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Syn Investor Presentation 2018
2210_rns_2018-11-07_962a30cd-2320-426f-bdb5-1f65be4fce07.pdf
Investor Presentation
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sýn
Key Financial Results Q3 2018
Revenue
5,449 m IKR
59% increase from 2017
EBITDA
1,032 m IKR
21% increase from 2017
Net Profit
226 m IKR
22% decrease from 2017
Equity Ratio
39.5%
Was 39.9% in end of 2017
Q3 Highlights
| ISK m | Q3 2018 | Q3 2017 | Change | % change |
|---|---|---|---|---|
| Revenue | 5,449 | 3,437 | 2,012 | 59% |
| Cost of Sales | 3,311 | 1,887 | 1,424 | 75% |
| Gross Profit | 2,138 | 1,550 | 588 | 38% |
| Operating costs | 1,641 | 1,092 | 549 | 50% |
| EBITDA | 1,032 | 854 | 178 | 21% |
| EBIT | 497 | 458 | 40 | 9% |
| Net Financials | 213 | 96 | 117 | 122% |
| Net Profit | 226 | 290 | -64 | -22% |
| Gross Margin (%) | 39.2% | 45.1% | ||
| EBITDA % | 18.9% | 24.8% | ||
| EBIT % | 9.1% | 13.3% |
Media largest contributor of revenue growth
| ISK m | Q3 2018 | Q3 2017 | Chg. | % chg. |
|---|---|---|---|---|
| Media | 2,090 | 531 | 1,559 | 293% |
| Broadband | 1,288 | 1,032 | 256 | 25% |
| Mobile | 1,228 | 1,092 | 136 | 12% |
| Fixed Line | 270 | 302 | -32 | -11% |
| Retail Sales | 310 | 307 | 3 | 1% |
| Other Revenue | 262 | 173 | 89 | 51% |
| Total Revenue | 5,449 | 3,437 | 2,012 | 59% |
Q3 Cash flow
^{}[]
| ISK m | Q3 2018 | Q3 2017 | Change | % chg. |
|---|---|---|---|---|
| Cash generated by operations | 519 | 858 | -339 | -40% |
| Investing activities | -516 | -368 | -148 | 40% |
| Financing activities | -50 | -430 | 380 | -88% |
| Change in cash | -47 | 60 | -107 | -178% |
| Effect of exchange rate | 1 | -1 | 2 | 0% |
| Cash at beginning of period | 317 | 326 | -9 | -3% |
| Cash at the end of period | 271 | 385 | -114 | -30% |
| Free Cash Flow | 157 | 563 | -406 | -72% |
Q3 2018 Cash Flow changes
Key Financial Results 9M 2018
Revenue
16,197 m IKR
63% increase from 2017
Profit
278 m ISK
62% decrease from 2017
399 m ISK adj.*
48% decrease from 2017
EBITDA
2,468 m ISK
6% increase from 2017
2,619 m ISK adj.*
10% increase from 2017
Equity Ratio
39.5%
Was 39.9% in end of 2017
*Amounts adjusted for one-time costs for the acquisition of 365 media hf.
9M Highlights
| ISK m | 9M 2018 | 9M 2017 | Change | % change |
|---|---|---|---|---|
| Revenue | 16,197 | 9,964 | 6,232 | 63% |
| Cost of Sales | 9,872 | 5,458 | 4,415 | 81% |
| Gross Profit | 6,325 | 4,507 | 1,820 | 40% |
| Operating Costs | 5,423 | 3,329 | 2,094 | 63% |
| EBITDA | 2,468 | 2,334 | 134 | 6% |
| EBIT | 902 | 1,177 | -275 | -23% |
| Net Financials | 550 | 265 | 285 | 108% |
| Net Profit | 278 | 730 | -452 | -62% |
| Gross Margin (%) | 39.1% | 45.2% | ||
| EBITDA % | 15.2% | 23.4% | ||
| EBIT % | 5.6% | 11.8% |
9M Highlights
| 9M 2018 | 9M 2017 | Change | % change | 9M '18 adj. | 9M '17 adj. | Change | % change | |
|---|---|---|---|---|---|---|---|---|
| Revenue | 16,197 | 9,964 | 6,233 | 63% | 16,229 | 9,964 | 6,265 | 63% |
| Cost of Sales | 9,872 | 5,458 | 4,414 | 81% | 9,855 | 5,458 | 4,397 | 81% |
| Gross Profit | 6,325 | 4,506 | 1,820 | 40% | 6,374 | 4,505 | 1,869 | 42% |
| Operating costs | 5,423 | 3,329 | 2,094 | 63% | 5,321 | 3,287 | 2,034 | 62% |
| EBITDA | 2,468 | 2,334 | 134 | 6% | 2,619 | 2,372 | 248 | 10% |
| EBIT | 902 | 1,177 | -275 | -23% | 1,053 | 1,215 | -162 | -13% |
| Net Financials | 550 | 265 | 285 | 108% | 550 | 265 | 285 | 108% |
| Net Profit | 278 | 730 | -452 | -62% | 399 | 760 | -361 | -48% |
| Gross Margin (%) | 39.1% | 45.2% | 39.3% | 45.2% | ||||
| EBITDA % | 15.2% | 23.4% | 16.1% | 23.8% | ||||
| EBIT % | 5.6% | 11.8% | 6.5% | 12.2% |
Media largest contributor of revenue growth
| ISK m | 9M 2018 | 9M 2017 | Breyt. | % breyt. |
|---|---|---|---|---|
