AI assistant
Síminn Investor Presentation 2022
2203_rns_2022-08-23_b7c23173-c577-4fe4-ac62-f3f83f2b005b.pdf
Investor Presentation
Open in viewerOpens in your device viewer
Investor Presentation
Q2 2022
Orri Hauksson and Öskar Hauksson
23 August 2022
Key figures
| Q2 2022 | 1H 2022 | |
|---|---|---|
| Revenue | 6.036 m.kr. | |
| Q2 2021: 5.937 m.kr. | 12.129 m.kr. | |
| 1H 2021: 11.955 m.kr. | ||
| EBITDA | 1.399 m.kr. | |
| Q2 2021: 1.318 m.kr. | 2.726 m.kr. | |
| 1H 2021: 2.592 m.kr. | ||
| EBITDA % | 23,2% | |
| Q2 2021: 22,2% | 22,5% | |
| 1H 2021: 21,7% | ||
| EBIT | 682 m.kr. | |
| Q2 2021: 543 m.kr. | 1.256 m.kr. | |
| 1H 2021: 1.047 m.kr. | ||
| CAPEX | 875 m.kr. | |
| Q2 2021: 644 m.kr. | 1.130 m.kr. | |
| 1H 2021: -6.363 m.kr. * | ||
| NIBD / 12M EBITDA | Cash | Equity Ratio |
| Cash generated by operation | ||
| 1,01 | ||
| Q4 2021: 0,87 | 1.365 m.kr. | |
| Q4 2021: 3.509 m.kr. | 44,0% | |
| Q4 2021: 44,6% | ||
| 1.567 m.kr. | ||
| Q2 2021: 1.525 m.kr. |
- Negative CAPEX in 1H 2021 is related to sale of network systems to Mila in the beginning of 2021. Mila is categorized as asset held for sale.
Operation
Income Statement
| Income statement | Q2 | 1H | ||||
|---|---|---|---|---|---|---|
| 2022 | 2021 | % | 2022 | 2021 | % | |
| Net sales | 6.036 | 5.937 | 1,7% | 12.129 | 11.955 | 1,5% |
| Cost of sales | (3.597) | (3.692) | -2,6% | (7.359) | (7.475) | -1,6% |
| Operating expenses | (1.757) | (1.702) | 3,2% | (3.514) | (3.433) | 2,4% |
| EBIT | 682 | 543 | 25,6% | 1.256 | 1.047 | 20,0% |
| Net financial items | (165) | (99) | 66,7% | (73) | (130) | -43,8% |
| Income tax | (107) | (102) | 4,9% | (220) | (199) | 10,6% |
| Net profit from continuing operation | 410 | 342 | 19,9% | 963 | 718 | 34,1% |
| Discontinued operation | 95 | 276 | 288 | 2.784 | -89,7% | |
| Net profit | 505 | 618 | -18,3% | 1.251 | 3.502 | -64,3% |
| EBITDA | 1.399 | 1.318 | 6,1% | 2.726 | 2.592 | 5,2% |
| EPS from continuing operation | 0,05 | 0,05 | 0,0% | 0,13 | 0,09 | 44,4% |
Revenue
EBITDA
EBIT
The quarter
- Revenue increase compared to Q2 2021.
- Mobile revenue increase by 8%.
- Main increase from roaming but also from subscription.
- TV revenue increase by 2%.
- Decrease in equipment sales compared to Q2 2021.
- Gross margin increases by 8%.
- EBIT increases by 26%.
- EBITDA increases by 6,1%.
- Total expenses unchanged YoY.
- Net profit from continuing operations increases by 20%.
