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Síminn Investor Presentation 2018
2203_rns_2018-02-19_833f2b85-7db7-48cf-9080-e4834bfc3cf8.pdf
Investor Presentation
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STELLA BLÖMKVIST
Q4 2017 Results
Full year 2017
Orri Hauksson og Óskar Hauksson | 20.02.2018
Highlights in Q4 2017
| FINANCE | EBITDA
1.930 m.kr. | EBITDA ratio
25,7% | Cash
718 m.kr. |
| --- | --- | --- | --- |
| | Net debt / EBITDA
2,06 | CAPEX
972 m.kr. | Equity ratio
59,9% |
| | EBITDA trailing twelve months | | |
HIGHLIGHTS
- The FTTH project is in good progress with 4.000 additional homes passed in the capital area in Q4 2017 - 60% of homes in the capital area have access to fiber from Mila.
- CAPEX has peaked in 2018 although Mila will continue significant investment in fiber.
- Severance payments effect results in Q4.
- Roaming revenues - 78 m.kr. decrease in margin in Q4 due to RLH
- 14% revenue growth in TV services in Q4 2017 adjusted for sold entities
Q4 2017 - Results
Income statement Q4 2017
| Q4 2017 | Q4 2016 | Change in % | |
|---|---|---|---|
| Net sales | 7.389 | 7.773 | -4,9% |
| Cost of sales | (4.105) | (4.302) | -4,6% |
| Gross profit | 3.284 | 3.471 | -5,4% |
| Gross profit ratio | 44,4% | 44,7% | |
| Other operating income | 111 | 172 | -35,5% |
| Operating expenses | (2.404) | (2.466) | -2,5% |
| Operating profit | 991 | 1.177 | -15,8% |
| Operating profit/Net sales | 13,4% | 15,1% | |
| Finance income | 55 | 232 | -76,3% |
| Finance cost | (400) | (584) | -31,5% |
| Net exchange rate differences | 2 | (18) | -111,1% |
| Net financial items | (343) | (370) | -7,3% |
| Income tax | (41) | (205) | -80,0% |
| Net profit | 607 | 601 | 1,0% |
| Depreciation and amortisation | (939) | (926) | 1,4% |
| EBITDA | 1.930 | 2.103 | -8,2% |
| EBITDA ratio | 25,7% | 26,5% | |
| EBIT | 991 | 1.177 | -15,8% |
| EBIT ratio | 13,2% | 14,8% |
Revenue by segments Q4 2017
| Q4 2017 | Q4 2016 | Change | Change % | |
|---|---|---|---|---|
| Mobile | 1.626 | 1.736 | ( 110) | -6,3% |
| Fixed voice | 532 | 548 | ( 16) | -2,9% |
| Internet & network | 2.210 | 2.031 | 179 | 8,8% |
| TV | 1.088 | 997 | 91 | 9,1% |
| IT services | 1.147 | 1.675 | ( 528) | -31,5% |
| Equipment sales | 639 | 677 | ( 38) | -5,6% |
| Other revenue | 258 | 281 | ( 23) | -8,2% |
| Revenues total | 7.500 | 7.945 | ( 445) | -5,6% |
Other revenue
Equipment sales
IT services
TV
Internet & network
Fixed voice
Mobile
Balance sheet
| 31.12.2017 | 31.12.2016 | |
|---|---|---|
| Assets | ||
| Non-current assets | ||
| Property, plant and equipment | 17.024 | 16.118 |
| Goodwill | 31.435 | 31.407 |
| Intangible assets | 3.226 | 3.181 |
| Other non-current assets | 658 | 1.349 |
| Non-current assets | 52.343 | 52.055 |
| Current assets | ||
| Inventories | 2.345 | 1.829 |
| Accounts receivables | 4.470 | 5.619 |
| Other current assets | 736 | 809 |
| Cash and cash equivalents | 718 | 3.667 |
| Current assets | 8.269 | 11.924 |
| Total assets | 60.612 | 63.979 |
| Equity and liabilities | ||
| Equity | ||
| Total equity | 36.281 | 34.260 |
| Non-current liabilities | ||
| Borrowings | 16.781 | 21.568 |
| Deferred tax liabilities | 817 | 442 |
| Non-current liabilities | 17.598 | 22.010 |
| Current liabilities | ||
| Bank loans | 500 | 0 |
| Accounts payables | 2.950 | 3.584 |
| Current maturities of borrowings | 1.150 | 1.376 |
| Other current liabilities | 2.133 | 2.749 |
| Current liabilities | 6.733 | 7.709 |
| Total equity and liabilities | 60.612 | 63.979 |
Equity ratio
Equity ratio
Net interest bearing debt
Net debt to EBITDA