| Media | 6,518 | 1,585 | 4,933 | 311% |
| Broadband | 3,678 | 2,882 | 796 | 28% |
| GSM | 3,416 | 3,115 | 301 | 10% |
| Fixed Line | 871 | 901 | -30 | -3% |
| Retail Sales | 937 | 918 | 19 | 2% |
| Other Revenue | 777 | 563 | 214 | 38% |
| Total Revenue | 16,197 | 9,964 | 6,233 | 63% |
EBITDA quarterly development
EBITDA quarterly development adjusted for one time items
Balance sheet 30.09.2018
| 30.09.18 | 31.12.17 | Change | % | |
|---|---|---|---|---|
| Operational assets | 5,204 | 4,902 | 302 | 6% |
| Intangible assets | 15,529 | 15,485 | 44 | 0% |
| Shares in other companies | 39 | 16 | 23 | 144% |
| Fixed assets | 20,772 | 20,403 | 369 | 2% |
| Other current assets | 5,463 | 4,656 | 807 | 17% |
| Cash and cash equivalents | 271 | 317 | -46 | -15% |
| Current assets | 5,734 | 4,973 | 761 | 15% |
| Total assets | 26,506 | 25,376 | 1,130 | 4% |
Balance sheet 30.09.2018
| 30.09.18 | 31.12.17 | Change | % | |
|---|---|---|---|---|
| Equity | 10,457 | 10,131 | 326 | 3% |
| Interest bearing debt | 10,990 | 10,732 | 258 | 2% |
| Deferred tax liabilities | 263 | 193 | 70 | 36% |
| Non-current liabilities | 11,253 | 10,925 | 328 | 3% |
| Interest bearing debt | 855 | 618 | 237 | 38% |
| Other current liabilities | 3,941 | 3,702 | 239 | 6% |
| Current liabilities | 4,796 | 4,320 | 476 | 11% |
| Total equity and liabilities | 26,506 | 25,376 | 1,130 | 4% |
| Interest bearing debt | 11,845 | 11,350 | ||
| Net interest bearing debt | 11,574 | 11,033 | ||
| Equity ratio | 39.5% | 39.9% |
Balance sheet KPI's
Equity Ratio
Net Interest Bearing Debet
Current Ratio
Net Debt/EBITDA
- Net Debt/EBITDA is calculated from the consolidated net interest bearing debt at 1Q end 2018 and EBITDA of trailing 12 months.
9M Cash flow
| ISK m | 9M 2018 | 9M 2017 | Change | % chg. |
|---|---|---|---|---|
| Cash generated by operations | 1,303 | 1,544 | -241 | -16% |
| Investing activities | -1,892 | -1,229 | -663 | 54% |
| Financing activities | 541 | -295 | 836 | -283% |
| Change in cash | -48 | 20 | -68 | -340% |
| Effect of exchange rate | 2 | -3 | 5 | -167% |
| Cash at beginning of period | 317 | 368 | -51 | -14% |
| Cash at the end of period | 271 | 385 | -114 | -30% |
| Free Cash Flow | -61 | 565 | -625 | -111% |
Cash flow 9M 2108
Financial Guidance
Financial guidance for 2018
^{}[]
EBITDA outlook for 2018 has been lowered and are now around ISK 3600 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 of the year. The estimated capital expenditure ratio is 11% of income. The management has assessed the guidance for 2019 and 2020 and do not find that there are premises for changing the outlook
Guidance for 2018 and clarifications
- From the provisional September operational results and Beyond Budgeting process for Q4 it came apparent that it was prudent to lower the prospects
- The reason, amongst other, is related to strain of resources due to merger projects as well as the depreciation of the ISK, i.e.:
- Higher cost and delay of merger projects during the second half
- Depreciation of the ISK has substantially affected the prospects for 4th quarter
- Increase in subscription does not fully cover lowering of content prices
- Lower advertisement income affects due to the World Cup and relocation of radio stations in September
Currency operational risk
- The company’s operational risk is approximately ISK 2.8 bn in foreign currency. 10% exchange-rate fluctuation has therefore a ISK 280 m.kr effect on the operational results.
- Action has been taken to increase revenue next year to counter the increased cost of the ISK currency weakening.
Operations in foreign currency (ISK m.)
■ Technology ■ Media ■ Consumer sales ■ Other departments
Outlook on syngergy 2018-2020
- Original synergy plan of ISK 1.0-1.1 bn.
