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Sýn hf.

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Sýn hf.: A turnaround year

Sýn hf.’s Consolidated Financial Statement for the year 2020 was approved by the board on February 24th, 2021.

Main results:

  • Revenue for the fourth quarter (Q4) of 2020 amounted to ISK 5,413 million, an increase by ISK 478 million compared to the same period in 2019. Revenue in the year 2020 increased by ISK 975 million between years, or 4.9%. COVID-19 has had a considerable impact on both roaming- and advertising revenues in the year
  • EBITDA for Q4 amounted to ISK 1,427 million, compared to ISK 1,409 million Q4 2019. The EBITDA margin was 26.4% in Q4 of 2020 compared to 28.6% in Q4 2019. EBITDA for the year 2020 was ISK 5,739 million, an increase of ISK 230 million from 2019. EBITDA margin was 27.6% for 2020 compared to 27.8% in 2019
  • Loss in Q4 of 2020 amounted to ISK 3 million, compared to a loss of ISK 2,132 million in the same quarter last year. Loss in the year 2020 amounted to ISK 405 million compared to a loss of ISK 1,748 million in the year 2019. Sales profit of the Faroese subsidiary P/F Hey amounting to ISK 872 million is included in net financial expense for the year 2019. An impairment of goodwill amounting to ISK 2,452 million is included in the Q4 2019 loss.
  • Cash flow from operations in Q4 amounted to ISK 2,051 million compared to ISK 1,953 million in the same period in 2019, an increase by 5%. Cash flow from operations in the year 2020 amounted to ISK 5,912 million compared to ISK 5,377 million in 2019, an increase of 10%.
  • Total investments for the year 2020 amounted to ISK 3,516 million, thereof ISK 1,049 million in property, plant and equipment and intangible assets (excluding broadcasting license rights) and ISK 2,511 million in broadcasting license rights. Payment amounted to ISK 100 million and dividend received amounted to ISK 144 million for business combination.
  • Negative cash flow from financial activities in the year 2020 amounted to ISK 2,238 million compared to ISK 380 million in 2019 which is an increase of ISK 1,858 million.
  • The Company’s equity ratio was 27.8% at the end of 2020.
  • Management estimates that the pandemic will continue to affect the Company's operations, mainly on roaming revenue and exchange rate, but it is expected that negative effects will be reduced as the year progresses. Work will continue in line with the firm’s strategy, which was set in the summer of 2019, with an emphasis on simplifying operations, increasing automation and have a stronger and clearer product range.
  • Management´s on going goal is to increase EBITDA margin in the year 2021. Investment in fixed and intangible assets (excluding broadcasting license rights) is estimated to be in the range of ISK 1,000-1,500 million.

Heiðar Guðjónsson, CEO:

"The pandemic had a significant impact on our annual results. Disregarding this effect will show that our new strategy would have resulted in a profit in the year of 2020. We have worked hard to implement our new strategy from 2019, to foster long term client relationship based on respect and trust. Last May we started a campaign called „a fresh start". By the end of the year we had reviewed services for over 25.000 households with the ambition to optimize their value and satisfaction in dealing with us. Our outreach was very much appreciated which yielded us a higher NPS score in the year of 2020, the highest in the history of the Company. Short term this leads to lower revenues but in the long term it will be rewarded. Our aim is of course to be able to face external shocks, like the pandemic, but still showing a profit and therefore we are streamlining operations further.

Media business is increasing its reach

We changed our product offering to increase the number of subscribers to Stöð 2. The growth was 14% in 2020. Since the acquisition we have continuously lowered prices. Stöð 2 Sport price has been halved in the last 3 years and now our clients can now split the offering in two, domestic and international at an previously unheard price point of 3.990.
Our video streaming service, Stöð 2+ is growing fast and subscriptions increased by 9% last year. Stöð 2+ is the largest OTT platform with local content and is uniquely positioned for the future.
Our radio station Bylgjan continues to be the most popular one in Iceland and FM957 and X-ið stand their ground. Our webportal Vísir is for the first time a clear leader. I think Vísir will only continue to grow over the next few years.

Selling infrastructure

In 2020 we made important steps to increase efficiency in the telco market by starting a sales process on passive mobile telecom infrastructure. It will give the opportunity to do more with less as well as increasing synergies in potential 5G cooperation. By selling we will free up capital to pay down debt, some of which is due to the acquisition of the media business in 2017. The aim is to increase flexibility in the business to the benefit of shareholders and customers.
Agreement has been reached in principle on the most important substantive issues in relation to the sale of the passive infrastructure of the mobile network. Financial terms will be in accordance with previous Stock Exchange announcements. The Board of Directors have approved Power of Attorney for management to sign all relevant documents on the premise that final documentation will take place prior to Syn‘s announcement of its Q1 2021 results, with the expectation of the Parties being that it will be signed well in advance of that. The Agreement will be subject to relevant regulatory approval.

Future of telecommunications

It has been said that 5G will be as important for machines and homes as 4G was for the individual. 4G brought highspeed access to the public which could stream, broadcast and more or less work remotely by only relying on a smartphone, as is currently evident during the pandemic. The "Internet of things"(IoT) is a part of the future of telecommunications.  There we reached important milestones in 2020.
We have collaborated closely with Controlant for over a decade. We produced the first SIM cards they could use in their business. Now when Controlant is working with the pharmaceutical industry internationally the growth has been phenomenal. Iceland is the only country in the world with more IoT cards outstanding than inhabitants. We have also signed an agreement with Iceland‘s largest utility on connecting their new smart metering system, which will cover over 160.000 houses. Our partnership with Vodafone Global means that more or less all new cars as of this year will use our telecom system. In this area our company is in a league of its own and at the forefront of building the telco system of the future.
We turned on our first 5G equipment in September 2020. Unfortunately, we have not been able to roll out the services as planned since the government still has not finalized the terms it will issue spectrum licenses at."

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