Annual Report (ESEF) • Mar 13, 2024
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Download Source File743700TU2S3DXWGU7H322023-01-012023-12-31743700TU2S3DXWGU7H322022-01-012022-12-31743700TU2S3DXWGU7H322023-12-31743700TU2S3DXWGU7H322022-12-31743700TU2S3DXWGU7H322021-12-31743700TU2S3DXWGU7H322021-12-31ifrs-full:IssuedCapitalMember743700TU2S3DXWGU7H322021-12-31ifrs-full:TreasurySharesMember743700TU2S3DXWGU7H322021-12-31eli:ReserveForInvestedUnrestrictedEquityMember743700TU2S3DXWGU7H322021-12-31ifrs-full:OtherReservesMemberiso4217:EURiso4217:EURxbrli:sharesxbrli:shares743700TU2S3DXWGU7H322021-12-31ifrs-full:RetainedEarningsMember743700TU2S3DXWGU7H322021-12-31ifrs-full:EquityAttributableToOwnersOfParentMember743700TU2S3DXWGU7H322021-12-31ifrs-full:NoncontrollingInterestsMember743700TU2S3DXWGU7H322022-01-012022-12-31ifrs-full:RetainedEarningsMember743700TU2S3DXWGU7H322022-01-012022-12-31ifrs-full:EquityAttributableToOwnersOfParentMember743700TU2S3DXWGU7H322022-01-012022-12-31ifrs-full:NoncontrollingInterestsMember743700TU2S3DXWGU7H322022-01-012022-12-31ifrs-full:OtherReservesMember743700TU2S3DXWGU7H322022-01-012022-12-31ifrs-full:TreasurySharesMember743700TU2S3DXWGU7H322022-12-31ifrs-full:IssuedCapitalMember743700TU2S3DXWGU7H322022-12-31ifrs-full:TreasurySharesMember743700TU2S3DXWGU7H322022-12-31eli:ReserveForInvestedUnrestrictedEquityMember743700TU2S3DXWGU7H322022-12-31ifrs-full:OtherReservesMember743700TU2S3DXWGU7H322022-12-31ifrs-full:RetainedEarningsMember743700TU2S3DXWGU7H322022-12-31ifrs-full:EquityAttributableToOwnersOfParentMember743700TU2S3DXWGU7H322022-12-31ifrs-full:NoncontrollingInterestsMember743700TU2S3DXWGU7H322023-01-012023-12-31ifrs-full:RetainedEarningsMember743700TU2S3DXWGU7H322023-01-012023-12-31ifrs-full:EquityAttributableToOwnersOfParentMember743700TU2S3DXWGU7H322023-01-012023-12-31ifrs-full:NoncontrollingInterestsMember743700TU2S3DXWGU7H322023-01-012023-12-31ifrs-full:OtherReservesMember743700TU2S3DXWGU7H322023-01-012023-12-31ifrs-full:TreasurySharesMember743700TU2S3DXWGU7H322023-12-31ifrs-full:IssuedCapitalMember743700TU2S3DXWGU7H322023-12-31ifrs-full:TreasurySharesMember743700TU2S3DXWGU7H322023-12-31eli:ReserveForInvestedUnrestrictedEquityMember743700TU2S3DXWGU7H322023-12-31ifrs-full:OtherReservesMember743700TU2S3DXWGU7H322023-12-31ifrs-full:RetainedEarningsMember743700TU2S3DXWGU7H322023-12-31ifrs-full:EquityAttributableToOwnersOfParentMember743700TU2S3DXWGU7H322023-12-31ifrs-full:NoncontrollingInterestsMember 2023 Financial Statements Report of the board of directors Report of the board of directors 1 Shares and shareholders 8 Board’s proposal for distribution of profits 10 Investor information 11 Financial Statements 2023 Report of the board of directors Shares and shareholders Board’s proposal for the distribution of profits Investor information 1Financial Statements 2023 Report of the board of directors 2023 TOIMINTAKERTOMUS Market situation The competitive environment has been active, especially in 4G subscriptions. The usage of mobile services has continued to evolve favourably. Brisk demand for 5G services has also continued due to the wider range of 5G devices and better network coverage. The current geopolitical situation has also increased the demand for cybersecurity services. Competition in the fixed broadband market has continued to be intense, and the number and usage of traditional fixed network subscriptions is declining. The markets for IT services have continued to develop favourably. Demand for other digital services is also growing well. The prevailing uncertainty in the general economy and increased interest rates have caused some companies to delay investment decisions and project implementation. Revenue, earnings and financial position Revenue increased by 2 per cent on the previous year, mainly due to growth in mobile, fixed, domestic and international digital services, as well as equipment sales. Decreases in usage and subscriptions of traditional fixed telecom services, and in interconnection and roaming revenue, affected revenue negatively. In addition, the divestment of Videra and the end of our video streaming cooperation negatively affected domestic and other digital services revenue. Comparable EBITDA increased by 3 per cent and comparable EBIT by 3 per cent, mainly due to revenue growth and efficiency improvement measures. Net financial income and expenses increased to EUR –23 million (–13), mainly due to increased interest Revenue, earnings and financial position EUR million 2023 2022 2021 Revenue 2,180 2,130 1,998 EBITDA 756 733 697 EBITDA-% 34.7% 34.4% 34.9% Comparable EBITDA (1 756 735 706 Comparable EBITDA-% 34.7% 34.5% 35.3% EBIT 482 470 431 EBIT-% 22.1% 22.1% 21.6% Comparable EBIT (1 (2 487 472 439 Comparable EBIT-% 22.4% 22.2% 22.0% Return on equity, % 29.4% 30.4% 28.8% 1) 2022 excluding EUR 2 million in restructuring costs and 2021 excluding EUR 8 million in restructuring costs. 2) 2023 excluding EUR 6 million impairment. rates. Income taxes in the income statement were EUR –84 million (–83). Comparable net profit was EUR 379 million (374), and earnings per share were EUR 2.34 (2.33). Comparable earnings per share was EUR 2.37 (2.34). Financial position Comparable cash flow after investments increased by 12 per cent to EUR 361 million. The positive change in net working capital, higher EBITDA and lower taxes affected cash flow positively, while higher capital expenditure and financial expenses had negative effects. The financial position and liquidity are strong. Cash and undrawn committed credit lines totalled EUR 363 million at the end of the reporting period. Changes in corporate structure In November, the businesses of Elisa’s subsidiary Elisa Videra and the German company MVC Mobile VideoCommunication GmbH (owned by KLP Vermögensverwaltungs GmbH) combined to form MVC Videra. KLP has a 62.5% holding and Elisa 37.5% of MVC Videra. After the transaction, MVC Videra is consolidated to Elisa Group as an associated company rather than a subsidiary. Financial position EUR million 2023 2022 2021 Net debt 1,304 1,276 1,219 Net debt / EBITDA (1 1.7 1.7 1.7 Gearing ratio, % 100.8% 101.9% 101.2% Equity ratio, % 41.6% 40.6% 39.9% Cash flow (2 347 300 322 Comparable cash flow (3 361 321 338 1) (Interest-bearing debt – financial assets) / (four previous quarters’ comparable EBITDA) 2) Cash flow after financing activities. 3) 2023 excluding EUR 14 million in share and business investments and sales. 2022 excluding EUR 21 million in share investments and 2021 excluding EUR 16 million in share investments. Report of the board of directors Shares and shareholders Board’s proposal for the distribution of profits Investor information 2Financial Statements 2023 Consumer Customers business EUR million 2023 2022 2021 (1 Revenue 1,335 1,301 1,243 EBITDA 521 496 476 EBITDA-% 39.0% 38.1% 38.3% Comparable EBITDA 2) 521 497 479 Comparable EBITDA-% 39.0% 38.2% 38.6% EBIT 342 322 302 EBIT-% 25.6% 24.7% 24.3% Comparable EBIT (2 (3 344 323 305 Comparable EBIT-% 25.8% 24.9% 24.6% CAPEX 213 191 169 1) Allocation rules between segments were specified in 2022, and the comparable figures in 2021 have been updated 2) 2022 excluding EUR 1.6 million and 2021 excluding EUR 3.2 million in restructuring costs. 3) 2023 excluding EUR 3 million impairment. Revenue increased by 3 per cent. Mobile and fixed services as well as equipment sales affected revenue positively, while it was negatively affected by interconnection and roaming revenue, as well as the decrease in traditional fixed telecom services. In addition, ending the video streaming service cooperation negatively affected domestic digital services revenue. Comparable EBITDA increased by 5 per cent, mainly due to revenue growth and efficiency improvement measures. Corporate Customers business EUR million 2023 2022 2021 (1 Revenue 846 829 755 EBITDA 235 238 221 EBITDA-% 27.8% 28.7% 29.3% Comparable EBITDA (2 235 238 227 Comparable EBITDA-% 27.8% 28.7% 30.0% EBIT 140 148 129 EBIT-% 16.6% 17.9% 17.1% Comparable EBIT (2 (3 143 148 134 Comparable EBIT-% 16.9% 17.9% 17.7% CAPEX 108 99 96 1) Allocation rules between segments were specified in 2022, and the comparable figures in 2021 have been updated. 2) 2022 excluding EUR 0.4 million and 2021 excluding EUR 5.2 million in restructuring costs. 3) 2023 excluding EUR 3 million impairment. Revenue increased by 2 per cent. Revenue was positively affected by growth in mobile, fixed and international digital services, whereas the decrease in equipment sales and traditional fixed services had a negative effect. In addition, the divestment of Videra negatively affected domestic and other digital services revenue. Comparable EBITDA decreased by 1 per cent. Report of the board of directors Shares and shareholders Board’s proposal for the distribution of profits Investor information 3Financial Statements 2023 Investments EUR million 2023 2022 2021 Capital expenditure (1 , of which 321 290 265 Consumer Customers 213 191 169 Corporate Customers 108 99 96 Shares 12 25 28 Total investments 333 314 293 Shares and business acquisitions 25 25 28 Licences 2 9 Leases 23 26 18 Capital expenditure excluding leases, licences, shares and business acquisitions 284 255 247 Capital expenditure as % of revenue 13 12 12 1) 2023 includes EUR 2 million for the 26 GHz frequency licence investment in Estonia. 2022 includes EUR 7 million for the 3.5 GHz and EUR 2 million for the 700 MHz frequency licence investments in Estonia. The main capital expenditures were related to the capacity and coverage increases in 5G networks, fibre and other networks, as well as IT investments. Personnel In 2023, the average number of personnel at Elisa was 5,721 (5,523), and employee expenses totalled EUR 417 million (395). Personnel by segment at the end of the year: 31 Dec 23 31 Dec 22 31 Dec 21 Consumer Customers 2,976 2,939 2,845 Corporate Customers 2,690 2,684 2,526 Total 5,666 5,623 5,371 Sustainability Key ESG indicators 4Q23 4Q22 4Q21 Energy efficiency of mobile network in Finland Change in energy consumption per GB from Q4 2021 level –26.1% –5.7% - Population coverage of >100 Mbps connections 92.5% 86.2% 72.6% Proportion of female supervisors 28.7% 29.6% 27.4% Patent portfolio development Number of active patents portfolio (1 396 337 265 Number of new first applications 11 12 19 1) Number of active patent applications and patents. All key figures will be published in assured annual sustainability report, during week 11. Financing arrangements and ratings EUR million Maximum amount In use on 31 Dec 2023 Committed credit limits 300 0 Credit facility (not committed) 100 0 Commercial paper programme (not committed) 350 35 EMTN programme (not committed) 1,500 1,148 Long term credit ratings Rating Outlook Credit rating agency Moody's Investor Services Baa2 Stable S&P Global Ratings BBB+ Stable On 5 September 2023, Elisa paid back a EUR 150 million loan to the European Investment Bank. On 27 September 2023, Elisa issued a fixed-rate, EUR 300 million Green Eurobond that matures on 29 January 2029 under the EUR 1.5 billion EMTN Programme. The coupon is 4.00 per cent, and the issue price was 99.585. On 26 September 2023, Elisa announced that it has purchased its bonds due in March 2024 in the amount of EUR 51.97 million. The purchase price was 98.57 per cent. After the purchase, EUR 248.03 million of the March 2024 bonds remain outstanding. In September, Elisa agreed with six banks to extend its EUR 130 million Sustainability-linked Revolving Credit Facility for two years, from September 2026 to September 2028. Report of the board of directors Shares and shareholders Board’s proposal for the distribution of profits Investor information 4Financial Statements 2023 Share Share trading volumes are based on trades made on the Nasdaq Helsinki and alternative marketplaces. Closing prices are based on the Nasdaq Helsinki. Trading of shares 2023 2022 2021 Nasdaq Helsinki, millions 64.4 71.2 81.6 Other marketplaces, millions (1 186.0 208.4 167.3 Total volume, millions 250.4 279.6 248.9 Value, EUR million 12,259.4 14,575.8 12,698.1 % of shares 149.6% 167.1% 148.7% Shares and market values 2023 2022 2021 Total number of shares 167,335,073 167,335,073 167,335,073 Treasury shares 6,946,654 7,075,378 7,147,772 Outstanding shares 160,388,419 160,259,695 160,187,301 Closing price, EUR 41.87 49.46 54.12 Market capitalisation, EUR million 7,006 8,276 9,056 Treasury shares, % 4.15% 4.23% 4.27% Number of shares Total Treasury Outstanding Shares on 31 Dec 2022 167,335,073 7,075,378 160,259,695 Performance Share Plan, 1 Feb 2023 (2 –127,539 127,539 Restricted Share Plan, 5 Sep 2023 (3 –1,185 1,185 Shares on 31 Dec 2023 167,335,073 6,946,654 160,388,419 1) Other marketplaces: based on Bloomberg. 2) Stock exchange release, 1 February 2023. 3) Stock exchange release, 5 September 2023. On 1 February 2023, Elisa transferred 127,539 treasury shares to people included in the Performance Share Plan for the period 2020–2022. In February, Elisa’s Board of Directors decided on the vesting period for the Restricted Share Plan 2019. The vesting period, with a total allocation of 2,500 shares, ends on 31 December 2023. The purpose of using the plan is to engage a number of key persons in Elisa businesses. On 5 September 2023, Elisa transferred 1,185 treasury shares to persons belonging to the Restricted Share Plan 2019 for the commitment period 2020–2022. In November, Elisa’s Board of Directors decided on the vesting period for the Restricted Share Plan 2023. The vesting period, with a total allocation of 334 shares, ends on 31 December 2024. The purpose of using the plan is to engage a number of key persons in Elisa businesses. Research and development The majority of service development occurs during the ordinary course of business and is accounted for as a normal operating expense. Elisa invested EUR 24 million (21) in research and development, of which EUR 9 million (8) was capitalised in 2023, corresponding to 1.1 per cent (1.0) of revenue. Annual General Meeting 2023 On 5 April 2023, Elisa’s Annual General Meeting decided to pay a dividend of EUR 2.15 per share based on the adopted financial statements for 31 December 2022. The dividend was paid on 19 April 2023 to shareholders registered in the company’s shareholder register maintained by Euroclear Finland Ltd on 11 April 2023. The Annual General Meeting adopted the financial statements for 2022. The members of the Board of Directors and the CEO were discharged from liability for 2022. The Annual General Meeting approved the Remuneration Report of the Company’s governing bodies for 2022. The number of the members of the Board of Directors was confirmed at eight (8). Mr Maher Chebbo, Mr Kim Ignatius, Ms Katariina Kravi, Ms Pia Kåll, Mr Topi Manner (until 18 August 2023, see stock exchange release, 18 August 2023), Ms Eva-Lotta Sjöstedt, Mr Anssi Vanjoki and Mr Antti Vasara were re-elected as members of the Board of Directors. Mr Anssi Vanjoki was appointed as the Chair and Ms Katariina Kravi as the Deputy Chair of the Board of Directors. The AGM decided that the amount of annual remuneration for the members of the Board of Directors be changed. The Chair is paid annual remuneration of EUR 140,000, the Deputy Chair and the Chairs of the Committees EUR 86,000, and other Board members EUR 71,000. Additionally, Board members receive a fee of EUR 800 per meeting of the Board or of a committee. However, if a Board member is physically present at a Board or committee meeting that is held in a country other than his/her permanent home country, the meeting fee is EUR 1,600. KPMG Oy Ab, Authorised Public Accountants Organisation, was re-elected as the company’s auditor. Toni Aaltonen, APA, is the responsible auditor. The AGM decided to amend the first paragraph of Section 11 of the Articles of Association to allow the General Meeting to also be held remotely without a meeting venue if the Board of Directors so decides, and to change the title of Section 11 to “General Meeting of Shareholders” so that the title covers not only the Annual General Meetings, but also any Extraordinary General Meetings. Composition of the Committees of the Elisa’s Board of Directors The Board of Directors held its organising meeting and appointed Ms Katariina Kravi (chair), Mr Maher Chebbo, and Ms Eva-Lotta Sjöstedt to the People and Compensation Committee. Mr Kim Ignatius (chair), Ms Pia Kåll, Mr Topi Manner (until 18 August 2023, see stock exchange release, 18 August 2023) and Mr Antti Vasara were appointed to the Audit Committee. Authorisations of the Board of Directors The Annual General Meeting decided to authorise the Board of Directors to resolve to repurchase or accept as pledge the company’s own shares. The repurchase may be directed. The number of shares under this authorisation is 5 million shares at maximum. The authorisation is valid for 18 months from the date of the resolution of the General Meeting. The Annual General Meeting decided to authorise the Board of Directors to pass a resolution concerning Report of the board of directors Shares and shareholders Board’s proposal for the distribution of profits Investor information 5Financial Statements 2023 a share issue, the right of assignment of treasury shares and/or the granting of special rights referred to in the Companies Act. The authorisation entitles the Board of Directors to execute the issue as directed. The number of shares under this authorisation is 15 million shares at maximum. The authorisation is valid for 18 months from the date of the resolution of the General Meeting. Elisa Shareholders’ Nomination Board The biggest shareholders were determined according to Elisa’s shareholder register on 31 August 2023, and they named the members of the Nomination Board. The composition of the Nomination Board since September 2023 has been as follows: • Mr Pauli Anttila, Investment Director, nominated by Solidium Oy • Mr Jouko Pölönen, President and CEO, nominated by Ilmarinen Mutual Pension Insurance Company • Mr Markus Aho, Chief Investment Officer, nominated by Varma Mutual Pension Insurance Company • Mr Jukka Vähäpesola, Head of Equities (Ms Hanna Hiidenpalo, until 15 September 2023), nominated by Elo Mutual Pension Insurance Company • Mr Anssi Vanjoki, Chair of the Board of Elisa The Nomination Board elected from amongst its members Mr Pauli Anttila as the chair. Elisa’s Shareholders’ Nomination Board was established in 2012 by the Annual General Meeting. Its duty is to prepare proposals for the election and remuneration of the members of the Board of Directors of Elisa for the Annual General Meeting. Significant legal and regulatory issues In January 2023, Elisa initiated arbitration proceedings against Azerion related to Azerion’s payment obligation for the shares in Sulake. Azerion fulfilled the payment obligation, and the arbitration has ended. In February, Elisa returned the 3.5 GHz frequency licence in the province of the Åland Islands. The Estonian auction for the 26 GHz spectrum ended on 10 May 2023. Elisa met its target and won 800 MHz of spectrum. The new spectrum is being used to build Elisa’s 5G network. Transposition in Finland of EU Directive 2022/2523 ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the European Union was completed in the fourth quarter of 2023, and the legislation came into force on 1 January 2024. This change is estimated to have an impact on taxes in the income statement for Elisa’s Estonian business from 2024 onwards. In July 2020, Tucana Telecom NV initiated legal proceedings against Polystar OSIX AB in the Business Court of Brussels with a claim of infringement of exclusivity included in a distribution agreement and also of wrongful termination of the distribution agreement. This case has been resolved pursuant to a judgement issued on 10 June 2022. The claim against Polystar OSIX AB was dismissed in full by the court, and consequently, no compensation or damages were awarded to the claimant. The decision has been appealed. After a tax audit on foreign dividend withholding tax, Elisa received a decision in April 2021 according to which it is required to pay a total of EUR 1.7 million in allegedly wrongly levied withholding taxes relating to the years 2015 and 2016. The Board of Adjustment of the Finnish Tax Authority issued a ruling in November 2022 in favour of Elisa. The ruling has been appealed by the Tax Recipients’ Legal Services Unit and is therefore not final and binding. In November 2021, the Estonian parliament adopted amendments to the Electronic Communications Act aimed at supplementing national security requirements. The amendments entered into force on 1 February 2022. Based on these amendments, on 25 November 2022, Estonia’s Consumer Protection and Technical Regulatory Authority issued a decision stating that usage of Huawei hardware and software in 5G mobile networks in Estonia is permitted only until 31 December 2025, and until 31 December 2029 in earlier generation (2G–4G) networks and fixed networks. On 1 December 2022, Elisa appealed the decision to the Estonian Administrative Court, as Elisa is being forced to replace the Huawei hardware and software currently used in its networks, but there is no compensation system in place. Substantial risks and uncertainties associated with Elisa’s operations Risk management is part of Elisa’s internal control system. It aims to ensure that risks affecting the company’s business are identified, influenced and monitored. The company classifies risks into strategic, operational, hazard and financial risks. Strategic and operational risks: The telecommunications industry is intensely competitive in Elisa’s main market areas, which may have an impact on Elisa’s business. The telecommunications industry is subject to heavy regulation. Elisa and its businesses are monitored and regulated by several public authorities. This regulation also affects the price level of some products and services offered by Elisa and may also require investments that have long payback times. Elisa processes different kinds of data, including personal and traffic data. Therefore, the applicable data protection legislation, especially the General Data Protection Regulation, has a significant impact on Elisa and its businesses. The rapid developments in telecommunications technology may have a significant impact on Elisa’s business. Changes in governmental relationships, including in the security environment, may increase the risk of restrictions being imposed on equipment from particular network providers that is also used in Elisa’s network. This could have financial or operational impacts on Elisa’s business. Elisa’s main market is Finland, where the number of mobile phones per inhabitant is among the highest in the world and growth in subscriptions is therefore limited. Furthermore, the volume of phone traffic on the fixed network has been decreasing during recent years. These factors may limit opportunities for growth. New international business expansion and possible future acquisitions abroad may increase risks. Elisa is liable to pay direct and indirect taxes and withholding taxes in the countries in which it operates. Changes in tax authorities’ interpretation of tax laws may lead to an increase in the tax burden for corporations. Uncertainty relating to regional conflicts globally, especially Russia’s war in Ukraine is continuing. This is expected to affect the general economic environment, e.g. inflation and energy prices. Challenges in global supply chains may also result in uncertainties in volumes and prices. Disturbances related to running infrastructure may also occur, for example due to cyber incidents. Elisa’s business in Russia was not essential, and Elisa withdrew from the Russian market in 2022. Report of the board of directors Shares and shareholders Board’s proposal for the distribution of profits Investor information 6Financial Statements 2023 Hazard risks: The company’s core operations are covered by insurance against damage and interruptions caused by accidents and disasters. Accident risks also include litigation and claims. Financial risks: In order to manage the interest rate risk, the Group’s loans and investments are diversified into fixed- and variable-rate instruments. Interest rate swaps can be used to manage the interest rate risk. As most of Elisa’s operations and cash flow are denominated in euros, the exchange rate risk is minor. Currency derivatives can be used to manage the currency risk. The objective of liquidity risk management is to ensure the Group’s financing in all circumstances. Elisa has cash reserves, committed credit facilities and a sustainable cash flow to cover its foreseeable financing needs. Liquid assets are invested within confirmed limits in financially solid banks, domestic companies and institutions. Credit risk concentrations in accounts receivable are minor, as the customer base is broad. Russia’s war in Ukraine and higher inflation have increased volatility in the financial markets. This might have an effect on Elisa’s ability to raise funds and may increase financing costs. A detailed description of financial risk management can be found in Note 7.1 to the consolidated financial statements. Corporate responsibility and non-financial reporting Elisa’s business operations and digitalisation solutions contribute to sustainable development and to environmentally friendly actions among its customers and society. Elisa is committed to the principles of the UN Global Compact in its business operations, and we have identified our most important contribution to the UN Sustainable Development Goals. Elisa has a strong track record of and a long-term commitment to environmental work. As a result, Elisa has had science-based climate targets since 2018. In 2023, Elisa was among the first companies in Finland to receive approval from the Science Based Targets initiative (SBTi) for new, even more ambitious targets for 2030, as well as a target of zero emissions (including supply chain emissions) by 2040, which is in line with the SBTi Net-Zero Standard. Sustainability has been part of Elisa’s strategy for over ten years. Our sustainability targets for 2022–2024 emphasise the importance of Elisa’s handprint, focusing on the availability of fast connections, cyber security, increasing its carbon handprint, the energy efficiency of the mobile network, innovations and promoting equality. Elisa will publish its 11th assured sustainability report as part of the Annual Report 2023. The sustainability report has been prepared primarily with reference to the Global Reporting Initiative (GRI) Standards, and for climate, in accordance with the Task Force on Climate- related Financial Disclosures (TCFD) recommendations. Elisa also reports non-financial information with reference to selected indicators of the Sustainability Accounting Standards Boards (SASB) framework. The report meets the requirements for non-financial reporting, including information regarding the EU Taxonomy Regulation. The report includes medium- term targets, performance and metrics. In recognising Elisa’s material corporate responsibility, the most important financial, social and environmental effects and risks of the company, as well as other significant trends affecting the industry, have been taken into account. The management’s description of corporate responsibility is available on the company website elisa.com/sustainability. Corporate Governance Statement and Remuneration Report Elisa’s Corporate Governance Statement and Remuneration Report for 2023 will be published no later than 16 February 2024. Events after the reporting period On 16 January 2024, Elisa and Moontalk Oy signed an agreement under which Elisa takes a majority holding of Moontalk, which is a SaaS software supplier focused on mobile voice communication management for enterprises. On 25 January 2024, the Shareholders’ Nomination Board announced its proposal to Elisa’s Board for the notice of the Annual General Meeting of 12 April 2024 that the number of members of the Board of Directors would be eight (8). The Nomination Board proposes that Mr Maher Chebbo, Mr Kim Ignatius, Ms Katariina Kravi, Ms Pia Kåll, Ms Eva-Lotta Sjöstedt, Mr Anssi Vanjoki and Mr Antti Vasara be re-elected. The Nomination Board further proposes that Mr Christoph Vitzthum be elected as a new member of the Board. The Nomination Board proposes that Mr Anssi Vanjoki be elected as the Chair of the Board and Ms Katariina Kravi be elected as the Vice Chair. All the proposed Board Members are considered to be independent of the company and of its significant shareholders. Outlook and guidance for 2024 Development in the general economy includes many uncertainties. Growth in the Finnish economy is expected to stall. In particular, uncertainty relating to Russia’s war in Ukraine and other conflicts, such as in inflation and energy prices, is continuing. Challenges in global supply chains may also result in uncertainties in volumes and prices. Competition in the Finnish telecommunications market remains keen. Full-year revenue is estimated to be same level or slightly higher than in 2023. Mobile data and digital services are expected to increase revenue. Full-year comparable EBITDA is anticipated to be same level or slightly higher than in 2023. Capital expenditure is expected to be 12–13 per cent of revenue. Elisa is continuing to develop to improve productivity, for example by increasing automation and data analytics in different processes, such as customer interaction, network operations and delivery. Additionally, Elisa’s continuous quality improvement measures will increase customer satisfaction and efficiency, and reduce costs. Elisa’s transformation into a provider of exciting, new and relevant services for its customers is continuing. Long-term revenue growth and profitability improvement will derive from growth in the mobile data market, as well as domestic and international digital services. Profit distribution According to Elisa’s distribution policy, profit distribution is 80–100 per cent of the previous fiscal year’s net profit. In addition, any excess capital can be distributed to shareholders. When making the distribution proposal or decision, the Board of Directors will take into consideration the company’s financial position, future financial needs and financial targets. Profit distribution includes dividend payment, capital repayment and purchase of treasury shares. The Board of Directors proposes to the Annual General Meeting a dividend of EUR 2.25 per share. The dividend Report of the board of directors Shares and shareholders Board’s proposal for the distribution of profits Investor information 7Financial Statements 2023 payment corresponds to 95 per cent of the comparable net profit for the financial period. The Board of Directors also proposes that the dividend be paid in two instalments. It is proposed that the first instalment of the dividend, EUR 1.13, be paid to shareholders who are listed in the company’s shareholder register maintained by Euroclear Finland Ltd on 16 April 2024. The Board of Directors proposes that the payment date be 23 April 2024. It is also proposed that the second instalment of the dividend, EUR 1.12, be paid to shareholders who are listed in the company’s shareholder register on 23 October 2024, and the Board of Directors proposes that the payment date be 30 October 2024. The profit for the period will be added to retained earnings. The Board of Directors also decided to propose to the General Meeting that the Board of Directors be authorised to acquire a maximum of five million treasury shares, which corresponds to 3 per cent of the total number of shares. BOARD OF DIRECTORS Report of the board of directors Shares and shareholders Board’s proposal for the distribution of profits Investor information 8Financial Statements 2023 1. Share capital and shares The company’s paid-up share capital registered in the Trade Register stood at EUR 83,033,008 at the end of the financial year. At the end of the financial year, the number of Elisa Corporation shares was 167,335,073, all within one share series. 