- Approx. ISK 400 m. positive results in cost synergies is apparent in 2018
- High cost level due to integration lead to a weaker impact of synergies in the operations
- Prospect of higher cost synergies than original plans
Estimated development of syngery
Business highlights
Relative size of Hey in Sýn has been decreasing
- Following difficult trading environment due to price war and sharp price reduction in the Faroes market, the operations of Hey have stabilized largely due to cost reduction initiatives
-
Hey's EBITDA has now grown (YoY) for 4 consecutive quarters after 2 years decrease
-
The relative Size of Hey in Sýn has furthermore reduced following the acquisition of assets and operations from 365.
- The board and management of Hey have therefore been seeking new developing opportunities that will result in less time commitment from Sýn' management for Hey
EBITDA T12M
FO revenue as a percentage of consolidated income
Majority of shares in Hey sold in a merger with Nema
- Sýn and the Faroese company Tjaldur have agreed on heads of terms in a merger of Hey a subsidiary of Sýn and the Faroese IT company Nema a subsidiary of Tjaldur.
- The transaction will create a leading ICT company in the Faroese market with diversified income streams from enterprise and consumer market in the Faroe Islands.
- The merger will realize cost synergies and unlock potential for further value creation through extended product supply to the enterprise ICT market.
-
The transaction is subject to several prerequisites such as completion of a final share purchase agreement and approval of the Faroese competition authorities.
-
Key terms agreed between parties:
- Sýn will hold 49,9% of the merged business and Tjaldur owning 50,1%.
- Sýn will receive a payment of DKK 22m.
-
Respective interests of the parties will be protected by a shareholder agreement. Fjárhagsleg áhrif á Sýn:
-
Impact on Sýn:
- The transaction will result in a profit of DKK 46m for Sýn from an increase in the booked value of Hey
- Following the transaction Sýn's stake in the merged business will most likely be accounted for using the equity method and therefore not on a consolidated basis.
Set-top box – just if it suits you!
- Watch wherever you want and whenever you want:
- Via set-top box
- Via phone
- Via computer
- Via Apple TV
- Via tablet
-
Via Chromecast or AirPlay
-
The Stöð 2 app gives access to: close to 30 stations, Stöð 2 Marathon, Hopster and on demand services.
Stöð 2 appið
ULTRA HD
The nations most popular TV show, S-American Dream. Mix of national and foreign quality material in linear and nonlinear schedule.
VISIR
77% of the nation reads
Vísir each week
165 thousand Icelanders
read Vísir at least 4
times a day.
SPORT
Increase in subscribers following a 35% reduction in subscriber price. Continues to be a strong sports center.
BYLGJAN
989
The nations most popular radio station. Over 50% market share.
66,4% of the population listen to Sýns radio stations every day.
Six radio stations that each cater to their target group. Contextual ads cover a wide audience of listeners.
World-class sports and coverage
- Stöð 2 Sport has most of the world's strongest sport content, despite the loss of content rights for the English Premier League from autumn 2019 (EPL 24% of broadcasts).
- Long-term agreements on key rights.
- Rights for the Nations League and UEFA Euro 2020.
- Lower prices have resulted in growth of subscribers, new position in the market gives opportunity to further grow the customer base
- Mobile - Revenue for use of cell phones, including data transfer with in the mobile network, subscription revenue from individuals, prepaid sim cards, roaming revenue from travelers, interconnection revenues etc.
- Broadband - Revenue from internet service in fixed-line networks, including fiber optic cables, xDSL service and other data connections.
- Media - Revenue from the operation of broadcast media, TV subscriptions, advertisement, distribution systems, set-top boxes, TVOD, SVOD and PPV.
- Fixed line - Revenue from home phone usage and corporate fixed line usage, interconnection revenue from fixed line.
- Retail sale - Revenue from sale of telecommunications equipment and accessories.
- Other revenue - Service revenues and rental of terminal equipment
Disclaimer
The information in this presentation are based on sources that Sýn hf. deem reliable at the time of publication. However, it is not possible to secure fully that they are completely faultless.
All information in the presentation are the property of Sýn hf. It is prohibited to copy, amend or distribute in any manner, partly or fully, the presentation and the information therein.
The presentation is only for information purposes and not to be used as basis for decision making on part of recipients. Recipients shall not in any manner interpret the content therein as promise or guidance. Sýn hf. is not obliged to provide the recipients with further information nor to amend or correct should the information it is based on change.
Any statement in this presentation that cites future prospects is solely for guidance purposes, based on current evolution, information and projections. Future guidance of the company are subject to numerous risk and uncertainties that can result in being substantially different from the content of this presentation. External factors, such as access to finance, legislation, regulatory actions and otherwise can thus have substantial effects.
Sýn hf. will not update future guidance of the company due to situations that will occur afterwards. Sýn hf. suggest that recipients of the presentation should not trust statements therein at a later stage as they are only relevant at the day of the publication. Subject to this proviso, all guidance on future prospects are fully reliable.
The recipients of the presentation acknowledge that they are subject to aforementioned disclaimers and limitations.