Syn — Earnings Release 2018

Feb 27, 2019

Sýn hf. : Merged company completes its first full year under challenging market conditions

Sýn hf. : Merged company completes its first full year under challenging market conditions

Sýn's 2018 annual financial statement was approved by Sýn's CEO and board of
directors at a board meeting 27th of February 2019. The financial statement was
audited and signed under unqualified opinion by the firm's auditors. The
financial statement will be presented for confirmation at the firm's annual
general meeting on the 22nd of March 2019.

In December 2017 the company purchased certain assets and operations of 365
Miðlar hf., and this influences the comparison between periods.

Sýn and the Faroese company Tjaldur have agreed on heads of terms in the merger
of P/F Hey a subsidiary of Sýn and the Faroese IT company Nema a subsidiary of
Tjaldur. Sýn being the sole shareholder of P/F Hey will hold 49,9% of the merged
business with Tjaldur owning 50,1%.  P/F Hey's assets and liabilities have been
classified as held for sale in the balance sheet but the company's operations in
2018 have not been presented as discontinued in the income statement as it is
considered unsubstantial in the company's accounts.

·      Revenue in the fourth quarter of 2018 amounted to ISK 5,754 million,
an increase of 34% from the previous year.

·      Total revenue for 2018 amounted to ISK 21,951 million, an increase by
54% from the previous year.

·      The quarter's EBITDA amounted to ISK 780 million, a decrease by ISK
23 million from previous year. EBITDA adjusted for one off items amounted to ISK
798 million, a 17% decrease from previous year.

·      EBITDA for the year amounted to ISK 3,248 million, a 4% increase from
previous year. EBITDA adjusted for one off items in relation to the acquisition
amounted to ISK 3,417 million, a 2% increase from the previous year.

·      Profit in the period amounted to ISK 195 million, a decrease of 45%
from the previous year.

·      The year's profit amounted to ISK 473 million, a 56% decrease from
previous year. Profit adjusted for one off items in relation to the acquisition
amounted to ISK 608 million, a 52% decrease from the previous year.

·      Profit per share was ISK 1.6 for the year.

· The years investment activities amounted to ISK 2,407 million, an increase
of 45% from the previous year. Investment activities as a percentage of revenue
was 11.0%, but was 11.7% in 2017.
    · The Board of Directors proposes that no dividend will be paid for the
operating year 2018.
    · The EBITDA guidance has been revised downwards by ISK 440 million.
Furthermore, the sale of the majority stake of P/F Hey, changes in accounting
methods of content rights and implementation of IFRS 16 leads to a revised
guidance of ISK 6.0 - 6.5 bn., see graph 5 in press release.
    · changed accounting policies used in the handling of the exhibit and the
implementation of IFRS 16.

Stefán Sigurðsson, CEO:

"The fourth quarter results mark the first full year of merged company. There
are several reasons why the results are lower than our earlier guidance.
Firstly, challenging economic conditions have affected sales in both advertising
and TV-subscriptions. Secondly, the cost level of the company has been higher
than anticipated along with cost increase due to the weakening of the ISK in the
fourth quarter. Thirdly, technical difficulties of migrating customers between
billing systems around mid-year caused a lot of strain on the company's service
at the same time as the competition in the market increased. This increased
churn, sales cost and led to lower ARPU in the fourth quarter. All mentioned
challenges have been met with various measures. The service level of the company
is back to normal, sales have increased although competition in the market is
still fierce. Focus has been put on cost cutting which will continue to have
positive effect on the company's results. At the same time measures will be
taken to simplify and improve the corporation's operations in coming months.

Technical projects related to the merger have mostly been completed and all
operations are now situated at the company HQ at Suðurlandsbraut 8-10. The sale
of the majority of P/F Hey in the Faroe Islands will simplify the operations.
Other projects include construction of Reykjavik first data center partly owned
by Sýn. The project has been met with much enthusiasm as the data center will be
the one of the most advanced in Iceland. After the merger the company is
financially stronger, with more diverse income streams, and numerous future
opportunities and therefore well positioned to face challenges in the market and
macro environment" says Stefán Sigurðsson CEO, Sýn.

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