Skipti hf. returns ISK 3.1 billion profit in 2007 ISK 6.7 billion turnaround from preceding year • Sales increased by ISK 7.7 billion between years, or 31% Sales were ISK 32.7 billion as compared to ISK 25,0 in the preceding year. • Profit for the year came to ISK 3.1 billion, as compared to a loss of ISK 3.6 billion in the preceding year • Earnings before depreciation and financial items (EBITDA) amounted to ISK 9.5 billion as compared to ISK 8.4 billion in 2006. EBITDA margin was 28.5%. • Since 2006 Skipti has acquired a number of companies outside Iceland, mainly in the UK and Scandinavia. In 2007, 20% of total sales came from operations outside Iceland. • Cash from operations, net of interest and taxes, amounted to ISK 9.0billion • Skipti's equity ratio is 34% Brynjólfur Bjarnason, CEO of Skipti: “I am very pleased with the Group's performance, whether we look at our business activities in telecommunications or information technology. The prospects for the present year are very good. Skipti is continuing its strategy of strengthening its business abroad, and we have already acquired companies with operations in the United Kingdom, Denmark, Norway and Sweden. In Iceland we have been doing very well, and our largest subsidiary, Síminn, is returning very good results; in addition, services to customers have been strengthened still further. Preparations for Skipti's market listing are progressing well, but as a result of negotiations relating to our potential acquisition of the Slovenian telecommunications company Telecom Slovenije, the process has been delayed somewhat, and listing is now scheduled for the end of March.” For further information on the consolidated accounts, please contact: Brynjólfur Bjarnason, CEO Tel. +354 550 6003 Pétur Þ. Óskarsson, VP Corporate Communications Tel. +354 863-6075 On the consolidated financial report Operation Sales in 2007 came to ISK 32,719 million, as compared to ISK 25,030 million in the preceding year, increasing by 31%. The significant increase is partly explained by income from the new companies in the Group, Aerofone, Sirius IT, Sensa, Ventelo and Business Phone. At the same time, sales of Síminn's services have increased in most categories. Earnings before financial items and taxes (EBIT) came to ISK 5,291 million, increasing by 15% between years. EBITDA for the Group came to ISK 9,493 million, as compared to 8,443 million in the preceding year. This corresponds to an increase of 1,050 million, or 12.4%. The EBITDA ratio is now 28.5%, against 33.4% a year ago. Skipti has invested in IT companies in recent months, and while this market generally yields a lower EBITDA ratio than telecommunications companies, the investments involved are lower in the IT sector. Depreciation amounted to ISK 4,202 million, as compared to ISK 3,837 million in 2006. Profit after tax for the Group stood at ISK 3,082 million, equivalent to 9.2% of earnings, as compared to a negative outcome of ISK 3,560 million in 2006. The turnaround can mainly be attributed to the trend in the exchange rate of the ISK, sale profit on the Fasteignafélagið Jörfi ehf. real estate company and efficient operation of the Group's companies. Cash Flow Cash provided by operations, net of interest and tax, came to ISK 9,014 million over the year, as compared to ISK 8,654 million in 2006. The Group's capital expenditures (CAPEX) amounted to ISK 3,490 million over the period, as compared to ISK 2,117 million in 2006. The increase is accounted for largely by investments in a third-generation mobile system, which Síminn has begun to develop. Balance Sheet The group's total assets as at 31 December 2007 came to ISK 97,641 million, having increased by ISK 8.7 billion, or 10%, over the year. Equity stood at ISK 32,757 million at year-end 2007, and the equity ratio was 34%. Highlights of operation in 2007 • At Síminn's AGM on 15 March a decision was approved to split Síminn into Skipti hf., Míla hf., which owns and operates the basic telecommunications network, Jörfi ehf., which operates real estate previously owned by Síminn, and Síminn hf. Skipti hf. became the parent company of the other companies. Skipti has now increased its holdings in Síminn and Míla to 99.99% of each respective company. Later in the year, Skipti accepted an offer from Exista Properties ehf. for the Jörfi ehf. real estate company. The profit from the sale amounted to ISK 1,396 million after taxes. The primary reason for the sale was that real-estate operations are not part of Skipti's core business activities, so it was decided to accept the offer while at the same time concluding a long-term lease agreement on the real estate housing the company's operations. • Three foreign telecommunications companies were acquired in the course of the year: the UK mobile telephone company Aerofone and the Danish companies Business Phone and Ventelo. The objective of the investments was tostrengthen still further Síminn's services to its corporate customers who are engaged in business overseas, in addition to implementing the company's strategy of external growth. • Síminn acquired all the shares in the IT company Sensa ehf. Síminn's strategy has been to increase specialised consultancy and introduce new communications solutions, and the acquisition of Sensa was part of this strategy. Sensa is the only company in Iceland that has earned certification as a Gold Certified Partner from Cisco Systems in recognition of its expertise in Cisco's IP network solutions. It was announced at the end of May that Anza would merge with Síminn as of 1 July. The aim of the merger was to achieve greater strength in services, consultancy and sales to customers in the corporate market. • Síminn sold nearly half of its shares in Tæknivörur ehf. during the year, retaining a share of 53.5%. • An operating company, Skjá miðlar ehf, was established in June to handle the operations of the Directory service Já and Skjárinn television station. • Síminn's 3G mobile network was opened to the market in the metropolitan area and the Leifur Eiríksson international Air Terminal at the beginning of September. In December the system was also opened to customers in Akureyri in Northern Iceland. • Preparations were begun to list Skipti hf. in the stock market with a view to listing the company before the end of the year. However, the listing was postponed as it was not regarded as feasible to list the company while it was engaged in the process of bidding for the Slovenian telecommunications company Telecom Slovenije. Market position and outlook Skipti's subsidiaries find themselves in a good market position, both as regards telecommunications and IT, in Iceland and abroad. There are plans to list Skipti hf. before the end of March and preparations are in the advanced stages. Development of a third generation (3G) mobile telephone system and the 3G services currently cover the metropolitan area of Reykjavík, Akureyri and the Leif Eiríksson International Air Terminal. Síminn has also begun experiments involving a new long-range 3G system. If the experiments are successful, there are plans to apply for authorisation from the Post and Telecom Administration to start the development of the long-range 3G system for rural areas. The main innovation in the 3G system is greater data transmission speed, as Síminn's 3G system will from the outset permit data downloads at speeds of up to 7.2 Mbit/s, one of the fastest rates currently available. It is an important part of Skipti´s strategy to continue growing internationally, especially in Northern-Europe where the group has already made a number of investments. Further growth, both organic and acquired, is to be expected. About Skipti hf. Skipti is a holding company engaged in the operation of enterprises in telecommunications and IT industry. The Group comprises Síminn, Míla, Já, Skjárinn, Sensa, Tæknivörur, On-Waves and Radiomiðun. Overseas subsidiaries are the telecommunications company Aerofone in the United Kingdom, BusinessPhone and Ventelo in Denmark and the information technology company Sirius IT, which has operations in Norway, Sweden and Denmark.