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Síminn Investor Presentation 2018
2203_rns_2018-10-30_49dfd24b-ca4a-4494-bfb2-f7bbb83e9d63.pdf
Investor Presentation
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Q3 2018 Results
Orri Hauksson og Óskar Hauksson
31 October 2018
Highlights in Q3 2018
EBI
FINANCE
EBITDA
2.397 m.kr.
EBITDA ratio
34,4%
Cash
570 m.kr.
Net debt / EBITDA*
1,88
CAPEX
1.192 m.kr.
Equity ratio
62,1%
*EBITDA trailing twelve months
HIGHLIGHTS
- Increase in revenue, EBITDA and net profit
- Increased number of customers and good sales performance
- Good quarter in IT and positive outlook
- Síminn is well positioned to deal with the effects of the weaker ISK and expected wage increases related to new labor agreements in 2019
Q3 2018 - Results
Income statement Q3 2018
| Q3 2018 | Q3 2017 | Change | Change in % | |
|---|---|---|---|---|
| Net sales | 6.828 | 6.856 | (28) | -0,4% |
| Cost of sales | (3.371) | (3.380) | 9 | -0,3% |
| Gross profit | 3.457 | 3.476 | (19) | -0,5% |
| Gross profit ratio | 50,6% | 50,7% | ||
| Other operating income | 141 | 100 | 41 | 41,0% |
| Operating expenses | (2.156) | (2.113) | (43) | 2,0% |
| Operating profit | 1.442 | 1.463 | (21) | -1,4% |
| Operating profit/Net sales | 21,1% | 21,3% | ||
| Finance income | 49 | 74 | (25) | -33,8% |
| Finance cost | (246) | (393) | 147 | -37,4% |
| Net exchange rate differences | (14) | 4 | (18) | -450,0% |
| Net financial items | (211) | (315) | 104 | -33,0% |
| Income tax | (253) | (243) | (10) | 4,1% |
| Net profit | 978 | 905 | 73 | 8,1% |
| Depreciation | (955) | (924) | (31) | 3,4% |
| EBITDA | 2.397 | 2.387 | 10 | 0,4% |
| EBITDA ratio | 34,4% | 34,3% | ||
| EBIT | 1.442 | 1.463 | (21) | -1,4% |
| EBIT ratio | 20,7% | 21,0% |
Revenue by segments Q3 2018
| Q3 2018 | Q3 2017 | Change | Change % | |
|---|---|---|---|---|
| Mobile | 1.605 | 1.822 | (217) | -11,9% |
| Fixed voice | 466 | 504 | (38) | -7,5% |
| Internet & network | 2.153 | 2.188 | (35) | -1,6% |
| TV | 1.190 | 1.005 | 185 | 18,4% |
| IT services | 861 | 775 | 86 | 11,1% |
| Equipment sales | 456 | 441 | 15 | 3,4% |
| Other revenue | 238 | 221 | 17 | 7,7% |
| Total revenue | 6.969 | 6.956 | 13 | 0,2% |
| Adjusted for disc. operations * | 6.969 | 6.918 | 51 | 0,7% |
*Sensa DK Aps was sold in end of 2017
Cash flow Q3 2018
| Q3 2018 | Q3 2017 | |
|---|---|---|
| Cash flow from operating activities | ||
| Operating profit | 1.442 | 1.463 |
| Operational items not affecting cash flow: | ||
| Depreciation | 955 | 924 |
| Other items not affecting cash flow | 5 | 15 |
| 2.402 | 2.402 | |
| Changes in current assets and liabilities | 113 | 216 |
| Cash generated by operation | 2.515 | 2.618 |
| Net interest expenses paid during the period | (197) | (434) |
| Payments of taxes during the period | (52) | (6) |
| Net cash from operating activities | 2.266 | 2.178 |
| Investing activities | ||
| Net investment in property, plant and equipments | (1.192) | (1.355) |
| Other investment | 0 | 72 |
| Investing activities | (1.192) | (1.283) |
| Financing activities | ||
| Buyback of ordinary shares | 0 | (528) |
| Proceeds from the exercise of share options | 174 | 179 |
| New borrowings | 0 | 18.400 |
| Payments of non-current liabilities | (287) | (22.510) |
| Bank loans, increase (decrease) | (575) | 0 |
| Financing activities | (688) | (4.459) |
| Increase (decrease) in cash and cash equivalents | 386 | (3.564) |
| Translation effects on cash | 1 | 1 |
| Cash and cash equivalents (beginning-of-period) | 183 | 3.896 |
| Cash and cash equivalents (end-of-period) | 570 | 333 |
Cash generated by operation
Net cash from operating activities
9M 2018 - Results
Income statement 9M 2018
| 9M 2018 | 9M 2017 | Change | Change in % | |
|---|---|---|---|---|
| Net sales | 20.505 | 20.603 | ( 98) | -0,5% |
| Cost of sales | ( 10.283) | ( 10.313) | 30 | -0,3% |
| Gross profit | 10.222 | 10.290 | ( 68) | -0,7% |
| Gross profit ratio | 49,9% | 49,9% | ||
| Other operating income | 491 | 330 | 161 | 48,8% |
