Síminn hf. - Continued revenue growth in core services

Financial highlights Q2 2023

• Revenue in the second quarter (Q2) of 2023 amounted to ISK 6,283 million compared to ISK 6,036 million in the same period 2022 and increased by 4.1%. There is still steady revenue growth in Síminn's core services where income from mobile, data and TV services increases by almost 9% during the quarter. Equipment sales decreased by 17.5%.
• EBITDA amounted to ISK 1,410 million in Q2 2023, up by ISK 11 million or 0.8% compared to the same period 2022. The EBITDA ratio was 22.4% in Q2 2023, compared to 23.2% in the same period of 2022. Operating profit EBIT amounted to ISK 362 million in Q2 2023, compared to ISK 682 million in the same period of 2022.
• Net financial expenses amounted to ISK 145 million in Q2 2023, compared to ISK 165 million in the same period of 2022. Financial expenses amounted to ISK 263 million, financial income ISK 124 million, and foreign exchange loss ISK 6 million.
• Profit in Q2 2023 amounted to ISK 179 million compared to a ISK 410 million profit of continuing operation in the same period 2022.
• Interest-bearing debt including lease liabilities amounted to ISK 8.8 billion at the end of Q2 2023, compared to ISK 8.9 billion at the end of 2022. Cash in the end of Q2 2023 amounted to ISK 0.7 billion, compared to ISK 3.7 billion at the end of 2022. The balance of loans at Síminn Pay was ISK 2.2 billion at the end of Q2 2023, but was ISK 1.7 billion at the end of 2022.
• Síminn's equity ratio was 55.1% at the end of Q2 2023 and equity was ISK 18.2 billion.

Orri Hauksson, CEO:

"The year 2023 is the first year that Síminn operates as a service company, after selling Míla last year. Following such fundamental changes, it is pleasing to see the revenue of our core products (internet, TV, and mobile) significantly growing year-on-year. Television's advertising revenue is an example of that increase, and that service still has a lot to offer due to the new possibilities that have started to be offered to advertisers. Lending through our revolving credit card Léttkort is also enjoying healthy growth, and therefore Síminn's financial income is increasing. In today's high-interest rate environment, financial expenses are also increasing, but the company's moderate leverage is beneficial in the current situation. Income from fixed voice continues its predictable decline, and equipment sales were also lower than the same period last year.

Overall, EBITDA is up slightly in the quarter, as costs grew almost as fast as revenues. Wages rose rapidly in line with wage trends in the country, and many supplier contracts have a direct or indirect connection to general price trends.

Due to recent investment efforts in TV content and technology, which has a short amortization period but will in various ways strengthen the business in the long term, there are rapid depreciations this year. The long-term development of 5G systems continues in cooperation with Míla, and the PSTN system will be discontinued at the end of the year, which will save costs against the decreasing income from fixed voice services.

As previously announced, investments in TV content will be reduced for the next years. The volume could shrink even faster in the last months of the year than expected, as there is a shortage of TV content from USA due to strikes by actors and screenwriters. On the other hand, Icelandic content will be strong this winter, such as Icelandic drama series and shows about the band IceGuys. Interesting sports rights will be auctioned in the autumn, but there is a new uncertainty about the value of such rights if the Competition Authority's new policy regarding their legal treatment is allowed to stand. Under all circumstances, Síminn has plans to act quickly to offer quality content to demanding television viewers in Iceland.

There are several exciting changes ahead. In FinTech, we continue to expand our range of services with Icelandair travel points and the sale of flexible travel insurance from VÍS. We recently started a collaborative project with the Handball Association of Iceland (HSÍ) on the innovative distribution of handball games on TV available to viewers all over the country. More national sports will hopefully follow this interesting innovation. We have recently made the biggest changes to our product mix in eight years and further innovations are on the way. We have also brought our balance sheet closer to the company's strategy for capital structure, among other things by issuing corporate notes, bonds and purchasing own shares. The year of change 2023 will continue to be eventful at Síminn."

Investor meeting 23 August 2023

An investor presentation will be held on Wednesday 23 August 2023 at 8:30 am at Síminn‘s headquarters in Ármúli 25, Reykjavík. During the meeting, Orri Hauksson CEO and Óskar Hauksson CFO will present the financial results. The meeting will be held in Icelandic. Documents for the meeting are available in Nasdaq‘s Iceland company news and on the company’s investor relations website https://www.siminn.is/fjarfestar/quarterly-results.
The meeting is webcasted on: https://www.siminn.is/fjarfestakynning.

Further information:

Orri Hauksson, CEO (orri@siminn.is)
Óskar Hauksson, CFO (oskarh@siminn.is)

Attachments

• Síminn hf - Financial results Q2 2023
• Síminn hf. - Investor Presentation Q2 2023
• Síminn hf. - Consolidated Interim Financial Statements Q2 2023