Q4 2021 Financial Highlights
In the financial statements of the Síminn group for the year 2021, Míla is treated as discontinued operations. The operations of the Síminn Group, including Míla, are described below.
Revenue for the fourth quarter (Q4) of 2021 was ISK 6,700 million, compared to ISK 6,703 million for the same period in 2020.
EBITDA was ISK 2,532 million in the fourth quarter of 2021, compared to ISK 2,713 million in the same period of 2020, down ISK 181 million or 6.7%. EBITDA ratio was 37.8% in Q4 2021, compared to 40.5% in the same period of 2020. EBIT operating income was ISK 918 million in Q4 2021, compared to ISK 1,207 million in the same period of 2020. If the reduction of an administrative fine in the fourth quarter of 2020 of ISK 300 million is taken into account, EBITDA for the period was ISK 2,413 million and EBIT was ISK 907 million.
Net finance costs amounted to ISK 279 million in the fourth quarter of 2021, compared to ISK 144 million in the same period of 2020. Finance costs amounted to ISK 360 million, finance income to ISK 87 million and loss exchange rate at 6 million ISK.
The profit in the fourth quarter of 2021 was ISK 654 million, compared to ISK 1,055 million in the same period of 2020. If the administrative fine reduction in the fourth quarter of 2020 is taken into account, the profit for the period was 755 million ISK.
Interest-bearing debt without Míla, including lease debt, was ISK 8.3 billion at the end of 2021, compared to ISK 21.5 billion at the end of 2020. Net interest-bearing debt without Míla, including rental debts, amounted to 4.8 billion ISK at the end of 2021. 2021 compared to 20.8 at the end of 2020.
Síminn’s equity ratio was 44.6% at the end of 2021 and shareholders’ equity was ISK 31.1 billion.
Orri Hauksson, CEO:
„2021 was a historic year for Síminn. The deal to sell Míla marks one of the biggest changes to the group in its century-long history. During the year, the sale of Síminn’s second subsidiary, the information technology company Sensa, was also finalized.
Along with the reshuffling of the group, basic operations went well, both in Síminn itself and within the group. The group’s profit is increasing year on year and amounts to almost ISK 3 billion thanks to the operations that were within the group at the end of last year, including Míla but without Sensa. Including the profit from the sale of Sensa, the profit was over ISK 5.2 billion. Part of the proceeds from the sale of Sensa were shares of Crayon, all of which were sold. Due to a positive development in Crayon’s share price, the final profit from the sale of Sensa turned out to be ISK 2,180 million, approximately ISK 120 million more than expected when the transaction has been finalized. The Group’s EBITDA has never been so high, at 10.6 billion ISK. Revenues increased significantly in mobile telephony but slightly in data transmission and television.
The improvement in operations last year was driven by lower costs, largely due to streamlining measures taken in 2020. These measures reduced labor costs, but the outsourcing of key aspects of Síminn’s information technology was fully implemented in 2021. This measure shifted costs between operating items and reduced expenses. The main objective of this change is to offer a long-term increased response rate and better service capacity to customers. The pandemic continued to have a clear effect on reducing revenues and expenses during the year. Síminn did not accept any public grants such as media grants, stock indemnities, or other public contributions established after the outbreak.
After some preparations, agreements were reached on the sale of Míla last October. The acquirer is the infrastructure fund company Ardian. The company asked Icelandic pension funds to co-own Míla with a minority share. Míla’s total value in the transaction is ISK 78 billion and Síminn’s estimated capital gain is ISK 46 billion, taking into account the cost of the transaction. Thus, the sale is particularly advantageous and maximizes the value of this asset for Síminn. A wholesale agreement has been concluded between Síminn and Míla for a period of 20 years, which takes effect upon delivery of the company. Thanks to the companies’ long-term agreement, Síminn secures access to the infrastructure necessary to continue to provide quality services to its customers. The change in ownership of Míla has almost no effect on transactions between the companies, they will remain on the same basis as since the creation of Míla in 2007, based on arm’s length considerations. Síminn’s operations will therefore not be affected beyond what is traditional when selling subsidiaries. It is also clear that the lease obligations are not formed in the balance sheet of Síminn after the transaction.
Míla’s balance sheet is classified in the 2021 Consolidated Financial Statements as discontinued operations and assets held for sale. The same goes for Mila’s operations. Furthermore, there is no effect in the account on the sale of the business and the capital gain on the transaction is not shown in the account. The operation is under investigation by the French Competition Authority, which announced on February 9 that it had received a concentration notification which it considers satisfactory. The agency’s review of the transaction has therefore begun and a decision should be made by the middle of the year.
The group was refinanced a few months before the sale of Míla and approximately ISK 8 billion was paid out to shareholders through a reduction in share capital. The parent company is now very moderately indebted and in fact financed by share capital to a much greater extent than is normal in the long term. The objective is to move the capital structure of Síminn to a more efficient position after the completion of the sale of Míla. Until then, investments in the company’s internal systems and processes will be accelerated and the purchase of own shares will continue. At the same time, the weight of the 5G structure increases in the name of the two companies, Síminn in the central system and Míla in the RAN system. By the end of the year, the 5G system covered most of the capital region and a 5-year agreement was reached with the Swedish technology company Ericsson to accelerate the national development of our future secure system.
Last year, Síminn also became the largest fiber optic local loop reseller in Iceland and for the first time was able to use all available networks in the country to offer its services to customers. Míla has also increased its investments in the fiber optic network, since the signing of the agreement for the sale of Míla. The TV right for the English Premier League has been renewed until 2025 and the collaboration with domestic and foreign content producers has been extended. In this way, quality content in the Síminn television service was ensured for the next few years.
This year will mark Síminn’s new start as an independent service company with less than 300 employees. The company is now built on a lean balance sheet and flexible operation, with excellent suppliers and an ambitious range of services in telecommunications, television and fintech. Other revenue growth opportunities are also being explored. “
Investor meeting February 16, 2022
An investor presentation will take place on Wednesday, February 16, 2022 at 8:30 a.m. at Síminn’s headquarters at Ármúli 25, Reykjavík. During the meeting, CEO Orri Hauksson and CFO Óskar Hauksson will present the financial results. The meeting will be held in Icelandic. Meeting materials are available on the Icelandic Nasdaq Company News and on the company’s Investor Relations website https://www.siminn.is/umsimann/uppgjor.
The meeting is webcast: https://www.siminn.is/fjarfestakynning.
The English version of the consolidated financial statements will be available at https://www.siminn.is/umsimann/quarterly-results later this week.
Orri Hauksson, CEO, tel. 354 550 6003 (firstname.lastname@example.org)
Óskar Hauksson, financial director, tel. 354 550 6003 (email@example.com)