| Operating expenses | ( 6.711) | ( 6.692) | ( 19) | 0,3% |
| Operating profit | 4.002 | 3.928 | 74 | 1,9% |
| Operating profit/Net sales | 19,5% | 19,1% | ||
| Finance income | 153 | 343 | ( 190) | -55,4% |
| Finance cost | ( 727) | ( 1.135) | 408 | -35,9% |
| Net exchange rate differences | ( 9) | 12 | ( 21) | -175,0% |
| Net financial items | ( 583) | ( 780) | 197 | -25,3% |
| Income tax | ( 701) | ( 679) | ( 22) | 3,2% |
| Net profit | 2.718 | 2.469 | 249 | 10,1% |
| Depreciation | ( 2.842) | ( 2.749) | ( 93) | 3,4% |
| EBITDA | 6.844 | 6.677 | 167 | 2,5% |
| EBITDA ratio | 32,6% | 31,9% | ||
| EBIT | 4.002 | 3.928 | 74 | 1,9% |
| EBIT ratio | 19,1% | 18,8% |
Revenue by segments 9M 2018
| 9M 2018 | 9M 2017 | Change | Change % | |
|---|---|---|---|---|
| Mobile | 4.643 | 5.026 | (383) | -7,6% |
| Fixed voice | 1.427 | 1.564 | (137) | -8,8% |
| Internet & network | 6.777 | 6.373 | 404 | 6,3% |
| TV | 3.499 | 3.030 | 469 | 15,5% |
| IT services | 2.443 | 2.964 | (521) | -17,6% |
| Equipment sales | 1.432 | 1.244 | 188 | 15,1% |
| Other revenue | 775 | 732 | 43 | 5,9% |
| Total revenue | 20.996 | 20.933 | 63 | 0,3% |
| Adjusted for disc. operations * | 20.996 | 20.724 | 272 | 1,3% |
*Sensa DK Aps was sold in end of 2017
Balance sheet
| 30.9.2018 | 31.12.2017 | |
|---|---|---|
| Assets | ||
| Non-current assets | ||
| Property, plant and equipment | 17.774 | 17.024 |
| Goodwill | 31.487 | 31.435 |
| Intangible assets | 3.219 | 3.226 |
| Other non-current assets | 656 | 658 |
| Non-current assets | 53.136 | 52.343 |
| Current assets | ||
| Inventories | 1.857 | 2.345 |
| Accounts receivables | 4.203 | 4.470 |
| Other current assets | 803 | 736 |
| Cash and cash equivalents | 570 | 718 |
| Current assets | 7.433 | 8.269 |
| Total assets | 60.569 | 60.612 |
| Equity and liabilities | ||
| Equity | ||
| Total equity | 37.638 | 36.281 |
| Non-current liabilities | ||
| Borrowings | 15.918 | 16.781 |
| Deferred tax liabilities | 829 | 817 |
| Non-current liabilities | 16.747 | 17.598 |
| Current liabilities | ||
| Bank loans | 0 | 500 |
| Accounts payables | 2.093 | 2.950 |
| Current maturities of borrowings | 1.150 | 1.150 |
| Other current liabilities | 2.941 | 2.133 |
| Current liabilities | 6.184 | 6.733 |
| Total equity and liabilities | 60.569 | 60.612 |
Equity ratio
Net interest bearing debt
Equity ratio
Net debt to EBITDA
Cash flow 9M 2018
| 9M 2018 | 9M 2017 | |
|---|---|---|
| Cash flow from operating activities | ||
| Operating profit | 4.002 | 3.928 |
| Operational items not affecting cash flow: | ||
| Depreciation | 2.842 | 2.749 |
| Other items not affecting cash flow | (87) | 36 |
| 6.757 | 6.713 | |
| Changes in current assets and liabilities | 266 | 318 |
| Cash generated by operation | 7.023 | 7.031 |
| Net interest expenses paid during the period | (581) | (871) |
| Payments of taxes during the period | (365) | (22) |
| Net cash from operating activities | 6.077 | 6.138 |
| Investing activities | ||
| Net investment in property, plant and equipments | (3.480) | (3.819) |
| Other investment | 2 | 93 |
| Investing activities | (3.478) | (3.726) |
| Financing activities | ||
| Dividend paid | (311) | (275) |
| Purchase of own shares | (1.068) | (670) |
| Net Financing activities | (1.362) | (4.798) |
| Financing activities | (2.741) | (5.743) |
| Increase (decrease) in cash and cash equivalents | (142) | (3.331) |
| Translation effects on cash | (6) | (3) |
| Cash and cash equivalents at the beginning of the year | 718 | 3.667 |
| Cash and cash equivalents at the end of the year | 570 | 333 |
Cash generated by operation
Net cash from operating activities
CAPEX development
Operations 9M 2018
Profit Increase Between Periods
- Positive revenue development in Q3 and YTD
- Growth in TV and Data revenue
- Continued success of the Home Bundle with subscribers now around 30.000
- Lower CHURN and positive revenue performance during the summer months
- Retail revenue growth in mobile compensates lower wholesale and roaming revenue
- Revenue decline in wholesale and roaming was 150 m.kr. between Q3 2018 and Q3 2017