2. Authorisations of the Board of Directors On 5 April 2023, the Annual General Meeting authorised the Board of Directors to decide on a new share issue, transfer of treasury shares owned by the company and/or granting of special rights referred to in chapter 10, section 1 of the Finnish Companies Act subject to the following: The authorisation allows the Board of Directors to issue a maximum of 15,000,000 shares in one or several issues. The share issue and shares granted by virtue of special rights are included in the aforementioned maximum number. The maximum number is approximately 9 per cent of the entire stock. The share issue can be free or for consideration and can also be directed to the Company itself. The authorisation entitles the Board to make a directed issue. The authorisation may be used for making acquisitions or implementing other arrangements related to the Company’s business, to finance investments, to improve the Company’s financial structure, or for other purposes decided by the Board of Directors. The Board of Directors has the right to decide on all other matters related to the share issue. The authorisation is valid for 18 months, and it annuls the authorisation given by the Annual General Meeting to the Board of Directors on 6 April 2022. On 5 April 2023, the Annual General Meeting also authorised the Board of Directors to decide on the acquisition of treasury shares subject to the following: The Board of Directors may decide to acquire or pledge on non-restricted equity a maximum of 5,000,000 treasury shares. The acquisition may take place as one or several blocks of shares. The consideration payable for the shares shall not be more than the ultimate market price. In purchasing the Company’s own shares derivative, share lending and other contracts customary in the capital market may be concluded pursuant to law and the applicable legal provisions. The authorisation entitles the Board of Directors to pass a resolution to purchase the shares by making an exception to the purchase of shares relative to the current holdings of the shareholders. The treasury shares may be used for making acquisitions or implementing other arrangements related to the Company’s business, to finance investments, to improve the Company’s financial structure, to be used as part of the incentive compensation plan, or for the purpose of otherwise assigning or cancelling the shares. The Board of Directors has the right to decide on all other matters related to the acquisition of the Company’s own shares. The authorisation is valid for 18 months, and it annuls the respective authorisation given by the Annual General Meeting to the Board of Directors on 6 April 2022. 3. Treasury shares, share issues and cancellations At the beginning of the financial period, Elisa held 7,075,378 treasury shares. The Annual General Meeting held on 5 April 2023 authorised the Board of Directors to acquire and assign treasury shares. The authorisation applies to a maximum of 5,000,000 treasury shares. On the basis of the authorisation, Elisa has not acquired any treasury shares. A total of 128,724 treasury shares were disposed during the financial year. At the end of the financial period, Elisa held 6,946,654 treasury shares. The treasury shares held by Elisa Corporation do not have any substantial impact on the distribution of holdings and votes in the Company. They represent 4.15 per cent of all shares and votes. 4. Management interests The aggregate number of shares held by Elisa’s Board of Directors and the CEO on 31 December 2023 was 309,729 shares and votes, which represented 0.19 per cent of all shares and votes. Shares and shareholders EMOYHTIÖN TILINPÄÄTÖS 5. Share performance The Elisa share closed at EUR 41.87 on 31 December 2023. The highest quotation of the year was EUR 56.52 and the lowest EUR 39.41. The average price was EUR 48.86. Information is based on share trades made on the Nasdaq Helsinki stock exchange. At the end of the financial year, the market capitalisation of Elisa’s total number of shares was EUR 7,006.3 million. 6. Quotation and trading The Elisa share is quoted on the Main List of the Nasdaq Helsinki with the ticker ELISA. The aggregate volume of trading on the Nasdaq Helsinki between 1 January and 31 December 2023 was 64,380,415 shares for an aggregate price of EUR 3,145.9 million. The trading volume represented 38.5 per cent of the total number of shares at the end of the financial year. Report of the board of directors Shares and shareholders Board’s proposal for the distribution of profits Investor information 9Financial Statements 2023 7. Distribution of holding by shareholder groups at 31 December 2023 Number of shares Proportion of all shares, % 1 Private companies 3,619,139 2.16 2 Financial and insurance institutions 5,111,885 3.05 3 Public corporations 30,263,678 18.09 4 Non-profit organisations 5,108,080 3.05 5 Households 36,682,383 21.92 6 Foreign 174,336 0.10 7 Nominee registered 79,428,918 47.47 Elisa Group, treasury shares 6,946,654 4.15 167,335,073 100.00 8. Distribution of holding by amount at 31 December 2023 Size of holding Number of shareholders % Number of shares % 1–100 52,854 29,42 2,280,269 1.36 101–1,000 122,386 68,14 27,274,000 16.30 1,001–10,000 4,142 2,31 9,753,560 5.83 10,001–100,000 197 0,11 5,050,677 3.02 100,001–1,000,000 28 0,01 7,333,101 4.38 1,000,001– 7 0,00 29,137,477 17.41 Nominee registered 79,428,918 47.47 179,614 100.00 Elisa Common Clearing account (1 130,417 0.08 Elisa Corporation, treasury shares 6,946,654 4.15 Issued amount 167,335,073 100.00 1) Shares in the Common Clearing account include shares that had not been transferred to the share owners’ book-entry accounts at the time of, or after, entering the shares into the Finnish book-entry system. 9. Largest shareholders at 31 December 2023 Name Number of shares % 1 Solidium Oy 16,802,800 10.04 2 Ilmarinen Mutual Pension Insurance Company 4,413,011 2.64 3 Varma Mutual Pension Insurance Company 3,096,976 1.85 4 Elo Mutual Pension Insurance Company 2,550,000 1.52 5 The State Pension Fund 1,150,000 0.69 6 City of Helsinki 1,124,690 0.67 7 Danske Invest Finnish Equity Fund 695,000 0.42 8 Nordea Pro Finland Fund 555,722 0.33 9 Sijoitusrahasto Seligson & Co 450,808 0.27 10 Föreningen Konstsamfundet R.f. 450,000 0.27 11 Stiftelsen För Åbo Akademi Sr 403,223 0.24 12 OP Finland Fund 397,578 0.24 13 OP Finland Index 381,891 0.23 14 Samfundet Folkhälsan i Svenska Finland R F 363,766 0.22 15 Keva 358,379 0.21 16 Juselius Sigrid Stiftelse 330,700 0.20 17 OP-Henkivakuutus Oy 326,315 0.20 18 City of Vantaa 258,738 0.15 19 Evli Finland Select Fund 237,500 0.14 20 S-Bank Fenno Equity Fund 229,316 0.14 34,576,413 20.66 Elisa Corporation, treasury shares 6,946,654 4.15 Nominee registered 1) 79,428,918 47.47 Shareholders not specified above 46,383,088 27.72 167,335,073 100.00 1) On 27 February 2017, BlackRock, Inc issued a notice in accordance with chapter 9, section 5 of the Finnish Securities Market Act, that the direct share ownership of Elisa Corporation shares owned by BlackRock, Inc. was 8,533,440 and by its funds 1,232,577 shares, totaling 9,766,017 shares, which was 5.84 per cent of Elisa Corporation’s entire stock. Report of the board of directors Shares and shareholders Board’s proposal for the distribution of profits Investor information 10Financial Statements 2023 Share trading volumes are based on the trades made on Nasdaq Helsinki. Elisa share is also traded in alternative marketplaces. 11. Trading volume Shares per month (million) 10. Daily price development Closing price in EUR 1) Rebalanced to Elisa share. 38 40 42 44 46 48 50 52 54 56 58 Elisa OMX Helsinki 25 -index (1 1) Rebased on Elisa's share price Daily price development Closing price in EUR Kurssikehitys päivittäin Päätöskurssi, euroa 1/2023 2/2023 3/2023 4/2023 5/2023 6/2023 7/2023 8/2023 9/2023 10/2023 11/2023 12/2023 0 1 2 3 4 5 6 7 8 Osakevaihto milj. kpl/kk 6.2 6.0 6.8 4.9 4.7 5.3 5.2 4.1 4.9 5.5 5.1 5.5 1/2023 2/2023 3/2023 4/2023 5/2023 6/2023 7/2023 8/2023 9/2023 10/2023 11/2023 12/2023 According to the balance sheet of 31 December 2023, the parent company’s equity is EUR 521,175,363.51, of which distributable funds account for EUR 410,814,562.35. The parent company’s profit for the period from 1 January to 31 December 2023 was EUR 284,341,392.56. Board’s proposal for distribution of profits The Board of Directors proposes to the General Meeting of Shareholders that the distributable funds be used as follows: • a dividend of EUR 2.25 per share shall be paid for a total of EUR 360,873,942.75 • no dividend shall be paid on shares in the parent company’s possession • EUR 49,940,619.60 shall be retained in shareholders’ equity. Tietoa sijoittajille Report of the board of directors Shares and shareholders Board’s proposal for the distribution of profits Investor information 11Financial Statements 2023 Outlook and guidance for 2024 Development in the general economy includes many uncertainties. Growth in the Finnish economy is expected to stall. In particular, uncertainty relating to Russia’s war in Ukraine and other conflicts, such as in inflation and energy prices, is continuing. Challenges in global supply chains may also result in uncertainties in volumes and prices. Competition in the Finnish telecommunications market remains keen. Full-year revenue is estimated to be same level or slightly higher than in 2023. Mobile data and digital services are expected to increase revenue. Full-year comparable EBITDA is anticipated to be same level or slightly higher than in 2023. Capital expenditure is expected to be 12–13 per cent of revenue. Elisa is continuing to develop to improve productivity, for example by increasing automation and data analytics in different processes, such as customer interaction, network operations and delivery. Additionally, Elisa’s continuous quality improvement measures will increase customer satisfaction and efficiency, and reduce costs. Elisa’s transformation into a provider of exciting, new and relevant services for its customers is continuing. Long-term revenue growth and profitability improvement will derive from growth in the mobile data market, as well as domestic and international digital services. Investor information Distribution policy According to Elisa’s distribution policy, profit distribution is 80–100 per cent of the previous fiscal year’s net profit. In addition, any excess capital can be distributed to shareholders. Profit distribution includes dividend payment, capital repayment and purchase of treasury shares. Annual General Meeting Elisa’s Annual General Meeting will be held on 12 April 2024. More information on the AGM invitation and at elisa.com/agm Payment of dividends The Board of Directors proposes to the AGM that the profit for the financial period 2023 be added to accrued earnings and that a dividend of EUR 2.25 per share be paid based on the adopted balance sheet of 31December 2023. The Board of Directors also proposes that the dividend be paid in two instalments. It is proposed that the first instalment of the dividend, EUR 1.13, be paid to shareholders who are listed in the company’s shareholder register maintained by Euroclear Finland Ltd on 16 April 2024. The Board of Directors proposes that the payment date be 23 April 2024. The second instalment of the dividend, EUR 1.12, is be paid to shareholders who are listed in the company’s shareholder register on 23 October 2024, and the payment date be 30 October 2024. Listing of Elisa’s shares Elisa’s shares are listed on the Nasdaq Helsinki and are registered in the Finnish book-entry register maintained by Euroclear Finland Ltd. Publication dates 2024 • 19 April 2024: Interim Report Q1 2024 • 16 July 2024: Half-Year Financial Report 2024 • 18 October 2024: Interim Report Q3 2024 Financial information Elisa publishes its financial reports and bulletins in Finnish and English. The Annual Report, Half-year report, Interim Reports, information on the AGM, stock exchange releases and other information for investors, as well as the Disclosure Policy, are available on the Elisa website at elisa.com/investors. Tietoa sijoittajille Guidance for 2024 Revenue Same level or slightly higher than in 2023 Comparable EBITDA Same level or slightly higher than in 2023 CAPEX/sales 12–13% Medium-term financial targets by the end of 2025 Revenue growth 2022–2025 CAGR > 2% EBITDA growth 2022–2025 CAGR > 3% CAPEX/sales ≤ 12% Net debt/EBITDA 1.5–2× Equity ratio > 35% Elisa’s investor relation contacts Vesa Sahivirta IR Director [email protected] tel. +358 50 520 5555 Kati Norppa IR Communications Manager [email protected] tel. +358 50 308 9773 elisa.com/investors [email protected] Tietoa sijoittajille Report of the board of directors Shares and shareholders Board’s proposal for the distribution of profits Investor information Financial statements Consolidated financial statement 14 Notes to the consolidated financial statements 18 Parent company financial statements 71 Notes to the financial statements of the parent company 73 Signatures to the board of directors’ report and financial statements 83 Auditor’s report 84 12Financial Statements 2023 Auditor’s reportParent company financial statements Consolidated financial statement 13Financial Statements 2023 CONSOLIDATED FINANCIAL STATEMENTS 14 Consolidated income statement and statement of comprehensive income 14 Consolidated statement of financial position 15 Consolidated cash flow statement 16 Consolidated statement of changes in equity 17 Notestotheconsolidatedfinancialstatements 18 1.Generalaccountingprinciples 18 1.1 Basic information about the Group 18 1.2 Basis of preparation of financial statements 18 1.3 Applied new and revised standards 19 2. Operational result 21 2.1 Operating segments and geographical areas 21 2.2 Items affecting comparability 22 2.3 Revenue from contracts with customers 23 2.4 Other operating income 25 2.5 Operating expenses 25 2.6 Earnings per share 26 3. Business acquisitions and disposals 27 4. Personnel 31 4.1 Employee expenses 31 4.2 Share-based incentives 33 4.3 Pension obligations 37 5. Tangible and intangible assets 39 5.1 Depreciation, amortisation and impairment 39 5.2 Property, plant and equipment 39 5.3 Right-of-use assets 41 5.4 Intangible assets 42 6. Inventories, trade and other receivables, trade and other liabilities 45 6.1 Inventories 45 6.2 Trade and other receivables 45 6.3 Trade and other liabilities 46 7.Capitalstructure 48 7.1 Financial risk management 48 7.2 Capital management 51 7.3 Equity 52 7.4 Financial assets and liabilities 53 8.Othernotes 59 8.1 Taxes 59 8.2 Provisions 62 8.3 Related party details 63 8.4 Off-balance sheet leases and other commitments 66 8.5 Events after the end of the reporting period 67 9.KeyIndicators 68 9.1 Key indicators describing the Group’s financial development 68 9.2 Alternative performance measures 69 9.3 Per-share indicators 70 PARENT COMPANY FINANCIAL STATEMENTS 71 Income statement 71 Balance sheet 71 Cash flow statement 72 Notestothefinancialstatementsoftheparent company 73 Accounting principles 73 Notestoincomestatement 74 1. Revenue 74 2. Other operating income 74 3. Materials and services 74 4. Employee expenses 74 5. Depreciation, amortisation and impairment 75 6. Audit fees 75 7. Financial income and expenses 75 8. Appropriations 75 9. Income taxes 75 Notes to balance sheet 76 10. Intangible assets and property, plant and equipment 76 11. Investments 78 12. Inventories 79 13. Non-current receivables 79 14. Current receivables 79 15. Equity 80 16. Provisions 80 17. Non-current liabilities 80 18. Current liabilities 81 19. Lease commitments and other liabilities 81 SIGNATURES TO THE BOARD OF DIRECTORS’ REPORT AND FINANCIAL STATEMENTS 83 AUDITOR’S REPORT 84 AUDITOR’S REASONABLE ASSURANCE REPORT ON ESEF FINANCIAL STATEMENTS 88 Contents Auditor’s reportParent company financial statements Consolidated financial statement 14Financial Statements 2023 Consolidated income statement EURmillion Note 2023 2022 Revenue 2.1, 2.3 2,180.5 2,129.5 Other operating income 2.4 9.8 6.9 Materials and services 2.5 –817.9 –820.8 Employee expenses 4.1 –417.1 –394.8 Other operating expenses 2.5 –199.3 –187.5 EBITDA 2.1 755.9 733.3 Depreciation, amortisation and impairment 2.1, 5.1 –274.1 –263.4 EBIT 2.1 481.8 469.8 Financial income 7.4.1 8.7 5.6 Financial expenses 7.4.1 –32.0 –18.7 Share of associated companies’ profit –0.4 –0.7 Profitbeforetax 458.1 456.0 Income taxes 8.1.1 –84.1 –83.2 Profitfortheperiod 374.0 372.8 Attributable to Equity holders of the parent 375.2 374.1 Non-controlling interests –1.2 –1.3 374.0 372.8 Earnings per share (EUR) Basic 2.6 2.34 2.33 Diluted 2.6 2.34 2.33 Averagenumberofoutstandingshares(1,000shares) Basic 2.6 160,376 160,253 Diluted 2.6 160,530 160,410 KONSERNITILINPÄÄTÖS Konsernitilinpäätöksen päälaskelmat Konsernin tuloslaskelma ja laaja tuloslaskelma Consolidated statement of comprehensive income EURmillion Note 2023 2022 Profitfortheperiod 374.0 372.8 Othercomprehensiveincome,netoftax Itemswhichmaybereclassifiedsubsequentlytoprofitorloss Cash flow hedge –0.1 –0.3 Translation differences –0.4 –4.7 Itemswhicharenotreclassifiedsubsequentlytoprofitorloss Remeasurements of the net defined benefit liability 4.3 1.2 0.4 Othercomprehensiveincome 0.8 –4.7 Totalcomprehensiveincome 374.8 368.0 Totalcomprehensiveincomeattributableto Equity holders of the parent 376.0 369.3 Non-controlling interests –1.2 –1.3 Auditor’s reportParent company financial statements Consolidated financial statement 15Financial Statements 2023 Consolidated statement of financial position EURmillion Note 31 Dec. 2023 31 Dec. 2022 ASSETS Non-current assets Property, plant and equipment 5.2 815.6 766.7 Right-of-use assets 5.3 87.3 90.4 Goodwill 5.4.1 1,157.2 1,157.3 Intangible assets 5.4 210.3 210.5 Investments in associated companies 8.3.2 20.8 9.9 Other financial assets 7.4.3 16.0 16.2 Trade and other receivables 6.2.2, 7.4.4 107.9 116.8 Deferred tax assets 8.1.2 11.5 13.1 2,426.6 2,380.9 Current assets Inventories 6.1 77.1 95.5 Trade and other receivables 6.2.1 555.8 537.1 Tax receivables 1.7 1.8 Cash and cash equivalents 63.4 85.4 698.0 719.9 TOTAL ASSETS 2.1 3,124.6 3,100.8 Konsernin tase EURmillion Note 31 Dec. 2023 31 Dec. 2022 EQUITY AND LIABILITIES EQUITY Share capital 83.0 83.0 Treasury shares –121.7 –124.5 Reserve for invested non-restricted equity 90.9 90.9 Other reserves 375.1 373.9 Retained earnings 863.1 823.2 Equityattributabletoequityholdersoftheparent 4.2, 7.3 1,290.4 1,246.5 Non-controlling interests 3.3 5.4 TOTAL EQUITY 1,293.7 1,251.9 LIABILITIES Non-current liabilities Deferred tax liabilities 8.1.2 24.7 25.7 Interest-bearing financial liabilities 7.4.2, 7.4.3 996.7 995.0 Interest-bearing lease liabilities 7.4.2, 7.4.3 67.8 70.8 Trade payables and other liabilities 6.3, 7.4.3, 7.4.4 19.4 30.3 Pension obligations 4.3 9.3 12.9 Provisions 8.2 3.4 2.9 1,121.3 1,137.7 Current liabilities Interest-bearing financial liabilities 7.4.2, 7.4.3 282.2 275.0 Interest-bearing lease liabilities 7.4.2, 7.4.3 20.8 20.4 Trade and other payables 6.3, 7.4.3 402.5 412.9 Tax liabilities 3.1 2.1 Provisions 8.2 1.0 0.8 709.6 711.2 TOTAL LIABILITIES 1,830.9 1,848.9 TOTAL EQUITY AND LIABILITIES 3,124.6 3,100.8 Auditor’s reportParent company financial statements Consolidated financial statement 16Financial Statements 2023 Consolidated cash flow statement EURmillion Note 2023 2022 Cashflowfromoperatingactivities Profit before tax 458.1 456.0 Adjustments Depreciation, amortisation and impairment 5.1 274.1 263.4 Financial income (-) and expenses (+) 7.4.1 23.3 13.1 Gains (-) and losses (+) on the disposal of fixed assets –4.2 –0.1 Increase (+) / decrease (-) in provisions on the income statement 0.7 –2.2 Other adjustments –19.6 –16.0 274.4 258.2 Change in working capital Increase (-) / decrease (+) in trade and other receivables –2.4 –16.2 Increase (-) / decrease (+) in inventories 15.0 –13.3 Increase (+) / decrease (-) in trade and other payables 2.4 2.0 15.1 –27.5 Dividends received 0.5 0.4 Interest received 5.4 2.3 Interest paid –24.0 –12.6 Taxes paid –81.6 -85.0 Netcashflowfromoperatingactivities 647.8 591.8 Konsernin rahavirtalaskelma EURmillion Note 2023 2022 Cashflowfrominvestingactivities Equity investments 3 –20.5 Contingent consideration of subsidiaries –4.1 –0.1 Investments in associates –0.3 0.0 Other investments –0.3 –0.3 Capital expenditure –304.7 –270.9 Repayment of loan receivables 0.1 Proceeds from disposal of subsidiaries and businesses 3.7 -0.2 Proceeds from disposal of other investments 0.3 0.0 Proceeds from disposal of tangible and intangible assets 4.6 0.1 Netcashflowusedininvestingactivities –300.8 –291.9 Cashflowbeforefinancingactivities 347.0 299.9 Cashflowfromfinancingactivities Proceeds from long-term borrowings 298.2 Repayment of long-term borrowings –201.7 –100.3 Increase (+) / decrease (-) in short-term borrowings –90.5 124.8 Repayment of lease liabilities –25.4 –24.9 Acquisition of non-controlling interests –7.3 Dividends paid –343.5 –328.1 Netcashusedinfinancingactivities –370.1 –328.5 Change in cash and cash equivalents –23.1 –28.6 Translation differences 1.1 –0.1 Cash and cash equivalents at the beginning of the period 85.4 114.1 Cashandcashequivalentsattheendoftheperiod 63.4 85.4 Auditor’s reportParent company financial statements Consolidated financial statement 17Financial Statements 2023 Consolidated statement of changes in equity Equityattributabletoequityholdersoftheparentcompany Reservefor invested Non- Share Treasury non-restricted Other Retained controlling Total EURmillion capital shares equity reserves earnings Total interests equity Balance at 1 January 2022 83.0 –126.1 90.9 373.9 776.1 1,197.8 6.3 1,204.1 Profit for the period 374.1 374.1 –1.3 372.8 Other comprehensive income Translation differences –4.8 –4.8 0.0 –4.7 Cash flow hedging –0.3 –0.3 –0.3 Remeasurements of the net defined benefit liability 0.4 0.4 0.4 Total other comprehensive income 0.0 -4.8 –4.7 0.0 –4.7 Total comprehensive income 0.0 369.3 369.3 –1.3 368.0 Dividend distribution -328.5 –328.5 –0.1 –328.7 Share-based compensation 1.6 1.6 1.6 Acquisition of subsidiary with non-controlling interests 0.5 0.5 Other changes 6.4 6.4 6.4 Balanceat31December2022 83.0 –124.5 90.9 373.9 823.2 1,246.5 5.4 1,251.9 Profit for the period 375.2 375.2 –1.2 374.0 Other comprehensive income Translation differences –0.4 –0.4 0.0 –0.4 Cash flow hedging –0.1 –0.1 –0.1 Remeasurements of the net defined benefit liability 1.2 1.2 1.2 Total other comprehensive income 1.2 –0.4 0.8 0.0 0.8 Total comprehensive income 1.2 374.8 376.0 –1.2 374.8 Dividend distribution –344.8 –344.8 –0.2 –345.1 Share-based compensation 2.8 2.8 2.8 Acquisition of non-controlling interests –0.6 –0.6 Other changes 9.9 9.9 –0.1 9.8 Balanceat31December2023 83.0 –121.7 90.9 375.1 863.1 1,290.4 3.3 1,293.7 Laskelma konsernin oman pääoman muutoksista Auditor’s reportParent company financial statements Consolidated financial statement 18Financial Statements 2023 Notes to the consolidated financial statements Konsernitilinpäätöksen liitetiedot 1. Yleiset laadintaperiaatteet 1.1 Konsernin perus- tiedot 1.2 Tilinpäätöksen laatimisperusta 1. General accounting principles 1.1 Basic information about the Group Information about the parent company: Elisa Corporation Domicile: Helsinki, Finland Registered address: Ratavartijankatu 5, 00520 Helsinki Business ID: 0116510–6 Elisa Corporation (“Elisa” or “the Group”) engages in telecommunications activities and provides ICT and online services in Finland and in selected international market areas. The shares of the parent company, Elisa Corporation, have been listed on the Nasdaq Helsinki since 1997. On 25 January 2024, Elisa Corporation’s Board of Directors accepted these financial statements for publication. A copy of these financial statements is available from Elisa’s head office at Ratavartijankatu 5, Helsinki, or on the company’s website at www.elisa.com. 1.2 Basis of preparation of financial statements Elisa’s consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS), including adherence to IAS and IFRS standards and SIC and IFRIC interpretations valid as at 31 December 2023. In the Finnish Accounting Act and the provisions issued pursuant to it, the International Financial Reporting Standards refer to standards and interpretations that have been approved for application in the EU according to the procedures provided for in EU regulation (EC) No. 1606/2002 (“IFRS”). The notes to the consolidated financial statements are also compliant with Finnish accounting and corporate legislation. The consolidated financial statements have been prepared under the historical cost convention, with the exception of financial assets and liabilities, share-based payments, pension liabilities and derivatives recognised at fair value through profit or loss or statement of comprehensive income. The financial statements are presented in EUR million and the figures are rounded to one decimal place. 1.2.1 Accounting principles, structure and presentation of the consolidated financial statements The accounting policies and descriptions of conclusions based on the judgement of Elisa’s management are mainly found in the notes to the financial statements, which are listed in the table below. Only some general accounting policies are described in this section. Summary of notes, related to accounting principles for the consolidated financial statements of Elisa Group. Accounting principle Note Operating segments 2.1 Revenue from contracts with customers 2.3 Other operating income 2.4 Research and development costs 2.5 Earnings per share 2.6 Business acquisitions and disposals 3 Share-based incentives 4.2 Pension obligations 4.3 Property, plant and equipment 5.2 Right-of-use assets 5.3 Intangible assets 5.4 Goodwill 5.4.1 Inventories, trade and other receivables, trade and other liabilities 6 Financial assets and liabilities 7.4 Derivative instruments 7.4.4 Income taxes 8.1.1 Deferred tax assets and liabilities 8.1.2 Provisions 8.2 Consolidation principles, subsidiaries 8.3.1 Consolidation principles, associated companies 8.3.2 Off-balance sheet leases 8.4 The symbols below indicate the figures mentioned in the notes that match the balances in the income statement, the statement of financial position and the cash flow statement. I/S = Income Statement B/S = Balance Sheet C/F = Cash Flow Statement Consolidation principles The consolidated financial statements include the parent company, Elisa Corporation, subsidiaries, associates and joint arrangements as described in detail in Notes 8.3.1 and 8.3.2. Foreign-currency items Functional currency The consolidated financial statements are presented in euros, which is the functional and presentation currency of the parent company. Transactions in foreign currencies Foreign-currency transactions are translated into the functional currency using the exchange rates prevailing on the dates of the transactions. Monetary items have been translated into the functional currency at the exchange rates prevailing at the end of the reporting period. Non-monetary items denominated in foreign currencies are translated at the exchange Auditor’s reportParent company financial statements Consolidated financial statement 19Financial Statements 2023 1.3 Uudet ja tulevat standardit rate on the date of the transaction, excluding items measured at fair value, which are translated at the exchange rates prevailing on the valuation date. Gains and losses arising from the currency translations are recognised through profit or loss. Foreign exchange gains and losses resulting from operating activities are included in the respective items above operating profit. Foreign exchange gains and losses from the liabilities denominated in foreign currencies are included in financial income and expenses, with the exception of exchange rate differences on foreign currency items that constitute a part of the net investment made in a foreign unit. These exchange rate differences are recognised in other comprehensive income, and accumulated exchange rate differences are included in the translation difference presented in shareholders’ equity. Translation of foreign Group companies’ financial statements The income statements of foreign subsidiaries that use a functional currency other than the Group’s presentation currency have been converted into euros at the average exchange rate prevailing during the year, and statements of financial position at the exchange rate prevailing at the end of the reporting period. The different exchange rates applicable to the conversion of profit or loss on the income statement and balance sheet result in a translation difference recognised in shareholders’ equity on the balance sheet, and any change in this difference is recognised in other comprehensive income. Translation differences arising from the elimination of the acquisition cost of foreign subsidiaries, as well as translation differences arising from equity items accumulated after the acquisition, are recognised in other comprehensive income. When a subsidiary is divested in full or in part, accumulated translation differences are recognised in the income statement as part of the sales gain or loss. Goodwill arising from the acquisition of foreign entities and the fair value adjustments made to the book values of the assets and liabilities of such foreign entities upon acquisition are treated as assets and liabilities belonging to the foreign entities. These are converted into euros at the exchange rate prevailing at the end of the reporting period. 