Financial position, capital resources and liquidity

Financial position

Financial position 
SEK in millions

2015

2014

Change
(SEK million)

Change
(%)

Goodwill and other intangible assets

67,933

86,161

-18,228

-21.2

Property, plant and equipment

55,093

69,669

-14,576

-20.9

Financial and other non-current assets

50,823

54,592

-3,769

-6.9

Total non-current assets

173,850

210,422

-36,572

-17.4

Current assets

29,708

32,909

-3,201

-9.7

Cash and cash equivalents

14,647

28,735

-14,088

-49.0

Assets held for sale

35,812

35,812

 

Total current assets

80,167

61,644

18,523

30.0

Total assets

254,017

272,066

-18,049

-6.6

Total equity

102,202

116,364

-14,162

-12.2

Borrowings

100,983

101,489

-506

-0.5

Provisions and other liabilities

39,234

54,213

-14,979

-27.6

Liabilities directly associated with assets held for sale

11,598

11,598

 

Total equity and liabilities

254,017

272,066

-18,049

-6.6

As of December 31, 2015, region Eurasia, formerly reported as a segment, is classified as held for sale. The region's assets and liabilities are therefore presented in two separate line items for 2915. The comparative year 2014 has not been restated.

The financial position remained stable year-on-year. Exchange rate changes contributed to volume decline in reported currency.

Goodwill in the continuing operations amounted to SEK 54.9 billion. The acquisition of Tele2’s operations in Norway added SEK 1.7 billion, while an impairment charge of SEK 1.9 billion related to Danish operations reduced goodwill. Exchange rate differences were negative. Other intangible assets totaled SEK 13.0 billion, impacted by investments of SEK 2.9 billion following the Tele2 acquisition in Norway, amortization of SEK 2.5 billion and negative currency effects.

Property, plant and equipment, totaling SEK 55.1 billion in the continuing operations, increased through CAPEX (capital expenditures) totaling SEK 12.3 billion and decreased due to depreciation and impairment losses amounting to SEK 8.3 billion. The effects from exchange rate differences were negative.

Financial and other non-current assets comprise investments in associated companies and joint ventures, deferred tax assets, pension obligation assets and other assets, mainly long-term interest-bearing receivables.

The carrying value of associated companies and joint ventures in the continuing operations was SEK 23.3 billion, of which the carrying values of Russian MegaFon and Turkish Turkcell were SEK 4.6 billion and SEK 17.7 billion, respectively. Share of net income in the associates and joint ventures amounting to SEK 3.4 billion added value, offset by dividends received from the companies, in total SEK 6.9 billion, and transactions with non-controlling interests within the Turkcell group of SEK 1.2 billion. Currency effects were negative at SEK 4.6 billion, almost entirely due to the depreciation of the the Turkish lira.

In the continuing operations, deferred tax assets decreased, mainly due to utilization of temporary differences concerning the Finnish operations. Deferred tax liabilities (included in Provisions) increased, largely as a result of negative changes in temporary differences related to pension obligations. All in all, the net deferred tax liability in the continuing operations was SEK 5.6 billion at year-end 2015.

Total long-term interest-bearing receivables increased to SEK 16.4 billion (14.3), mainly as a result of using surplus cash to invest in bonds and derivative instruments. At year-end 2014, other non-current and current assets included a receivable on AF Telecom, totaling SEK 4.9 billion, representing the two remaining installments of the deferred consideration for the 2012 sale of shares in the associated company OAO Telecominvest in Russia. In 2015, TeliaSonera received payments for both installments.

In the continuing operations, net working capital (inventories and non-interest-bearing receivables, less non-interest-bearing liabilities and excluding foreign exchange rate derivatives and accrued interest) ended at SEK -1.6 billion.

Total equity decreased 12.2 percent to SEK 102.2 billion (116.4). Total shareholders’ equity fell to SEK 97.9 billion (111.4), negatively impacted by dividends of SEK 13.0 billion and currency effects of SEK 11.5 billion. Net income of SEK 8.6 billion and remeasurement effects on pension obligations net amounting to SEK 3.4 billion had a positive impact. Total equity attributable to non-controlling interests decreased to SEK 4.3 billion (5.0). Net income added SEK 1.7 billion, while currency effects and dividends during the year affected negatively by SEK 1.4 billion and SEK 0.8 billion, respectively.

In 2015, rising yields on mortgage bonds, used as reference rates when discounting pension obligations, resulted in remeasurement effects reducing the present value of pension obligations in the continuing operations. At year-end 2014, assets in overfunded pension plans (reported in Financial assets) fell short of liabilities in the underfunded plans (included in Provisions), leading to a total net pension obligation liability of SEK 3.2 billion, while at year-end 2015, a total net pension obligation asset of SEK 1.9 billion was reported, of which liabilities in underfunded plans SEK 1.8 billion and assets in overfunded plans SEK 3.7 billion.

TOTAL NET DEBT AND TOTAL NET DEBT/TOTAL EBITDA*

Net-debt.ai

* Excluding non-recurring items

LIQUIDITY POSITION* AND TIME TO MATURITY OF THE DEBT PORTFOLIO

LIQUIDITY-POSITION.ai

* Liquidity position: Surplus liquidity plus available unutilized amounts under committed credit facilities. 2015 refers to the continuing operations; the other years to the whole group.

Total gross borrowings in the continuing operations decreased slightly, with a relative shift towards long-term borrowings amounting to SEK 91.6 billion. Short-term borrowings were SEK 9.3 billion. Cash and cash equivalents decreased to SEK 14.6 billion, impacted by a SEK 2.5 billion shift of the terms of short-term investments towards maturities over 3 months (reported in Current assets) and a SEK 4.1 billion increase in investments in securities convertible to cash within 2 days but with formal maturities over 12 months (included in Financial non-current assets).