Revenue by segments
| Segments | Q2 | 1H | ||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | Change | % | 2022 | 2021 | Change | % | |
| Mobile | 1.469 | 1.362 | 107 | 7,9% | 2.882 | 2.662 | 220 | 8,3% |
| Fixed voice | 367 | 399 | -32 | -8,0% | 745 | 805 | -60 | -7,5% |
| Internet & network | 1.870 | 1.833 | 37 | 2,0% | 3.728 | 3.692 | 36 | 1,0% |
| TV | 1.601 | 1.570 | 31 | 2,0% | 3.274 | 3.195 | 79 | 2,5% |
| Equipment sales | 492 | 515 | -23 | -4,5% | 941 | 1.033 | -92 | -8,9% |
| Other revenue | 237 | 258 | -21 | -8,1% | 559 | 568 | -9 | -1,6% |
| Total revenue | 6.036 | 5.937 | 99 | 1,7% | 12.129 | 11.955 | 174 | 1,5% |
Mobile
Internet & network
TV
Other segments
Operation in the first half of 2022
Strong growth in performance
- EBITDA increases by 5,2% from 1H 2021
- Revenue increase from 1H 2021
- Mobile revenue grow by 8% mainly as a result of increased roaming revenue. Roaming revenue is mainly related to Icelandic tourists
- Increase in TV services generated from Síminn Premium.
- Internet revenue increase by 2%
- EBIT increases by over 200 m.kr. from 1H 2021
- Depreciation decreases by 75 m.kr.
- Profit from continued operations increases by 245 m.kr.
- Sales gain from Síminn’s stake in Auðkenni was 113 m.kr.
-
Síminn had interest income from 16 billion financing to Míla in Q1 2021. Míla was re-financed with external funding in the beginning of Q2 2021 and has since not received funding from the parent company.
-
Wage cost increases by 96 m.kr. or 4.8%
- Mainly as a result of severance pay in Q1 this year
- The largest cost items for the most part unchanged YoY
- Large part of cost is in long-term contracts with domestic and foreign suppliers
- Inflation will increasingly play a role on the cost side
- Exchange rate development is favourable
- The cost related to the sale of Míla is booked as prepaid cost
- Will be netted against the capital gain when the transaction is completed
- Míla had strong performance in 1H this year and delivered comparable EBITDA results as in 1H 2021
- Net profit decreases by 373 m.kr. which relates to increase in interest expenses
5
Balance Sheet and Cash Flow
Balance Sheet
| Assets | 30.06.2022 | 31.12.2021 |
|---|---|---|
| Non-current assets | ||
| Property, plant and equipment | 2.195 | 2.219 |
| Right-of-use assets | 690 | 753 |
| Intangible assets | 19.191 | 19.403 |
| Other non-current assets | 669 | 675 |
| Non-current assets | 22.745 | 23.050 |
| Current assets | ||
| Inventories | 1.140 | 923 |
| Accounts receivables | 1.994 | 2.234 |
| Other current assets | 3.512 | 3.082 |
| Cash and cash equivalents | 1.365 | 3.509 |
| Assets held for sale | 37.223 | 36.929 |
| Current assets | 45.234 | 46.677 |
| Total assets | 67.979 | 69.727 |
| Equity and liabilities | 30.06.2022 | 31.12.2021 |
| --- | --- | --- |
| Equity | ||
| Total equity | 29.939 | 31.079 |
| Non-current liabilities | ||
| Borrowings | 5.949 | 5.943 |
| Finance lease | 594 | 653 |
| Deferred tax liabilities | 406 | 604 |
| Non-current liabilities | 6.949 | 7.200 |
| Current liabilities | ||
| Bank loans | 332 | 1.518 |
| Accounts payables | 2.621 | 2.141 |
| Current maturities of borrowings | 182 | 180 |
| Other current liabilities | 2.124 | 1.783 |
| Liabilities held for sale | 25.832 | 25.826 |
| Current liabilities | 31.091 | 31.448 |
| Total equity and liabilities | 67.979 | 69.727 |
Net interest bearing debt with lease liabilities
Equity ratio
Net debt with lease liabilities to EBITDA*
Return on Equity
- Without government fine in 2020.
Lease liabilities included from 2019.
