Sýn hf.: Operational improvement and important changes for the future
Sýn hf.’s Condensed Consolidated Interim Financial Statements for the first nine months of 2020 were approved by the board on November 4th, 2020.
Main results:
• Revenue for the third quarter (Q3) of 2020 amounted to ISK 5,026 million, an increase by ISK 148 million compared to the same period in 2019. Endor ehf. revenue amounted to ISK 443 million in the third quarter. Revenue in the first nine months increased by ISK 497 million between years, or 3%.
• The quarter’s EBITDA amounted to ISK 1,593 million, compared to ISK 1,623 million in the third quarter of 2019. The EBITDA margin was 31.7% in the third quarter of 2020 compared to 33.3% in Q3 2019. EBITDA for the first nine months of 2020 was ISK 4,312 million, an increase of ISK 212 million from same period in 2019. EBITDA margin was 28% compared to 27.6% in 2019
• Profit in the third quarter of 2020 amounted to ISK 8 million, compared to a loss of ISK 71 million in the same quarter last year. Loss in the first nine months of the year amounted to ISK 402 million compared to a profit of ISK 384 million in the first nine months of 2019. Sales profit of the Faroese subsidiary Hey amounting to ISK 817 million is included in the 9M 2019 profit.
- Cash flow from operations in the third quarter amounted to ISK 1,055 million compared to ISK 1,235 million in the same period in 2019, a decrease of 15%. Cash flow from operations in the first nine months of 2020 amounted to ISK 3,855 million compared to ISK 3,424 million in the same period in 2019, an increase of 13%.
- Total investments for the first nine months of the year amounted to ISK 2,345 million, thereof ISK 764 million in property, plant and equipment and intangible assets (excluding broadcasting license rights) and ISK 1,581 million in broadcasting license rights.
- Negative cash flow from financial activities in the first nine months of 2020 amounted to ISK 1,932 million compared to ISK 600 million in the same period in 2019 which is an increase of ISK 1,332 million.
- The company’s equity ratio was 27.7% at the end of the third quarter of 2020.
Management´s ongoing goal is to increase EBITDA margin and operating cash flow in 2020. The process is ongoing; however, the negative impact of COVID-19 is not yet known. Capital investment in fixed and intangible assets (excluding broadcasting license rights) will be around ISK 1 bn.
Heiðar Guðjónsson, CEO:
"Important changes for the future.
Our business continues to improve. We continue to face challenges in advertisement sales and our roaming revenues nearly disappeared in the quarterly results. Fortunately, other parts of our business are on the rise. Our customer experience has changed for the better, which is the most important indicator for the future, leading to an increase in the number of customers.
In every quarterly announcement this year we have referred to our plan to reduce fixed costs. We need to outsource more and change fixed cost into variable cost and simplify our operations. We can now see important change on the horizon in this regard. We have signed an exclusivity agreement on selling the passive infrastructure of our mobile telecom network which could realize a big profit on assets which are not performing in our current business. We believe the profits could amount to around 6 billion without having a meaningful impact on our EBITDA. This transaction would mean that we sell around 200 of our 600 mobile sites.
Our infrastructure will still be very robust. In addition to a great mobile network with 99,8% coverage at high speeds we have a countrywide fixed line network, the only countrywide TV and radio broadcasting network and one of two IPTV networks. Our company has therefore active equipment on over 800 sites in Iceland.
To us it is important to strengthen the balance sheet for the future. Long term debt, excluding lease obligations, is decreasing at 10,4 billion. By selling of infrastructure the company will be left with very little debt.
There is uncertainty regarding 5G roll-out due to governmental interference of network vendors. Our plan to build a extensive 5G network is therefore delayed which will negatively impact the future growth of the economy. All vendors should face the same strict security standards, anything else would be risky and lead to discrimination between operators."
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