Total net debt declined from SEK 59.3 billion to SEK 55.7 billion. The total equity/assets ratio, adjusted for the proposed dividend, decreased to 35.1 percent (38.0). The total net debt/EBITDA rate declined to 1.53 (1.68) and the total net debt/equity ratio increased to 62.5 percent (57.4).

See Consolidated statements of financial position, Consolidated statements of changes in equity and related notes to the consolidated financial statements for further details.

Assets and liabilities in discontinued operations

Region Eurasia, formerly reported as a segment, is classified as held for sale and discontinued operations as of December 31, 2015. Net assets amounted to SEK 24,214 million. In aggregate, assets classified as held for sale and liabilities directly associated with assets classified as held for sale in the discontinued operations were as follows.

Assets and liabilities, 
discontinued operations

SEK in millions

2015

Goodwill and other intangible assets

10,821

Property, plant and equipment

10,379

Other non-current and current assets

3,925

Cash and cash equivalents

10,687

Total assets

35,812

Borrowings

1,468

Provisions and other liabilities

10,131

Total liabilities

11,598

For additional information on assets held for sale and discontinued operations, see Note C34 to the consolidated financial statements.

DEBT PORTFOLIO MATURITY SCHEDULE – 2016 AND ONWARDS

Credit facilities

TeliaSonera believes that its bank credit facilities and openmarket financing programs are sufficient for the present liquidity requirements. In the continuing operations, TeliaSonera’s surplus liquidity (short-term investments, cash and bank, and certain securities with maturities exceeding 12 months but convertible to cash within 2 days) totaled SEK 28.7 billion at year-end. In addition, the total available unutilized amount under committed bank credit facilities as well as overdraft and short-term credit facilities at year-end was SEK 16.2 billion.

TeliaSonera AB retained its good credit ratings. In February 2016, Moody´s Investors Service confirmed its Prime-2 rating for short-term borrowings and announced that it had placed its A3 rating for long-term borrowings on review for downgrade. In March 2016, Standard & Poor’s Ratings Services confirmed its rating of A- for long-term borrowings and A-2 for short-term borrowings with a stable outlook.

TeliaSonera generally seeks to arrange its financing through the parent company TeliaSonera AB. The primary means of external borrowing are described in Notes C20 and C26 to the consolidated financial statements. In 2015, TeliaSonera AB issued some SEK 7.8 billion equivalent in the debt capital markets under its EMTN (Euro Medium Term Note) program. The new funding was denominated in EUR, JPY, SEK and NOK and issued on a long-term basis. At year-end, the average time to maturity of TeliaSonera AB’s overall debt portfolio was approximately 8.5 years.

At the end of 2015, TeliaSonera AB had no Commercial Papers outstanding.

Cash flow

Cash flow from operating activities increased to SEK 35.2 billion (29.3), largely due to the dividend from Turkcell of SEK 4.7 billion net of taxes. Increased cash inflow from underlying operations and lower net interest payments by SEK 1.0 billion contributed positively. Cash flow generation from changes in working capital was negative at SEK 0.9 billion (negative 0.1).

Cash CAPEX (cash used in capital expenditures) increased by SEK 2.5 billion, mainly driven by payments for fiber and 4G build-out. In total, free cash flow (cash flow from operating activities less cash CAPEX) increased to SEK 16.6 billion (13.0). In the continuing operations, free cash flow was SEK 12.5 billion (8.1).

Cash outflow from other investing activities, totaling SEK 10.3 billion (5.8), consists of acquisitions and disposals, changes in loans receivable and in short term investments, and repayments from or additional contributions to pension funds. Cash paid for acquisitions was SEK 6.2 billion (1.1), while cash received for divesting equity instruments and other assets was SEK 4.9 billion (2.2). In 2015, no compensation was paid from the Swedish pension fund (SEK 0.4 billion). Net cash used for granting loans was SEK 10.5 billion (5.0) and cash inflow from net changes in short-term investments SEK 1.6 billion (outflow 2.2).

Cash outflow from financing activities in 2015, totaling SEK 9.6 billion (10.3), included dividends paid to share-holders of the parent company of SEK 13.0 billion (13.0) and to non-controlling interests of SEK 0.8 billion (1.1). Cash paid for acquired non-controlling interests was SEK 0.4 billion (–). Net inflow from new and repaid borrowings amounted to SEK 4.1 billion (2.7). Settlement of hedging activities was positive at SEK 0.5 billion (1.2).

See Consolidated statements of cash flows and related notes to the consolidated financial statements for further details.

Cash flow

SEK in millions

2015

2014

Change
(SEK million)

Change
(%)

Cash flow from operating activities

35,249

29,252

5,997

20.5

Cash CAPEX

-18,699

-16,206

-2,493

15.4

Free cash flow

16,550

13,046

3,504

26.9

of which continuing operations

12,520

8,141

4,379

53.8

Cash flow from other investing activities

-10,285

-5,774

-4,511

78.1

Cash flow before financing activities

6,264

7,272

-1,008

-13.9

Cash flow from financing activities

-9,628

-10,269

641

-6.2

Cash and cash equivalents, opening balance

28,735

31,355

-2,620

-8.4

Net cash flow for the period

-3,363

-2,997

-366

12.2

of which continuing operations

-7,082

-6,847

-235

3.4

Exchange rate differences

-38

377

-415

 

Cash and cash equivalents, closing balance

25,334

28,735

-3,401

-11.8

of which continuing operations

14,647

21,627

-6,980

-32.3

© TeliaSonera 2015
In the event of any differences between this online version of the Annual and sustainability report and the printed version, the printed version shall prevail.