1.2.2 Accounting principles that require the judgement of the management and key sources of uncertainty in estimates Preparation of the financial statements requires the Group’s management to make certain estimates and considerations. In addition, judgement is required in applying the accounting policies. This applies particularly to cases in which valid IFRS standards provide for alternative methods of recognition, measurement or presentation. The estimates made in connection with the preparation of financial statements are based on the management’s best view at the end of the financial period, and the outcome may differ from the estimates and assumptions. Estimates are based on historical experience and assumptions concerning the future that are believed to be reasonable at the end of the financial period. The Group regularly assesses the realisation of estimates and assumptions, as well as changes in the underlying factors. Any changes in estimates and assumptions are recorded for the financial year during which the estimate or assumption was adjusted, and for all subsequent periods. Significant areas of estimation and uncertainty in applying accounting policies that have the most significant impact on amounts recognised in the financial statements are related to business combinations (3), impairment of intangible assets (5.4.1), share-based payments (4.2), recognition of net defined pension liability (4.3) and recognition of deferred tax assets (8.1.2). The potential climate change-related risks and opportunities to which the Group is exposed are disclosed in the Group’s 2023 Sustainability report on pages 147 and 220. Management has exercised judgement in concluding that there is no other material financial impact from climate-related risks and opportunities that needs to be recognised in the consolidated financial statements. As the future impact of climate change will depend on environmental, regulatory and other factors outside of the Group’s control that are not currently known, management will continue to monitor these estimates. 1.3 Applied new and revised standards The consolidated financial statements have been prepared in accordance with the same accounting policies used in 2022, with the exception of the new standards, interpretations and revisions to existing standards listed below, which the Group has applied since 1 January 2023. These revisions did not have a material impact on the consolidated financial statements. • IFRS 17 Insurance Contracts. The new standard for insurance contracts will help investors and other parties better understand insurers’ risk exposure, profitability and financial position. This standard replaces the IFRS 4 standard. • Amendments to IAS 1 Presentation of Financial Statements. The amendments clarify the application of materiality to disclosure of accounting policies to help companies provide useful accounting policy disclosures. • Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors. The amendments clarify how companies should distinguish changes in accounting policies from changes in accounting estimates, with a primary focus on the definition of and clarifications to accounting estimates. • Amendments to IAS 12 Income Taxes. The amendments concern deferred taxes related to assets and liabilities arising from a single transaction, and OECD’s (Organisation for Economic Co-operation and Development) international tax reform. The amendments narrow the initial recognition exemption (IRE) and clarify that the exemption does not apply to transactions such as leases and decommissioning obligations which give rise to equal and offsetting temporary differences. The amendments give relief from accounting for deferred taxes arising from the OECD’s international tax reform and require new disclosures to compensate for the potential loss of information resulting from the relief. On 1 January 2024, the Group will adopt the following new amendments, provided they are approved by the EU by the planned date of adoption. These revisions are not expected to have a material impact on the consolidated financial statements. • Amendments to IFRS 16 Leases. The amendments introduce a new accounting model for variable payments and will require seller-lessees to reassess and potentially restate sale-and-leaseback transactions entered into since 2019. • Amendments to IAS 1 Presentation of Financial Statements. The amendments are intended to promote consistency in application and clarify the requirements for determining if a liability is current or non-current. The amendments specify that covenants Auditor’s reportParent company financial statements Consolidated financial statement 20Financial Statements 2023 to be complied with after the reporting date do not affect the classification of debt as current or non-current on the reporting date. The amendments require companies to disclose information about these covenants in the notes to the financial statements. The amendments also clarify transfer of a company’s own equity instruments is regarded as settlement of a liability. Liability with any conversion options might affect classification as current or non-current unless these conversion options are recognized as equity under IAS 32. • Amendments to IAS 7 Statements of Cash Flows and IFRS 7 Financial Instruments: Disclosures. The amendments enhance the transparency of supplier finance arrangements and their effects on a company’s liabilities, cash flows and exposure to liquidity risk. Amendments require to disclose quantitative and qualitative information about supplier finance programs. On 1 January 2025, the Group will adopt the following new amendment, provided it is approved by the EU by the planned date of adoption. This revision is not expected to have a material impact on the consolidated financial statements. • Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates. The amendments require to apply a consistent approach in assessing whether a currency can be exchanged into another currency and, when it cannot, in determining the exchange rate to use and the disclosures to provide. Auditor’s reportParent company financial statements Consolidated financial statement 21Financial Statements 2023 Operating segments 2023 Consumer Corporate Group EUR million Customers Customers Unallocated Total Revenue 1,334.7 845.8 2,180.5 EBITDA 520.8 235.1 755.9 Depreciation, amortisation and impairment –179.3 –94.9 –274.1 EBIT 341.6 140.3 481.8 Financial income 8.7 8.7 Financial expenses –32.0 –32.0 Share of associated companies' profit –0.4 –0.4 Profit before tax 458.1 Investments 213.0 108.4 321.4 Assets 1,900.5 1,110.7 113.4 3,124.6 2022 Consumer Corporate Group EUR million Customers Customers Unallocated Total Revenue 1,300.9 828.6 2,129.5 EBITDA 495.7 237.6 733.3 Depreciation, amortisation and impairment –174.0 –89.5 –263.4 EBIT 321.7 148.1 469.8 Financial income 5.6 5.6 Financial expenses –18.7 –18.7 Share of associated companies' profit –0.7 –0.7 Profit before tax 456.0 Investments 190.6 99.1 289.7 Assets 1,891.9 1,082.4 126.5 3,100.8 2. Toiminnan tulos 2.1 Toimintasegmentit ja maantieteelliset tiedot Revenue 2022 Consumer Custom ers 1,334,7 Corporate Custom ers 845.8 EBITDA 2022 Consumer Custom ers 520.8 Corporate Custom ers 235.1 2 Operational result 2.1 Operating segments and geographical areas The Group has two reporting segments: Consumer Customers and Corporate Customers. The organisational and management structure of Elisa Group is based on a customer-oriented operating model. The reportable segments are based on the internal reporting provided to management. The Consumer Customers segment provides consumers with telecommunications and communications services, such as fixed and mobile subscriptions with supplementary digital services, cable TV subscriptions, the Elisa Viihde entertainment service and the Elisa Kirja eBook service. The Corporate Customers segment provides corporate and public administration organisations with services such as IT and communication solutions for the digital environment as well as fixed and mobile subscriptions. The Corporate Customers segment provides worldwide services such as videoconferencing services, solutions for automating network management and operations for mobile operators, and IoT solutions for industry. Revenue 2023 EUR million EBITDA 2023 EUR million Auditor’s reportParent company financial statements Consolidated financial statement 22Financial Statements 2023 Geographical areas 2023 Rest of Other Group EUR million Finland Europe countries total Revenue 1,821.6 306.2 52.7 2,180.5 Assets 2,597.3 497.3 30.0 3,124.6 2022 Rest of Other Group EUR million Finland Europe countries total Revenue 1,782.2 295.7 51.7 2,129.5 Assets 2,578.7 489.3 32.8 3,100.8 Accounting Principles – Operating Segments: The segments are controlled by segment-specific performance reporting that includes external revenue, EBITDA, EBIT and capital investments. Financial items, share of associated companies’ profit and income taxes are not allocated to operating segments. The costs of production and support functions are allocated to operating segments on the matching principle. Operations in Estonia are divided into the Consumer Customers and Corporate Customers operating segments on the basis of customer accounts. Segment assets consist of intangible and tangible assets, right-of-use assets, inventories, trade and other non- interest bearing receivables. Deferred tax assets, investments in associated companies, other investments, interest-bearing receivables, financial items and income tax receivables are not included in segment assets. Liabilities are not allocated to operating segments. The accounting principles of the segments are the same as those used in the preparation of the financial statements. The reported geographical areas are Finland, Rest of Europe and Other Countries. Revenues are presented on the basis of customer location. The assets are presented on the basis of their location. 2.2 Vertailukelpoisuuteen vaikuttavat erät Income statement EUR million 2023 2022 Restructuring costs –2.0 Items affecting comparability in EBITDA –2.0 Impairment losses –5.6 Items affecting comparability in EBIT and profit before tax –5.6 –2.0 Income taxes on items affecting comparability 1.1 0.4 Items affecting comparability in profit for the period –4.5 –1.6 EUR million 2023 2022 Comparable EBITDA I/S EBITDA 755.9 733.3 Items affecting comparability in EBITDA 2.0 755.9 735.3 Comparable EBIT I/S EBIT 481.8 469.8 Items affecting comparability in EBIT 5.6 2.0 487.4 471.8 Comparable profit before tax I/S Profit before tax 458.1 456.0 Items affecting comparability in profit before tax 5.6 2.0 463.7 458.0 Comparable profit for the period I/S Profit for the period 374.0 372.8 Items affecting comparability in profit for the period 4.5 1.6 378.5 374.4 Comparable profit for the period attributable to equity holders of the parent Comparable profit for the period 378.5 374.4 Non-controlling interests –1.2 –1.3 379.7 375.7 Comparable earnings per share, EUR Comparable profit for the period attributable to equity holders of the parent 379.7 375.7 Average number of outstanding shares, diluted (1,000 shares) 160,530 160,410 2.37 2.34 2.2 Items affecting comparability Elisa uses comparable key figures in its financial reporting to describe the financial development of its business and increase comparability between different periods. Exceptional transactions outside the ordinary course of business are treated as items affecting comparability. Such items, as identified by the Group, are, for example, capital gains and losses from divestments of the assets and businesses, acquisition costs of assets and businesses, impairments, restructuring expenses and costs of legislative changes, damages or litigation. Auditor’s reportParent company financial statements Consolidated financial statement 23Financial Statements 2023 Cash flow EUR million 2023 2022 Acquisitions and disposals of shares and business combinations 13.8 20.9 Items affecting comparability in cash flow before financing 13.8 20.9 The main items affecting comparability in 2023 were the acquisition of Elenia’s optical fibre network business, payment of camLine contingent consideration and Sulake purchase price receivable. The main items affecting comparability in 2022 were the acquisitions of Frinx and Cardinality. Comparable cash flow after investments C/F Cash flow before financing 347.0 299.9 Items affecting comparability in cash flow before financing 13.8 20.9 360.8 320.9 20232022202120202019 Development of revenue, EUR million 0 500 1,000 1,500 2,000 2,500 1,844 1,895 1,998 2,130 2,180 2.3 Revenue from contracts with customers Division of Group’s revenue EUR million 2023 2022 Rendering of services 1,781.4 1,726.8 Sale of equipment 398.7 402.7 Interest revenue 0.4 I/S 2,180.5 2,129.5 EUR million 2023 2022 Mobile telecommunications 1,290.2 1,252.5 Fixed-network broadband and others 890.2 877.0 I/S 2,180.5 2,129.5 2.3 Liikevaihto Auditor’s reportParent company financial statements Consolidated financial statement 24Financial Statements 2023 Accounting Principles – Revenue from contracts with customers: Revenue from consumer customers mainly consists of fixed and mobile subscriptions with supplementary digital services, cable TV subscriptions, the Elisa Viihde entertainment service and the Elisa Kirja eBook service. Consumer customer contracts are typically standard contracts that are treated as separate performance obligations. Customer contracts may include several performance obligations, and Elisa may agree on the delivery or rendering of several products, services or access rights (service bundle). In that case, prices specified in the contract are used as the transaction price, which is allocated to performance obligations on a relative standalone selling price basis. Revenue from corporate customers mainly consists of fixed and mobile subscriptions with supplementary digital services, IT and communication solutions for the digital environment, videoconferencing services, solutions for automating network management and operations for mobile operators and IoT solutions for industry. Contracts with corporate customers typically meet the criteria laid down for a contract negotiated as a single package, in which case, the revenue will be allocated to the goods and services based on the prices agreed with each customer. A performance obligation may be fulfilled and revenue recognised over time or at certain points of time. The key criterion for the revenue recognition is the transfer of control. For performance obligations that are satisfied at a certain point of time, such as equipment, the customer is deemed to gain control when they enter into the contract and revenue is recognised when the equipment is transferred to the customer. Service contracts mainly comprise performance obligations that are satisfied over time. The performance is carried out, and revenue is recognised over time as the services are provided. Fixed-term service contracts are recognised over the contract period, and the opening fees and related expenses, as well as discounts granted, are allocated to the entire contract period. Incremental costs of obtaining a fixed-term contract, such as sales and represent commissions, are capitalised and accrued as an expense during the contract period when these commissions relate directly to a contract that can be specifically identified. Service contracts valid until further notice are recognised over time. The opening fees and related expenses are recognised at the time when the service is connected. The Group provides consumer customers with various payment methods granting them the possibility to purchase equipment with 12–36 months’ credit. Revenue for equipment is recognised at the time of the sale, regardless of whether the customer pays for the device fully at the time of sale or in monthly payments. If revenue accumulated by installment contract is higher than the cash selling price of the device, the difference is taken into account as a financing component. In this case, the transaction price is adjusted to take account of the financing component, and the intrest revenue is recognised over time during the customer’s contract period. Interest revenue is presented as part of the Group’s revenue. In the comparison period, based on management’s judgement, there was no significant financing component in the contracts. Revenue from prepaid mobile phone cards is recognised over the period of realised use of the cards. Service fees invoiced from a customer on behalf of a third-party content service provider are not recognised as revenue. As a rule, the customer has four weeks to cancel a service contract entered into through distance sales and return the purchased equipment. In principle, there is no right of cancellation for equipment bought from an Elisa shop. Based on historical experience, the number of refunds is expected to be low, due to which the Group has not recognised a refund liability for the amounts expected to be refunded, and revenue has not been adjusted by the estimated number of refunds. The Group does not currently have any valid loyalty programmes. Auditor’s reportParent company financial statements Consolidated financial statement 25Financial Statements 2023 2.4 Liiketoiminnan muut tuotot 2.4 Other operating income EUR million 2023 2022 Gain on disposals of property, plant and equipment 4.2 0.2 Gain on disposal of subsidiaries 0.5 Government grants 0.0 0.4 Other items 5.1 6.3 I/S 9.8 6.9 (1 (2 1) Includes a EUR 0.5 million profit on divestment of Videra companies. 2) Other items include rental income from the real estate and other income not associated with ordinary operating activities. Accounting Principles – Other operating income: Other operating income includes non-operating income, such as capital gains on the disposal of tangible and intangible assets, subsidiaries and businesses, and rental income from real estate. Government grants associated with development projects are recognised as other operating income when the related costs are recognised as expenses. Government grants associated with capitalised development costs are recorded as a reduction of capital expenditure. 2.5 Operating expenses Materials and services EUR million 2023 2022 Purchases of materials, supplies and goods 529.0 556.4 Change in inventories 11.2 –8.8 External services 277.7 272.9 Foreign exchange gains and losses 0.0 0.2 I/S 817.9 820.8 Gains and losses arising from foreign currency translations are recognised in accordance with their nature, either in materials and services or financial income and expenses. 2.5 Liiketoiminnan kulut Employee expenses More detailed analysis of employee expenses is included in Note 4. Audit fees EUR million 2023 2022 Auditing 0.4 0.4 Tax advisory services 0.0 0.0 Other services 0.1 0.0 0.5 0.4 In 2023, non-audit fees charged by KPMG Oy Ab were EUR 0.1 (0.0) million. Research and development costs EUR million 2023 2022 Research and development costs recognised as expenses 15.5 13.4 Capitalised development costs 8.9 8.0 24.4 21.4 The focus areas for the research and development activities in 2023 were the development of corporate customers new services and platforms, production and quality management software for the manufacturing industry, as well as the development of network software solutions for telecom operators. Accounting Principles – Research and development: Research costs are recorded as expenses in the income statement. Development costs are capitalised from the date the product is technically feasible, it can be utilised commercially and the asset is expected to generate future economic benefit, and the Group has both the intention and the resources to complete the development and use or sell the asset. Capitalised development costs include those material, labour and testing costs and any capitalised borrowing costs that are directly attributable to bringing the asset to its working condition for its intended use. Otherwise, development costs are recorded as an expense. Development costs initially recognised as expenses cannot be subsequently capitalised. Auditor’s reportParent company financial statements Consolidated financial statement 26Financial Statements 2023 2.6 Earnings per share Earnings per share, basic 2023 2022 I/S Net profit for the period attributable to equity holders of the parent (EUR million) 375.2 374.1 Weighted average number of shares outstanding (1,000 shares) 160,376 160,253 Earnings per share, basic (EUR/share) 2.34 2.33 Diluted earnings per share 2023 2022 I/S Net profit for the period attributable to equity holders of the parent (EUR million) 375.2 374.1 Weighted average number of shares outstanding (1,000 shares) 160,376 160,253 Impact of share-based incentive plans 154 157 Weighted average number of shares outstanding adjusted by dilutive effect (1,000 shares) 160,530 160,410 Diluted earnings per share (EUR/share) 2.34 2.33 Accounting principles – Earnings per share: Basic earnings per share are calculated by dividing the net profit for the period attributable to the parent company’s equity holders by the weighted average number of shares outstanding during the period. Diluted earnings per share are calculated on the same basis as earnings per basic share, except for the dilutive effect of converting all dilutive potential shares into basic shares. 2.6 Osakekohtainen tulos 3. Hankitut ja myydyt liiketoiminnot Auditor’s reportParent company financial statements Consolidated financial statement 27Financial Statements 2023 3. Business acquisitions and disposals Acquired businesses in 2023 Changes in ownership interests On 30 November 2023, the Group acquired an additional 43.5 per cent of shares in Sutaria Services Inc. The acquisition price was EUR 7.3 million. Following the acquisition, the Group owns the entire share capital of the company. Due to the acquisition the share of non-controlling interests decreased by EUR 0.6 million and the liability for the redemption EUR 7.3 (6.6) million was paid to non-controlling interests. Initial recognition and changes of liability for the redemption has been treated as equity transactions. Disposals of businesses in 2023 Disposal of Elisa Videra business The businesses of Elisa Corporation’s subsidiary Elisa Videra and the German company MVC Mobile VideoCommunication GmbH (owned by KLP Vermögensverwaltungs GmbH) was combined into MVC on 20 December 2023. After combination Elisa has 37.5% holding of MVC Mobile Video Communication GmbH and Elisa became a minority shareholder of the company. The transaction was conducted as a share swap. As a result of a share swap, Elisa lost control of Elisa Videra Oy and its subsidiaries. The change in ownership was recorded in the Group as a sale of a subsidiary, and it resulted in a profit of EUR 0.5 million, recorded in other operating income. The Group has consolidated the result of the companies as a subsidiary until 30 November 2023 and, starting from 1 December 2023, as an associated company. Net assets of the sold entity Carrying EUR million amount Tangible and intangible assets 1.0 Inventories 2.4 Trade and other receivables 23.6 Cash and cash equivalents 2.2 Deferred tax liabilities –1.1 Lease liabilities –0.3 Trade payables and other liabilities –6.9 20.9 Effects of disposal on cash flow EUR million Cash and cash equivalent of a sold entity –2.2 –2.2 Effects of disposal on consolidated income statement and balance sheet EUR million Selling price 11.0 Net assets of a sold entity –20.9 Pre-existing relationships between the Group and the sold entity 10.4 Profit from the sale 0.5 (1 1) As a result of the loss of control, the Group’s net assets increased as the net receivables, totalling EUR 10.4 million and previously eliminated as intra-group items, were treated as the external receivables . Auditor’s reportParent company financial statements Consolidated financial statement 28Financial Statements 2023 Acquired businesses in 2022 Acquisition of Frinx s.r.o. On 31 March 2022, Elisa Polystar acquired Frinx s.r.o., a telecom network automation software supplier based in Slovakia. Frinx’s products and software complement Elisa Polystar’s zero-touch automation and analytics offering that helps communication service providers automate the management process of telecom networks in a multivendor environment. The acquisition price was EUR 14.4 million, including a contingent consideration of EUR 1.1 million. EUR 0.5 million of the total acquisition price was allocated to software, which will be amortised over four years.The acquisition resulted in EUR 12.9 million of goodwill relating to the Group’s growth in digital services internationally and strengthening Elisa IndustIQ business. The acquired company has been consolidated from 1 April 2022 onwards. External revenue after the acquisition was EUR 2.3 million, and the impact on the Group’s profit for the period was EUR 0.5 million. Had the acquisition been made as of the beginning of the year 2022, the impact on Group revenue would have been EUR 2.7 million and the effect on profit for the period EUR 0.3 million. Consideration transferred Carrying EUR million amount Cash paid 13.4 Contingent consideration 1.1 Total acquisition price 14.4 Net assets acquired EUR million Tangible assets 0.0 Intangible assets 0.5 Trade and other receivables 0.8 Cash and cash equivalents 1.0 Deferred tax liabilities –0.1 Trade payables and other liabilities –0.4 Tax liabilities –0.3 1.5 Effects of acquisition on cash flow EUR million Acquisition price paid in cash –13.4 Cash and cash equivalents of the acquired entity 1.0 –12.3 Goodwill arising from business combination EUR million Consideration transferred 14.4 Identifiable net assets of the acquired entity 1.5 Goodwill 12.9 EUR 0.2 million of acquisition-related costs, such as professional fees, were recorded in other operating expenses in 2022. Auditor’s reportParent company financial statements Consolidated financial statement 29Financial Statements 2023 4. Henkilöstö 4.1 Työsuhde-etuuksista aiheu- tuvat kulut Disposals of businesses in 2022 Withdrawal from business in Russia Elisa sold OOO LNR in Russia on 7 July 2022. The divestment of Polystar Ryssland LLC was initiated in 2022 and the company has been liquidated in 2023. The costs of the withdrawal from the Russian operations, EUR 1.1 million, are presented in other operating expenses of the comparison period 2022. Acquisition of Cardinality group On 4 August 2022, Elisa acquired the UK-based company Cardinality Ltd. Cardinality is a supplier of cloud-native data management (DataOps), service assurance and customer experience analytics for communications service providers (CSPs) globally. The acquisition price was EUR 10.0 million including a contingent consideration of EUR 0.4 million. EUR 1.5 million of the total acquisition price was allocated to software, which will be amortised over four years. The acquisition resulted in EUR 8.7 million of goodwill relating to the Group’s growth in digital services internationally and acceleration of its telecom software business development under Elisa Polystar. The acquired companies have been consolidated from 1 August 2022 onwards. External revenue after the acquisition was EUR 1.5 million, and the impact on Group’s profit for the period was EUR –0.7 million. Had the acquisition been made as of the beginning of the year 2022, the impact on Group revenue would have been EUR 3.4 million and the effect on profit for the period EUR –2.1 million. Consideration transferred Carrying EUR million amount Cash paid 9.6 Contingent consideration 0.4 Total acquisition price 10.0 Net assets acquired EUR million Tangible assets 0.0 Intangible assets 1.5 Trade and other receivables 0.5 Tax receivables 0.5 Cash and cash equivalents 1.4 Deferred tax liabilities –0.3 Interest-bearing liabilities –0.3 Trade payables and other liabilities –2.1 1.2 Effects of acquisition on cash flow EUR million Acquisition price paid in cash –9.6 Cash and cash equivalents of the acquired entities 1.4 –8.2 Goodwill arising from business combination EUR million Consideration transferred 10.0 Identifiable net assets of the acquired entities 1.2 Goodwill 8.7 EUR 0.4 million of acquisition-related costs, such as professional fees, were recorded