Skipti hf.
Skipti results in 2009

Skipti hf. / 

22.03.2010 17:52

Dissemination of a Corporate News, transmitted by
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The issuer / publisher is solely responsible for the content of this announcement.

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- EBITDA amounted to ISK 8.7 billion

*  Sales amounted to ISK 39.7 billion as compared to ISK 39.0 billion in the
   preceding year, increasing by 2%.
 
*  Earnings before depreciation and financial items (EBITDA) amounted to ISK 8.7
   billion as compared to ISK 9.0 billion for 2008. EBITDA margin was 22%.
 
*  Cash from operations amounted to ISK 9.1 billion as compared to ISK 10.1
   billion in 2008. After tax and interest, cash from operations came to ISK 6.9
   billion. 

*  Loss over the period came to ISK 10.2 billion, mainly due to impairment of
   intangible assets, which amounted to ISK 7.3 billion, and the devaluation of
   the Icelandic krona. 

*  Exhange loss came to ISK 2.1 billion of the total of ISK 7.5 billion finance
   cost for the year. 

*  37% of Skipti's sales derived from international operations as compared to
   32% in 2008. 

*  Net interest bearing debts (interest bearing debts, minus deposits) amounted
   to ISK 54.4 billion at the turn of the year, as compared to 51.1 billion in
   the preceding year.
 
*  Skipti's equity ratio is 21% and equity stood at ISK 25.5 billion at the end
   of 2009. 

Highlights of  2009

*  The economic crisis left its mark on Skipti's business activities during the
   year, and those of its subsidiaries. Various measures were taken in the
   Company's operations to ensure healthy results; nevertheless, continued
   difficulties may be anticipated in the operating environment of Icelandic
   businesses. 

*  Síminn continued the development of its long-range GSM system and long-range
   3G system, providing users with strong high-speed communications throughout
   Iceland and on the surrounding fishing grounds. Síminn also continued work on
   the development of a countrywide high-speed network in partnership with the
   Telecommunications Fund. The objective is to have in place a high-speed
   network for all Icelanders before the end of 2010. Almost 1800 households
   will be linked to the high-speed network in the course of the project. 

*  Síminn launched a new service under the brand name 'Ring'. Ring is
   specifically intended to appeal to young customers and made a successful
   start. 

*  In the course of the year, Síminn began its development of 'Ljósnet',
   Síminn's fiber optic system; over the next two years over 40 thousand homes
   in the metropolitan area of the capital will have the option of hooking up to
   the network. 

*  Míla's operations were quite successful over the year. The operation has
   undergone considerable changes: various functions which are external to
   Míla's core activities have been outsourced, and the company is now well
   placed to respond to fluctuations in its operating environment. 

*  Sirius IT returned very good results and strengthened its backlog of projects
   still further. In the course of the year, Síminn sold the British
   communications company Aerofone. 

*  Skjámidlar faced falling revenues owing to the deep recession in the
   advertising market. Nevertheless, efforts to adapt the operations to the
   changed environment proved successful, and at the end of the year SkjárEinn
   became a subscription channel. The public reception exceeded expectations,
   and some 22% of all Icelandic households are already subscribing to the
   station. 



Brynjólfur Bjarnason, CEO of Skipti hf.

' The year 2009 was characterised by great uncertainty in the Company's
operating environment. The results of the Company's regular operations over the
year are good, considering the circumstances; cash provided by operating
activities continues to be strong, and we take pride in having achieved an
EBITDA of almost ISK 9 billion. The Group's subsidiaries have managed to adapt
to the changed operating environment and sluggish demand and expenses have been
cut. The increase in income between years is a result of increased foreign
revenues, which now account for approximately 37% of total income, an all-time
high. The value of the Icelandic króna continued to fall throughout the year,
which partly explains the Company's losses. The budget for the coming years is
cautious, entailing an impairment of intangible assets, which accounts for a
large part of the loss over the year. We are forecasting continued difficulties
in our environment, but we believe that the measures we have taken have left
the Company well placed to take on the challenges ahead.' 



Operating results for the year 2009

Accounting Polices
The Consolidated Financial Statements for the year 2009 are prepared in
accordance with International Financial Reporting Standards as adopted by the
EU. The Consolidated Financial Statements of Skipti hf. for the year 2009
consist of the Consolidated Financial Statements of Skipti hf. and its
subsidiaries.  The Board of Directors and the CEO of Skipti hf. have confirmed
the Consolidated Financial Statements for the year 2009. 