CASH FLOW
| Cash Flow | 1H 2022 | 1H 2021 |
|---|---|---|
| Cash flow from operating activities | ||
| Operating profit | 1.256 | 1.047 |
| Operational items not affecting cash flow: | ||
| Depreciation and amortisation | 1.470 | 1.545 |
| Gain on sale of fixed assets | ( 4) | ( 1) |
| 2.722 | 2.591 | |
| Changes in current assets and liabilities | 481 | 1.441 |
| Cash generated by operation | 3.203 | 4.032 |
| Net interest expenses paid during the period | ( 176) | ( 69) |
| Payments of taxes during the period | ( 348) | ( 439) |
| Net cash from operating activities | 2.679 | 3.524 |
| Investing activities | ||
| Net investment in property, plant and equipments | ( 1.130) | 6.363 |
| Other investment | ( 17) | ( 261) |
| Sale of subsidiary and discontinued operation | 0 | 14.774 |
| Investing activities | ( 1.147) | 20.876 |
| Financing activities | ||
| Dividend paid | ( 500) | ( 500) |
| Purchase of own shares | ( 1.891) | ( 1.196) |
| Share capital reduction | 0 | ( 7.968) |
| Payment of long term lease | ( 93) | ( 85) |
| Net Financing activities | ( 1.186) | ( 8.411) |
| Financing activities | ( 3.670) | ( 18.160) |
| Increase (decrease) in cash and cash equivalents | ( 2.138) | 6.240 |
| Translation effects on cash | ( 6) | ( 12) |
| Cash and cash equivalents at the beginning of the year | 3.509 | 735 |
| Cash and cash equivalents at the end of the period | 1.365 | 6.963 |
Balance sheet and cash flow
- Mila’s assets are categorized as assets held for sale in the balance sheet
- Considerable changes in cash position from end of Q2 2021
- Related to changes in capital structure which was completed in Q2 2021
- Reduction in cash this quarter is due to a decrease in short-term debt by 1,2 billion and dividend payment
- CAPEX decreases YoY – Will increase in 2H
- The broadcasting right of the English Premier League was partly paid in Q1 2021 – No payment this year but will effect CAPEX
- Long-term funding is with favourable repayment schedule
CAPEX
CAPEX
Excluding Míla
CAPEX will increase this year which is temporary
- Due to the increased cost of TV rights to the English Premier League and as it is now the first year of a new contract (front-loaded investment).
- A new contract will become investment in Q3 2022. The first payment was in 2021, but nothing is paid for the right in 2022
TV Content Networks TV CPE's BSS Other
*Adjusted for changed accounting treatment of content CAPEX
Highlights
New Organizational Structure
- New organizational structure has been announced
- Is aligned with changed environment and technical development
- More efficient decision making, open communication, divers view, and stronger culture.
- New members in management
- Berglind Björg Harðardóttir, Sales and services
- Erla Ósk Ásgeirsdóttir, Sustainability and culture
Telco and media
- Co-operation between the telcos and National Emergency Service (112)
- Mobile transmitters installed in rural areas
- MOCN secures mobile connection regardless of mobile service providers
-
The telcos provide the active equipment based on information from 112 which in turn provides the passive equipment such as masts and electricity
-
Electronic invoices
-
Síminn from now on will cease to use printed invoices for their services. This is aligned with our focus on sustainability
-
Over 40 nominations for Edda awards
- Síminn’s Icelandic content production received 41 nomination for Edda awards
- Systrabönd received 10 nominations
- The movie Dýrið received 13 nominations
- In total 12 shows and other material from Síminn received nominations
Síminn Pay
- Healthy growth in loans to customers
- The users of the Pay app are now 62 thousand
- Exciting new products to be launched in coming months
Total loans in end of quarters (M.ISK)
Sale of Míla to Ardian
The sale of Míla to Ardian is still under review by the Competition Authority
- The Icelandic Competition Authority (ICA) announced on 14 March that the transaction required further investigation. That extended the ICA deadline by 90 business days, or until 27 July.