in other operating expenses in 2022. Auditor’s reportParent company financial statements Consolidated financial statement 30Financial Statements 2023 Accounting principles – Business acquisitions and disposals: Subsidiaries are consolidated from the date the Group obtains control, and divested companies until the loss of control. Acquisitions are measured at amortised cost. Identifiable assets acquired and assumed liabilities are measured at their fair value on the acquisition date. Possible investments in non-controlling interests are measured either at a proportionate share of the acquiree’s identifiable net assets or at fair value. The method to be used is selected on a case-by-case basis. Subsequent changes in non-controlling interests are treated as equity transactions. In business combinations carried out in stages, any previously held equity share in the acquiree is measured at fair value, and the resulting gain or loss is recognised through profit or loss. The acquisition price consists of the fair value of cash and any contingent consideration transferred. The amount of the acquisition price that exceeds the fair value of the acquired net assets is recognised as goodwill. Additional information regarding valuation and impairment testing of goodwill is available under note 5.4.1. Any changes in contingent consideration are expensed through profit and loss. Acquisition-related costs, such as consulting fees and transfer tax, are accounted for as expenses for the periods when the costs were incurred and the services received. The costs are presented as other operating expenses in the income statement. In connection with loss of control, any investment retained in a former subsidiary is measured at fair value through profit or loss on the date of the transaction. Changes in ownership interest that do not result in a loss of control are accounted for as equity transactions. Accounting policies that require management’s judgement – Acquisitions: The identifiable assets and liabilities acquired in a business combination are measured at fair value at the acquisition date. When determining the fair value of the acquired net assets, consideration and estimates may be required. Estimates and judgement are based on the management’s best view of the situation at the time of the acquisition. Auditor’s reportParent company financial statements Consolidated financial statement 31Financial Statements 2023 4 Personnel 4.1 Employee expenses EUR million 2023 2022 Salaries and wages 331.0 314.4 Share-based payments 15.4 14.0 Pension expenses - defined contribution plans 45.8 44.2 Pension expenses - defined benefit plans 0.5 0.3 Other employee costs 24.3 21.8 I/S 417.1 394.8 Number of personnel at the end of the reporting period 2023 2022 Consumer Customers 2,976 2,939 Corporate Customers 2,690 2,684 5,666 5,623 Number of personnel at the year end 4,000 3,000 2,000 1,000 Corporate Customers 0 Consumer Customers 2019 2020 2021 2022 2023 5,000 6,000 2,148 2,257 2,736 2,914 2,526 2,845 2,684 2,939 2,690 2,976 Employee bonus and incentive schemes All employees are included in the scope of performance-, incentive-, commission- or provision-based bonus schemes. The Group also has a personnel fund. The costs of the performance-based bonus scheme and personnel fund are recognised on an accrual basis, and the costs are based on the best available estimate of realised amounts. Performance-based bonus scheme Rewards are based on financial and operational metrics of Elisa Corporation and its units. Targets are set, and the maximum amount of reward is confirmed semi-annually. Some of the Group’s key personnel also participated in the share-based compensation plan. Personnel fund The objective of the personnel fund is to secure the commitment of the personnel to Elisa’s long-term objectives and to reinforce their interest in the company’s financial success and its metrics. The evaluation metrics for the performance-based bonus schemes are earnings per share (EPS) and achievement of defined strategic goals. The Board of Directors decides on the performance-based bonus schemes and sets the earning criteria for the profit share reward annually. The members of the personnel fund are the employees of Elisa Group, with the exception of those employees who are part of the share incentive plan. In 2023, EUR 1.5 (2.2) million was recognised in the Group’s personnel fund. Remuneration of management EUR million 2023 2022 Managing Directors 7.9 8.0 Members and deputy members of Boards of Directors 0.8 0.8 Employment benefits for key management Key management consists of Elisa’s Board of Directors, the CEO and the Executive Board. The remuneration of the Board members and CEO is presented under note 4 for the parent company. Benefits recognised on the income statement EUR million 2023 2022 Remuneration and other short-term employee benefits 4.8 5.1 Post-employment benefits 0.3 0.3 Share-based compensation 5.7 5.1 10.8 10.5 (1 1) In 2023, the share-based compensation expenses were EUR 15.4 (14.0) million, of which EUR 1.5 (1.3) million is allocated to the CEO and EUR 4.2 (3.7) million to the Executive Board. The terms and conditions of share-based incentive plans are described under Note 4.2. Auditor’s reportParent company financial statements Consolidated financial statement 32Financial Statements 2023 Benefits paid EUR million 2023 2022 Board of Directors 0.8 0.8 CEO 1.0 1.1 Executive Board 3.1 3.2 Share-based compensation 5.3 2.7 10.1 7.8 (1 1) The reward paid to the CEO under the share-based compensation plans was EUR 1.4 (0.7) million, and the reward paid to the Executive Board members EUR 3.9 (2.0) million. The period of notice for the CEO is six months if the service contract is terminated by Elisa, and three months if the contract is terminated by the CEO. Should the service contract be terminated by the Elisa, the CEO is entitled to a severance payment equalling the total salary of 24 months less the salary for the period of notice. The period of notice for other members of the Executive Board is six months if the service contract is terminated by the Elisa. Should the contract be terminated by Elisa, the member of the Executive Board is entitled to receive a severance payment that equals the total salary of 15 months less the salary for the period of notice. CEO’s pension commitments In 2020, the Board of Directors agreed with the CEO of Elisa Corporation, Veli-Matti Mattila, that he will continue as CEO until further notice. In August 2023 Veli-Matti Mattila informed the company´s Board of Directors that he will retire when the new CEO Topi Manner starts in the position, on 1 March 2024 at the latest. Under the previous executive agreement, Mattila would have retired at the age of 60. An increase in the statutory retirement age is compensated for by a decision of the Board. The CEO’s supplementary pension coverage is based on a defined contribution scheme. The pension arrangements include a right to a paid-up policy. The company’s pension liability of EUR 1.7 million is included in the pension obligations on the balance sheet. It accrues annually at 5.1% of annual earnings under employer’s pension insurance (TyEL), and the pension insurance for the management group accrues at 20.7% of annual earnings under TyEL for pensions payable from the age of 62 onwards. The executive agreements of the Group Management Board members appointed before 2013 expire mainly at the age of 62, when they have the right to retire. Pension provisions are cash-based, and they are covered by management supplementary pension insurance, which includes vested rights. Share-based compensation granted to the management The reward paid in 2023 to the CEO under the 2017 plan’s 2020–2022 performance period equals the value of 12,057 shares and for the rest of the Executive Board 34,848 shares. The reward paid in 2022 to the CEO under the 2017 plan’s 2019–2021 performance period equals the value of 6,426 shares and for the rest of the Executive Board 17,642 shares. The maximum reward granted to the CEO under the 2021 plan’s 2021–2023 performance period equals the value of 32,000 shares and for the rest of the Executive Board 94,500 shares. The reward will be paid after the publication of the 2023 financial statements. The maximum reward granted to the CEO under the 2021 plan’s 2022–2024 performance period equals the value of 32,000 shares, of which a portion that corresponds to his working time during the performance period will be paid. The maximum reward granted for the rest of the Executive Board equals the value of 89,500 shares. The reward will be paid after the publication of the 2024 financial statements. The maximum reward granted to the CEO under the 2021 plan’s 2023–2025 performance period equals the value of 38,430 shares of which a portion that corresponds to his working time during the performance period will be paid. The maximum reward granted for the rest of the Executive Board equals the value of 109,000 shares. The reward will be paid after the publication of the 2025 financial statements. Elisa shares held by key members of the management The members of Elisa’s Board of Directors, the CEO, the members of the Executive Board and their related parties held a total of 309,729 shares and votes, corresponding to 0.19 per cent of all shares and votes. Auditor’s reportParent company financial statements Consolidated financial statement 33Financial Statements 2023 4.2 Share-based incentives The Group has share-based incentive plans in place. The aim of the plans is to align the objectives of the shareholders and the key employees to increase the value of the Company over the long term, to retain the key employees at the Company, and to offer them a competitive reward plan that is based on earning and accumulating the Company´s shares. The potential rewards are based on the accomplishment of the goals set. 4.2.1 Share-based incentive plan 2021 On 4 March 2021, the Board of Directors of Elisa Corporation has appoved a share-based incentive plan for the Group key employees for years 2021–2025. The Performance Share Plan includes three three-year performance periods, calendar years 2021–2023, 2022–2024 and 2023–2025. The Board of Directors decided the performance criteria for the plan and required performance levels for each criterion at the beginning of each perfomance period. After the end of each performance period, the reward is paid as a combination of company shares and cash after the financial statements are completed. The cash proportion is intended to cover taxes and tax-related costs arising from the reward to the participant. As a rule, no reward will be paid if a participant’s employment or service ends before the reward is paid. The performance criteria for the performance period 2023–2025 are based on Group’s earnings per share (EPS), the International Digital services growth, Employee Engagement and annual progress in specific key business growth targets. The rewards to be paid on the basis of the performance period 2023–2025 correspond to the value of a maximum total of 395,800 Elisa Corporation shares. The performance criteria for the performance period 2022–2024 are based on Group’s EPS, the International Digital services growth, Employee Engagement and annual progress in specific key business growth targets. The rewards to be paid on the basis of the performance period 2022–2024 correspond to the value of a maximum total of 360,500 Elisa Corporation shares. The performance criteria for the performance period 2021–2023 are based on Group’s EPS, the International Digital services growth and on annual progress in specific key business growth targets. The rewards to be paid on the basis of the performance period 2022–2024 correspond to the value of a maximum total of 410,700 Elisa Corporation shares. The CEO of the company and members of the Corporate Executive Board must retain a minimum of 50 per cent of the net shares given on the basis of the plan. For the CEO, this obligation remains in place until the CEO’s shareholding in the company corresponds to the value of his annual salary, and for members of the Corporate Executive Board, until their total shareholding corresponds to the value of half of their annual salary. 4.2 Osakeperusteiset maksut Performance Perfomance Perfomance Amount of share incentives and terms and period period period assumptions in the fair value calculation 2023–2025 2022–2024 2021–2023 Maximum number of shares granted 395,800 360,500 410,700 Grant date 31.12.2022 31.12.2021 31.12.2020 Share price on the grant date, EUR 49.46 54.12 49.70 Performance period starts 1.1.2023 1.1.2022 1.1.2021 Performance period ends 31.12.2025 31.12.2024 31.12.2023 Estimated realisation of earning criteria at the beginning of performance period, % 41 44 46 Estimated realisation of earning criteria on the closing date, % 58 79 76 Number of participants in the plan on the closing date 192 177 154 Auditor’s reportParent company financial statements Consolidated financial statement 34Financial Statements 2023 4.2.2 Share-based incentive plan 2017 On 15 December 2017, Elisa’s Board of Directors decided on the share-based incentive plan for key personnel for 2018–2022. The performance-based incentive plan has three performance periods: the calendar years 2018–2020, 2019–2021 and 2020–2022. The Board of Directors decides the performance criteria for the plan and the required performance levels for each criterion at the beginning of each performance period. After the end of each performance period, the reward is paid as a combination of company shares and cash after the financial statements are completed. The cash portion is intended to cover the tax obligations resulting from the share-based payment. As a rule, no reward will be paid if a participant’s employment or service ends before the reward is paid. The earnings criteria for the performance period 2020–2022 were based on Group’s earnings per share EPS, development of new businesses and other key objectives. The total maximum amount to be paid for the performance period 2020–2022 equals the value of 407,600 Elisa shares. The earnings criteria for the performance period 2019–2021 were based on Group’s EPS, development of new businesses and other key objectives. The total maximum amount to be paid for the performance period 2019–2021 equals the value of 536,000 Elisa shares. The earnings criteria for the performance period 2018–2020 were based on Group’s EPS, development of new businesses and other key objectives. The total maximum amount to be paid for the performance period 2018–2020 equals the value of 550,000 Elisa shares. The CEO of the company and members of the Corporate Executive Board must retain a minimum of 50 per cent of the net shares given on the basis of the plan. For the CEO, this obligation remains in place until the CEO’s shareholding in the company corresponds to the value of his annual salary, and for members of the Corporate Executive Board, until their total shareholding corresponds to the value of half of their annual salary. Performance Performance Performance Amount of share incentives and terms and assumptions in period period period the fair value calculation 2020–2022 2019–2021 2018–2020 Maximum number of rewards granted 407,600 536,000 550,000 Grant date 31.12.2019 31.12.2018 31.12.2017 Share price on the grant date, EUR 49.25 36.08 32.72 Performance period starts 1.1.2020 1.1.2019 1.1.2018 Performance period ends 31.12.2022 31.12.2021 31.12.2020 Estimated realisation of earning criteria at the beginning of performance period, % 61 74 85 Realisation of earning criteria, % 71 31 39 Number of shares distributed 127,539 72,394 95,241 Volume weighted average share price at distribution date, EUR 52.85 52.52 49.39 Number of shares distributed as a proportion of the possible maximum number, % 31 14 17 Number of participants in the plan on the payment date 164 175 164 Auditor’s reportParent company financial statements Consolidated financial statement 35Financial Statements 2023 4.2.3 Committed share-based incentive plan 2019 On 31 January 2019, Elisa’s Board of Directors decided on a committed share-based incentive plan for 2019–2025. The rewards granted under the plan have a restriction period of 1–3 years. The potential reward is based on the validity of the key person’s contract of employment. The maximum number of rewards paid under the plan equals the value of 500,000 Elisa shares. Restriction Restriction Restriction Amount of share incentives and terms and period period period assumptions in the fair value calculation 2023 2022–2023 2022–2023 Maximum number of rewards granted 2,500 8,000 2,500 Grant date 1.1.2023 1.8.2022 1.8.2022 Share price on the grant date, EUR 49.78 54.16 54.16 Restriction period started 1.1.2023 1.8.2022 1.8.2022 Restriction period ends 31.12.2023 31.12.2023 31.8.2023 Estimated realisation of earnings criteria at the beginning of performance period, % 100 100 100 Estimated realisation of earning criteria on the closing date, % 100 100 Realisation of earning criteria, % 100 Number of shares transferred 1,185 Average exchange rate on the day of transfer, EUR 44.98 Number of shares distributed as a proportion of the maximum amount of share rewards granted, % 47 Number of participants in the plan on the payment date 5 Number of participants in the plan on the closing date 6 4 4.2.4 Committed share-based incentive plan 2023 On 1 February 2023, Elisa’s Board of Directors decided on a committed share-based incentive plan for 2023–2027. The rewards granted under the plan have a restriction period of 1–3 years. The potential reward is based on the validity of the key person’s contract of employment. The maximum number of rewards paid under the plan equals the value of 500,000 Elisa shares. Restriction Amount of share incentives and terms and period assumptions in the fair value calculation 2023–2024 Maximum number of rewards granted 334 Grant date 1.11.2023 Share price on the grant date, EUR 40.78 Restriction period started 1.11.2023 Restriction period ends 31.12.2024 Estimated realisation of earnings criteria at the beginning of performance period, % 100 Estimated realisation of earning criteria on the closing date, % 100 Number of participants in the plan on the closing date 1 Expenses of share-based incentive plans In 2023, EUR 15.4 (14.0) million of expenses were recognised for the share incentive plans. Auditor’s reportParent company financial statements Consolidated financial statement 36Financial Statements 2023 Accounting principles – Share-based payments: In the share-based payment scheme, the total reward amount is the gross earning of shares granted less the applicable withholding tax, with the remaining net amount being paid to the reward recipient in shares. Compensation costs for the share-based incentive plans are entirely treated as equity-settled arrangements. Share-based incentive costs are recognised based on the number of gross shares issued, even though the employee ultimately receives only net shares. The Group settles a cash payment for each portion with the Finnish Tax Administration, as required to meet withholding tax obligations. The withholding tax paid to the Tax Administration is recognised directly in equity. Share-based incentive plans are measured at the fair value on the grant date. If the assumption regarding the realised number of shares changes, an adjustment will be recorded through profit and loss. The share-based incentive plans do not include any other non-market-based terms and conditions. Transfer restrictions related to the share-based incentive plans are out of the scope of the fair value measurement and expense recognition. Accounting policies that require management’s judgement – Share-based payments: The expense recognition for the share-based incentive plans is based on an estimate of the fulfilment of the share incentive plan criteria and the development of Elisa Group’s share price. The fulfilment of the share incentive plan criteria and the development of the share price might deviate from the estimates. Auditor’s reportParent company financial statements Consolidated financial statement 37Financial Statements 2023 4.3 Pension obligations The Group’s pension obligations are classified as either defined contribution plans or defined benefit plans. Under a defined contribution plan, the Group pays fixed contributions to pension insurance companies. If the pension insurance company does not hold sufficient assets to pay all employees the benefits in question, the Group will have no legal or constructive obligation to pay further contributions. The contributions for defined contribution pension plans are recognised as expenses during the financial year in which the payment obligation has arisen. All other plans not meeting the above criteria are classified as defined benefit plans. The pension schemes for the Group’s personnel in Finland are covered by the Employees Pensions Act (TyEL) and are arranged through pension insurance companies. The Finnish Employees Pensions Act (TyEL) is a defined contribution plan. Supplementary pensions are arranged through life insurance companies. Some supplementary pension plans and pension plans under the responsibility of some Group companies have been classified as defined benefit plans. The defined benefit plans are mainly funded by yearly contributions to the insurance companies, based on actuarial valuation. Local tax and other legislation are applied to the pension plan arrangements. Only Elisa Corporation has defined benefit plans. The pension plans in foreign subsidiaries are defined contribution plans. Post-employment benefits of key management are described in Note 4.1. The net defined benefit related to pension liability EUR million 2023 2022 Present value of unfunded obligations –2.8 –3.1 Present value of funded obligations –41.2 –47.5 Fair value of plan assets 34.7 37.7 B/S Net pension liability (-) / receivable (+) in the statement of financial position –9.3 –12.9 Pension expenses recognised in the statement of comprehensive income EUR million 2023 2022 Expense recognised in profit or loss Service cost 0.2 0.2 Net interest 0.4 0.1 0.5 0.3 Remeasurements –1.5 –0.5 Tax effect of the remeasurements 0.3 0.1 I/S –1.2 –0.4 4.3 Eläkevelvoitteet Reconciliation of the net defined benefit obligations in the statement of financial position EUR million 2023 2022 Net defined benefit obligation at the beginning of the period 12.9 14.4 Pension expenses recognised in profit or loss 0.5 0.3 Remeasurements –1.5 –0.5 Contributions paid by the employer –2.6 –1.3 Net defined benefit obligation at the end of period 9.3 12.9 Changes in the present value of the defined benefit obligations EUR million 2023 2022 Obligation at the beginning of the period –50.6 –62.6 Current service cost –0.2 –0.2 Interest expenses –1.5 –0.4 Remeasurements Actuarial gain (+) or loss (-) arising from changes in economic assumptions 2.4 8.0 Gain (+) or loss (-) arising from experience adjustments 1.5 0.1 Benefits paid 4.5 4.5 Obligation at the end of period –44.0 –50.6 Changes in the fair value of plan assets EUR million 2023 2022 Fair value of plan assets at the beginning of the period 37.7 48.2 Interest income 1.2 0.3 Remeasurements, gain (+) or loss (-) –2.3 –7.7 Benefits paid –4.5 –4.5 Contributions paid by the employer 2.6 1.3 Fair value of plan assets at the end of period 34.7 37.7 The principal actuarial assumptions used 2023 2022 Discount rate, % 3.8 3.3 Future pension increase, % 2.7 2.8 Inflation, % 2.4 2.6 Auditor’s reportParent company financial statements Consolidated financial statement 38Financial Statements 2023 5. Aineelliset ja aineettomat hyö- dykkeet 5.1 Poistot ja arvonalentumiset Sensitivity analysis of net defined benefit obligation Effect on the net defined benefit obligation, EUR million Change in actuarial assumptions 2023 2022 Discount rate + 0.5% –0.6 –0.9 Future pension increase +0.5% 0.7 0.9 Expected mortality +1 year 0.6 0.7 When calculating a change in one assumption of the sensitivity analysis, the other assumptions are assumed to remain unchanged. In practice, this is not likely to happen, and some changes in the assumptions may correlate with each other. The figures in the sensitivity analysis have been calculated using the same method that is applied when calculating defined benefit obligations. Defined benefit obligations expose the Group to various risks. Decreases in the gain of corporate bonds, higher inflation and a higher expected retirement age may predispose the Group to the growth of defined benefit obligations. On the other hand, since the fair value of assets is calculated using the same discount rate that is used when calculating the obligation, the change in the discount rate will only affect the net defined benefit obligation. Similarly, a rise in life expectancy will increase the assets and affect the net defined benefit obligation. The weighted average duration of the obligation is 12.7 (13.6) years. The Group expects to contribute EUR 1.4 (0.7) million to defined benefit pension plans in 2024. The assets of the defined benefit obligations are 100 per cent acceptable insurances. Accounting principles – Pension obligations: The Group’s defined benefit obligation has been calculated separately for each plan using the projected unit credit method. Pension expenses calculated by authorised actuaries are recognised in profit or loss over the employees’ working lives. The rate used to discount the present value of the defined benefit obligation is determined by reference to market yields of high-quality corporate bonds. If such information is not available, the market yields on government bonds are used. The maturity of corporate bonds and government bonds are substantially consistent with the maturity of pension obligations. The present value of a defined benefit obligation is reduced by the fair value of the plan assets at the end of the reporting period. The net defined benefit pension liability is recognised in the statement of financial position. The current service cost and net interest of the net defined benefit liability are recorded in employee expenses on the income statement. The remeasurements of the net defined benefit liability, for example actuarial gains and losses and the return on plan assets, are recognised in other comprehensive income during the financial period in which they incur. Accounting policies that require management’s judgement – Pension obligations: The book value of defined pension obligations is based on actuarial valuations. Assumptions and estimates used in the valuations include, among others, the discount rate used on the valuation of the pension obligation and plan assets, as well as the development of inflation and salary levels. Auditor’s reportParent company financial statements Consolidated financial statement 39Financial Statements 2023 5.2 Property, plant and equipment Telecom Land and Buildings devices, Other Tangible 2023 water and machinery and tangible assets under EUR million areas structures equipment assets construction Total Acquisition cost at 1 Jan. 11.7 334.8 4,045.9 36.6 32.7 4,461.7 Additions 0.3 14.8 190.8 0.1 30.6 236.6 Business disposals –0.5 –9.5 –10.0 Disposals –0.2 –1.2 –374.6 –0.1 0.0 –376.2 Reclassifications 0.0 3.4 22.7 –24.9 1.3 Translation differences 0.0 0.0 –0.1 0.0 0.0 –0.1 Acquisition cost at 31 Dec. 11.7 351.3 3,875.3 36.6 38.3 4,313.3 Accumulated depreciation and impairment at 1 Jan. –0.1 206.7 3,452.6 35.9 3,695.0 Depreciation and impairment 0.0 12.3 176.0 0.1 188.4 Accumulated depreciation on disposals and reclassifications 0.0 –1.1 –374.6 –0.1 –375.8 Accumulated depreciation on business disposals –0.4 –9.5 –9.9 Translation differences 0.0 0.0 0.0 0.0 Accumulated depreciation and impairment at 31 Dec. –0.1 217.4 3,244.5 35.9 3,497.7 B/S Book value at 1 Jan. 11.8 128.1 593.3 0.8 32.7 766.7 B/S Book value at 31 Dec. 11.9 133.9 630.8 0.8 38.3 815.6 5.2 Aineelliset hyödykkeet 5 Tangible and intangible assets 5.1 Depreciation, amortisation and impairment EUR million 2023 2022 Tangible assets Land and water areas Right-of-use assets 1.2 1.1 Buildings and constructions Owned buildings and constructions 12.3 11.9 Right-of-use assets 21.5 20.3 Telecom devices, machinery and equipment Owned telecom devices, machinery and equipment 176.0 168.8 Right-of-use assets 2.9 3.0 Other tangible assets 0.1 0.1 213.9 205.2 Intangible assets Customer base 2.6 4.3 Other intangible assets 57.6 53.9 60.2 58.2 I/S 274.1 263.4 EUR 5.6 (0.0) million of impairment losses have been recorded for the assets in connection with the ramp down of the 3G network. Auditor’s reportParent company financial statements Consolidated financial statement 40Financial Statements 2023 Telecom Land and Buildings devices, Other Tangible assets 2022 water and machinery and tangible under EUR million areas structures equipment assets construction Total Acquisition cost at 1 Jan. 12.3 316.0 3,949.0 36.5 33.9 4,347.7 Business acquisitions 0.0 0.1 0.0 0.1 Additions 0.1 18.1 152.4 0.1 29.6 200.3 Business disposals –1.2 –1.2 Disposals –80.7 0.0 –80.8 Reclassifications –0.6 0.6 26.2 0.0 –30.8 –4.6 Translation differences 0.0 0.0 0.0 0.0 0.0 0.1 Acquisition cost at 31 Dec. 11.7 334.8 4,045.9 36.6 32.7 4,461.7 Accumulated depreciation and impairment at 1 Jan. 0.0 195.9 3,363.3 35.8 3,595.0 Depreciation and impairment –0.1 11.9 168.8 0.1 180.7 Accumulated depreciation on business acquisitions 0.1 0.1 Accumulated depreciation on disposals and reclassifications –1.2 –78.9 0.0 –80.1 Accumulated depreciation on business disposals –0.7 –0.7 Translation differences 0.0 0.0 0.0 0.0 Accumulated depreciation and impairment at 31 Dec. –0.1 206.7 3,452.6 35.9 3,695.0 B/S Book value at 1 Jan. 12.3 120.0 585.7 0.8 33.9 752.7 B/S Book value at 31 Dec. 11.8 128.1 593.3 0.8 32.7 766.7 On 31 December 2023, the investment commitments for tangible and intangible assets were EUR 73.5 (70.1) million. Accounting principles – Property, plant and