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Síminn Investor Presentation 2024
2203_rns_2024-02-20_7f0b0e68-932b-4eb7-85c5-62cf5d08e7ec.pdf
Investor Presentation
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Investor Presentation
Q4 2023
Orri Hauksson and Oskar Hauksson
20 February 2024
Simin
Highlights in Q4 and 2023
| Q4 2023 | 12M 2023 | |
|---|---|---|
| Revenue | 6.659 m.kr. | |
| Q4 2022: 6.233 m.kr. | 25.741 m.kr. | |
| 12M 2022: 24.572 m.kr. | ||
| EBITDA* | 1.614 m.kr. | |
| Q4 2022: 1.433 m.kr. | 6.150 m.kr. | |
| 12M 2022: 5.949 m.kr. | ||
| EBITDA %* | 24,2% | |
| Q4 2022: 23,0% | 23,9% | |
| 12M 2022: 24,2% | ||
| EBIT* | 634 m.kr. | |
| Q4 2022: 503 m.kr. | 2.079 m.kr. | |
| 12M 2022: 2.745 m.kr. | ||
| CAPEX | 760 m.kr. | |
| Q4 2022: 1.269 m.kr. | 3.671 m.kr. | |
| 12M 2022: 4.352 m.kr. | ||
| NIBD / 12M EBITDA* | Cash | Equity Ratio |
| 0,95x | ||
| Q4 2022: 0,58x | 1.810 m.kr. | |
| Q4 2022: 3.721 m.kr. | 52,1% | |
| Q4 2022: 68,9% |
Cash generated by operation
1.469 m.kr.
Q4 2022: 2.015 m.kr.
- Without 200 m.kr. Cancellation of a competition fine in Q4 2022.
Net-interest bearing debt includes lease liabilities minus cash and loans at Siminn Pay.
69
Operation
Income Statement
| Income statement | Q4 | 12M | ||||
|---|---|---|---|---|---|---|
| 2023 | 2022 | % | 2023 | 2022 | % | |
| Net sales | 6.659 | 6.233 | 6,8% | 25.741 | 24.572 | 4,8% |
| Cost of sales | (4.119) | (3.874) | 6,3% | (16.497) | (14.914) | 10,6% |
| Operating expenses | (1.906) | (1.656) | 15,1% | (7.165) | (6.713) | 6,7% |
| EBIT | 634 | 703 | -9,8% | 2.079 | 2.945 | -29,4% |
| Net financial items | (120) | (389) | -69,2% | (392) | (546) | -28,2% |
| Income tax | (100) | 67 | -249,3% | (341) | (337) | 1,2% |
| Net profit from continuing operation | 414 | 381 | 8,7% | 1.346 | 2.062 | -34,7% |
| Discontinued operation | 0 | 289 | -100,0% | 0 | 36.205 | -100,0% |
| Net profit | 414 | 670 | -38,2% | 1.346 | 38.267 | -96,5% |
| EBITDA | 1.614 | 1.633 | -1,2% | 6.150 | 6.149 | 0,0% |
| EPS from continuing operation | 0,15 | 0,08 | 87,5% | 0,46 | 0,31 | 48,4% |
Revenue
EBIT
Positive earnings trend in last quarter of year
- TV revenue increases by more than 11%
- Revenue from Siminn Premium increases by over 20%
- Advertising revenue increases by almost 28%
- Mobile revenues increase by almost 8%
- Roaming revenues increase by almost 30%
- About 2/3 of the increase in revenue is due to increase in subscription revenue
The increase in costs is largely linked to increased costs from main suppliers and an increase in depreciation
- EBITDA without repayment of competition fine up by almost 13% from Q4 2022 and EBIT up by 26%
- Profit from continuing operations rises significantly
-
Fair value loss on a bond related to the sale of Mila was nearly ISK 400 million in Q4 2022
-
EBITDA and EBIT in the graphs are without 200 m.kr. repayment of competition fine in Q4 2022.