- On 1 July the ICA issued preliminary findings which stated that the transaction could harm competition and would not be approved without conditions or further explanations from the merging parties.
- On 9 July Ardian requested to enter into settlement discussion with the ICA which extended the deadline to 18 August.
- On 17 July Ardian informed Síminn that, as a result of remedies that Ardian had offered to the ICA, it would not complete the share purchase agreement (SPA) as announced on 23 October 2021, without amendments.
- On 22 July it was announced that Ardian and Síminn had agreed to amend the SPA which e.g. included amendments on the enterprise value (EV).
- On 11 August Ardian requested further extension on the ICA deadline to finish the merger investigation. The deadline is now until 15 September and no further deadlines are available.
Financial impact of amended SPA with Ardian
- On 22 July Síminn and Ardian announced that the amended SPA had been approved. The most significant change was related to the EV of Míla which was previously ISK 78 billion, as announced on 23 October 2021, including debt the buyer takes over.
- The EV was lowered by ISK 5 billion and is now ISK 73 billion.
- Based on the amended SPS Síminn will receive ISK 35 billion in cash at closing and ISK 19 billion will be paid with sellers loan in form of a bond issued by the buyer. The bond will have a 3 year maturity. The bond was ISK 15 billion in the previous SPA.
- The bond is transferable and has 4% interest which is unchanged from the previous SPA.
- The changes of the SPA mean that expected sales gain is now ISK 41.8 billion ISK, incl. sales cost, which is ISK 4.6 billion reduction from the SPA announced in October 2021.
Pro forma balance sheet – post sale of Míla
| Síminn Group | 2022 | Sale of Míla | 2022 PF |
|---|---|---|---|
| Non-current assets | 22.745 | 19.000 | 41.745 |
| Current assets | 8.011 | 34.174 | 42.185 |
| Assets held for sale | 37.223 | -37.223 | 0 |
| Assets | 67.979 | 15.951 | 83.930 |
| - thereof Cash | 1.365 | 34.500 | 35.865 |
| - thereof Bond | 0 | 19.000 | 19.000 |
| Equity | 29.939 | 41.783 | 71.722 |
| Non-current liabilities | 6.949 | 0 | 6.949 |
| Current liabilities | 5.259 | 0 | 5.259 |
| Debts held for sale | 25.832 | -25.832 | 0 |
| Equity and liabilities | 67.979 | 15.951 | 83.930 |
| - thereof interest bearing debts | 6.281 | 6.281 | |
| - thereof lease liabilities | 776 | 776 | |
| Equity ratio | 44,0% | 85,5% |
Sales proceeds
- The balance sheet of Síminn will change considerably following the sale of Míla since cash position will be strong resulting in possibility to distribute cash to shareholders.
- Síminn re-iterates that while the sale of Míla is in process at the ICA the company will not discuss any plans regarding the sale proceed.
- Once closing of the transaction is completed, Síminn will hold a shareholders meeting where shareholders will be able to discuss the most efficient use of the sales proceeds.