equipment: Property, plant and equipment are recognised in the statement of financial position at the original cost. Property, plant and equipment are valuated at acquisition cost less accumulated depreciation and impairments. Depreciation is recorded on a straight-line basis over the useful lives of tangible assets. The residual value and the useful life of an asset are reviewed at year-end and adjusted, if necessary. Subsequent costs, such as renewals and major renovation projects, are capitalised when it is probable that future economic benefit will flow to the Group. Ordinary repair, service and maintenance costs are recognised as expenses during the financial period in which they incur. Government grants, such as grants received in connection with the acquisition of fixed assets, are recorded as a deduction from the carrying amount of the fixed assets. Government grants are recognised in profit and loss in the form of lower depreciation over the useful life of the fixed asset. Expected useful life of property, plant and equipment: Buildings and structures 25–40 years Machinery and equipment in buildings 10–25 years Telecommunications network (line, backbone, area, subscription, cable TV) 8–15 years Exchanges and concentrators (fixed and mobile core) 6–10 years Equipment for the network and exchanges 3–8 years Telecommunication terminals 2–4 years Other machinery and equipment 3–5 years Land and water areas are not depreciated. Auditor’s reportParent company financial statements Consolidated financial statement 41Financial Statements 2023 5.3 Käyttöoikeusomaisuus 5.3 Right-of-use assets Buildings Telecom devices, 2023 Land and and machinery and EUR million water areas structures equipment Total Acquisition cost at 1 Jan. 17.2 143.6 20.9 181.7 Additions 1.8 17.7 3.8 23.3 Business disposals –0.9 –0.1 –1.0 Disposals –0.5 –0.5 Reclassifications –0.2 –24.2 –9.9 –34.3 Translation differences 0.0 0.0 0.0 Acquisition cost at 31 Dec. 18.7 135.7 14.7 169.1 Accumulated depreciation and impairment at 1 Jan. 4.0 72.2 15.1 91.3 Depreciation and impairment 1.2 21.5 2.9 25.6 Accumulated depreciation on disposals and reclassifications –0.2 –24.2 –9.9 –34.3 Accumulated depreciation on business disposals –0.7 –0.1 –0.7 Translation differences 0.0 0.0 0.0 Accumulated depreciation and impairment at 31 Dec. 4.9 68.9 8.0 81.8 B/S Book value at 1 Jan. 13.2 71.4 5.9 90.4 B/S Book value at 31 Dec. 13.8 66.8 6.7 87.3 Land and Buildings Telecom devices, 2022 water and machinery and EUR million areas structures equipment Total Acquisition cost at 1 Jan. 15.5 129.1 130.3 274.9 Business acquisitions 0.0 0.0 Additions 1.6 20.6 3.3 25.5 Disposals –1.6 –1.6 Reclassifications –4.3 –112.6 –117.0 Translation differences –0.2 0.0 –0.2 Acquisition cost at 31 Dec. 17.2 143.6 20.9 181.7 Accumulated depreciation and impairment at 1 Jan. 2.9 56.3 124.7 183.9 Depreciation and impairment 1.1 20.3 3.0 24.4 Accumulated depreciation on disposals and reclassifications –4.3 –112.6 –117.0 Translation differences –0.1 0.0 –0.1 Accumulated depreciation and impairment at 31 Dec. 4.0 72.2 15.1 91.3 B/S Book value at 1 Jan. 12.6 72.8 5.5 91.0 B/S Book value at 31 Dec. 13.2 71.4 5.9 90.4 On 31 December 2023, the lease commitments for lease contracts commencing in the future in accordance with IFRS 16 were EUR 2.8 (0.1) million. Accounting principles – Right-of-use assets: A lease contract is a contract or a part of a contract that conveys the right to use the underlying asset for a specified period in exchange for consideration. When a new contract is made, Elisa assesses whether the contract in question is a lease contract or contains a lease contract. The Group’s leases mainly consist of leases for business premises, telecom and equipment premises, retail facilities and vehicles. Last-mile rentals from other operators and indefeasible right to use (IRU) contracts mainly do not fulfil the definition of a lease. The right-of-use assets and lease liabilities recognised on the balance sheet are measured at the present value of future lease payments at the time of initial recognition. The lease payments are discounted using industry-specific interest rates considering the length of the lease contracts. The depreciation costs of the right-of-use assets and the interest portion of the lease liabilities are expensed. The depreciation of right-of-use assets is recorded on a straight-line basis starting at the commencement of the agreement over the useful life of the right-of-use asset or over the lease period, depending on which of these is shorter. The right-of-use asset is adjusted in certain cases with remeasurements of the lease liability. Lease liabilities are mainly remeasured when future payments change due to index or interest rate changes or when the Group’s assessment of using a possible extension option changes. When a lease liability is remeasured, the book value of the right-of-use asset is usually adjusted accordingly. Short-term and low-value leases are recognised in the income statement and presented as off-balance sheet commitments. Leases with a lease term of 12 months or less are classed as short-term leases, and leases for which the underlying asset is of low value are classed as low-value leases. Rental expenses for short-term and low- value leases are described under Note 8.4 (Off-balance sheet leases and other commitments). The Group separates the service components included in the lease agreements of business premises, retail facilities and vehicles and recognises their share as an expense in the income statement. Auditor’s reportParent company financial statements Consolidated financial statement 42Financial Statements 2023 5.4 Intangible assets 2023 intangible assets under EUR million Goodwill Customer base assets construction Total Acquisition cost at 1 Jan. 1,178.4 44.3 906.4 19.0 2,148.1 Additions 51.5 10.0 61.6 Disposals –1.4 –1.4 Business disposals –7.9 –0.1 –8.0 Reclassifications 13.1 –14.1 –1.0 Translation differences –0.1 0.0 0.0 0.0 Acquisition cost at 31 Dec. 1,178.4 44.3 961.8 14.8 2,199.3 Accumulated amortisation and impairment at 1 Jan. 21.1 38.3 720.8 780.2 Amortisation and impairment 2.6 57.6 60.2 Accumulated amortisation on disposal and reclassifications –1.3 –1.3 Accumulated amortisation on business disposals –7.4 –7.4 Translation differences 0.1 0.0 0.0 0.1 Accumulated amortisation and impairment at 31 Dec. 21.2 40.9 769.7 831.8 Book value at 1 Jan. 1,157.3 6.0 185.5 19.0 1,367.9 Book value at 31 Dec. 1,157.2 3.4 192.1 14.8 1,367.5 Other (1 (3 5.4 Aineettomat hyödykkeet Other Intangible 2022 intangible assets under EUR million Goodwill Customer base assets construction Total Acquisition cost at 1 Jan. 1,160.6 45.0 845.1 13.4 2,064.1 Business acquisitions 22.5 2.1 24.6 Additions 51.4 12.5 63.9 Disposals –0.2 –0.2 Business disposals 0.0 0.0 Reclassifications 8.0 –6.9 1.1 Translation differences –4.7 –0.7 0.0 –5.4 Acquisition cost at 31 Dec. 1,178.4 44.3 906.4 19.0 2,148.1 Accumulated amortisation and impairment at 1 Jan. 21.2 34.5 670.9 726.7 Amortisation and impairment 4.3 53.9 58.2 Accumulated amortisation on business acquisitions 0.1 0.1 Accumulated amortisation on disposals and reclassifications –4.0 –4.0 Accumulated amortisation on business disposals 0.0 0.0 Translation differences –0.1 –0.5 0.0 –0.7 Accumulated amortisation and impairment at 31 Dec. 21.1 38.3 720.8 780.2 Book value at 1 Jan. 1,139.4 10.5 174.2 13.4 1,337.5 Book value at 31 Dec. 1,157.3 6.0 185.5 19.0 1,367.9 (2 (3 1) Includes Estonian 26 GHz spectrum licence in a carrying amount of EUR 1.63 million . 2) Includes Estonian 3,5 GHz spectrum licence in a carrying amount of EUR 7.2 million and 2x10 MHz spectrum licence in carryng amount of EUR 2.11 million . 3) Includes software in carrying amount of EUR 96.8 (89.6) million. Auditor’s reportParent company financial statements Consolidated financial statement 43Financial Statements 2023 Accounting principles – Intangible assets: An intangible asset is recognised only if it is probable that the expected future economic benefits attributable to the asset will flow to the Group and the cost of the asset can be measured reliably. Subsequent costs related to the intangible assets are capitalised only if the future economic benefits that will flow to the Group exceed the level of performance originally assessed. In other cases, the costs are recognised when the expense is incurred. In connection with the business combinations, intangible assets, such as customer base and brand, are measured at fair value. Other intangible assets are measured at original acquisition cost and amortised on a straight-line basis over their estimated useful life. Amortisation periods for intangible assets: Customer base 3–5 years Brand 10 years Development expenses 3 years IT software 5 years Other intangible assets 3–10 years Research costs are recorded as expenses in the income statement. Development expenses capitalised from the date the product is technically feasible, it can be utilised commercially and the asset is expected to generate future economic benefit. Otherwise, development costs are recorded as an expense. Development costs initially recognised as expenses cannot be capitalised subsequently. Public grants related to research and development projects are recognised as other operating income when research and development costs are recognised as an annual expense. If the public grant relates to the product development cost to be capitalised, the grant received reduces the capitalised acquisition costs. Implementation costs of a SaaS arrangement are generally recognised as an expense and capitalised as an intangible asset only if the capitalisation conditions are met. The Group assesses at each balance sheet date whether there is any indication that an asset may be impaired. If such evidence exists, the recoverable amount of the asset is assessed. Additionally, regardless of any existence of impairment indications, the recoverable amount of intangible assets under construction is assessed annually. The Group does not have any intangible assets with an indefinite useful life. The recoverable amount of the asset is its fair value less the cost of disposal or its value in use, if it is higher. Value in use is the discounted present value of future net cash flows expected to be derived from an asset. An impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount. An impairment loss is recognised immediately in the income statement. An impairment loss is reversed if there are indications that a change in circumstances has taken place and the recoverable amount of the asset has changed since the impairment loss was recognised. However, the reversal of an impairment loss will never exceed the carrying amount of the asset had no impairment loss been recognised. Auditor’s reportParent company financial statements Consolidated financial statement 44Financial Statements 2023 5.4.1 Goodwill Goodwill is allocated to the Group’s cash generating units as follows: EUR million 2023 2022 Consumer Customers 641.0 641.0 Corporate Customers 516.2 516.3 B/S 1,157.2 1,157.3 The reported operating segments based on Elisa’s organisational and management structure are Consumer Customers and Corporate Customers. Impairment testing: In annual impairment tests, the recoverable amount of the segments is determined based on the value in use, which is calculated on the basis of projected discounted cash flows (DCF model). Covering a five-year period, the cash flow projections are based on plans approved by the management. The projections are mostly consistent with information from external sources and reflect actual development. The discount rate before taxes that is used is 6.9 per cent for the Consumer Customers and 6.8 per cent for the Corporate Customers. (6.6 per cent for both segments in comparison period). Cash flows after five years have been projected by estimating the change in future cash flows as 2 per cent growth. As a result of the impairment tests performed, there was no need for impairment of the segments’ goodwill. Usage of the DCF model requires forecasts and assumptions concerning market growth, prices, volume development, investment needs and general interest rates. The major sensitivities in the performance are associated with forecast revenue and profitability levels. Sensitivity analysis Consumer Corporate Consumer Corporate Customers Customers Customers Customers Projection parameters applied 2023 2023 2022 2022 Amount in excess of CGU carrying value, EUR million 5,478 2,847 5,446 2,452 EBITDA margin on average, % 39.1 28.9 38.5 30.0 Horizon growth, % 2.0 2.0 2.0 2.0 Pre-tax discount rate, % 6.9 6.8 6.6 6.6 (1 1) On average during a five-year projection period. 6. Vaihto-omaisuus, myyntisaamiset ja muut saamiset sekä os- tovelat ja muut velat 6.1 Vaihto-omaisuus 6.2 Myyntisaamiset ja muut saamiset Consumer Corporate Consumer Corporate Change in projection parameters that Customers Customers Customers Customers makes the fair value equal to book value 2023 2023 2022 2022 EBITDA margin on average, % –18.1 –13.8 –18.8 –13.3 Horizon growth, % –30.6 –29.4 –28.9 –22.8 Pre-tax discount rate, % 17.1 16.4 17.3 15.3 Accounting principles – Goodwill: Goodwill arising from business combinations prior to 2004 is accounted for in accordance with the previous financial statements regulations, and the book value is the assumed acquisition cost in accordance with IFRS. Business combinations incurred between 1 January 2004 and 31 December 2009 have been accounted for in accordance with IFRS 3 (2004). Goodwill arising from business combinations incurred after 1 January 2010 represents the excess of the consideration transferred over the Group’s interest in the net fair value of the identifiable net assets acquired and the amount of non-controlling interest, and in a business combination achieved in stages, the acquisition-date fair value of the equity interest. Goodwill is not amortised. Goodwill is tested for impairment annually, or more frequently if there is any indication of a potential impairment. For the purpose of impairment testing, goodwill is allocated to the cash-generating units (CGUs) – Consumer Customers and Corporate Customers. Goodwill is carried at its cost less any accumulated impairment losses. An impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount. An impairment loss is recognised immediately in the income statement. If an impairment loss is allocated to a CGU, it is first allocated to reduce the carrying amount of any goodwill allocated to the CGU, and then to the other assets of the unit on a pro rata basis. An impairment loss recognised for goodwill is never reversed under any circumstances. Accounting policies that require management’s judgement – Goodwill impairment testing: The recoverable amount of cash-generating units is determined by calculations based on value in use, the preparation of which requires estimates and assumptions. The main uncertainties are associated with the estimated levels of revenue and profitability and the discount rate. Any changes may lead to the recognition of impairment losses. Auditor’s reportParent company financial statements Consolidated financial statement 45Financial Statements 2023 6 Inventories, trade and other receivables, trade and other liabilities 6.1 Inventories EUR million 2023 2022 Materials and supplies 25.2 33.2 Finished goods 51.9 62.4 B/S 77.1 95.5 An impairment on inventories of EUR 1.1 (0.4) million was recognised during the financial period. 6.2 Trade and other receivables 6.2.1 Current receivables EUR million 2023 2022 Trade receivables 441,5 421,9 Impaired trade receivables –6,1 –4,7 Contract assets related to revenue 3,8 2,0 Contract assets related to costs 5,8 5,7 Accrued income 75,2 79,8 Finance lease receivables 17,2 16,5 Loan receivables 0,1 0,1 Receivables from associated companies 7,0 0,1 Other receivables 11,4 15,6 B/S 555,8 537,1 Accrued income includes interest receivables as well as income and cost accruals from the operating activities. Aging of trade receivables 2023 2022 Nominal Carrying Nominal Carrying EUR million value Impairment amount value Impairment amount Not past due 394.9 0.0 394.9 374.9 0.0 374.9 Past due Past due less than 30 days 28.2 –0.2 28.1 32.8 –0.2 32.6 Past due 31–60 days 5.9 –0.7 5.2 5.1 –0.4 4.7 Past due 61–90 days 3.0 –0.7 2.4 3.0 –0.5 2.5 Past due 91–180 days 3.1 –1.8 1.3 2.7 –1.7 1.0 Past due more than 181 days 6.4 –2.8 3.6 3.4 –1.9 1.5 441.5 –6.1 435.5 421.9 –4.7 417.2 The book value of trade receivables approximates their fair value. The credit risk associated with trade receivables is described in note 7.1. The maximum exposure to credit risk is the carrying amount of the trade receivables on the closing date: EUR 435.5 million. Auditor’s reportParent company financial statements Consolidated financial statement 46Financial Statements 2023 6.2.2 Non-current receivables EUR million 2023 2022 Loan receivables 0.0 0.0 Trade receivables 94.7 99.4 Receivables from associated companies 4.2 Finance lease receivables 5.7 12.7 Accrued income 1.3 2.4 Non-current derivatives 1.0 1.2 Other non-current receivables 1.1 1.1 B/S 107.9 116.8 The effective interest rate on receivables (current and non-current) was 0.00 (0.00) per cent. Gross finance lease receivables – maturity of minimum lease receivables EUR million 2023 2022 Within one year 17.4 17.0 Later than one year, not later than five years 5.7 13.1 23.1 30.1 Future finance income –0.2 –0.8 Present value of finance lease receivables 22.9 29.3 Maturity of present value of future minimum lease receivables EUR million 2023 2022 Within one year 17.2 16.5 Later than one year, not later than five years 5.7 12.7 22.9 29.3 Lease periods vary from one to five years, and conditions vary in terms of index clauses. 6.3 Trade and other liabilities EUR million 2023 2022 Non-current Trade payables 1.4 Advances received 4.8 4.3 Derivative instruments 0.0 Other liabilities 14.6 24.6 B/S 19.4 30.3 Current Trade payables 191.2 199.0 Advances received 11.0 10.3 Contract liabilities, from revenue 34.7 30.8 Accrued employee-related expenses 62.0 64.9 Other accruals 11.1 8.0 Liabilities to associated companies 0.5 0.0 Other liabilities 92.2 99.9 B/S 402.5 412.9 421.9 443.2 (1 (2 (1 (2 1) Comparable year 2022 includes non-current trade payables of EUR 1.4 million for the 26 GHz spectrum licence. Current trade payables include liabilities of EUR 0.0 (5.3) million for the 3540–3670 MHz spectrum licence and EUR 1.4 (1.4) million for the 26 GHz spectrum licence. 2) Other non-current liabilities include EUR 8.7 (18.1) million and other current liabilities include EUR 1.1 (6.9) million of contingent considerations and contingent redemption obligations for non-controlling interests related to business acquisitions. Other accruals consist of accrued interest expenses as well as income and cost accruals from the operating activities. 6.3 Ostovelat ja muut velat Auditor’s reportParent company financial statements Consolidated financial statement 47Financial Statements 2023 Accounting principles – Inventories, trade and other receivables, trade and other liabilities: Inventories: Inventories are measured at their acquisition cost or at the net realisable value, if lower than the cost. In the ordinary course of business, net realisable value is the estimated selling price less estimated necessary costs associated with the eventual sale. The cost is determined using a weighted average price. Receivables: Receivables are valued at amortised cost and recognised at the original invoiced amount. The Group records the provision for the impairment losses arising from trade receivables based on historical default rates over the expected life and recognises the impairment loss when the trade receivables are stated as lost. The impairment loss is adjusted by the amount of factored receivables. Trade receivables and other receivables are classified as non-current receivables if they mature in more than 12 months. In other cases, they are classified as current receivables. The Group offers consumer customers various payment methods, granting the possibility to purchase equipment on 12–36 months’ credit. At the time of the sale of the equipment, such transactions are recorded as revenue and trade receivables. The trade receivables are classified as non-current if their maturity exceeds 12 months. Finance lease receivables: The Group acts as a lessor in the lease arrangements for videoconferencing and data terminal equipment, which is accounted for as finance leases. At the time of the sale of the equipment, the proceeds is recorded as revenue and receivables at present value. Rental income received are recorded as financial income and a reduction of the receivables, reflecting a constant periodic rate of return on the net investment. Trade payables: The current value of trade payables and other liabilities is a reasonable estimate of their fair value. The payment terms of the Group’s trade payables correspond to conventional corporate payment terms. 7.1 Rahoitusriskien hallinta 7. Pääomarakenne Auditor’s reportParent company financial statements Consolidated financial statement 48Financial Statements 2023 7 Capital structure 7.1 Financial risk management Elisa’s central treasury department manages the exchange rate, interest rate, liquidity and refinancing risks for the entire Group. The financing policies, covering funding and investment principles, are annually discussed and ratified by the Audit Committee of the Board of Directors. Funding risks are monitored as a part of the regular business monitoring procedure. 7.1.1 Market risks Interest rate risk Elisa is exposed to interest rate risk mainly through its financial liabilities. In order to manage the interest rate risk, the Group’s borrowings and investments are diversified into fixed- and variable-rate instruments. Derivative financial instruments may also be used in managing the interest rate risk. The purpose is to minimise the negative effects caused by changes in the interest rate level. Timing of interest rate changes for interest-bearing financial liabilities (EUR million) 31 Dec. 2023, at nominal value Between Over Time of interest rate change Less than 1 year 1 and 5 years 5 years Total Variable-rate financing instruments Commercial paper 34.5 34.5 Bank loans 100.0 100.0 Fixed-rate financing instruments Bonds 248.0 600.0 300.0 1,148.0 Bank loans 3.0 3.0 Lease liabilities 20.8 27.4 40.4 88.6 403.3 627.4 343.4 1,374.2 On 31 December 2023, the Group’s interest-bearing financial assets consisted of commercial papers and bank deposits amounting to EUR 0.0 million and cash in the bank amounting to EUR 63.4 million. Lease contracts contain index-linkages, which affect the amounts of lease liabilities, right-of-use assets and depreciation. The sensitivity analysis includes the financial liabilities at the balance sheet date. The change in interest rate level is assumed to be one percentage point, and the effect on income is calculated before taxes. The interest rate position is assumed to include interest-bearing financial liabilities and receivables, as well as interest rate swaps on the balance sheet date, assuming that all the contracts will be valid and stay unchanged for the entire year. EUR million 2023 2022 Change in interest rate level +/- 1% –1.35/1.35 –2.25/2.25 Foreign exchange risk Most of Elisa Group’s cash flows are denominated in euros, which means that the company’s exposure to exchange rate risk (economic risk and transaction risk) is low. Business-related exchange rate risks arise from Polystar Osix Ab and its subsidiaries, international interconnection traffic and, to a minor extent, other acquisitions. The most essential currencies are the US dollar (USD), Swedish krona (SEK), Canadian dollar (CAD), British pound (GBP) and Norwegian krone (NOK). The impact of other currencies is insignificant. During the financial year, exchange rate hedges have been used against changes in the value of the Swedish krona and US dollar. The Group has hedged Swedish krona- and US dollar-denominated expenses with foreign currency forward contracts. The Group’s financial liabilities do not include exchange rate risk. The translation difference exposure from the foreign subsidiaries included in consolidated equity mainly consists of the Elisa Polystar subgroup. The translation difference exposure has not been hedged during the reporting period. Foreign currency position 2023 2022 EUR million Trade receivables Trade payables Trade receivables Trade payables USD 10.1 5.8 13.0 7.6 SEK 4.0 0.2 4.0 0.9 CAD 2.5 0.0 3.8 0.0 GBP 0.4 0.7 1.0 0.3 NOK 0.3 0.0 0.4 0.0 The Group-level currency exposure is the basis for the sensitivity analysis of foreign exchange risk. If the euro were to appreciate or depreciate by 20 per cent against all other currencies, the impact on cash flows would be: EUR million 2023 2022 USD +/- 0.9 +/- 1.1 SEK +/- 0.8 +/- 0.6 CAD +/- 0.5 +/- 0.7 GBP -/+ 0.0 +/- 0.2 NOK +/- 0.1 +/- 0.1 Auditor’s reportParent company financial statements Consolidated financial statement 49Financial Statements 2023 Commodity risks Elisa is investing strongly in the use of renewable energy and has signed a wind power purchase agreement for the Puutikankangas wind farm. The agreement is valid until March 2033 and it covers about half of the electricity consumption of Elisa’s mobile network in Finland. Elisa hedges electricity purchases with physical purchase contracts and derivatives. The electricity price risk is assessed for a five-year period. Hedge accounting is applied to contracts hedging future purchases. The effective portion of derivatives that qualify for hedge accounting is recognised in the revaluation reserve of equity, and the ineffective portion is recognised in the income statement under other operating income or expenses. The change in the revaluation reserve, recognised in equity, is presented in the statement of comprehensive income under ”Cash flow hedge”. At the end of the year, the ineffective portion of hedge accounting was EUR 0.0 (0.0) million. Hedging rate for purchases in the following years, % 2023 2022 0–1 years 93.1 86.6 1–2 years 77.4 60.1 2–3 years 38.8 38.9 3–4 years 42.3 37.8 4–5 years 41.1 36.7 If the market price of electricity derivatives changed by +/- 10 per cent from the balance sheet date 31 December 2023, it would contribute EUR +0,4/–0,4 (+0,6/–0,6) million to equity. The impact has been calculated before tax. 7.1.2 Liquidity risk The objective of liquidity risk management is to ensure the Group’s financing under all circumstances. The Group’s most important financing arrangement is an EMTN programme of EUR 1,500 million, under which the Company issued bonds for EUR 1,148 million. 20 September 2023 Elisa issued a EUR 300 million Green Bond under the programme. The proceeds from the Green Bond will be earmarked specifically for Eligible Projects and Assets as set out in Elisa’s Sustainability Finance Framework. On 26 September 2023, Elisa announced that it has purchased its bonds due in March 2024 in the amount of EUR 51.97 million. Furthermore, the Company has a EUR 350 million commercial paper programme and committed credit limit of EUR 300 million, out of which a EUR 130 million credit limit will fall due on 22 September 2028, and EUR 170 million will fall due on 17 May 2028. Both credit lines were fully undrawn on 31 December 2023. The loan margin is determined based on the Company’s credit rating. Elisa has issued EUR 100 million of short-term financing under the credit facility, which was arranged by Landesbank Baden-Württemberg. The limit is non-committed and is valid until further notice. The limit was fully undrawn on 31 December 2023. As part of ensuring its financing, Elisa has acquired international credit ratings. Moody’s Investor Services have rated Elisa’s long-term commitments as Baa2 (outlook stable). S&P Global has rated the company’s long-term commitments as BBB+ (outlook stable) and short-term commitments as A–2. Cash and undrawn committed limits EUR million 2023 2022 Cash and cash equivalents 63.4 85.4 Credit limits 300.0 300.0 363.4 385.4 On 31 December 2023, cash and cash equivalents, as well as undrawn committed credit limits less commercial papers issued by Elisa, were EUR 328.9 (260.4) million. Contract-based cash flows for financial liabilities are presented under Note 7.4.2 Auditor’s reportParent company financial statements Consolidated financial statement 50Financial Statements 2023 7.1.3 Credit risk Financial instruments contain an element of risk of the respective parties failing to fulfil their obligations. Liquid assets are invested within confirmed limits in investment targets with good credit ratings. Investments and the limits specified for them are reviewed annually, or more often, if necessary. Derivative contracts are only signed with Finnish and foreign banks with good credit ratings. The business units are liable for credit risk associated with trade receivables. The units have written credit policies that are mainly consistent with uniform principles. The credit ratings of new customers are always reviewed from external sources when selling products or services invoiced in arrears. In the case of additional sales to existing customers, creditworthiness is reviewed on the basis of the company’s own accounts. The Group may also collect advance or guarantee payments in accordance with its credit policy. Credit risk concentrations in trade receivables are minor, as the Group’s customer base is wide; the ten largest customers represent approximately 7 per cent of customer invoicing. EUR 6.1 (4.7) million of uncertain receivables have been deducted from consolidated trade receivables. The Group’s previous experience in the collection of trade receivables corresponds to the recognised impairment. Furthermore, the Group regularly sells past-due trade receivables from defined customer groups. Based on these facts, the management is confident that the Group’s trade receivables do not involve any substantial credit risk. The maximum credit risk is the value of the trade receivables. On 31 December 2023, short-term trade receivables were EUR 435.5 (417.2) million and long-term trade receivables EUR 94.7 (99.4) million. The aging of short-term trade receivables is described in note 6.2.1. 