Financial highlights Q1 2019

  • Q1 2018 interim statement has been restated according to changes made to treatment of TV rights.
  • Síminn‘s revenue amounted to ISK 6,962 million in the first quarter (Q1) of 2019, compared to ISK 6,874 million in the same period 2018. An increase by ISK 88 million or 1.3%.
  • EBITDA amounted to ISK 2,369 million in Q1 2019, compared to ISK 2,404 million in the same period of 2018, down by ISK 35 million or 1.5%. The EBITDA ratio was 34.0% in Q1 2019, compared to 35.0% in the same period of 2018. Considering changes due to IFRS 16, EBITDA at Q1 2018 amounted to ISK 2,604 million and EBITDA ratio was 37.9%.
  • Profit in Q1 2019 amounted to ISK 615 million, compared to ISK 887 million in the same period of 2018.
  • Cash generated by operation amounted to ISK 2,062 million in Q1 2019, compared to ISK 2,390 million in the same period of 2018. Net cash from operating activities amounted to ISK 1,711 million in Q1 2019, compared to ISK 2,043 million in the same period 2018.
  • Interest bearing debt amounted to ISK 16.5 billion at the end of Q1 of 2019, compared to ISK 17.2 billion at the end of 2018. Net interest-bearing debt amounted to 15.5 billion ISK at the end of Q1 2019 compared to 16.0 at the end of 2018.
  • Net financial expenses amounted to ISK 313 million in Q1 2019, compared to ISK 182 million in the same period of 2018. Financial expenses amounted to ISK 356 million, financial income ISK 50 million, and foreign exchange loss ISK 7 million.
  • Síminn's equity ratio was 55.4% at the end of Q1 2019 and equity was 35.8 billion.

Orri Hauksson, CEO:

“The Group's operations are based on a solid foundation in the first quarter of 2019, as in recent quarters. Revenues have increased between years, and important revenue streams such as television services will grow even stronger during the year.

Several events set their mark in the first months of the year. EBITDA increases in accounting terms between years but decreases this quarter YoY when the same accounting policies are used for the previous year's figures. Profit also contracted in the first quarter. We charged a precautionary charge of ISK 100 million during the quarter, including penalty interest, due to the judgment of the District Court of Reykjavík on matters that took place in Snæfellsnes over a decade ago. We have appealed the amount which we believe should be significantly lower. Employment termination costs increase between years, as employees of Síminn hf. decreased by 30 in the quarter. The closure of our store in Kringlan mall last month was the biggest single change, but in addition, automation and increased stability of our systems continue to reduce the need for humans monitoring and servicing around the clock. Our wholesale and roaming business is just over ISK 200 million lower year-on-year in Q1, but this difference will be negligible as the year progresses.

The large wage agreement negotiations in the labor market ended with a rather realistic conclusion, which is of great importance to the Group, as wage costs are by far our single cost item. We have still not finalized agreements with large labor groups operating within our ranks, but we expect to finalize those agreements in line with the larger labor market agreements. As is known, the interruption of WOW Air's operations has a negative impact on the economy and hence on the Group's operations, but the airline was in business with Síminn. In the context of other changes in operations, however, the impact is limited and does not affect our forecast for the year.

Sensa had a strong quarter and increased its revenues year-on-year, but Sensa's revenues tend to fluctuate more between quarters than the Groups other business lines. Míla had a stable and good quarter as is often the case. Investments will continue to be high this year, mainly in fiber-optic cables. The FTTH project has been implemented for years now and has entered its latter part, as Míla´s fiber reaches more than half of Iceland's households. In addition, as is customary with telecom companies, we continue to update our systems, such as our mobile and information systems. What is more, for the first time, a large part of our acquired TV programing is accounted for as an investment, which is written off with use over time. Previously, this item was expensed from inventory, which is why this new accounting method shows higher investment between years.

The telecom market in Iceland continues to be competitive. Competition within the corporate market has been especially lively, which has driven the price of mobile phone services down in recent years. Such reductions continued last year as can be seen in our Q1 figures this year. In the retail market, certain products have been reduced in price, such as the Internet last fall. In addition, efforts have been made to improve our services, e.g. TV services and data packages, which have in certain instances included price increases in parallel with these changes. Our mobile customer base increased by 10.500 between years, largely due to the popularity of a product called Þrennan. The number of our home package product (Heimilispakki) increased by more than 5.400 and the TV service is enjoying great success. We will further strengthen this income stream as of the third quarter, when the English Premier League starts at Síminn. Slowly but surely describes our year best. “

Further information

Orri Hauksson, CEO, tel. 354 550 6003 (orri@siminn.is)

Óskar Hauksson, CFO, tel. 354 550 6003 (oskarh@siminn.is)


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