Revenue by segment
| Segments | Q4 | 12M | ||||||
|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | Change | % | 2023 | 2022 | Change | % | |
| Mobile | 1.656 | 1.535 | 121 | 7,9% | 6.510 | 6.035 | 475 | 7,9% |
| Fixed voice | 265 | 279 | -14 | -5,0% | 1.100 | 1.342 | -242 | -18,0% |
| Internet & network | 1.976 | 1.940 | 36 | 1,9% | 7.939 | 7.591 | 348 | 4,6% |
| TV | 1.974 | 1.774 | 200 | 11,3% | 7.440 | 6.722 | 718 | 10,7% |
| Equipment sales | 523 | 479 | 44 | 9,2% | 1.784 | 1.838 | -54 | -2,9% |
| Other revenue | 265 | 226 | 39 | 17,3% | 968 | 1.044 | -76 | -7,3% |
| Total revenue | 6.659 | 6.233 | 426 | 6,8% | 25.741 | 24.572 | 1.169 | 4,8% |
Mobile
Internet & network
TV
Other segments
Revenue increase between years is 4.8%
Excluding non-margin sale of telecommunications equipment to Míla in Q1 2022, Síminn's revenue increased by ISK 1,260 million (5.1%) between years
The largest revenue growth continues to be in TV, with Premium revenue increasing by 20% and advertising revenue by 16% year-on-year
- On the other hand, there is a revenue decline in foreign channels and VOD services
Mobile subscriptions increased by 5,000 in 2023
- Mobile subscriptions for the first time included in bundles in 2023 which had positive impact
- Almost half of the increase in mobile revenue is due to roaming revenues
Revenue from data transmission remains Síminn's largest revenue segment, growing by almost 5% between years
- There was a slight increase in number of subscribers during the year
Fixed line down by 18% but this first product of Síminn will not be a separate revenue segment in 2024
The cost of services sold increases by around ISK 900 million
- Increased costs from telecommunications suppliers, as inflation is high, and the cost is partially indexed
Depreciation increases by ISK 868 million between years, or more than 27% due to investments in tech equipment with a short depreciation period and TV programs with short useful lifetime as well
Labor costs increased by 3.7% between years
Sales and marketing costs increased by approximately 9% between years, mainly due to selling costs
Interest expenses are close to doubling between years, while interest income increases by 17%
- Net debt / EBITDA was 0.95x at end of 2023 compared to 0.58x at end of 2022
Fixed telephone a part of history
This company's first product will not be a revenue segment this year. The fixed line telephone has been part of the company's core business for 118 years.
Fixed line telephone over the old circuit-switching system will disappear altogether on 1 March 2024, but the last fixed line station will be discontinued, and all calls over voice telephone will therefore pass through the latest generation of voice telephone systems based on VOIP technology.
6
Balance sheet and cash flow statement
63
Balance sheet
| Assets | 31.12.2023 | 31.12.2022 |
|---|---|---|
| Property, plant and equipment | 2.552 | 2.466 |
| Right-of-use assets | 732 | 941 |
| Intangible assets | 21.047 | 22.122 |
| Other non-current assets | 431 | 580 |
| Non-current assets | 24.762 | 26.109 |
| Inventories | 1.257 | 1.212 |
| Accounts receivables | 2.279 | 2.045 |
| Loans (Siminn Pay) | 2.715 | 1.359 |
| Other current assets | 966 | 1.048 |
| Corporate bond | 0 | 15.687 |
| Cash and cash equivalents | 1.810 | 3.721 |
| Current assets | 9.027 | 25.072 |
| Total assets | 33.789 | 51.181 |
Net interest bearing debt with lease liabilities and Pay
Equity ratio
| Equity and liabilities | 31.12.2023 | 31.12.2022 |
|---|---|---|
| Total equity | 17.600 | 35.261 |
| Total equity | 17.600 | 35.261 |
| Borrowings | 7.470 | 5.956 |
| Finance lease | 503 | 731 |
| Accounts payables | 0 | 639 |
| Deferred tax liabilities | 232 | 89 |
| Non-current liabilities | 8.205 | 7.415 |
| Bank loans | 2.281 | 1.929 |
| Accounts payables | 4.261 | 4.788 |
| Current maturities of borrowings | 276 | 251 |
| Other current liabilities | 1.166 | 1.537 |
| Current liabilities | 7.984 | 8.505 |
| Total equity and liabilities | 33.789 | 51.181 |
Net interest bearing debt with lease liabilities to EBITDA*
Return on Equity*
Net interest-bearing debt takes into account loans from Siminn Pay. Lease commitments included since 2019.
*Without competition fine paid in 2020 and refunded in 2022.