7.2 Pääoman hallinta Auditor’s reportParent company financial statements Consolidated financial statement 51Financial Statements 2023 7.2.1 Capital structure and key indicators EUR million 2023 2022 Interest-bearing net debt 1,304.1 1,275.8 B/S Total equity 1,293.7 1,251.9 Total capital 2,597.7 2,527.7 Gearing ratio, % 100.8 101.9 Net debt / EBITDA 1.7 1.7 Equity ratio, % 41.6 40.6 7.2 Capital management Elisa’s capital consists of equity and liabilities. To develop its business, Elisa may carry out expansion investments and acquisitions, which may be financed through equity or liabilities, directly or indirectly. The target for the company’s equity ratio is over 35 per cent and for comparable net debt / EBITDA 1.5 to 2.0. The company’s distribution of profit to shareholders consists of dividends, capital repayment and acquisition of treasury shares. Effective profit distribution is 80–100 per cent of profit for the period. Furthermore, additional profit distribution to the shareholders may occur. When proposing or deciding on the profit distribution, the Board takes into account the company’s financial position, future financing needs, and set financial objectives. 7.2.2 Available sources of financing With regard to capital financing, the company’s objective is to maintain sufficient flexibility for the Board of Directors to issue shares. The Annual General Meeting 2023 authorised the Board of Directors to pass a resolution concerning the share issue, right of assignment of treasury shares and/or granting of special rights referred to in the Limited Liability Companies Act. The authorisation entitles the Board of Directors to issue the shares in a proportion other than that of the current shareholdings (directed share issue). A maximum aggregate of 15 million of the company’s shares can be issued under the authorisation. Shareholders’ equity 2023 2022 Treasury shares, 000s 6,947 7,075 Share issue authorisation, 000s 14,999 15,000 On 31 December 2023, the maximum amount of the share issue authorisation at the share closing price was EUR 628.0 (741.9) million. With regard to capital financing, the company maintains loan programmes and credit arrangements that allow quick issuance. The arrangements are committed and non-committed, and allow issuances for different maturities. Debt capital 2023 2022 Commercial paper programme (non-committed) 315.5 225.0 Credit facility (non-committed) 100.0 100.0 Revolving credits (committed) 300.0 300.0 EMTN programme (non-committed) 352.0 600.0 Total, EUR million 1,067.5 1,225.0 (1 (2 (3 On the closing date, the share issue authorisation as well as committed and non-committed credit arrangements totalled EUR 1,695.5 (1,966.9) million. 1) The commercial paper programme amounted to EUR 350 million, of which EUR 34.5 million was in use on 31 December 2023. 2) Elisa has two committed revolving credit facilities of EUR 300 million in total. Both credit facilities were undrawn on 31 December 2023. 3) Elisa has a European Medium Term Note programme (EMTN) for a total of EUR 1,500 million, of which EUR 1,148 million was in use on 31 December 2023. The programme was updated on 19 July 2023, and it is valid for one year as of the update. Auditor’s reportParent company financial statements Consolidated financial statement 52Financial Statements 2023 7.3 Equity 7.3.1 Share capital and treasury shares Number of shares, Share Treasury EUR million 000s capital shares 1 Jan. 2022 167,335 83.0 –126.1 Disposal of treasury shares 1.6 B/S 31 Dec. 2022 167,335 83.0 –124.5 Disposal of treasury shares 2.8 B/S 31 Dec. 2023 167,335 83.0 –121.7 At the end of the reporting period, the company’s paid-in share capital registered in the Trade Register was EUR 83,033,008 (83,033,008). According to its Articles of Association, Elisa Corporation has only one series of shares, each share entitling to one vote. All issued shares have been paid for. Shares do not have a nominal value. Treasury shares include the acquisition cost of treasury shares held by the Group, and they are deducted from shareholder’s equity in the consolidated financial statements. Accounting Holding, % Number of countervalue, of shares Treasury shares shares EUR and votes Treasury shares held by the Group at 1 Jan. 2022 7,147,772 3,546,782 4.27 Disposal of treasury shares –72,394 Treasury shares held by the Group at 31 Dec. 2022 7,075,378 3,510,859 4.23 Disposal of treasury shares –128,724 Treasury shares held by the Group at 31 Dec. 2023 6,946,654 3,446,986 4.15 7.3.2 Dividends The Annual General Meeting has proposed a total dividend of EUR 2.25 per share to be paid for the 2023 result. A dividend of EUR 2.15 per share was paid for the 2022 result. 7.3 Oma pääoma 7.3.3 Other reserves Reserve for invested Fair non-restricted Contingency value Other EUR million equity reserve reserve reserves Total 1 Jan. 2022 90.9 3.4 –10.6 381.0 464.7 Cash flow hedge –0.3 –0.3 Remeasurements of the net defined benefit liability 0.4 0.4 B/S 31 Dec. 2022 90.9 3.4 –10.5 381.0 464.8 Cash flow hedge –0.1 –0.1 Remeasurements of the net defined benefit liability 1.2 1.2 B/S 31 Dec. 2023 90.9 3.4 –9.4 381.0 465.9 The reserve for invested non-restricted equity includes the proportion of share subscription prices that was not recognised as share capital in accordance with the share issue terms. The contingency reserve includes the amount transferred from distributable equity under the Articles of Association or by a decision of the General Meeting. The fair value reserve includes changes in the fair value of other investments, the remeasurements of the net defined benefit liability and the effective portion of the changes in the fair values of derivatives designated as cash flow hedges. Other reserves were formed through share issues in business acquisitions by the amount exceeding the par value of the share received by the Company. Auditor’s reportParent company financial statements Consolidated financial statement 53Financial Statements 2023 7.4 Financial assets and liabilities 7.4.1 Financial income and expenses EUR million 2023 2022 Financial income Dividend income from other financial assets 0.5 0.4 Interest and financial income from loans and other receivables 4.7 2.2 Gain on disposal of financial assets 0.2 0.1 Foreign exchange gain 2.1 2.8 Other financial income 1.2 0.0 I/S 8.7 5.6 Financial expenses Interest expenses on financial liabilities measured at amortised cost –24.3 –11.1 Interest expenses on lease liabilities –3.3 –2.6 Other financial expenses on financial liabilities measured at amortised cost –2.1 –2.0 Other interest expenses –0.1 –0.2 Impairments –0.1 –0.2 Loss on disposal of financial assets –0.3 –0.2 Foreign exchange loss –1.9 –2.2 Other financial expenses 0.0 –0.3 I/S –32.0 –18.7 Accounting principles – Financial income and expenses: Interest income and expenses are recognised using the effective interest rate method, and dividend income is recognised when the right to dividend is incurred. Foreign exchange rate gains and losses are recognised in accordance with their nature either in materials and services or in financial income and expenses. 7.4 Rahoitusvarat ja -velat 7.4.2 Financial liabilities 2023 2022 Balance sheet Balance sheet EUR million values Fair values values Fair values Non-current Bonds 893.7 870.5 891.8 819.9 Bank loans 103.0 103.0 103.2 103.2 Lease liabilities 67.8 67.8 70.8 70.8 B/S 1,064.5 1,041.4 1,065.9 994.0 Current Bonds 247.7 246.5 Bank loans 0.0 0.0 150.0 150.0 Lease liabilities 20.8 20.8 20.4 20.4 Commercial paper 34.5 34.5 125.0 125.0 B/S 303.0 301.8 295.4 295.4 1,367.5 1,343.2 1,361.2 1,289.3 The financial liabilities include a total of EUR 88.6 (91.2) million of secured lease liabilities. In practice, lease liabilities are secured liabilities, as the rights to the leased property will revert to the lessor if the payments are neglected. Material parts of the financial liabilities are denominated in euros. Financial liabilities are measured at amortised cost. The fair values of financial liabilities are based on quoted market prices. The average maturity of non-current liabilities was 2.8 (2.7) years, and the effective average interest rate was 2.0 (1.0) per cent. Auditor’s reportParent company financial statements Consolidated financial statement 54Financial Statements 2023 Contract-based cash flows on the repayment of financial liabilities and costs 2023 EUR million 2024 2025 2026 2027 2028 2029– Total Bonds 258.3 16.1 316.1 312.8 12.0 312.0 1,227.3 Financial costs 10.3 16.1 16.1 12.8 12.0 12.0 79.3 Repayments 248.0 0.0 300.0 300.0 0.0 300.0 1,148.0 Bank loans 4.7 104.7 0.2 0.2 0.2 2.1 112.1 Financial costs 4.5 4.4 0.0 0.0 0.0 0.1 9.1 Repayments 0.3 100.3 0.2 0.2 0.2 1.9 103.0 Commercial paper 34.5 34.5 Financial costs 0.6 0.6 Repayments 33.9 33.9 Lease liabilities 24.4 19.7 12.9 6.6 4.5 68.5 136.6 Financial costs 3.6 7.0 5.0 2.5 1.7 28.1 47.9 Repayments 20.8 12.7 7.8 4.1 2.8 40.4 88.6 Derivatives –0.9 –0.2 –1.1 Electricity derivatives –0.8 –0.2 –1.0 Currency derivatives –0.1 –0.1 Contingent considerations 1.1 1.1 Trade payables 191.2 191.2 Total 513.3 140.4 329.2 319.5 16.7 382.5 1,701.7 Financial costs 18.0 27.4 21.2 15.3 13.7 40.2 135.8 Repayments 495.3 113.0 308.0 304.2 3.0 342.3 1,565.9 2022 EUR million 2023 2024 2025 2026 2027 2028– Total Bonds 6.8 306.8 4.1 304.1 300.8 922.5 Financial costs 6.8 6.8 4.1 4.1 0.8 22.5 Repayments 0.0 300.0 0.0 300.0 300.0 900.0 Bank loans 153.9 3.3 103.3 0.2 0.2 2.3 263.2 Financial costs 3.7 3.0 3.0 0.0 0.0 0.2 9.9 Repayments 150.3 0.3 100.2 0.2 0.2 2.1 253.2 Commercial paper 125.0 125.0 Financial costs 0.5 0.5 Repayments 124.5 124.5 Lease liabilities 23.4 17.8 14.2 9.8 5.3 66.0 136.5 Financial costs 3.1 5.8 5.0 3.8 2.0 25.6 45.2 Repayments 20.4 11.9 9.2 6.0 3.3 40.4 91.2 Derivatives –1.1 –1.1 Electricity derivatives –1.2 –1.2 Currency derivatives 0.0 0.0 Contingent considerations 4.3 0.5 4.9 Trade payables 199.0 199.0 Total 511.3 328.3 121.6 314.1 306.3 68.3 1,649.9 Financial costs 12.8 15.6 12.2 7.9 2.7 25.8 77.0 Repayments 498.5 312.7 109.4 306.2 303.5 42.5 1,572.9 Future financial costs of variable-rate financial liabilities have been calculated at the interest rate prevailing on the period end date. The company has EUR 300 million in credit facilities. Both EUR 130 million and EUR 170 million credit facilities mature in 2028 and were fully undrawn on 31 December 2023. Auditor’s reportParent company financial statements Consolidated financial statement 55Financial Statements 2023 Bonds In the framework of its bond programme, the parent company has issued the following bonds: 31 Dec. 2023 Balance Nominal Nominal Effective Fair value sheet value value interest interest Maturity EUR million EUR million EUR million rate, % rate, % date EMTN programme 2001 / EUR 1,000 million I/2017 246.5 247.7 248.0 0.875 0.974 17.3.2024 I/2019 287.8 297.3 300.0 1.125 1.236 26.2.2026 I/2020 272.0 298.6 300.0 0.250 0.322 15.9.2027 I/2023 310.7 297.7 300.0 4.000 4.092 27.1.2029 1,117.1 1,141.3 1,148.0 The fair value of bonds is based on market quotes. Maturity of lease liabilities’ cash flows EUR million 2023 2022 Within one year 20.8 20.4 Later than one year, but not later than five years 27.4 30.5 Later than five years 40.4 40.4 88.6 91.2 Auditor’s reportParent company financial statements Consolidated financial statement 56Financial Statements 2023 7.4.3 Financial assets and liabilities recognised at fair value Carrying amounts of financial assets and liabilities by category Financial Financial assets/liabilities assets/liabilities Financial measured at measured at fair value assets/liabilities 2023 fair value through through other measured at Book Fair EUR million profit or loss comprehensive income amortised cost values values Note Non-current financial assets Other financial assets 0.6 15.4 16.0 16.0 Trade and other receivables 1.0 106.9 107.9 107.9 6.2.2 Current financial assets Trade and other receivables 555.8 555.8 555.8 6.2.1 Non-current financial liabilities 0.6 1.0 678.1 679.7 679.7 Financial liabilities 1,064.5 1,064.5 1,041.4 7.4.2 Trade and other liabilities 14.6 14.6 14.6 6.3 Current financial liabilities Financial liabilities 303.0 303.0 301.8 7.4.2 Trade and other liabilities 1.1 390.4 391.5 391.5 6.3 1.1 1,772.5 1,773.6 1,749.3 (1 (2 (2 Financial Financial assets/liabilities assets/liabilities Financial measured at measured at fair value assets/liabilities 2022 fair value through through other measured at Book Fair EUR million profit or loss comprehensive income amortised cost values values Note Non-current financial assets Other financial assets 0.6 15.6 16.2 16.2 Trade and other receivables 1.2 115.6 116.8 116.8 6.2.2 Current financial assets Trade and other receivables 537.1 537.1 537.1 6.2.1 0.6 1.2 668.3 670.1 670.1 Non-current financial liabilities Financial liabilities 1,065.9 1,065.9 994.0 7.4.2 Trade and other liabilities 4.6 0.0 21.4 26.0 26.0 6.3 Current financial liabilities Financial liabilities 295.4 295.4 295.4 7.4.2 Trade and other liabilities 0.3 402.3 402.6 402.6 6.3 4.9 0.0 1,785.0 1,789.9 1,718.0 (1 (2 (2 1) Other investments contain the Group’s listed and unlisted equity investments 2) Excluding advances received The fair values of financial asset and liability items are presented in detail under the specified note number. Auditor’s reportParent company financial statements Consolidated financial statement 57Financial Statements 2023 Financial assets and liabilities recognised at fair value EUR million 2023 Level 1 Level 2 Level 3 Financial assets and liabilities measured at fair value through other comprehensive income Electricity derivatives 1.0 1.0 Currency derivatives 0.1 0.1 Financial assets and liabilities measured at fair value through profit or loss Listed equity investments 0.6 0.6 Contingent considerations in business combinations –1.1 –1.1 0.5 0.6 1.0 –1.1 EUR million 2022 Level 1 Level 2 Level 3 Financial assets and liabilities measured at fair value through other comprehensive income Electricity derivatives 1.2 1.2 Currency derivatives 0.0 0.0 Financial assets and liabilities measured at fair value through profit or loss Listed equity investments 0.6 0.6 Contingent considerations in business combinations –4.9 –4.9 –3.1 0.6 1.1 –4.9 Items measured at fair value are categorised using a three-level value hierarchy. Level 1 includes financial instruments with quoted prices in active markets, such are listed shares owned by the Group. Level 2 includes instruments with observable prices based on market data, such are electricity and currency derivatives. Level 3 includes instruments with prices that are not based on observable market data, but instead, on the company’s internal information, such are Group’s contingent considerations relating to business combinations. Level 3 reconciliation Contingent considerations related to business acquisitions EUR million 2023 2022 At the beginning of the period 4.9 3.3 Increase in contingent consideration 0.6 1.7 Payment of contingent consideration –4.2 –0.1 Release of unused contingent consideration –0.1 Translation differences 0.0 0.0 At the end of the period 1.1 4.9 According to the management’s estimation for the financial instruments valued at Level 3, replacing one or more of the pieces of fair value measurement data with a possible alternative assumption would not significantly change the fair value of the items, considering the small total amount of underlying liabilities. Auditor’s reportParent company financial statements Consolidated financial statement 58Financial Statements 2023 Accounting principles – Derivative instruments: Derivatives are recognised at fair value as financial assets or liabilities on the date of acquisition. Gains and losses arising from the fair value remeasurements are recognised in accordance with the nature of the derivative contracts. Outstanding derivatives that do not qualify for hedge accounting are measured at fair value at the end of the reporting period, and the fair value changes are immediately recognised in financial items on the income statement. The fair value of derivatives is expected to approximate the quoted market prices or, if the quoted market prices are not available, the value is estimated using commonly used valuation methods. The Group applies hedge accounting for electricity price risk and the Swedish krona, and treats electricity derivative contracts as cash flow hedges. The change in fair value of effective portion of derivatives that qualify for hedge accounting is recognised in other comprehensive income and presented in the equity hedge revaluation reserve (as a part of “Other reserves”). Gains or losses on derivative instruments accumulated in equity are expensed when any hedged item affects profit or loss. The ineffective portion of the derivatives is recognised in other operating income and expenses on the income statement. The hedge accounting is discontinued when the hedge contract is expired, sold, terminated or completed. Any cumulative gain or loss arising from the hedge instrument remains in equity until the expected transaction is realised. Accounting principles – Financial assets and liabilities: Financial assets: Acquisition and sale of financial assets are recognised on the settlement date. The Group derecognises financial assets when its contractual rights to the cash flows from the financial asset expire or when it has transferred substantially all the risks and rewards to an external party. Cash and cash equivalents include cash at hand and bank deposits as well as highly liquid short-term investments with maturities of up to three months. Investments in shares, excluding investments in associated companies and mutual real-estate companies, are classified as other financial assets and generally measured at fair value. Investments in unlisted companies are recognised at original acquisition cost less any impairment. Investments in listed companies are measured at fair value, based on share transactions. Equity investments are included in non-current assets. On 31 December 2023, the Group’s equity investments consisted mainly of investments in unlisted companies. Financial liabilities: Financial liabilities are initially recognised at fair value equalling the net proceeds received and subsequently measured at amortised cost, using the effective interest rate method. The transaction costs are included in the original acquisition cost of financial liabilities. Financial liabilities are recognised in non-current and current liabilities, and they may be non-interest-bearing or interest-bearing. In cases where the terms of the financial liability measured at amortised cost are amended in such a way that the change does not result in derecognition of the liability from the balance sheet, the Group must nevertheless recognise the profit or loss in the income statement. The profit or loss is calculated as the difference between the original contractual cash flows and the cash equivalents, discounted at the original effective interest rate of amended agreements. Lease liabilities: Lease liabilities are initially measured at the present value of future lease payments. The estimated lease term includes the non-cancellable period of the lease together with periods covered by termination and extension options, if exercise of these options is reasonably certain. The company has discounted the future lease payments using the borrowing rate based on the duration of the estimated lease term. The lease liability is initially measured using the actual value of an index at the commencement date. The lease liabilities are remeasured if the changes are reflected in the cash flow or if the Group reassesses whether it is reasonably certain to exercise a possible option. Classification of assets and liabilities: The Group’s financial assets and liabilities are classified as financial assets and liabilities measured at amortised cost, financial assets and liabilities measured at fair value through other comprehensive income, and financial assets and liabilities measured at fair value through profit or loss. Financial assets and liabilities measured at amortised cost include fixed-term contracts the cash flow of which include payments of principal and interest on the principal amount outstanding. Financial assets and liabilities measured at fair value through other comprehensive income include financial items that are expected both to collect contractual cash flows and to s ell financial assets/liabilities. Financial assets and liabilities measured at fair value through profit or loss include ite ms that do not meet the criteria of the other groups. The Group categorises electricity and currency derivatives that qualify for hedge accounting as financial assets or liabilities measured at fair value through other comprehensive income. Contingent considerations in busines s combinations and listed equity investments are recognised as financial assets or liabilities measured at fair valu e through profit or loss. Other financial assets and liabilities are measured at amortised cost. 7.4.4 Derivative instruments Nominal values of derivatives 2023 2022 Period of validity Period of validity Less than Over Less than Over EUR million 1 year 1–5 years 5 years 1 year 1–5 years 5 years Electricity derivatives 3.5 5.8 Currency derivatives 3.3 3.3 6.8 9.1 Fair values of derivatives 2023 2022 Positive Negative Positive Negative EUR million fair value fair value Total fair value fair value Total Electricity derivatives 1.0 1.0 1.2 1.2 Currency derivatives 0.1 0.1 0.0 0.0 1.0 1.0 1.2 0.0 1.1 Determination of fair value and categorisation The fair value of derivative instruments is determined using quoted prices in active markets. The Group recognises the derivative instruments at the fair value hierarchy Level 2. Please see note 7.4.3. Auditor’s reportParent company financial statements Consolidated financial statement 59Financial Statements 2023 8.1.1 Income taxes EUR million 2023 2022 Taxes for the period –82.7 –83.0 Taxes for previous periods 0.0 –0.1 Deferred taxes –1.4 –0.2 I/S –84.1 –83.2 Income taxes recognised directly in comprehensive income: 2023 2022 Before Tax After Before Tax After EUR million taxes effect taxes taxes effect taxes Remeasurements of the net defined benefit liability 1.5 –0.3 1.2 0.5 –0.1 0.4 Cash flow hedge –0.1 0.0 –0.1 –0.4 0.1 –0.3 1.5 –0.3 1.2 0.0 0.0 0.0 Translation differences do not include a tax effect. Reconciliation of the tax expense on the income statement and taxes calculated at the Group’s domestic statutory tax rate 20 (20): EUR million 2023 2022 I/S Profit before tax 458.1 456.0 Tax according to the domestic tax rate –91.6 –91.2 Tax effects of the following: Tax-free income 0.1 0.2 Non-deductible expenses –1.8 –0.7 Tax effect related to the foreign subsidiaries 11.0 10.3 Usage of tax losses, for which no deferred tax was recognised 0.7 0.2 Loss for the period, for which no deferred tax asset is recognised –2.4 –1.6 Taxes for previous periods 0.0 –0.1 Other items 0.0 –0.4 I/S Taxes on the income statement –84.1 –83.2 Effective tax rate, % 18.4 18.2 8 Other notes 8.1 Taxes 8. Muut liitetiedot 8.1 Verot Accounting principles – Income taxes for the period and deferred taxes: Taxes recognised on the income statement include current and deferred taxes. Income taxes for the financial year are calculated on the net profit for the period at the current tax rate and are adjusted by taxes for the prior periods. Deferred taxes are recognised from temporary differences arising between the tax bases of assets and liabilities and their carrying values. Please refer to note 8.1.2 for details. The global minimum tax regulation (OECD’s pillar 2) that enters into force in 2024 will apply to Elisa, which has begun analysing the impact of the regulation. As Elisa mainly operates in countries with local tax rates above the 15 percent minimum rate, no significant top-up taxes are expected to be paid. Elisa’s Estonian subsidiaries are subject to a profit distribution tax system, whereby corporate tax is only levied on the distribution of profits at a tax rate not lower than the minimum tax rate. The deferred profit distribution tax will be recognised based on the taxable income of the Estonian subsidiaries, and the regulation requires that the profit distribution tax will be realised within the next four financial years. No deferred tax has been recognised on the results of the Estonian subsidiaries for the financial year 2023, totalling EUR 54.9 million. The reporting period as well as prior reporting periods may be subject to a tax audit, which may subsequently result in a change in tax decisions, additional tax payments or refunds. Auditor’s reportParent company financial statements Consolidated financial statement 60Financial Statements 2023 8.1.2 Deferred tax assets and liabilities Change in deferred tax assets and liabilities during 2023 Recognised on consolidated Deferred tax assets Recognised statement of 1 Jan. on the income comprehensive Translation 31 Dec. EUR million 2023 statement income differences 2023 Lease liabilities 17.3 –0.9 16.4 Right-of-use assets –15.6 1.0 –14.6 Lease contracts total 1.7 0.1 1.8 Internal margins 2.8 –0.4 2.4 Share-based incentive plans 3.9 –0.3 3.6 Pension obligations 2.8 –0.4 –0.3 2.1 Provisions 0.8 0.2 1.0 Confirmed losses 0.3 –0.3 0.0 Other temporary differences 0.8 –0.2 0.0 0.0 0.6 B/S 13.1 –1.3 –0.3 0.0 11.5 Deferred tax liabilities Recognised 1 Jan. on the income Business Translation 31 Dec. EUR million 2023 statement disposals differences 2023 Fair value measurement of tangible and intangible assets in business combinations 3.0 –1.0 0.0 2.0 Accumulated depreciation differences 17.4 0.6 18.0 Finance lease agreements 1.3 0.7 –1.1 0.9 Customer contracts 1.8 –0.1 1.7 Bonds 0.7 –0.2 0.5 Other temporary differences 1.6 0.0 1.6 B/S 25.7 0.1 –1.1 0.0 24.7 Deferred income tax assets recognised for tax losses are carried forward to the extent that the realisation of the related tax benefit through future profits is probable. On 31 December 2023, the Group had no deferred tax assets recognised for confirmed tax losses. At the end of the reporting period, the Group had EUR 20.1 (18.8) million of unused tax losses for which no tax assets have been recognised. Change in deferred tax assets and liabilities during 2022 Recognised on consolidated Deferred tax assets Recognised statement of 1 Jan. on the income comprehensive Translation 31 Dec. EUR million 2022 statement income differences 2022 Lease liabilities 17.3 –0.1 17.3 Right-of-use assets –15.7 0.1 –15.6 Lease contracts total 1.6 0.1 1.7 Internal margins 2.8 0.0 2.8 Share-based incentive plans 3.0 0.9 3.9 Pension obligations 3.0 –0.1 –0.1 2.8 Provisions 1.2 –0.4 0.8 Confirmed losses 0.7 –0.4 0.3 Other temporary differences 0.9 –0.2 0.1 0.0 0.8 B/S 13.1 0.0 0.0 0.0 13.1 Deferred tax liabilities Recognised 1 Jan. on the income Business Translation 31 Dec. EUR million 2022 statement combinations differences 2022 Fair value measurement of tangible and intangible assets in business combinations 3.9 –1.2 0.4 0.0 3.0 Accumulated depreciation differences 16.4 1.0 17.4 Finance lease contracts 0.6 0.7 1.3 Customer contracts 1.9 –0.1 1.8 Bonds 0.8 –0.1 0.7 Other temporary differences 1.6 –0.1 1.6 B/S 25.3 0.1 0.4 0.0 25.7 Auditor’s reportParent company financial statements Consolidated financial statement 61Financial Statements 2023 Accounting principles – Deferred tax assets and liabilities: Deferred taxes are recognised for all temporary differences arising between the carrying amount and the tax base, with the exception of situations where a deferred tax asset or liabilty arises from initial recognition of goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination, and at the time of the transaction, does not affect either the accounting or the taxable profit, and does not give rise to equal taxable and deductible temporary differences. No deferred tax is recognised on valuation differences of shares for which the sales profit would be tax-deductible. Leases are typically transactions in which equal taxable and deductible temporary differences arises on initial recognition of the asset and liability. Elisa recognise the tax arising from this difference as an expense or income and presents it as deferred tax receivables in balance sheet. Deferred tax assets are recognised only to the extent that it is probable that they can be utilised against future taxable income. Deferred tax liabilities are recognised on the balance sheet in total, with the exception for Estonian subsidiaries, where no tax liability has been recognised for the untaxed retained earnings EUR 251.8 million, as no profit distribution decision or plans for profit distribution exist for the time being. Deferred tax liabilities and assets are not offset. Accounting policies that require management’s judgement – Deferred tax assets: Particularly at the end of each financial period, the Group assesses the probability of subsidiaries generating taxable income against which unused tax losses can be utilised. The appropriateness of recognising other deferred tax assets is also determined at the end of each financial period. Changes in the estimates may lead to the recognition of significant tax expenses. Auditor’s reportParent company financial statements Consolidated financial statement 62Financial Statements 2023 8.2 Provisions Termination EUR million benefits Other Total 1 Jan. 2022 4.3 1.7 5.9 Increase in provisions 2.0 2.0 Utilised provisions –3.8 –3.8 Release of unused provisions –0.5 –0.5 31 Dec. 2022 2.0 1.7 3.7 Increase in provisions 4.4 4.4 Utilised provisions –3.3 –3.3 Release of unused provisions –0.3 –0.3 31 Dec. 2023 2.8 1.7 4.5 EUR million 2023 2022 B/S Long-term provisions 3.4 2.9 B/S Short-term provisions 1.0 0.8 4.5 3.7 Termination benefits As a part of the Group’s rationalisation, Elisa carried out statutory employee negotiations leading to personnel reductions in 2023. The restructuring provision includes provisions for both unemployment pensions and other expenses due to redundancies. The provisions associated with redundancies will be realised during 2024–2027, and the provision associated with unemployment pensions will be realised in 2024–2025. Other provisions Other provisions include environmental provisions made for telephone poles. 