequence of
recognition of deferred tax assets that have been impaired in prior
years, as well as a gain on sale of discontinued operations, Telenor
Satellite Services, in 2007.
Total investments in 2008 amounted to NOK 22.5 billion, of which
NOK 20.6 billion were capital expenditure (capex) and NOK 1.9 billion
were investments in businesses. Capex increased by NOK 1.1
billion, mainly due to the launch of the satellite Thor 5 in Broadcast,
REPORT OF THE BOARD OF DIRECTORS
the acquisition of a 3G licence in DiGi, additional 2G spectrum in
Grameenphone and a 4G licence in Sweden. This was partially offset
by lower network investments in several operations. In addition to
the factors mentioned above, capex in 2008 was mainly related to
network expansion in the international mobile operations, as well
as expansion of 3G and HSPA in the Nordic markets. Capex as a
proportion of revenues was 21% in 2008, in line with the expectation
of around 20% that was outlined in the Annual Report for 2007.
The net cash infl ow from operating activities were NOK 25.6 billion in
2008 compared to NOK 23.7 billion in 2007. The change was mainly
related to Telenor being in a tax paying position in Norway from the
end of 2007. The net cash outfl ow from investing activities for the
year 2008 was NOK 14.8 billion, a decrease of NOK 1.0 billion which
was mainly related to lower capex payments. Paid capex was NOK
3.2 billion lower than reported capex for the year 2008, mainly due
to no cash outfl ows related to DiGi’s capitalisation of 3G spectrum,
Broadcast’s capitalisation of the satellite Thor 5, Grameenphone’s
partly paid spectrum acquisition and in general higher network rollout
at the end of 2008. Paid and reported capex were around the
same level as for the year 2007. The net cash outfl ow from fi nancing
activities for the year 2008 was NOK 9.5 billion, an increase of NOK
3.9 billion, which is mainly explained by increased share buy-back
and dividends paid.
At the end of 2008, total assets in the balance sheet amounted to
NOK 187.2 billion with an equity ratio (including minority interests)
of 47.3% compared to NOK 160.8 billion and 46.4%, respectively,
in 2007. Total current liabilities at the end of 2008 were NOK
48.2 billion compared to NOK 38.3 billion at the end of 2007. Net
interest- bearing liabilities increased from NOK 39.9 billion at the end
of 2007 to NOK 45.5 billion at the end of 2008. The increase of NOK
5.6 billion was mainly related to the depreciation of the Norwegian
Krone from the end of 2007 to the end of 2008. The increase in debt
facilities was only slightly higher than the repayment of debt, while
the net change in liquid assets was marginal. In the Board’s view,
Telenor holds a satisfactory fi nancial position.
In accordance with section 3-3a of the Accounting Act (Norway), we
confi rm that the accounts have been prepared based on the going
concern principle.
TELENOR’S OPERATIONS
Telenor’s main operations are divided into three geographic areas:
The Nordic countries, Central Eastern Europe and Asia. Of the 12
operations in these regions, the businesses in Norway, Sweden,
ANNUAL REPORT 2008 PAGE 3