Cash flow Q4 2017
| Q4 2017 | Q4 2016 | |
|---|---|---|
| Cash flow from operating activities | ||
| Operating profit | 991 | 1.177 |
| Operational items not affecting cash flow: | ||
| Depreciation and amortisation | 939 | 926 |
| Other items not affecting cash flow | 6 | 5 |
| 1.936 | 2.108 | |
| Changes in current assets and liabilities | 129 | 133 |
| Cash generated by operation | 2.065 | 2.241 |
| Net interest expenses paid during the period | (187) | (139) |
| Payments of taxes during the period | (593) | 4 |
| Net cash from operating activities | 1.285 | 2.106 |
| Investing activities | ||
| Net investment in property, plant and equipments | (972) | (1.849) |
| Other investment | 112 | 152 |
| Investing activities | (860) | (1.697) |
| Financing activities | ||
| Buyback of ordinary shares | (253) | (93) |
| Proceeds from the exercise of share options | 179 | 93 |
| New borrowings | 0 | 0 |
| Payments of non-current liabilities | (288) | (229) |
| Bank loans, increase (decrease) | 500 | 0 |
| Financing activities | 138 | (229) |
| Increase (decrease) in cash and cash equivalents | 563 | 180 |
| Translation effects on cash | 1 | (8) |
| Cash and cash equivalents (beginning-of-period) | 154 | 3.495 |
| Cash and cash equivalents (end-of-period) | 718 | 3.667 |
5
2017 Full year results
Income statement 2017
| 2017 | 2016 | Change in % | |
|---|---|---|---|
| Net sales | 27.992 | 29.037 | -3,6% |
| Cost of sales | (14.418) | (15.387) | -6,3% |
| Gross profit | 13.574 | 13.650 | -0,6% |
| Gross profit ratio | 48,5% | 47,0% | |
| Other operating income | 441 | 535 | -17,6% |
| Operating expenses | (9.096) | (9.559) | -4,8% |
| Operating profit | 4.919 | 4.626 | 6,3% |
| Operating profit/Net sales | 17,6% | 15,9% | |
| Finance income | 398 | 765 | -48,0% |
| Finance cost | (1.535) | (1.884) | -18,5% |
| Net exchange rate differences | 14 | 21 | -33,3% |
| Net financial items | (1.123) | (1.098) | 2,3% |
| Income tax | (720) | (772) | -6,7% |
| Net profit | 3.076 | 2.755 | 11,7% |
| Depreciation and amortisation | (3.688) | (3.619) | 1,9% |
| EBITDA | 8.607 | 8.245 | 4,4% |
| EBITDA ratio | 30,3% | 27,9% | |
| EBIT | 4.919 | 4.626 | 6,3% |
| EBIT ratio | 17,3% | 15,6% |
Revenue by segments 2017
| 2017 | 2016 | Change | Change % | |
|---|---|---|---|---|
| Mobile | 6.652 | 7.190 | ( 538) | -7,5% |
| Fixed voice | 2.096 | 2.239 | ( 143) | -6,4% |
| Internet & network | 8.583 | 8.498 | 85 | 1,0% |
| TV | 4.118 | 4.062 | 56 | 1,4% |
| IT services | 4.111 | 4.619 | ( 508) | -11,0% |
| Equipment sales | 1.883 | 1.993 | ( 110) | -5,5% |
| Other revenue | 990 | 971 | 19 | 2,0% |
| Revenues total | 28.433 | 29.572 | ( 1.139) | -3,9% |
| Adjusted for disc. operations * | 28.433 | 28.960 | ( 527) | -1,8% |
- Staki, Talenta, Siminn Sport (EM 2016) and K100
Key figures from subsidiaries
| 2017 | 2016 | Change | Change % | |
|---|---|---|---|---|
| Siminn hf. | ||||
| Revenue | 22.981 | 23.595 | -614 | -2,6% |
| EBITDA | 5.212 | 4.968 | 244 | 4,9% |
| EBITDA ratio | 22,7% | 21,1% | ||
| CAPEX | 1.758 | 2.290 | -532 | -23,2% |
| CAPEX to revenue | 7,6% | 9,7% | ||
| Mila ehf. | ||||
| Revenue | 6.058 | 6.082 | -24 | -0,4% |
| EBITDA | 2.907 | 2.981 | -74 | -2,5% |
| EBITDA ratio | 48,0% | 49,0% | ||
| CAPEX | 3.037 | 2.183 | 854 | 39,1% |
| CAPEX to revenue | 50,1% | 35,9% | ||
| Sensa ehf. * | ||||
| Revenue | 4.593 | 5.058 | -465 | -9,2% |
| EBITDA | 539 | 645 | -106 | -16,4% |
| EBITDA ratio | 11,7% | 12,8% | ||
| CAPEX | -5 | 187 | -192 | -102,4% |
| CAPEX to revenue | -0,1% | 3,7% |
- Without effect of Sensa DK Aps.