- Postpaid and prepaid subscriptions increase by 10.000 in 2018. The success of Prenna continues
- The pressure on ARPU in the B2B market continues albeit at a slower pace in Q3
- ARPU in the B2C market is stable
- IT revenue return to growth in Q3 and outlook is positive for the year
- The 365 effect on wholesale for the most parts realized in Q2 and in Q3
Mobile voice customers in rapid growth this year
Mobile Prepaid and Postpaid
Number Portability in Mobile
Increased number of young customers
Continuous growth in fixed Internet
Driven by fiber rollout and Heimilispakki
Number of Internet connections
Home bundle (Heimilispakki)
Operations 9M 2018
Cost control ongoing
- Continues cost savings realization
- Adjusted of sold and acquired entities, average FTE's are 35 fewer in 2018 compared to 2017
- Defaults at record lows – Positive effects on bad debt allowance
- Increase in content cost. Revenue increase twice the amount of cost increase
-
IT cost increase as a result of outsourcing. The overall cost effects of outsourcing have been positive
-
Finance cost decreases by 408 m.kr. or 36% YoY
-
The cost of refinancing in Q3 2017 was 110 m.kr.
-
Continues cost savings to adjust the business to higher wage cost and increased inflation
-
Well positioned to deal with the added wage cost as a result of labor agreements next year and the effects of the weaker ISK
-
The focus on digitalization is showing positive results – further benefits in coming quarters
Guidance for 2018
Guidance presented in beginning of 2018
Highlights
Usage development in Linear TV vs VoD viewing
Linear TV according to PPM measurement - Gallup
VOD ads increasing as percentage of total ads revenue
Local content creates differentiation
Líf kviknar
Með Løga
Smakk í Japan
Venjulegt fólk
Míla
Míla continues to add new homes to its fibre network
Co-operation between Míla and GR
The first areas that have been jointly worked on have been finished
se162
Good quarter in IT and positive outlook
❤
Appendix
Business segments
- Mobile: Revenue from mobile services in Iceland and abroad, whether traditional GSM service, satellite service or other mobile service.
- Fixed voice: Revenue from fixed voice service (fees and traffic).
- Internet & network: Revenue from data service, 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.
Disclaimer
Information contained in this presentation is based on sources that Síminn hf. ("Síminn" or the "company") considers reliable at each time. Its accuracy or completeness can however not be guaranteed. This report contains forward-looking statements that reflect the management's current views with respect to certain future events and potential financial performance. Although the management believe that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. The forward looking information contained in this presentation applies only as at the date of this presentation.
Síminn does not undertake any obligation to provide recipients of this presentation with any further information on the company or to make amendments or changes to this publication should inaccuracies or errors be discovered or opinions or information change. Other than as required by applicable laws and regulation.
This presentation is solely for information purposes and is not intended to form part of or be the basis of any decision making by its recipients. Nothing in this presentation should be construed as a promise or recommendation.
Statements contained in this presentation that refer to the company's estimated or anticipated future results or future activities are forward looking statements which reflect the company's current analysis of existing trends, information and plans. Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially depending on factors such as the availability of resources, the timing and effect of regulatory actions and other factors.
By the receipt of this presentation the recipient acknowledges and accepts the aforesaid disclaimer and restrictions.