Key figures from Míla's operations
| Key Figures | Q2 | 1H | ||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021ifference | % | 2022 | 2021ifference | % | |||
| Operating income | 2.125 | 2.125 | 0 | 0,0% | 4.253 | 4.262 | (9) | -0,2% |
| Operating expenses | (900) | (886) | (15) | 1,7% | (1.773) | (1.756) | (17) | 1,0% |
| EBITDA | 1.225 | 1.240 | (15) | -1,2% | 2.480 | 2.506 | (26) | -1,0% |
| Depreciation | (762) | (656) | (106) | 16,2% | (1.484) | (1.304) | (180) | 13,8% |
| EBIT | 463 | 584 | (121) | -20,7% | 996 | 1.202 | (206) | -17,1% |
| Financial items | (342) | (217) | (125) | 57,7% | (632) | (372) | (260) | 69,9% |
| Operating profit before taxes | 121 | 367 | (246) | -67,1% | 364 | 830 | (466) | -56,1% |
| Taxes | (26) | (75) | 49 | -65,5% | (76) | (169) | 93 | -55,0% |
| Profit | 95 | 292 | (197) | -67,5% | 288 | 661 | (373) | -56,4% |
| CAPEX | 740 | 664 | 76 | 11,5% | 1.369 | 1.266 | 103 | 8,2% |
Míla
- The performance of Míla is steady
- EBITDA similar YoY
- Increase in depreciation related to the acquisition of Network systems from Síminn in 2021
- Míla increased leverage when the capital structure was changed in Q2 2021
- Interest expenses increase due to higher leverage and since the funding of Míla is with floating rates
Shareholders
Shareholders
| Shareholders 18.8.2022 | Position | % O/E |
|---|---|---|
| Stoðir hf. | 1.162.220.631 | 15,92% |
| Lifeyrissjóður verzlunarmanna | 868.257.927 | 11,89% |
| Lifeyrissj.starfsm.rik. A-deild | 796.450.000 | 10,91% |
| Gildi - lifeyrissjóður | 567.992.195 | 7,78% |
| Íslandsbanki hf,safnskráning 2 | 396.693.435 | 5,43% |
| Brú Lifeyrissjóður starfs sveit | 365.650.161 | 5,01% |
| Stapi lifeyrissjóður | 296.751.432 | 4,07% |
| Birta lifeyrissjóður | 283.396.563 | 3,88% |
| Söfnunarsjóður lifeyrisréttinda | 251.575.320 | 3,45% |
| Lifeyrissj.starfsm.rik. B-deild | 248.550.000 | 3,40% |
| Top 10 shareholders | 5.237.537.664 | 71,75% |
| Other Shareholders | 1.882.848.634 | 25,79% |
| Shares outstanding | 7.120.386.298 | 97,54% |
| Own shares | 179.613.702 | 2,46% |
| Total number of shares | 7.300.000.000 | 100% |
- Stoðir hf.
- Lifeyrissjóður verzlunarmanna
- Lifeyrissj.starfsm.rik. A-deild
- Gildi - lifeyrissjóður
- Íslandsbanki hf,safnskráning 2
- Brú Lifeyrissjóður starfs sveit
- Stapi lifeyrissjóður
- Birta lifeyrissjóður
- Söfnunarsjóður lifeyrisréttinda
- Lifeyrissj.starfsm.rik. B-deild
- Other Shareholders
- Own shares
Shareholders
- Share buy-back
- Share buy-back amounted to 930 m.kr. In Q1 and 961 m.kr. In Q2. In total 1.891 m.kr. in 1H 2022.
- Annual dividend was 500 m.kr.
- The current share buy-back is based on plan announcement to the stock exchange on 20 June.
- Shareholders were 1.226 at the end of Q2 2022
- The share price has lowered by 9,2% year-to-date and by 5,3% for last 12 months.
5
Guidance 2022
Outlook for 2022
Unchanged guidance
- Síminn had successful first half of 2022
- High margin revenue have increased YoY
- Inflation is high which puts pressure on cost
- Due to high labour demand there is pressure on wage increases
-
Positive exchange rate development offsets inflation pressure to some extent
-
Síminn constantly strives to adjust the cost side to rising inflation
-
Annual wage cost around ISK 4 billion – Upcoming labour negotiations of importance for Síminn
-
Expectations are for even stronger performance in 2H of 2022 resulting in good EBITDA performance in 2022
- While the sale of Míla is not finalized there is uncertainty regarding costs that are related to the sales process
- Therefore any adjustments on the guidance are not justified
Guidance for 2022
Group EBITDA excl. Míla was ISK 5.502 million in 2021
Group CAPEX excl. Míla was ISK 2.503 million in 2021
❤
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, local loop and access network.
- TV: Revenue from TV broadcast and distribution and Síminn TV (fees, traffic and advertisement).
- Equipment sales: Revenue from sale of telco equipment.
- Other revenue: Revenue from sold telco service, IT and finance.
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 restriction.