Cash flow statement 2017
| 2017 | 2016 | |
|---|---|---|
| Cash flow from operating activities | ||
| Operating profit | 4.919 | 4.626 |
| Operational items not affecting cash flow: | ||
| Depreciation and amortisation | 3.688 | 3.619 |
| Other items not affecting cash flow | 42 | 19 |
| 8.649 | 8.264 | |
| Changes in current assets and liabilities | 447 | (371) |
| Cash generated by operation | 9.096 | 7.893 |
| Net interest expenses paid during the period | (1.058) | (1.125) |
| Payments of taxes during the period | (615) | (6) |
| Net cash from operating activities | 7.423 | 6.762 |
| Investing activities | ||
| Net investment in property, plant and equipments | (4.791) | (4.656) |
| Other investment | 205 | 125 |
| Investing activities | (4.586) | (4.531) |
| Financing activities | ||
| Dividend paid | (275) | (577) |
| Purchase of own shares | (923) | (657) |
| Net Financing activities | (4.586) | (1.371) |
| Financing activities | (5.784) | (2.605) |
| Increase (decrease) in cash and cash equivalents | (2.947) | (374) |
| Translation effects on cash | (2) | (30) |
| Cash and cash equivalents at the beginning of the year | 3.667 | 4.071 |
| Cash and cash equivalents at the end of the year | 718 | 3.667 |
CAPEX development
Operations in 2017
Improved operations a result of cost reduction
- Salary expenses reduce by 642 m.kr. Around third is related to sale of subsidiaries. Outsourcing continues.
- Average full-time employees (FTE’s) decrease by 78 from 2016.
- Cost of goods sold decreases due to lower content cost, re-negotiated service agreements and lower interconnecting fees.
- Rent decreases by 82 m.kr. from 2016.
- IT cost increases due to sale of Staki and Talenta and outsourcing of operations.
- Lower Gen. & ad. due to e.g. lower staff cost and reduced professional services.
- Sales and marketing cost reduces as result of termination of the GoMobile agreement and different approach to marketing.
- Less defaults in wholesale and retail result in lower bad debt allowance.
Wholesale and roaming revenue
Operation adjusted to changes
- The merger of certain parts of 365 and Fjarskipti (Vodafone) will result in lower wholesale revenue at Síminn.
- The effect is estimated to be 600 m.kr. on annual bases.
- Will not have full effect in 2018.
-
The merger process was long and as a result Síminn had sufficient time to adjust operations to the revenue shortfall.
-
Average number of FTE’s will reduce by around 50 between 2017 and 2018.
-
For the most parts implemented before year end 2017.
-
The merger of Síminn and On-Waves is effective from 1 January 2017 and Sensa DK was acquired by minority shareholders of the Danish company.
- The total EBITDA loss for the two subsidiaries was around 500 m.kr. during the past 2 years.
- On-Waves continues operations post the merger and results are improving.
Dividend and share buyback
The dividend policy for Síminn hf. states that Síminn intends to distribute between 20 - 50% of after-tax profit to shareholders through dividend and/or share buyback.
The proposal at the Annual General Meeting on March 15th will be to distribute 50% by:
- Pay 10% of after-tax profit in 2017 as dividend, the amount is 310 m.kr.
- Share buyback for up to 40% of after-tax profit in 2017
Outlook for 2018
The Signs are Encouraging
Síminn
- Increase in mobile subscribers.
- TV revenue growth expected to continue.
- The success of the Home bundle has positive effect on fixed line revenue.
- Wholesale revenue will decrease but new revenue streams will offset part of the shortfall.
- Improvement in key processes.
- 20% reduction in calls to service centers between 2016 and 2017.
- Creates opportunities for further cost cutting.
- The co-operation with Telefónica is a success.
- Procurement improvements – lower cost.
- Co-operation in business development.
Subsidiaries
- Loss generating units have been spun off or sold.
- Míla expected to generate EBITDA growth in 2018.
- The fiber project at Míla reduces churn and cost.
- The outlook is good for Sensa.
- Loss making client relationships were terminated in 2017.
- The recent agreement with Verne creates opportunities for Sensa in hosting and managed services. Will lower cost for the group.
- Radiómiðun is performing well with its services to the fishing industry.
Guidance for 2018
EBITDA
2018
EBITDA 8.4 – 8.8 b.ISK.
CAPEX
2018
CAPEX 4.3 – 4.6 b.ISK.
5
Highlights
Home connected with fiber from Mila tripled YoY
5
Síminn
Record number of homes with Sjonvarp Simans Premium
MARVEL
Síminn
Improved service decreases calls to services centers by 20% in 2017
Síminn®
The co-operation with one of the largest Telco's in the world a success
Telefónica
Pay
Close to 300 retail outlets accept payments with Síminn Pay
5
Síminn
Síminn installs 1 Gb/s Mobile Base Stations and reaches further with 700 Mhz
4G networks reach virtually all in Iceland – or 98,2%
98,2% 4G reach
Siminn
Síminn, Sensa and Verne Global intend to offer the best hosting service available for domestic and global markets
Siminn
sensa
VERNE GLOBAL
Siminn and Spotify offer Premium for families
5
❤
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. GPON, Internet, IP net, core network, local loop and access network
- TV: Revenues from TV and Radio broadcast (fees, traffic and advertisement), TV distribution and Síminn TV.
- IT services: Revenue from hosting and operations, advisor fees and sold service and IT related harward 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.