Q2 2018 Results Orri Hauksson og Óskar Hauksson 29 August 2018
HIGHLIGHTS FINANCE Highlights in Q2 2018 EBITDA 2.216 m.kr. EBITDA ratio 31,0% Cash 183 m.kr. Net debt / EBITDA* 2,02 CAPEX 1.106 m.kr. Equity ratio 60,8% *EBITDA trailing twelve months EBITDA amount and margin increases Margin from roaming services decreases due to effects of RLH Net profit increases between periods The co-operation with GR will reduce unit prices Dividend and share buyback amounted to ISK 1.553 m.kr. in Q2 Share buyback completed
Q2 2018 - Results
Income statement Q2 2018 Q2 2018 Q2 2017 Change Change in % Net sales 6.921 7.145 ( 224) -3,1% Cost of sales ( 3.610) ( 3.687) 77-2,1% Gross profit 3.311 3.458 ( 147) -4,3% Gross profit ratio 47,8% 48,4% Other operating income 232 109 123 112,8% Operating expenses ( 2.280) ( 2.289) 9-0,4% Operating profit 1.263 1.278 ( 15) -1,2% Operating profit/net sales 18,2% 17,9% Finance income 52 134 ( 82) -61,2% Finance cost ( 240) ( 390) 150-38,5% Net exchange rate differences ( 2) ( 2) 0 0,0% Net financial items ( 190) ( 258) 68-26,4% Income tax ( 220) ( 230) 10-4,3% Net profit 853 790 63 8,0% Depreciation and amortisation ( 953) ( 913) ( 40) 4,4% EBITDA 2.216 2.191 25 1,1% EBITDA ratio 31,0% 30,2% EBIT 1.263 1.278 ( 15) -1,2% EBIT ratio 17,7% 17,6%
Revenue by segments Q2 2018 Q2 2018 Q2 2017 Change Change % Mobile 1.497 1.622 ( 125) -7,7% Fixed voice 463 514 ( 51) -9,9% Internet & network 2.364 2.113 251 11,9% TV 1.142 1.019 123 12,1% IT services * 880 1.289 ( 409) -31,7% Equipment sales 549 432 117 27,1% Other revenue 258 265 ( 7) -2,6% Total revenue 7.153 7.254 ( 101) -1,4% Adjusted for disc. operations * 7.153 7.174 ( 21) -0,3% *Sensa DK Aps was sold in end of 2017
Cash flow Q2 2018 Cash flow from operating activities Operating profit... Operational items not affecting cash flow: Depreciation and amortisation... Other items not affecting cash flow... Q2 2018 Q2 2017 1.263 1.278 953 913 ( 98) 12 2.118 2.203 Cash generated by operation Changes in current assets and liabilitites... 0 ( 217) Cash generated by operation 2.118 1.986 Net interest expenses paid during the period... ( 193) ( 115) Payments of taxes during the period... ( 157) ( 7) Net cash from operating activities 1.768 1.864 Investing activities Net investment in property, plant and equipments... ( 1.106) ( 1.417) Other investment... ( 26) 14 Investing activities ( 1.132) ( 1.403) 2.118 1.986 1.638 Q2 2018 Q2 2017 Q2 2016 Net cash from operating activities Financing activities Dividend paid... ( 311) ( 275) Buyback of ordinary shares... ( 1.242) ( 321) Payments of non-current liabilities... ( 288) ( 230) Bank loans, increase... 575 0 Financing activities ( 1.266) ( 826) Decrease in cash and cash equivalents... Translation effects on cash... Cash and cash equivalents at the beginning of the period... Cash and cash equivalents at the end of the period... ( 630) ( 365) 8 ( 4) 805 4.265 183 3.896 1.768 1.864 1.492 Q2 2018 Q2 2017 Q2 2016
1H 2018 - Results
Income statement 1H 2018 1H 2018 1H 2017 Change Change in % Net sales 13.677 13.747 ( 70) -0,5% Cost of sales ( 6.912) ( 6.933) 21-0,3% Gross profit 6.765 6.814 ( 49) -0,7% Gross profit ratio 49,5% 49,6% Other operating income 350 230 120 52,2% Operating expenses ( 4.555) ( 4.579) 24-0,5% Operating profit 2.560 2.465 95 3,9% Operating profit/net sales 18,7% 17,9% Finance income 104 269 ( 165) -61,3% Finance cost ( 481) ( 742) 261-35,2% Net exchange rate differences 5 8 ( 3) -37,5% Net financial items ( 372) ( 465) 93-20,0% Income tax ( 448) ( 436) ( 12) 2,8% Net profit 1.740 1.564 176 11,3% Depreciation and amortisation ( 1.887) ( 1.825) ( 62) 3,4% EBITDA 4.447 4.290 157 3,7% EBITDA ratio 31,7% 30,7% EBIT 2.560 2.465 95 3,9% EBIT ratio 18,3% 17,6%
Revenue by segments 1H 2018 1H 2018 1H 2017 Change Change % Mobile 3.038 3.204 ( 166) -5,2% Fixed voice 961 1.060 ( 99) -9,3% Internet & network 4.624 4.185 439 10,5% TV 2.309 2.025 284 14,0% IT services * 1.582 2.189 ( 607) -27,7% Equipment sales 976 803 173 21,5% Other revenue 537 511 26 5,1% Total revenue 14.027 13.977 50 0,4% Adjusted for disc. operations * 14.027 13.806 221 1,6% *Sensa DK Aps was sold in end of 2017
