Syn — Earnings Release 2018

Nov 7, 2018

Sýn hf. : The merger starting to generate positive results with EBITDA increase of 21%

Sýn hf. : The merger starting to generate positive results with EBITDA increase of 21%

The interim financial report for Sýn hf. for the third quarter of 2018, was
approved by the company's Board of Directors and CEO at a board meeting on
November 7th 2018. In December 2017 the company purchased certain assets and
operations of 365 Miðlar hf., and this influences the comparison between
periods.

· Revenue in the third quarter of 2018 amounted to ISK 5,449 million, an
increase of 59% from the previous year. Income in the first nine months of the
year increased by ISK 6,233 million, or 63%.
· The quarter's EBITDA amounted to ISK 1,032 million, an increase by ISK 178
million from previous year. EBITDA for the first nine months amounted to ISK
2,468 million, a 6% increase from previous year.
· EBITDA adjusted for one off items in relation to the acquisition amounted to
ISK 1,038 million, a 21% increase from the previous year.
· Profit in the period amounted to ISK 226 million, a decrease of 22% from the
previous year. Profit for the first nine months of the year amounted to ISK 278
million, a 62% decrease from previous year.
· Profit per share was ISK 0.76 in Q3 and was ISK 0.94 for the first nine months
of the year.
· The quarter's investment activities amounted to ISK 516 million, an increase
of 40% from the previous year due to integration projects.
· Sýn hf. published revised EBITDA guidance for 2018 on November 1, 2018.
Current EBITDA guidance for 2018 is estimated at ISK 3,600 million from regular
operations. One-off items in the first nine months of the year are ISK 151
million. It is expected that the one-off items will not have material effect on
the last quarter. The estimated Capex ratio is 11% of income and is higher than
expected mostly due to investments regarding moving of broadcasting studios and
employees at the end of the year.

Stefán Sigurðsson, CEO:
"I was pleased to see the merger result in increased EBITDA of ISK 1,032 million
in the third quarter, an increase of 21% compared to the third quarter last
year. As the synergies have not fully materialized and total cost of the merger
is higher than expected, the next quarters should show positive operating
results, in accordance to the third quarter, throughout 2019 and into 2020. The
management goal is a steady increase of the quarterly EBITDA up to ISK 1.0 to
1.4 bn. in accordance to merger plans which assumed full synergies within 18
months.

The company was forced to lower its earnings prospects for 2018, mainly due to
merger projects having more effect on the operations for a longer time than
anticipated. This has resulted in higher cost level in the company as synergy
projects have taken time from regular operations, leading to higher wage cost
due to increased work load and overtime while moving and combining various
operating systems. Reduction of full-time employees is however in accordance
with the plans of the merger. The depreciation of the ISK has in addition had
negative effects, especially on the outlook for the fourth quarter. On the
positive side, the increased strain of the merger will not last forever and the
synergy projects are well underway. With each passing day the operation is
getting more to normal and with relocation of all staff and studio operations to
Suðurlandsbraut by the end of the year we will have seen the last of the
extensive merger projects.

Management is working hard on specific actions to strengthen the companys
operations and at this point does not see reason to change outlook for 2019 from
ISK 4,600 to 5,000 million despite lowered guidance for 2018. Management is
working on many different fronts to execute on the outlined merger goals.
Already, action has been taken to increase revenue for the coming year to
complement the weakening of the ISK, synergy effects related to supplier deals
will affect in lower cost for 2019 in whole, and operational projects will
result in improved operation. The number of full-time employees have already
decreased by 5% in the second half of the year and with less strain, plans
assume a decrease of further 5% by second half of 2019 following employee
turnover. We therefore see positive operations in coming quarters, well into
2020."

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