Cash flow
| Cash Flow | Q4 2023 | Q4 2022 | 2023 | 2022 |
|---|---|---|---|---|
| Cash flow from operating activities | ||||
| Operating profit | 634 | 703 | 2.079 | 2.945 |
| Operational items not affecting cash flow: | ||||
| Depreciation | 980 | 930 | 4.071 | 3.204 |
| Items not affecting cash flow | 18 | (1) | 30 | (57) |
| 1.632 | 1.632 | 6.180 | 6.092 | |
| Changes in current assets and liabilities | (163) | 383 | (568) | 2.042 |
| Cash generated by operation | 1.469 | 2.015 | 5.612 | 8.134 |
| Net interest expenses paid during the period | (89) | 196 | (189) | (12) |
| Payments of taxes during the period | 60 | (325) | (570) | (882) |
| Net cash from operating activities | 1.440 | 1.886 | 4.853 | 7.240 |
| Investing activities | ||||
| Net investment in property, plant and equipments | (760) | (1.269) | (3.671) | (4.352) |
| Consumer Loans Siminn Pay | (367) | (328) | (1.272) | (576) |
| Sale of stocks | 0 | (1.076) | 15.685 | 31.789 |
| Investing activities | (1.127) | (2.673) | 10.742 | 26.861 |
| Financing activities | ||||
| Dividend paid | 0 | 0 | (499) | (500) |
| Purchase of own shares | (789) | (347) | (2.976) | (3.043) |
| Share capital reduction | 0 | (30.542) | (15.580) | (30.542) |
| Payment of long term lease | (67) | (61) | (265) | (216) |
| Net Financing activities | 373 | 1.598 | 1.852 | 412 |
| Financing activities | (483) | (29.352) | (17.468) | (33.889) |
| Changes in cash and cash equivalents | (170) | (30.139) | (1.873) | 212 |
| Translation effects on cash | 1 | 8 | (38) | 0 |
| Cash and cash equivalents at the beginning of the year | 1.979 | 33.852 | 3.721 | 3.509 |
| Cash and cash equivalents at the end of the period | 1.810 | 3.721 | 1.810 | 3.721 |
Apart from sale of bond and a reduction in capital, there were little changes in the balance sheet in 2023
The large movement of current assets in cash flow is mainly related to the sale of Mila
Siminn expanded its base prospectus last year
- Previously, corporate notes allowed to be issued for up to ISK 2 billion, but the extended prospectus is ISK 6 billion for both notes and bonds
Siminn issued notes four times last year
- 18 April ISK 1,100 million 8.87% flat rates - 0.48% margin
- 24 May ISK 900 million 9.80% flat rates – 0.29% margin
- 17 October ISK 1,400 million 10.31% flat rates – 0.32% margin
- 29 November ISK 1,000 million 10.29% flat rates – 0.31% margin
In addition, Siminn issued bonds amounting to ISK 1.5 billion with three-year duration at 1M REIBOR plus a 1.3% premium
36
CAPEX
CAPEX
CAPEX decreased by ISK 680 million between years and is at the lower end of the published guidance for the year
- Investment in TV rights decreased by ISK 560 million year-on-year which is mainly due to how investment in the English Premier League distributes over the period of the contract, which began in 2022
- Investments in technical infrastructure including routers and STBs decreased by ISK 122 million or 7%
- Siminn Pay invested in fintech innovation for ISK 98 million which is a decrease of ISK 24 million between years
The guidance for 2024 assumes a further decrease in CAPEX, in the range of ISK 100-500 million, mainly due to reduced investment in TV rights
2019-2020 numbers are without the mobile RAN and IP/MPLS sold to Mila in the year 2020/2021
5
CAPEX – Parent company
Development 2019 - 2023
Infrastructure investments
2019-2020 numbers are without the mobile RAN and IP/MPLS sold to Mila in the year 2020/2021
Highlights
Síminn acquire companies in the advertising market
In January, Síminn signed a purchase agreement to acquire all shares in three related companies in the advertising market
Síminn has been developing a TV advertising system that allows customers to target advertisements to specific audiences and areas, which means that the advertisements are more targeted for Síminn's customers
The acquisition will further strengthen Síminn's service offering in the advertising market and Síminn will have more opportunities to develop and expand its advertising services
The total value of the companies amounts to ISK 5,150 million and will be financed by equity in Síminn worth ISK 1,000 million and cash
Síminn's annual turnover is estimated to increase by ISK 1,450 million and EBITDA by ISK 800 million on an annualized basis without the effect of IFRS 16
The transaction is subject to usual conditions such as approval of the Competition Authority, but a merger plan has been sent to the Authority
The best mobile network in Iceland
The best user experience is on Síminn's mobile network
The development of a robust mobile network in collaboration with Míla and Ericsson continues
- 670 mobile sites nationwide
- At the end of last year, 135 5G sites were in use, increasing the number by more than 50 in 2023.
