The interim financial report for Sýn hf. for the second quarter of 2018, was approved by the company's Board of Directors and CEO at a board meeting on August 29th, 2018. In December 2017, the company acquired certain assets and operations of 365 Media hf., this affects the comparisons of amounts between years.
· Income in the second quarter of 2018 amounted to ISK 5,444 million, an increase of 61% from the previous year. Income in the first half of the year amounted to ISK 4,221 million, a 3% decrease from previous year. · The quarter's EBITDA amounted to ISK 718 million, a 3% decrease from previous year. EBITDA for the first six months amounted to ISK 1,436 million, a 3% decrease from previous year. · EBITDA adjusted for one off items in relation to the acquisition amounted to ISK 748 million, a 3% decrease from the previous year. · Loss in the period amounted to ISK 4 million, a decrease of 102% from the previous year. Profit for the first half of the year amounted to ISK 52 million, an 88% decrease from previous year. · Loss per share was ISK 0.01 in Q2 and was ISK 0.19 for the first six months of the year. · The quarter's investment activies amounted to ISK 854 million, an increase of 59% from the previous year due to intergration projects. · EBITDA outlook for 2018 is estimated at ISK 4,000-4,400 million from regular operations. The company' forecast for 2018 is currently in the lower end of the range. One-off items in the first half of the year are ISK 145 million. It is expected that the one-off items will not have material effect on the second half of the year. The estimated capital expenditure ratio is 8-10% of income and will be close to the upper bound considering front-loaded investment in relation to integration projects.
Stefán Sigurðsson, CEO: "The second quarter was characterized by very large synergy projects. Important milestones were reached, such as a successful transfer of all 365 mobile customers to Sýn's mobile telecom infrastructure which required sim card change for all those customers. Other projects include a merger of numerous departments as well as integration of number of systems. A significant part of the integration of the businesses relates to physical movement of operations from Skaftahlíð to Suðurlandsbraut. By end of the quarter, 69% of the employees of the acquired units have now moved to our HQ at Suðurlandsbraut. This means that important synergy projects have been finalized which will deliver fast decrease in costs from the third quarter. We therefore are expecting much stronger quarters in 2H, both because of lower costs as well as seasonally stronger income quarters, where income of telecommunications are historically strong 3Q and Media a strong 4Q. EBITDA of the quarter is below our expectations, especially due to higher cost following the merger projects. Total costs are not only higher due to one off costs but also due to costs related to extensive merger related projects that require substantive extra employee work load, double systems in operations, double housing as well as limited opportunity of the company to adapt to the quarters general wage increases in the middle of the merger process. The higher merger costs than expected is the main reason for the EBITDA being lower than anticipated. The execution of merger projects is however on plan which will start to deliver better operations in 2H of 2018. More costs in 1H than anticipated means that the company is currently by the lower end of its EBITDA outlook range for the year. The outlook range for EBITDA of 2019 and 2020 are unchanged. Total revenues and number of clients are in accordance with original plans of the acquisitions which is an important milestone considering complex client transfers between systems that have been executed in the integration. The company has as well streamlined its product portfolio after the merger, for example strengthened its TV proposition with lower price points as well as renewed and new content rights such as UEFA and the Italian League recently. We are pleased that the largest and most challenging period of the merger, regarding risk, is now completed and look forward towards bright times with lower costs and positive EBITDA development for the next quarters in line with the overall aim of the merger. We wish to thank Sýn's employees for outstanding and relentless work to build the foundation of a leading integrated media and telecommunications company "
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