Balance sheet 30.6.2018 31.12.2017 Assets Non-current assets Property, plant and equipment... 17.490 17.024 Goodwill... 31.487 31.435 Intangible assets... 3.267 3.226 Other non-current assets... 732 658 Non-current assets 52.976 52.343 Current assets Inventories... 1.855 2.345 Accounts receivables... 4.249 4.470 Other current assets... 779 736 Cash and cash equivalents... 183 718 Current assets 7.066 8.269 Equity and liabilities Equity Total equity... Total assets 60.042 60.612 36.480 36.281 Non-current liabilities Borrowings... 16.205 16.781 Deferred tax liabilities... 809 817 Non-current liabilities 17.014 17.598 Current liabilities Bank loans... 575 500 Accounts payables... 2.470 2.950 Current maturities of borrowings... 1.150 1.150 Other current liabilities... 2.353 2.133 Current liabilities 6.548 6.733 Total equity and liabilities 60.042 60.612
Cash flow 1H 2018 Cash flow from operating activities Operating profit... Operational items not affecting cash flow: Depreciation and amortisation... Other items not affecting cash flow... 1H 2018 1H 2017 2.560 2.465 1.887 1.825 ( 92) 21 4.355 4.311 Cash generated by operation Changes in current assets and liabilitites... 153 102 Cash generated by operation 4.508 4.413 Net interest expenses paid during the period... ( 384) ( 437) Payments of taxes during the period... ( 313) ( 16) Net cash from operating activities 3.811 3.960 Investing activities Net investment in property, plant and equipments... ( 2.288) ( 2.464) Other investment... 2 21 Investing activities ( 2.286) ( 2.443) 4.508 4.413 2.971 1H 2018 1H 2017 1H 2016 Net cash from operating activities Financing activities Dividend paid... ( 311) ( 275) Buyback of ordinary shares... ( 1.242) ( 321) Payments of non-current liabilities... ( 575) ( 688) Bank loans, increase... 75 0 Financing activities ( 2.053) ( 1.284) (Decrease) increase in cash and cash equivalents... ( 528) 233 Translation effects on cash... ( 7) ( 4) Cash and cash equivalents at the beginning of the period... 718 3.667 3.811 3.960 2.388 Cash and cash equivalents at the end of the period... 183 3.896 1H 2018 1H 2017 1H 2016
CAPEX development 19,5% 13,7% 15,5% 1.024 1.417 1.106 Q2 2016 Q2 2017 Q2 2018 CAPEX CAPEX / Revenue
Operations in 1H 2018 Profit and EBITDA Increase Between Periods Revenue from sale of services were growing in the first half of year but equipment sales decline Sale of IT equipment was the reason for the decline whereas sale of telecom equipment grew Ongoing cost reduction results in lower cost YoY The effects of RLH had impact on performance in Q2 Revenue similar to Q2 2017 but expenses were higher due to sharp increase in data usage Focus is on improving margins from the service with e.g. review of roaming contracts Wholesale revenue with a slight decrease since H1 2017. The decline will increase in H2 Healthy increase in Data and TV services revenue The mobile product Þrenna is showing significant growth - Over 15.000 subscribers Míla with a stronger EBITDA performance in H1 compared to last year Refinancing in 2017 results in lower interest expenses
Operations in 1H 2018 Highlights from H1 The fiber rollout project at Míla is progressing well The co-operation with GR will reduce unit prices Over 20% of Síminn s internet subscribers connect with fiber New businesses are progressing Heimilispakki (Home package) and 10x well received Síminn TV now available to everyone Síminn Pay New products will be launched during the fall Digitalization at Síminn Improving customer experience The results are showing with e.g. fewer calls to service centers The aim is significant cost reduction
Guidance for 2018 Unchanged guidance EBITDA 2018 EBITDA 8.4 8.8 b.isk. CAPEX 2018 CAPEX 4.3 4.6 b.isk.
Highlights
1.500 homes added to Míla s fiber network in Reykjanesbær and Selfoss
. Hybrid IT platform Outlook positive for H2
Ordinary People
LOGI BERGMANN
Appendix
Business segments Mobile: Revenue from mobile services in Iceland and abroad, whether traditional GSM service, satellite service, wholesale mobile service or other mobile service. Fixed voice: Revenue from fixed voice service (fees and traffic) both retail and wholesale. Internet & network: Revenue from data service both wholesale and retail, incl. xdsl service, GPON, Internet, IP net, core network, local loop and access network. TV: Revenue from TV broadcast and distribution and Síminn TV (fees, traffic and advertisement). IT services: Revenue from hosting and operations, advisor fees and sold service and IT related hardware sales. Equipment sales: Revenue from sale of telco equipment. Other revenue: Revenue from i.e. sold telco service and hosting.
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