8.2 Varaukset Accounting principles – Provisions and contingent liabilities: A provision is recognised when the Group has a legal or constructive obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation, and the amount of the obligation can be reliably estimated. Contingent liabilities are potential liabilities arising from past events that may occur depending on the outcome of uncertain future events that are beyond the control of the Group. Also, a present obligation that is unlikely to require settlement of a payment obligation or the amount of which cannot be reliably measured is a contingent liability. Contingent liabilities are not recognised in the statement of financial position. Contingent liabilities are presented in note 8.4. Auditor’s reportParent company financial statements Consolidated financial statement 63Financial Statements 2023 8.3 Related party details The Group’s related parties include the parent company, subsidiaries, associates and joint ventures. The related parties also include Elisa’s Board of Directors, the CEO, the Executive Board as well as entities controlled by them and close members of their family. Transactions carried out with related parties: 2023 EUR million Revenue Purchases Receivables Liabilities Associates 0.7 0.9 11.6 0.5 2022 EUR million Associates 0.5 1.0 0.6 0.0 The employee benefits of the Group’s related parties are presented in Note 4.1. 8.3 Lähipiiritiedot 8.3.1 Group companies The parent company of the Group is Elisa Corporation. Subsidiaries Domicile Group’s ownership, % Banana Fingers Limited Bristol, UK 100 Digiset Oy Helsinki, Finland 100 Elisa IndustriQ Oy Helsinki, Finland 100 Elisa camLine Holding GmbH Petershausen, Germany 100 camLine GmbH Petershausen, Germany 100 camLine Solutions S.r.l. Iași, Romania 100 camLine USA Inc. Atlanta GA, USA 100 camLine Hungary Kft. Szombathely, Hungary 60 camLine Pte. Ltd. Singapore, Singapore 100 camLine Taiwan New Taipei City, Taiwan 100 camLine sdn. Bhd. Bayan Lepas, Malaysia 100 PT Elisa camLine Indonesia Surabaya, Indonesia 100 Suzhou camLine Technology Co. Ltd Suzhou, China 100 TenForce NV Leuven, Belgium 50 TenForce USA LLC Houston TX, USA 50 Process Data Control Corporation Arlington TX, USA 50 Elisa Deutschland GmbH Petershausen, Germany 100 Elisa Finance Oü Tallinn, Estonia 100 Elisa France SAS Les Sorinieres, France 100 Subsidiaries Domicile Group’s ownership, % Elisa Santa Monica Oy Helsinki, Finland 100 Elisa Eesti AS Tallinn, Estonia 100 Elistar AB Stockholm, Sweden 100 Elisa Polystar Finland Oy Helsinki, Finland 100 Cardinality Ltd Guildford, England 100 Cardinality SP. z.o.o. Lublin, Poland 100 Frinx s.r.o. Bratislava, Slovakia 100 Polystar Egypt LLC Cairo, Egypt 100 Polystar Instruments Canada Inc. Toronto, Canada 100 Polystar Instruments Inc. Frisco TX, USA 100 Polystar Osix AB Stockholm, Sweden 100 Polystar Asia Private Ltd. Singapore, Singapore 100 Polystar Australia Pty Sydney, Australia 100 P-OSS Solutions S.L.U. Bilbao, Spain 100 Enia Oy Helsinki, Finland 100 Epic TV SAS Sallanches, France 100 Fenix Solutions Oy Turku, Finland 100 Fonum Oy Helsinki, Finland 100 Karelsat Oy Joensuu, Finland 100 Kepit Systems Oy Vaasa, Finland 70 Kiinteistö Oy Raision Luolasto Espoo, Finland 100 Kiinteistö Oy Rinnetorppa Kuusamo, Finland 100 Kiinteistö Oy Tapiolan Luolasto Espoo, Finland 100 LNS Kommunikation AB Stockholm, Sweden 100 Preminet Oy Helsinki, Finland 100 Sutaria Services Inc. Murphy TX, USA 100 Watson Nordic Oy Vaasa, Finland 100 Joint arrangements Kiinteistö Oy Brahenkartano Turku, Finland 60 Significant changes in ownership of subsidiaries are presented in note 3. Other changes in group structure is described below. On 13 April 2023, camLine Dresden merged with camLine GmbH and on 1 June 2023 LE-Kuitu Oy merged with Elisa Oyj. Elisa Hong Kong Limited, Cardinality Inc, Frinx Corporation and Polystar Ryssland LLC were liquidated in December 2023. Auditor’s reportParent company financial statements Consolidated financial statement 64Financial Statements 2023 Accounting principles – Consolidation principles, subsidiaries: The consolidated financial statements include the parent company, Elisa Corporation, and those subsidiaries over which the Group has control. The group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are consolidated from the date the Group obtains control and divested companies until the loss of control. The acquisition method is used in the accounting for the elimination of internal ownership. All intra-group transactions, gains on the sale of inventories and fixed assets, intra-group receivables, payables and dividends are eliminated. Profit for the period attributable to the equity holders of the parent and non-controlling interests is presented separately in the consolidated income statement. Non-controlling interests are presented separately from the equity of the owners of the parent in the consolidated statement of financial position. Losses of subsidiaries are allocated to non-controlling interests even if they exceed their share of ownership. Accounting principles – Consolidation principles, joint arrangements: Joint arrangements are arrangements over which the Group exercises joint control with one or more parties. A joint arrangement is either a joint venture or a joint operation. A joint venture is a joint arrangement, where the Group has rights to the net assets of the arrangement. A joint operation is a joint arrangement where the Group has rights to the assets and obligations for the liabilities relating to the arrangement. The only joint arrangement owned by the Group, Kiinteistö Oy Brahenkartano, is a joint operation, which is consolidated using the proportional consolidation method. Sixty per cent of the assets, liabilities, income and expenses of the joint operation are consolidated to the Group’s financial statements. The company owns and manages a building and a site in Turku. Elisa is mainly entitled to manage office and telecom facilities with the shares owned. Auditor’s reportParent company financial statements Consolidated financial statement 65Financial Statements 2023 8.3.2 Investments in associated companies Aggregated financial information of associates EUR million 2023 2022 I/S Group’s share of associated companies’ profit –0.4 –0.7 B/S Group’s investments in associated companies 20.8 9.9 EUR million 2023 2022 Balance at the beginning of the period 9.9 10.6 Additions 11.5 0.0 Reclassifications –0.2 0.0 Share of profits for the period –0.4 –0.7 Dividends received 0.0 0.0 Impairment –0.1 B/S Balance at the end of the period 20.8 9.9 (1 1) The businesses of Elisa Corporation’s subsidiary Elisa Videra and the German company MVC Mobile Video Communication GmbH (owned by KLP Vermögensverwaltungs GmbH) was combined into MVC on 20 December 2023. After combination Elisa has 37.5% holding of MVC Mobile Video Communication GmbH and Elisa became a minority shareholder of the company. The transaction was conducted as a share swap and acquistion price for the shares was EUR 11.4 million. Accounting principles – Consolidation principles, associated companies Associated companies are entities over which the Group exercises significant influence. Significant influence is presumed to exist when the Group owns over 20 per cent of the voting rights of the company or when the Group otherwise exercises significant influence, but does not exercise control. Associated companies are consolidated in accordance with equity method. If the Group’s share of losses of an associated company exceeds its interest in the associated company, the investment is recognised on the balance sheet at zero value and the Group discontinues recognising its share of further losses unless the Group has other obligations for the associated company. Associated companies are consolidated from the date the Group obtains significant influence and divested associated companies are consolidated until the loss of significant influence. Associates Domicile Group’s ownership,% FNE-Finland Oy Kontiolahti, Finland 45.9 Kiinteistö Oy Helsingin Sentnerikuja 6 Helsinki, Finland 50.0 Kiinteistö Oy Herrainmäen Luolasto Tampere, Finland 50.0 Kiinteistö Oy Helsingin Lauttasaarentie 19 Helsinki, Finland 41.7 Kiinteistö Oy Pohjanplassi Lapua, Finland 39.3 Kiinteistö Oy Riihimäen Maisterinkatu 9 Riihimäki, Finland 37.0 Kiinteistö Oy Runeberginkatu 43 Helsinki, Finland 29.6 Kiinteistö Oy Helsingin Stenbäckinkatu 5 Helsinki, Finland 40.0 MVC Mobile Video Communication GmbH Kronberg im Taunus, Germany 37.5 sedApta Group Milan, Italy 19.0 Suomen Numerot NUMPAC Oy Helsinki, Finland 33.3 Tele Scope Oy Espoo, Finland 22.0 KE-Masto Oy Kajaani, Finland 49.5 Auditor’s reportParent company financial statements Consolidated financial statement 66Financial Statements 2023 8.4 Off-balance sheet leases and other commitments Leases Group as a lessee Lease payments related to off-balance sheet lease commitments: EUR million 2023 2022 Lease payments associated with short-term leases 34.9 31.9 Lease payments associated with low-value assets 14.2 4.6 49.1 36.5 Future minimum lease payments under non-cancellable off-balance sheet leases: EUR million 2023 2022 Within one year 14.4 13.2 Later than one year, but not later than five years 5.1 4.3 Later than five years 1.4 1.0 20.9 18.4 Lease payments are presented without value added tax. Group as a lessor Future minimum lease receivables under non-cancellable operating leases: EUR million 2023 2022 Within one year 3.0 3.6 Later than one year, but not later than five years 0.4 0.7 3.5 4.3 8.4 Taseen ulkopuoliset vuokrasopimukset ja muut vastuusitoumukset Accounting principles – Leases: The group as a lessee The Group recognises rental expenses for short-term leases and low-value assets in the income statements and presents such contracts as off-balance sheet liabilities. The group as a lessor The Group acts as a lessor in two different types of lease arrangements that are accounted for as operating leases: rental income from telecom premises and carrier services is recognised as revenue over the lease period, and rental income from real estate is recognised as other operating income. The lease contract periods are mainly short with durations of 1–6 months. Rental income is recognised over the lease period. Collateral, commitments and other liabilities EUR million 2023 2022 On behalf of own commitments Mortgages 3.8 3.8 Guarantees 0.8 0.6 Deposits 0.5 0.6 On behalf of others Guarantees 0.5 0.3 5.6 5.2 Other contractual obligations Venture capital investment obligation 0.2 0.5 0.2 0.5 Real estate investments VAT refund liability for real estate investments indicates the amount that may become completely non tax-deductible if the intended use of the property was to change. On 31 December 2023, the VAT refund liability for real estate investments was EUR 39.7 (36.1) million. Auditor’s reportParent company financial statements Consolidated financial statement 67Financial Statements 2023 8.5 Events after the end of the reporting period On 16 January 2024, Elisa Oyj and Moontalk Oy signed an agreement under which Elisa takes a majority holding of Moontalk. The deal is currently awaiting approval from the competition authority as well as other conditions typical for the completion of a business transaction. The deal will strengthen Elisa’s application development expertise, especially in developing SaaS-based applications. On 25 January 2024, the Shareholders’ Nomination Board announced its proposal to Elisa’s Board for the notice of the Annual General Meeting of 12 April 2024 that the number of members of the Board of Directors would be eight (8). The Nomination Board proposes that Mr Maher Chebbo, Mr Kim Ignatius, Ms Katariina Kravi, Ms Pia Kåll, Ms Eva- Lotta Sjöstedt, Mr Anssi Vanjoki and Mr Antti Vasara be re-elected. The Nomination Board further proposes that Mr Christoph Vitzthum is elected as a new member of the Board. The Nomination Board proposes that Mr Anssi Vanjoki be elected as the Chair of the Board and Ms Katariina Kravi be elected as the Vice Chair. All the proposed Board Members are considered to be independent of the company and of its significant shareholders. 8.5 Tilinpäätöspäivän jälkeiset tapahtumat Auditor’s reportParent company financial statements Consolidated financial statement 68Financial Statements 2023 9.1 Key indicators describing the Group’s financial development 2023 2022 2021 2020 2019 INCOME STATEMENT Revenue, EUR million 2,180 2,130 1,998 1,895 1,844 Change of revenue, % 2.4 6.6 5.5 2.8 0.7 EBITDA, EUR million 756 733 697 685 661 EBITDA as % of revenue 34.7 34.4 34.9 36.2 35.8 EBIT, EUR million 482 470 431 409 395 EBIT as % of revenue 22.1 22.1 21.6 21.6 21.4 Profit before tax, EUR million 458 456 418 398 372 Profit before tax as % of revenue 21.0 21.4 20.9 21.0 20.2 Return on equity (ROE), % 29.4 30.4 28.8 28.1 26.6 Return on investment (ROI), % 18.5 18.3 16.9 16.7 17.2 Research and development costs, EUR million 24 21 16 10 8 Research and development costs as % of revenue 1.1 1.0 0.8 0.5 0.4 BALANCE SHEET Gearing ratio, % 100.8 101.9 101.2 101.9 103.0 Current ratio 1.0 1.0 1.4 1.3 1.2 Equity ratio, % 41.6 40.6 39.9 39.1 41.0 Non-interest-bearing liabilities, EUR million 463 488 491 430 428 Interest-bearing net debt 1,304 1,276 1,219 1,207 1,184 Balance sheet total, EUR million 3,125 3,101 3,028 3,041 2,814 INVESTMENTS Investments in shares and business combinations, EUR million 12 25 28 70 83 CAPITAL EXPENDITURE Gross investments, EUR million 321 290 265 266 256 Gross investments as % of revenue 14.7 13.6 13.3 14.1 13.9 PERSONNEL Average number of employees during the period 5,721 5,523 5,391 5,097 4,882 Revenue/employee, EUR 1,000 381 386 371 372 378 The order book is not presented, as the information is not relevant due to the nature of the Group’s business. 9. Tunnusluvut 9.1 Konsernin taloudellista kehitystä kuvaavat tunnusluvut 9 Key Indicators The key indicator tables are unaudited. Formulae for financial summary indicators EBITDA EBIT + depreciation, amortisation and impairment EBIT Profit for the period + income taxes + financial income and expenses + share of associated companies’ profit Return on equity (ROE),% Profit for the period X 100 Total shareholders’ equity on average Return on investment (ROI),% Profit before taxes + interest and other financial expenses X 100 Total equity + interest-bearing liabilities on average Gearing ratio,% Interest-bearing liabilities - cash and cash equivalents and financial assets at fair value through profit or loss X 100 Total shareholders’ equity Current ratio Current assets Current liabilities - advance payments received Equity ratio,% Total shareholders’ equity X 100 Balance sheet total - advance payments received Auditor’s reportParent company financial statements Consolidated financial statement 69Financial Statements 2023 9.2 Alternative performance measures (1 2023 2022 2021 2020 2019 INCOME STATEMENT Comparable EBITDA, EUR million 756 735 706 685 668 Comparable EBITDA as % of revenue 34.7 34.5 35.3 36.2 36.2 Comparable EBIT, EUR million 487 472 439 415 402 Comparable EBIT as % of revenue 22.4 22.2 22.0 21.9 21.8 Comparable profit before tax, EUR million 464 458 427 399 379 Comparable profit before tax as % of revenue 21.3 21.5 21.4 21.0 20.5 Comparable return on equity (ROE), % 29.7 30.5 29.3 28.1 27.1 Comparable return on investment (ROI), % 18.7 18.4 17.2 16.7 17.5 Comparable earnings per share (EPS) 2.37 2.34 2.19 2.05 1.93 1) other than the financial indicators defined by IFRS 9.2 Vaihtoehtoiset tunnusluvut Formulae for alternative performance measures Comparable EBITDA EBIT + depreciation, amortisation and impairment +/- items affecting comparability Comparable EBIT Profit for the period + income taxes + financial income and expenses + share of associated companies’ profit +/- items affecting comparability Comparable profit for the period Profit for the period +/- items affecting comparability Profit attributable to owners of the parent company +/- items affecting comparability Comparable EPS Average number of shares during the period adjusted for share issues Comparable return on equity (ROE), % Profit for the period +/- items affecting comparability X 100 Total shareholders’ equity on average Comparable return on investment (ROI), % Profit before taxes + interest and other financial expenses +/- items affecting comparability X 100 Total equity + interest-bearing liabilities on average Comparable cash flow after investments Net cash flow from operating activities - net cash used in investing activities +/- items affecting comparability Auditor’s reportParent company financial statements Consolidated financial statement 70Financial Statements 2023 9.3. Per-share indicators (1 2023 2022 2021 2020 2019 Share capital, EUR 83,033,008 83,033,008 83,033,008 83,033,008 83,033,008 Number of shares at year-end 160,388,419 160,259,695 160,187,301 160,082,908 159,897,796 Average number of shares 160,376,432 160,253,348 160,174,453 160,065,712 159,880,581 Number of shares at year-end, diluted 160,542,095 160,416,729 160,187,301 160,082,908 159,897,796 Average number of shares, diluted 160,530,108 160,410,382 160,174,453 160,065,712 159,880,581 Market capitalisation, EUR million 7,006 8,276 9,056 7,508 8,241 Earnings per share (EPS), EUR 2.34 2.33 2.15 2.05 1.90 Dividend per share, EUR 2.25 2.15 2.05 1.95 1.85 Payout ratio, % 96.2 92.1 95.6 95.1 97.6 Equity per share, EUR 8.05 7.78 7.48 7.39 7.19 P/E ratio 17.9 21.2 25.2 21.9 26.0 Effective dividend yield, % 5.4 4.3 3.8 4.3 3.8 Share performance on Nasdaq Helsinki Mean price, EUR 48.86 51.99 51.00 51.08 42.26 Closing price at year-end, EUR 41.87 49.46 54.12 44.87 49.25 Lowest price, EUR 39.41 45.57 45.10 40.79 35.51 Highest price, EUR 56.52 56.90 56.18 58.88 49.91 Trading of shares on Nasdaq Helsinki Total trading volume, 1,000 shares 64,380 71,229 81,557 122,497 96,662 Percentage of shares traded 38 43 49 73 58 (2 (6 (3 (4 (5 1) The numbers of shares are presented without treasury shares held by Elisa Group. 2) Calculated on the basis of the closing price on the last trading day of the year and the total number of shares at the end of the period (167,335,073). 3) Calculated on the basis of the closing price on the last trading day of the year. 4) Elisa share is also traded in alternative marketplaces. According to Bloomberg, the trading volumes in these markets in 2023 were approximately 289 (293) per cent of the volumes on the Nasdaq Helsinki. 5) Calculated in proportion to the total number of shares at the end of the period. 6) The Board of Directors proposes a dividend payment of EUR 2.25 per share. 9.3 Osakekohtaiset tunnusluvut Formulae for per-share indicators Earnings per share (EPS) Profit for the period attributable to the equity holders of the parent Average number of shares during the period adjusted for share issues Dividend per share (1 Dividend adjusted for share issues Number of shares at the balance sheet date adjusted for share issues Effective dividend yield, % (1 Dividend per share X 100 Share price at the balance sheet date adjusted for share issues Payout ratio, % (1 Dividend per share X 100 Earnings per share Equity per share Equity attributable to equity holders of the parent Number of shares at the balance sheet date adjusted for share issues P/E ratio (price/earnings) Share price on the balance sheet date Earnings per share 1) The calculation formulae apply also to the capital repayment indicators. Auditor’s reportParent company financial statements Consolidated financial statement 71Financial Statements 2023 EUR million Note 2023 2022 Revenue 1 1,771.6 1,731.1 Other operating income 2 10.3 7.9 Materials and services 3 –666.3 –670.9 Employee expenses 4 –271.9 –253.9 Depreciation, amortisation and impairment 5 –267.9 –261.4 Other operating expenses –174.0 –165.5 Operating profit 401.7 387.3 Financial income and expenses 7 –37.3 –13.5 Profit before tax and appropriations 364.4 373.8 Appropriations 8 0.8 –10.9 Income taxes 9 –80.8 –78.9 Profit for the period 284.3 284.1 Income statement, parent company, FAS EMOYHTIÖN TILINPÄÄTÖS Emoyhtiön tilinpäätöksen päälaskelmat Tuloslaskelma EUR million Note 31 Dec. 2023 31 Dec. 2022 ASSETS Non-current assets Intangible assets 10 247.7 276.4 Property, plant and equipment 10 741.0 694.3 Investments 11 851.5 863.7 1,840.2 1,834.4 Current assets Inventories 12 52.8 64.6 Non-current receivables 13 109.3 123.7 Current receivables 14 465.0 439.1 Cash and bank receivables 37.9 53.0 665.1 680.4 TOTAL ASSETS 2,505.3 2,514.8 EQUITY AND LIABILITIES Equity 15 Share capital 83.0 83.0 Treasury shares –121.5 –124.4 Reserve for invested non-restricted equity 77.8 77.8 Contingency reserve 3.4 3.4 Retained earnings 194.1 257.5 Profit for the period 284.3 284.1 521.2 581.5 Accumulated appropriations 87.3 83.3 Provisions 16 5.4 5.0 Liabilities Non-current liabilities 17 1,005.8 1,007.3 Current liabilities 18 885.6 837.7 1,891.4 1,845.0 TOTAL EQUITY AND LIABILITIES 2,505.3 2,514.8 Balance sheet, parent company, FAS Tase Auditor’s reportParent company financial statements Consolidated financial statement 72Financial Statements 2023 EUR million 2023 2022 Cash flow from operating activities Profit before appropriations and taxes 364.4 373.8 Adjustments: Depreciation and amortisation 267.9 261.4 Other income and expenses with no payment relation 1.1 0.3 Other financial income (-) and expenses (+) 18.0 13.5 Gains (-) and losses (+) on the disposal of fixed assets –3.9 Gains (-) and losses (+) on the disposal of investments 16.6 0.0 Change in provisions in the income statement 0.4 –2.0 Cash flow before changes in working capital 664.5 647.1 Change in working capital Increase (-) / decrease (+) in current non-interest-bearing trade receivables 0.9 –12.8 Increase (-) / decrease (+) in inventories 10.8 –8.8 Increase (+) / decrease (-) in trade and other payables –4.0 0.9 Cash flow before financial items and taxes 672.2 626.3 Dividends received 5.0 6.1 Interests received 5.3 1.6 Interests paid –28.5 –15.9 Income taxes paid –77.8 –81.7 Net cash flow from operating activities 576.1 536.4 Cash flow statement, parent company, FAS EUR million 2023 2022 Cash flow from investing activities Capital expenditure –292.5 –252.1 Proceeds from disposal of property, plant and equipment and intangible assets 4.0 Investments in shares and other investments –4.7 –4.9 Proceeds from disposal of shares and other investments 0.3 0.0 Loans granted –13.4 –17.5 Repayment of loan receivables 5.2 10.9 Net cash flow used in investing activities –301.2 –263.7 Cash flow after investing activities 275.0 272.7 Cash flow from financing activities Increase in long-term borrowings (+) 300.0 Decrease in long-term borrowings (-) –202.0 –100.0 Increase (+) / decrease (-) in short-term borrowings –39.5 138.2 Group contributions received (+) / paid (-) –5.3 –2.7 Dividends paid –343.2 –327.9 Net cash flow used in financing activities –290.0 –292.4 Change in cash and cash equivalents –15.0 –19.8 Cash and cash equivalents at the beginning of the period 53.0 72.7 Cash from business transfers and mergers 0.0 Cash and cash equivalents at the end of the period 37.9 53.0 Rahoituslaskelma Auditor’s reportParent company financial statements Consolidated financial statement 73Financial Statements 2023 ACCOUNTING PRINCIPLES Elisa Corporation’s financial statements have been prepared in accordance with the accounting principles based on Finnish accounting legislation. Foreign currency items Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the dates of transactions. At the end of the reporting period, assets and liabilities denominated in foreign currencies are valued at the exchange rates quoted by the European Central Bank on the closing date. Fixed assets The carrying value of intangible and tangible assets is stated at cost less accumulated depreciation, amortisation and impairment. Internally generated fixed assets are measured at variable costs. The difference between depreciation according to plan and total depreciation is presented under appropriations of the parent company’s income statement, and the accumulated depreciation difference is presented under accumulated appropriations in shareholders’ equity and liabilities on the balance sheet. Depreciation according to plan is recognised on a straight-line basis over the useful life from the original acquisition cost. The useful life according to plan for the different asset groups: Intangible rights 3–5 years Goodwill 5–20 years Other expenditure with long-term effects 5–10 years Buildings and structures 25–40 years Machinery and equipment in buildings 10–25 years Telephone exchanges (fixed and mobile network) 6–10 years Cable network 8–15 years Telecommunication terminals 2–4 years Other machines and equipment 3–5 years Inventories Inventories are stated at the lowest of variable cost, acquisition price or the likely disposal or repurchase price. Cost is determined using a weighted average price. Marketable securities Investments in money market funds are recognised at the repurchase price. Investments in certificates of deposit and commercial paper are recognised at the acquisition cost, as the difference between the repurchase price and cost of acquisition is not significant. Revenue recognition principles Revenue from deliverables is recognised at the time of ownership transfer, and revenue from services is recognised when the services have been performed. Interconnection fees that are invoiced from the customers and paid as such to other telecommunication companies are presented as an adjustment to revenue (Finnish Accounting Standards Board 1995/1325). Profit from the sale of business operations and fixed assets, subsidies received and rental income from premises is presented under other operating income. Losses from the sale of fixed assets are presented under other operating expenses. The profit or loss from the sale of shares is presented in financial income and expenses. Research and development Research costs are expensed as they incur, with the exception of development costs, which are capitalised. The capitalisation criteria are met when the product is technically and commercially feasible, and it is expected to generate future economic benefit. Development costs initially recognised as expenses cannot be capitalised subsequently. Notes to the financial statements of the parent company Emoyhtiön tilinpäätöksen liitetiedot Laatimisperiaatteet Public grants associated with development projects are recognised as other operating income when the related costs are recognised as expenses. Public grants, associated with capitalised development costs, are recorded as a reduction of cost. Future expenses and losses Probable future expenses and losses related to the reporting period or a prior financial period without corresponding income are recognised on the income statement. Such items are recognised on the balance sheet under provisions if a reliable estimate of the amount or timing of the obligation cannot be made. Otherwise the obligation is recognised as accrual. Income taxes Income taxes for the financial year are recognised on the income statement. No deferred tax liabilities or receivables have been recognised in the financial statements. Auditor’s reportParent company financial statements Consolidated financial statement 74Financial Statements 2023 1. Revenue EUR million 2023 2022 Revenue 1,838.4 1,794.3 Interconnection fees and other adjustments –66.8 –63.2 1,771.6 1,731.1 Geographical distribution Finland 1,747.1 1,704.1 Rest of Europe 23.2 25.2 Other countries 1.4 1.8 1,771.6 1,731.1 2. Other operating income EUR million 2023 2022 Gain on disposals of fixed assets 3.9 Other income (1 6.5 7.9 10.3 7.9 1) Other income includes rental income from real estate, management fee income charged from subsidiaries and other income not associated with ordinary operating activities. 3. Materials and services EUR million 2023 2022 Materials, supplies and goods Purchases during reporting period 346.5 370.1 Change in inventories 11.8 –8.5 358.4 361.6 External services 308.0 309.3 666.3 670.9 1. Liikevaihto 2. Liiketoiminnan muut tuotot 3. Materiaalit ja palvelut Tuloslaskelman liitetiedot 4. Henkilöstökulut 4. Employee expenses EUR million 2023 2022 Salaries and wages 226.7 211.8 Pension costs 38.7 36.3 Other social security costs 6.5 5.8 271.9 253.9 Personnel on average 3,361 3,295 CEO remuneration, EUR 2023 2022 Fixed salaries 668,040.00 674,640.00 Performance-based bonus 294,218.10 365,376.72 Fringe benefits 20,903.10 20,077.03 Share-based payments (1 1,351,749.69 715,958.19 2,334,910.89 1,776,051.94 1) The maximum award allocated to the CEO under the share-based compensation plans equals the value of 102,430 shares. See note 4.1 of the consolidated financial statements. In 2020, the Board of Directors agreed with the CEO of Elisa Corporation, Veli-Matti Mattila, that he will continue as CEO until further notice. In August 2023 Veli-Matti Mattila informed the company´s Board of Directors that he will retire when the new CEO Topi Manner starts in the position, on 1 March 2024 at the latest. Under the previous executive agreement, Mattila would have retired at the age of 60. The pension arrangements include a right to a paid-up policy. Remuneration of Board members, EUR 2023 2022 Clarisse Berggårdh 2,400.00 95,400.00 Maher Chebbo 93,400.00 87,600.00 Kim Ignatius 98,000.00 97,000.00 Katariina Kravi 97,200.00 78,000.00 Pia Kåll 83,000.00 78,800.00 Topi Manner 78,200.00 79,600.00 Eva-Lotta Sjöstedt 93,400.00 85,200.00 Seija Turunen 2,400.00 Anssi Vanjoki 148,000.00 138,000.00 Antti Vasara 82,200.00 82,000.00 775,800.00 824,000.00 Auditor’s reportParent company financial statements Consolidated financial statement 75Financial Statements 2023 For the year 2023, the following compensations were decided by the Annual General Meeting for the Members of the Board: remuneration fee for the Chair EUR 140,000, for Deputy Chair and the Chairs of the Committees EUR 86,000, and other Board members EUR 71,000; and additionally EUR 800 per meeting of the Board and of a committee. However, if a Board member lives permanently outside Finland and is physically present at a Board or committee meeting that is held in a country other than his/her permanent home country, the meeting fee is EUR 1,600. According to the decision of the Board on 5 April 2023, the annual remuneration was paid in Company shares on 25 April 2023. The outstanding remuneration amounts were paid net of tax, 60 per cent. 5. Depreciation, amortisation and impairment EUR million 2023 2022 Intangible assets 83.7 87.6 Property, plant and equipment 184.3 173.7 267.9 261.4 EUR 5.6 (0.0) million of impairment losses have been recorded for the assets. Specification of depreciation, amortisation and impairment by balance sheet items is included in note 10. 