Financial position
- During the first half of 2010, non-current assets increased by NOK 15.7 billion, primarily due to an increase in the carrying amounts of associated companies mainly resulting from the contribution of Kyivstar to VimpelCom Ltd. The increase in carrying amounts resulted from the step-up to fair value on the shares received in consideration for Kyivstar.
- Net interest-bearing liabilities decreased by NOK 0.8 billion to NOK 25.5 billion, as a result of a NOK 3.1 billion increase in cash and cash equivalents. The increase was largely attributable to strong operating cash flow, partly offset by new debt in Uninor of NOK 2.2 billion.
- As of 30 June 2010, the Norwegian Krone had depreciated against most of the functional currencies of Telenor’s foreign subsidiaries and associated companies when compared to 31 December 2009. Total equity increased by NOK 13.9 billion to NOK 99.0 billion. The increase is due to strong earnings and positive translation effects contributing to a total comprehensive income of NOK 18.9 billion for the period, partly offset by total dividends declared of NOK 5.3 billion to equity holders of Telenor ASA and non-controlling interests in subsidiaries.
Cash flow
- The net cash inflow from operating activities in the first half of 2010 was NOK 13.8 billion, a decrease of NOK 4.2 billion. Income taxes paid amounted to NOK 3.2 billion, an increase of NOK 1.8 billion due to the jointly taxed Norwegian entities being in a tax paying position from the end of 2009. Dividends received decreased by NOK 3.2 billion, related to high dividend payments from Kyivstar in 2009. The positive change in working capital of NOK 3.2 billion was mainly related to revenue share accruals in DTAC and strong cash inflow resulting from a high level of receivables in the fourth quarter of 2009 and prepayments in the second quarter of 2010.
- The net cash outflow from investing activities in the first half of 2010 was NOK 8.6 billion, of which NOK 7.1 billion was related to intangible assets and property, plant and equipment. Paid capex was higher than reported capex, related to the network roll-out in Uninor as well as high capex payables in Pakistan at year-end 2009. The acquisition of C More Group AB amounted to gross cash outflow of NOK 1.1 billion.
- The net cash outflow from financing activities in the first half of 2010 was NOK 3.3 billion. This was mainly attributable to payment of dividends to equity holders of Telenor ASA and non-controlling interests in subsidiaries, partly offset by net proceeds relating to interest-bearing liabilities.
- Cash and cash equivalents increased by NOK 3.1 billion to NOK 14.6 billion as of 30 June 2010.
Transactions with related parties
For detailed information on related party transactions refer to Note 34 in Telenor’s Annual Report 2009. In addition to transactions described in the Annual Report the following new significant related party transactions occurred in 2010:
- On 13 January 2010, the extraordinary general meeting of shareholders of Kyivstar approved additional dividends of UAH 0.8 billion (approximately NOK 0.5 billion) for the fiscal year of 2008, of which Telenor has received its appropriate share of approximately NOK 230 million. The dividend distributed is a proportion of total net profit of UAH 5.1 billion for the fi scal year of 2008.
- On 21 April 2010, VimpelCom Ltd. successfully completed the Exchange Offer for OJSC VimpelCom shares and American Depository Shares. As part of the transaction, Telenor’s shares in Kyivstar was transferred to VimpelCom Ltd. and a gain of approximately NOK 6.5 billion has been recognized in the second quarter of 2010.
- On 11 May 2010, at the same time as Telenor Media & Content Services AS acquired 35% of the shares in C More Entertainment commented on in note 4, Telenor received a payment of approximately NOK 0.5 billion related to a sublicense agreement with C More Entertainment of certain Danish sports rights entered into in 2009.
- On 28 June 2010, Telenor signed a 3-year agreement with TV 2 for distribution of Premier League matches from the 2010/2011 season until the 2012/2013 season to Canal Digital’s cable and satellite subscribers.
- Outlook for 2010 Based on the current group structure including Uninor and currency rates as of 30 June 2010 Telenor expects:
- Organic revenue growth of 3–5%.
- An EBITDA margin before other income and expenses of around 28%.
- Capital expenditure as a proportion of revenues, excluding licences and spectrum, of 12–13%.
- Telenor expects that Uninor will contribute with an EBITDA loss in the range of NOK 4.5–5 billion and capital expenditure in the range of NOK 2.0–2.5 billion.
Risks and uncertainties
The existing risks and uncertainties described below are expected to remain for the next six months. A growing share of Telenor’s revenues and profits is derived from operations outside Norway. Currency fluctuations may influence the reported figures in Norwegian Kroner to an increasing extent. Political risk, including regulatory conditions, may also influence the profits.
For additional explanations regarding risks and uncertainties, please refer to the Report of the Board of Directors for 2009, section Risk Factors and Risk Management, and Telenor’s Annual Report 2009 Note 30 Financial Instruments and Risk Management and Note 35 Commitments and Contingencies. Readers are also referred to the disclaimer at the end of this section.
Disclaimer
This report contains statements regarding the future in connection with Telenor’s growth initiatives, profi t fi gures, outlook, strategies and objectives. In particular, the section ‘Outlook for 2010’ contains forward looking statements regarding the Group’s expectations. All statements regarding the future are subject to inherent risks and uncertainties, and many factors can lead to actual profits and developments deviating substantially from what has been expressed or implied in such statements.
Cash Flow Statement
Changes in Equity
Income Statement
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