- Capacity and range of 4G increased in almost 80 locations
- Substantial increase in data transmission through Síminn's mobile network during the year, with an increase of 50%
- Síminn recently acquired 4G and 5G frequencies for 20 years
Síminn reacted quickly when eruption turmoil began in Reykjanes
- Mobile sites in the vicinity of Grindavík and Svartsengi were dually connected to the mobile core, both with fiber optic and microwave, to ensure optimal communication in case of connections to the sites being disrupted
- Close collaboration with HS Orka and measures undertaken to ensure secure remote control of energy infrastructure
- Back-up power units were also installed in the areas to ensure a quicker response in the event of power shortage in the area, which was then realized during eruptions
- In good cooperation with Míla, Emergency service and other telco companies to ensure optimal communications in these conditions
Great year in TV
Never more subscribers in Síminn TV Premium service and it is now the largest national subscription provider
Record views last year
- Up by 15% year-on-year
- Over a million orders every week during the year
IceGuys was the most popular series of the year, but all the episodes set ratings records and the collaboration with HBO has been very successful
Síminn premiered four domestic series out of the six produced nationwide
- This year, six series out of eleven will be produced by Síminn
Síminn Pay's lending increases significantly
Síminn Pay's loans amounted to ISK 3 billion at the end of the year
- The net increase in lending for the year amounts to ISK 1.2 billion – just under 70%
- The Léttkaup product decreased, accounting for a third of loans at the end of last year
Síminn Pay’s corporate card to be launched soon
New corporate credit card launched in the coming weeks
- The corporate card is only electronic and thus activated immediately after the application has been approved
- Complete control over the management of all the company's cards and real-time overview of usage where all transactions will be visible on the service website
- Cardholders are identified by means of electronic identification which ensures that the card is used only by the correct parties
- The time spent sorting and posting transactions decreases by 95%, because all transactions are posted automatically as they are performed
Shareholders
Shareholders
Shareholders
| Shareholders 13.2.2024 | Position | % O/S |
|---|---|---|
| Stoðir hf. | 461.194.170 | 16,62% |
| Brú Lifeyrissjóður starfs sveit | 254.877.095 | 9,18% |
| Lifeyrissj.starfsm.rik. A-deild | 253.771.439 | 9,14% |
| Lifeyrissjóður verzlunarmanna | 215.422.187 | 7,76% |
| Gildi - lifeyrissjóður | 149.446.085 | 5,39% |
| Birta lifeyrissjóður | 105.467.528 | 3,80% |
| Stapi lifeyrissjóður | 104.151.623 | 3,75% |
| Söfnunarsjóður lifeyrisréttinda | 88.830.504 | 3,20% |
| Stefnir - Innlend hlutabréf hs. | 85.825.521 | 3,09% |
| Lifeyrissj.starfsm.rik. B-deild | 65.306.152 | 2,35% |
| Top 10 shareholders | 1.784.292.304 | 64,30% |
| Other Shareholders | 713.208.696 | 25,70% |
| Shares outstanding | 2.497.501.000 | 90,00% |
| Own shares | 277.499.000 | 9,99996% |
| Total number of shares | 2.775.000.000 | 100,00% |
- Stoðir hf.
- Brú Lifeyrissjóður starfs sveit
- Lifeyrissj.starfsm.rik. A-deild
- Lifeyrissjóður verzlunarmanna
- Gildi - lifeyrissjóður
- Birta lifeyrissjóður
- Stapi lifeyrissjóður
- Söfnunarsjóður lifeyrisréttinda
- Stefanir - Innlend hlutabréf hs.
- Lifeyrissj.starfsm.rik. B-deild
- Other Shareholders
- Own shares
Dividends, repurchases and reduction of share capital
- Nearly ISK 500 million dividend was paid on 31 March 2023
- On the same day, the company's share capital was reduced by ISK 1,440 million with ISK 15.6 billion payment to shareholders
- On 21 March, a buy-back program of ISK 1 billion was announced which ended on 17 July
- On 18 July, a new program of ISK 1 billion was announced which ended on 19 January 2024
- Buybacks for 2023 totaled ISK 2,976 million
There were 1,027 shareholders at the end of 2023, a decrease of 175 during the year
Siminn's shares declined 7% in 2023, but since the beginning of the year the share price has risen 4.5%
Outlook for 2024
6
65
Outlook for 2024
Considerable profit growth expected this year
- Revenue growth is expected in all core products
- Fixed line will drop significantly
- Will no longer be shown separately as a segment in this year's results
- Infrastructure costs will continue to rise, as they are partially indexed, and the increase in Simin's customer base will require increased purchases from major suppliers
- Other cost is expected to change little from last year
CAPEX forecast for the year is ISK 3.2 – 3.5 billion which is a significant decrease from 2023
- Reduction mainly due to declining investment in TV rights
- Investments in telco infrastructure increase between years
- Depreciation will be relatively high in 2024 due to high investments in TV rights in 2022 and 2023 but declining from 2023 when they peaked
| EBITDA | ISK 6.4 – 6.7 billion |
|---|---|
| EBIT | ISK 2.5 – 2.8 billion |
| CAPEX | ISK 3.2 – 3.5 billion* |
- Excluding licences and spectrum
39
Appendix
Business segments
Mobile: Revenue from mobile services in Iceland and abroad, whether conventional GSM services, satellite services or other mobile services.
Fixed voice: Revenue from fixed voice services for (fees and traffic).
Internet & network: Revenue from data service, including xDSL services, GPON, Internet, IP networks, local loops and access networks.
TV: Distribution of TV, subscriptions, fees and advertising on Síminn TV.
Equipment sales: Revenue from sale of telco equipment.
Other revenue: Revenues related to telecommunications, information technology 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.