6. Audit fees EUR million 2023 2022 Auditing 0.2 0.2 Tax advisory services 0.0 0.0 Other services 0.1 0.0 0.3 0.2 7. Financial income and expenses EUR million 2023 2022 Interest income and other financial income Dividends received From Group companies 4.5 5.5 From associated companies 0.0 From others 0.4 0.4 4.9 5.9 Other interest and financial income From Group companies 1.0 0.4 Capital gains from investments 0.1 0.0 From others 4.9 1.7 5.9 2.1 10.8 8.0 Interest costs and other financial expenses To Group companies –8.6 –6.1 Impairment of investments in subsidiaries –0.1 –2.1 To others 1) –39.4 –13.3 –48.2 –21.5 –37.3 –13.5 1) Includes a EUR 16,2 million loss on divestment of Elisa Videra Oy. 8. Appropriations EUR million 2023 2022 Change in appropriations –3.9 –5.5 Group contributions received 10.4 8.1 Group contributions paid –5.7 –13.5 0.8 –10.9 9. Income taxes EUR million 2023 2022 Income taxes for the reporting period –80.8 –78.9 Taxes for previous periods 0.0 –80.8 –78.9 5. Poistot ja arvonalentumiset 6. Tilintarkastajan palkkiot 7. Rahoitustuotot ja -kulut 8. Tilinpäätössiirrot 9. Tuloverot Taseen liitetiedot Auditor’s reportParent company financial statements Consolidated financial statement 76Financial Statements 2023 10. Intangible assets and property, plant and equipment Intangible assets 2023 EUR million Development costs Intangible rights Goodwill Other intangible assets Intangible assets under construction Total Acquisition cost at 1 Jan. 74.0 163.2 886.3 603.3 18.8 1,745.6 Additions 8.3 1.8 35.3 9.9 55.4 Disposals –0.1 –0.1 Reclassifications 4.4 1.1 8.0 –13.9 –0.4 Acquisition cost at 31 Dec. 86.7 166.0 886.3 646.6 14.8 1,800.5 Accumulated amortisation and impairment at 1 Jan. 58.2 95.1 797.5 518.4 1,469.2 Accumulated amortisation on disposals and reclassifications –0.1 –0.1 Amortisation and impairment for the period 9.2 9.1 31.4 34.0 83.7 Accumulated amortisation and impairment at 31 Dec. 67.4 104.1 829.0 552.4 1,552.8 Book value at 31 Dec. 19.4 61.9 57.3 94.2 14.8 247.7 Property, plant and equipment 2023 EUR million Land and water areas Buildings and constructions Machinery and equipment Other assets Assets under construction Total Acquisition cost at 1 Jan. 9.4 243.8 4,114.8 35.1 31.3 4,434.3 Additions 0.2 12.7 188.1 29.4 230.4 Disposals 0.0 –1.0 –372.2 –373.3 Reclassifications 0.0 2.6 28.3 –24.9 6.1 Acquisition cost at 31 Dec. 9.5 258.1 3,958.9 35.1 35.8 4,297.5 Accumulated depreciation and impairment at 1 Jan. 151.2 3,554.3 34.6 3,740.0 Accumulated depreciation on disposals and reclassifications –1.0 –366.8 –367.8 Depreciation and impairment for the period 0.0 8.3 176.0 0.0 184.3 Accumulated depreciation and impairment at 31 Dec. 0.0 158.5 3,363.4 34.6 3,556.5 Book value at 31 Dec. 9.5 99.7 595.5 0.5 35.8 741.0 10. Aineettomat ja aineelliset hyödykkeet Auditor’s reportParent company financial statements Consolidated financial statement 77Financial Statements 2023 Intangible assets 2022 EUR million Development costs Intangible rights Goodwill Other intangible assets Intangible assets under construction Total Acquisition cost at 1 Jan. 59.6 157.2 886.3 569.7 13.3 1,686.1 Additions 7.4 5.5 27.9 12.3 53.1 Reclassifications 7.0 0.4 5.7 –6.8 6.4 Acquisition cost at 31 Dec. 74.0 163.2 886.3 603.3 18.8 1,745.6 Accumulated amortisation and impairment at 1 Jan. 50.5 86.5 758.6 485.9 1 381,5 Accumulated amortisation on disposals and reclassifications 0.0 0.0 0,0 Amortisation and impairment for the period 7.7 8.6 38.9 32.5 87,6 Accumulated amortisation and impairment at 31 Dec. 58.2 95.1 797.5 518.4 1,469.2 Book value at 31 Dec. 15.9 68.1 88.7 84.9 18.8 276.4 Property, plant and equipment 2022 EUR million Land and water areas Buildings and constructions Machinery and equipment Other assets Assets under construction Total Acquisition cost at 1 Jan. 10.0 227.7 3,943.8 35.1 31.8 4,248.4 Additions 0.0 15.6 155.3 21.4 192.3 Reclassifications –0.6 0.5 15.7 –21.9 –6.4 Acquisition cost at 31 Dec. 9.4 243.8 4,114.8 35.1 31.3 4,434.3 Accumulated depreciation and impairment at 1 Jan. 143.2 3,388.6 34.5 3,566.3 Accumulated depreciation on disposals and reclassifications 0.0 0.0 0.0 Depreciation and impairment for the period 8.0 165.7 0.0 173.7 Accumulated depreciation and impairment at 31 Dec. 151.2 3,554.3 34.6 3,740.0 Book value at 31 Dec. 9.4 92.6 560.5 0.6 31.3 694.3 Auditor’s reportParent company financial statements Consolidated financial statement 78Financial Statements 2023 11. Investments Investments in Receivables from 2023 EUR million Subsidiaries Associates Other companies Group companies Other companies Total Acquisition cost at 1 Jan. 842.2 6,3 23,3 1,5 873,3 Additions 1) 4.1 11,5 0,3 0,0 16,0 Disposals –0.2 –0,5 –0,6 Acquisition cost at 31 Dec. 846.2 17,8 23,1 1,5 888,6 Impairment at 1 Jan. –5.1 –0.1 –4.3 –9.6 Disposals 1) –27.4 –0.1 0.0 –27.5 Impairment at 31 Dec. –32.6 –0.2 -4.3 –37.1 Book value at 31 Dec. 813.6 17.6 18.7 1.5 851.5 1) The businesses of Elisa Corporation’s subsidiary Elisa Videra and the German company MVC Mobile Video Communication GmbH (owned by KLP Vermögensverwaltungs GmbH) was combined into MVC on 20 December 2023. After combination Elisa has 37.5% holding of MVC Mobile Video Communication GmbH and Elisa became a minority shareholder of the company. The transaction was conducted as a share swap and acquistion price for the shares was EUR 11.4 million. The loss on divestment has been recorded in financial items. A list of the Group and associated companies is available under note 8.3 of the consolidated financial statements. Investments in Receivables from 2022 EUR million Subsidiaries Associates Other companies Group companies Other companies Total Acquisition cost at 1 Jan. 837.7 6.2 22.9 1.6 0.1 868.5 Additions 4.5 0.0 0.3 4.9 Disposals 0.0 0.0 –0.1 –0.1 Acquisition cost at 31 Dec. 842.2 6.3 23.3 1.5 0.0 873.3 Impairment at 1 Jan. –3.3 –0.1 –4.1 –7.5 Disposals –1.8 –0.2 –2.1 Impairment at 31 Dec. –5.1 –0.1 –4.3 –9.6 Book value at 31 Dec. 837.1 6.2 18.9 1.5 0.0 863.7 11. Sijoitukset Auditor’s reportParent company financial statements Consolidated financial statement 79Financial Statements 2023 13. Non-current receivables EUR million 2023 2022 Receivables from Group companies Loan receivables 17.2 26.2 Receivables from associated companies Loan receivables 4.2 Receivables from others Trade receivables 74.5 84.9 Prepayments and accrued income (1 13.5 12.6 87.9 97.5 109.3 123.7 1) Breakdown of prepayments and accrued income Rent advances 8.8 8.7 Transaction costs and losses related to loan issuance 4.6 3.9 13.5 12.6 12. Vaihto-omaisuus 13. Pitkäaikaiset saamiset 12. Inventories EUR million 2023 2022 Materials and supplies 13.1 21.3 Finished goods 39.7 43.4 52.8 64.6 14. Current receivables EUR million 2023 2022 Receivables from Group companies Loan receivables 41.8 32.8 Trade receivables 3.7 3.3 Prepayments and accrued income 1.2 1.4 Other receivables 10.8 8.1 57.6 45.7 Receivables from associated companies Loan receivables 6.8 0.0 Trade receivables 0.2 0.1 6.9 0.1 Receivables from others Trade receivables 340.7 326.0 Loan receivables 0.0 Prepayments and accrued income (1 52.9 55.5 Other receivables 7.0 11.8 400.5 393.3 465.0 439.1 1) Breakdown of prepayments and accrued income Interests 0.2 0.2 Rent advances 1.4 1.4 Transaction costs and losses related to loan issuance 2.2 3.0 Income taxes 0.9 Other business expense advances paid 49.0 50.0 52.9 55.5 14. Lyhytaikaiset saamiset Auditor’s reportParent company financial statements Consolidated financial statement 80Financial Statements 2023 15. Oma pääoma 15. Equity EUR million 2023 2022 Share capital at 1 Jan. 83.0 83.0 Share capital at 31 Dec. 83.0 83.0 Treasury shares at 1 Jan. –124.4 –125.9 Disposal of treasury shares 2.8 1.6 Treasury shares at 31 Dec. –121.5 –124.4 Reserve for invested non-restricted equity at 1 Jan. 77.8 77.8 Reserve for invested non-restricted equity at 31 Dec. 77.8 77.8 Contingency reserve at 1 Jan. 3.4 3.4 Contingency reserve at 31 Dec. 3.4 3.4 Retained earnings at 1 Jan. 541.6 587.4 Dividend distribution –344.8 –328.5 Withdrawal of dividend liabilities 0.2 0.2 Disposal of treasury shares –2.8 –1.6 Retained earnings at 31 Dec. 194.1 257.5 Profit for the period 284.3 284.1 Total equity 521.2 581.5 Distributable earnings Retained earnings 194.1 257.5 Treasury shares –121.5 –124.4 Reserve for invested non-restricted equity 77.8 77.8 Development costs –23.9 –20.5 Profit for the period 284.3 284.1 410.8 474.6 16. Provisions EUR million 2023 2022 Provision for unemployment pensions 4.3 4.2 Other provisions (1 1.0 0.8 5.4 5.0 1) Other provisions consist of salaries, including related statutory employee costs for employees not required to work during their severance period, and a provision for other operating expenses. Provisions of EUR 1.3 (3.0) million were used and EUR 2.9 (1.1) million were reversed as unused in 2023. 17. Non-current liabilities EUR million 2023 2022 Interest-bearing Liabilities to others Bonds 900.0 900.0 Loans from financial institutions 100.0 100.0 1,000.0 1,000.0 Non-interest bearing Liabilities to others Trade payables 1.4 Accruals and deferred income (1 5.8 5.9 5.8 7.3 1,005.8 1,007.3 Liabilities maturing after five years Bonds 300.0 1) Breakdown of accruals and deferred income Rent advances 5.8 5.9 16. Pakolliset varaukset 17. Pitkäaikainen vieras pääoma Auditor’s reportParent company financial statements Consolidated financial statement 81Financial Statements 2023 18. Current liabilities EUR million 2023 2022 Interest-bearing Liabilities to Group companies Cash Pool account 283.8 232.8 283.8 232.8 Liabilities to others Loans from financial institutions 150.0 Bonds 248.0 Commercial paper 34.5 125.0 282.5 275.0 566.4 507.8 Non-interest bearing Liabilities to Group companies Trade payables 7.1 6.8 Other liabilities 5.8 13.7 12.9 20.5 Liabilities to associates Trade payables 0.4 0.0 0.4 0.0 Liabilities to others Advances received 4.7 5.2 Trade payables 163.4 173.3 Accrued liabilities (1 65.5 56.0 Other liabilities 72.3 75.0 305.9 309.4 319.2 329.9 885.6 837.7 1) Breakdown of accrued liabilities Salaries, wages and social security costs 48.8 48.2 Interests 8.2 5.5 Direct taxes 2.2 Rent advances 1.0 1.0 Income received in advance 4.8 0.9 Others 0.6 0.4 65.5 56.0 18. Lyhytaikainen vieras pääoma 19. Vuokrasopimukset ja muut vastuusitoumukset 19. Lease commitments and other liabilities Collateral EUR million 2023 2022 On behalf of own commitments Bank deposits 0.3 0.3 Guarantees 0.5 0.2 0.8 0.5 Lease commitments EUR million 2023 2022 Real estate leases (1 Within one year 29.8 28.7 Later than one year, but not later than five years 34.7 40.1 Later than five years 63.7 62.6 128.2 131.4 Other lease commitments (2 Within one year 4.9 3.4 Later than one year, but not later than five years 6.4 3.7 11.3 7.1 Total leases 139.5 138.6 Other commitments EUR million 2023 2022 Venture capital investment obligation 0.2 0.5 0.2 0.5 1) Real estate leases comprise rental contracts relating to business, office and telecom premises. 2) Lease liabilities consist mainly of car and IT equipment leases. Real estate leases are presented at nominal values. Rental liabilities are exclusive of value added tax, except for vehicle lease liabilities. Auditor’s reportParent company financial statements Consolidated financial statement 82Financial Statements 2023 Derivative instruments EUR million 2023 2022 Currency derivatives Nominal value 3.3 3.3 Fair value 0.1 0.0 Electricity derivatives Nominal value 3.5 5.8 Fair value 1.0 1.2 Elisa hedges electricity purchases through physical purchase agreements and derivatives. The electricity price risk is assessed over a five-year period. Electricity derivatives are subject to hedge accounting. The hedging rate for purchases during the coming years, % Sähköostojen suojausaste seuraavien vuosien hankinnoista, % 2023 2022 0–1 years 93.1 86.6 1–2 years 77.4 60.1 2–3 years 38.8 38.9 3–4 years 42.3 37.8 4–5 years 41.1 36.7 Real-estate investments On 31 December 2023, the VAT refund liability of real-estate investments was EUR 39.7 (36.1) million. Auditor’s reportParent company financial statements Consolidated financial statement 83Financial Statements 2023 Signatures to the board of directors’ report and financial statements Helsinki, 25 January 2024 Anssi Vanjoki Chairman of the Board of Directors Maher Chebbo Kim Ignatius Katariina Kravi Pia Kåll Eva-Lotta Sjöstedt Antti Vasara Veli-Matti Mattila President and CEO TOIMINTAKERTOMUKSEN JA TILINPÄÄTÖKSEN ALLEKIR- JOITUKSET Auditor’s reportParent company financial statements Consolidated financial statement 84Financial Statements 2023 To the Annual General Meeting of Elisa Corporation Report on the Audit of the Financial Statements Opinion We have audited the financial statements of Elisa Corporation (business identity code 0116510-6) for the year ended 31 December 2023. The financial statements comprise the consolidated balance sheet, income statement, statement of comprehensive income, statement of changes in equity, statement of cash flows and notes, including material accounting policy information, as well as the parent company’s balance sheet, income statement, statement of cash flows and notes. In our opinion • the consolidated financial statements give a true and fair view of the group’s financial position, financial performance and cash flows in accordance with IFRS Accounting Standards as adopted by the EU • the financial statements give a true and fair view of the parent company’s financial performance and financial position in accordance with the laws and regulations governing the preparation of financial statements in Finland and comply with statutory requirements. Our opinion is consistent with the additional report submitted to the Audit Committee. Basis for Opinion We conducted our audit in accordance with good auditing practice in Finland. Our responsibilities under good auditing practice are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the parent company and of the group companies in accordance with the ethical requirements that are applicable in Finland and are relevant to our audit, and we have fulfilled our other ethical responsibilities in accordance with these requirements. In our best knowlede and understanding, the non-audit services that we have provided to the parent company and group companies are in compliance with laws and regulations applicable in Finland regarding these services, and we have not provided any prohibited non-audit services referred to in Article 5(1) of regulation (EU) 537/2014. The non-audit services that we have provided have been disclosed in note 2.5 to the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Materiality The scope of our audit was influenced by our application of materiality. The materiality is determined based on our professional judgement and is used to determine the nature, timing and extent of our audit procedures and to evaluate the effect of identified misstatements on the financial statements as a whole. The level of materiality we set is based on our assessment of the magnitude of misstatements that, individually or in aggregate, could reasonably be expected to have influence on the economic decisions of the users of the financial statements. We have also taken into account misstatements and/or possible misstatements that in our opinion are material for qualitative reasons for the users of the financial statements. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. The significant risks of material misstatement referred to in the EU Regulation No 537/2014 point (c) of Article 10(2) are included in the description of key audit matters below. We have also addressed the risk of management override of internal controls. This includes consideration of whether there was evidence of management bias that represented a risk of material misstatement due to fraud. Auditor’s Report OSAKKEET JA OSAKKEENOMISTAJAT Auditor’s reportParent company financial statements Consolidated financial statement 85Financial Statements 2023 THE KEY AUDIT MATTER HOW THE MATTER WAS ADDRESSED IN THE AUDIT Valuation of goodwill, € 1 157.2 million (Consolidated accounting principles 1.2 and note 5.4) • The amount of goodwill in the consolidated statement of financial position is significant due to the acquisitions carried out in the previous years. The amount of goodwill equals approximately to the consolidated equity. • Goodwill is tested for impairment annually and the group prepares impairment tests for the financial statements or when needed on a discounted cash flow basis with sensitivity analyses. • Estimating future cash flows underlying the impairment tests involves a significant amount of management judgment, particularly in respect of growth in net sales, profitability and discount rates. • Due to management judgments about the estimates used in the impairment tests, as well as the significant carrying amount involved, impairment of goodwill is considered a key audit matter. • We assessed critically those management judgments and the assumptions made, which were used to prepare the cash flow projections for the coming years. In addition, we compared previous years’ estimates to the actual amounts to be able to evaluate the reliability of the estimating methods applied. • We used KPMG valuation specialists when considering the appropriateness of the discount rate used and the technical correctness of the calculations, as well as comparing the assumptions used to market and industry-specific information. • In addition, we assessed the adequacy of the sensitivity analyses and the appropriate presentation of the notes related to impairment tests in the consolidated financial statements. Revenue recognition, € 2 180.5 million (Consolidated accounting principles 1.2 and note 2.3) • Revenues are recognized once the service has been rendered to the customer or once the significant risks and rewards related to the ownership of the goods have been transferred to the buyer. • The IT system environment related to billing transactions is complex and the volume of billing data is large containing wide variety of different products. • Due to large volumes of data, revenue recognition involves the risk of revenue being recognized in an incorrect period as well as the risk that all transactions are not recorded as complete. • Revenue recognition accrual is partially based on estimates from the management’s past experience. • We evaluated the sales-related IT control environment and the key controls in the billing process over the completeness and accuracy of revenue. • The majority of the group’s billing data is processed in a single IT system. We evaluated the reliability of the associated IT control environment by assessing, among others, the processes related to the user authorization management and back-up and recoveries, as well as by testing the key application controls over the billing process. • We also evaluated the group’s internal control procedures over the control environment in the billing process, as well as assessed the group’s monthly revenue monitoring procedures at business unit level. • In addition to control testing, we performed substantive procedures to sales accruals to assess the completeness and the accuracy of the recognized revenues. Auditor’s reportParent company financial statements Consolidated financial statement 86Financial Statements 2023 Capital expenditures (Consolidated accounting principles 1.2 and note 5) • The group invests heavily especially in its own telecommunication network and IT environments as well as new technology to remain competitive. • The group’s capital expenditures (investments) amount to € 321.4 million in 2023, and therefore capital expenditures comprise a significant part of the consolidated statement of financial position. • We observed the group’s investment budget for the year 2023 and followed up developments quarterly. • We evaluated the group’s internal control environment. We also tested the controls over the approval of investment projects; over the authorization process when placing individual orders under an investment project; over the associated approval process when approving purchase invoices; and over recording transactions in the asset register (for property, plant and equipment and intangible assets). • Our substantive procedures focused on assessing the appropriateness of the accounting treatment in respect of the most significant investment projects. In addition, we tested whether the assets under construction met the capitalization requirements and assessed whether they were disclosed appropriately in the financial statements. Responsibilities of the Board of Directors and the Managing Director for the Financial Statements The Board of Directors and the Managing Director are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with IFRS Accounting Standards as adopted by the EU, and of financial statements that give a true and fair view in accordance with the laws and regulations governing the preparation of financial statements in Finland and comply with statutory requirements. The Board of Directors and the Managing Director are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Board of Directors and the Managing Director are responsible for assessing the parent company’s and the group’s ability to continue as going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting. The financial statements are prepared using the going concern basis of accounting unless there is an intention to liquidate the parent company or the group or cease operations, or there is no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of Financial Statements Our objectives are to obtain reasonable assurance on whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with good auditing practice will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. As part of an audit in accordance with good auditing practice, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the parent company’s or the group’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of the Board of Directors’ and the Managing Director’s use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the parent company’s or the group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report Auditor’s reportParent company financial statements Consolidated financial statement 87Financial Statements 2023 to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the parent company or the group to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events so that the financial statements give a true and fair view. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Other Reporting Requirements Information on our audit engagement We were first appointed as auditors by the Annual General Meeting on 31 March 2004, and our appointment represents a total period of uninterrupted engagement of 20 years. The current auditor in charge, Toni Aaltonen, Authorised Public Accountant, KHT, was elected on 6 April 2017. Other Information The Board of Directors and the Managing Director are responsible for the other information. The other information comprises the report of the Board of Directors and the information included in the Annual Report, but does not include the financial statements or our auditor’s report thereon. We have obtained the report of the Board of Directors prior to the date of this auditor’s report, and the Annual Report is expected to be made available to us after that date. Our opinion on the financial statements does not cover the other information. In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. With respect to the report of the Board of Directors, our responsibility also includes considering whether the report of the Board of Directors has been prepared in accordance with the applicable laws and regulations. In our opinion, the information in the report of the Board of Directors is consistent with the information in the financial statements and the report of the Board of Directors has been prepared in accordance with the applicable laws and regulations. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Helsinki, 25 January 2024 KPMG OY AB Toni Aaltonen Authorised Public Accountant, KHT Auditor’s reportParent company financial statements Consolidated financial statement 88Financial Statements 2023 Independent Auditor’s Reasonable Assurance Report on Elisa Corporation’s ESEF Financial Statements To the Board of Directors of Elisa Corporation We have undertaken a reasonable assurance engagement in respect of whether the consolidated financial statements for the year ended 31 December, 2023 included in the digital financial statements 743700TU2S3DXWGU7H32-2023-12-31-en.zip of Elisa Corporation (Business ID 0116510-6) have been marked up with iXBRL markups in accordance with the requirements of Article 4 of EU Delegated Regulation 2018/815 (ESEF RTS). The Responsibility of the Board of Directors and Managing Director The Board of Directors and Managing Director are responsible for preparing the report of the Board of Directors and financial statements (ESEF financial statements) that comply with the requirements of ESEF RTS. This responsibility includes: • preparation of ESEF financial statements in XHTML format in accordance with Article 3 of the ESEF RTS • marking up the primary statements and the notes to the consolidated financial statements, and the company identification data included in the ESEF financial statements with iXBRL tags in accordance with Article 4 of the ESEF RTS; and • ensuring consistency between ESEF financial statements and audited financial statements. The Board of Directors and the Managing Director are also responsible for such internal control as they deem necessary to prepare the ESEF financial statements in accordance with the requirements of the ESEF RTS. Auditor’s Independence and Quality Management We are independent of the company in accordance with the ethical requirements applicable in Finland, which apply to the engagement we have performed, and we have fulfilled our other ethical responsibilities in accordance with these requirements. The auditor applies International Standard on Quality Management ISQM 1, which requires the firm to design, implement and operate a system of quality management including policies or procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulations requirements. Auditor’s Responsibility In accordance with the Engagement Letter our responsibility is to express an opinion on whether the marking up of the consolidated financial statements included in the ESEF financial statements comply in all material respects with the Article 4 of the ESEF RTS. We conducted our reasonable assurance engagement in accordance with International Standard on Assurance Engagements 3000. The engagement involves procedures to obtain evidence whether; • the primary statements of the consolidated financial statements included in the ESEF financial statements are, in all material respects, marked up with iXBRL tags in accordance with Article 4 of the ESEF RTS, and; • whether the notes to the consolidated financial statements and the company identification data included in the ESEF financial statements data, have been marked up, in all material respects, with iXBRL tags in accordance with Article 4 of the ESEF RTS; and • whether the ESEF financial statements and the audited financial statements are consistent with each other. The nature, timing and the extent of procedures selected depend on practitioner’s judgement. This includes the assessment of the risks of material departures from the requirements set out in the ESEF RTS, whether due to fraud or error. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Opinion In our opinion, the primary statements of the consolidated financial statements, the notes to the consolidated financial statements and the company identification data included in the ESEF financial statements of Elisa Corporation identified as 743700TU2S3DXWGU7H32-2023-12-31-en.zip for the year ended 31 December, 2023 are, in all material respects, marked up in compliance with the ESEF Regulatory Technical Standard. Our audit opinion on the audit of the consolidated financial statements of Elisa Corporation for the year ended 31 December, 2023 is set out in our Auditor’s Report dated 25 January, 2024. In this report, we do not express any audit opinion or other assurance conclusion on the consolidated financial statements. Helsinki 12 March, 2024 KPMG OY AB Toni Aaltonen Authorised Public Accountant, KHT Auditor’s reportParent company financial statements Consolidated financial statement
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