Operation
Sales in 2009 came to ISK 39,682 million, as compared to ISK 39,013 million in 
the preceding year, increasing by 2%. The increase is explained by income from
international operations. 

EBITDA for the Group came to ISK 8,678 million, as compared to 8.966 million in
2008.  The EBITDA ratio is now 22%, against 23% a year ago. Skipti has invested
in IT companies and while this market generally yields a lower EBITDA ratio
than telecommunications companies, the investments involved are lower in the IT
sector. Furthermore, Skipti's telecommunication companies abroad do not own the
networks on which they operate, which results in a lower EBITDA margin than in
the case of companies that own and operate networks. 

Depreciation amounted to ISK 11,578 million, as compared to ISK 6.354 million
in 2008. This is mainly explained by impairment of intangible assets. 
Loss for the Group came to ISK 10,205 million, as compared to a loss of ISK
6,424 million in 2008.  The loss is mainly due to the devaluation of the
Icelandic krona and impairment of intangible assets which amounted to ISK 7.3
billion. 


Cash Flow
Cash provided by operations came to ISK 9,094 million for the year, as compared
to ISK 10,102 million in the preceding year. 

The Group's capital expenditures (CAPEX) amounted to ISK 3,161million over the
year, as compared to ISK 4,859 million in 2008. 

Balance sheet
The group's total assets at 31st of December 2009 came to ISK 120,697 million,
having decreased by ISK 8.0 billion, or 6%, from the beginning of the year. Net
interest bearing debt (interest bearing debts, minus deposits) amounted to ISK
54.4 billion at the turn of the year, as compared to 51.1 billion in the
preceding year. The ratio of net interest bearing debt/EBITDA was 6.3 at the
turn of the year, as compared to 5,7 in the preceding year. 

Equity stood at ISK 25,525 million at the end of 2009, and the equity ratio was
21%. 

Market position and outlook

Síminn continued the development of its long-range GSM system and long-range 3G
system throughout Iceland and its surrounding fishing grounds. Also, Síminn
began the development of a countrywide high-speed network in partnership with
the Telecommunications Fund. The target is to set up a high-speed network for
the entire population of Iceland before the end of 2010 and it appears set to
be achieved ahead of schedule. Almost 1800 households will be linked to the
high-speed network in the course of this project. Early in the year Síminn
entered into a contract with Greenland Connect on a submarine cable to Canada
and shortly thereafter the Danice cable was added, marking the first time that
contracts are in effect for four submarine cables to and from Iceland. This
significantly improves security and services, with the bandwidth to North
America now increased fivefold. Síminn sold its share in the British
telecommunications company Aerofone in August. In November, Síminn launched a
new service under the brand name 'Ring'. Ring is specifically intended to
appeal to young customers and has made a successful start. In the course of the
year, Síminn began its development of 'Ljósnet', Síminn's fiber optic system;
over the next two years over 40 thousand homes in the metropolitan area of the
capital will have the option of hooking up to the network. The system enables
an effective connection of up to 100 MB/s. 

Míla's operations were quite successful over the year. The operation has
undergone some changes in the past two years: various functions which are
external to Míla's core activities have been outsourced, and the company is now
well placed to respond to fluctuations in its operating environment. 
Skjámidlar faced dwindling revenues owing to the deep recession in the
advertising market. Nevertheless, efforts to adapt the operations to the
changed environment proved successful, and at the end of the year SkjárEinn
became a subscription channel. The public reception exceeded expectations, and
22% of Icelandic households are already subscribing to the station. 

Já published the telephone directory for the year 2009 at the end of May; for
the second year in a row the partnership continued with cartoonist Hugleikur
Dagsson, who published an independent sequel to his tale in last year's
directory. Three months after publication, 64% of all households had collected
their copy. The popularity of the directory website já.is continues to grow,
and the number of weekly users increased 23% from the preceding year. 
On-Waves, a Síminn subsidiary, specialises in offering mobile telephone
services aboard ocean liners and ferries as well as cargo vessels. These
operations are enjoying solid growth and in the course of last year the company
signed a number of contracts for GSM services aboard ocean liners. 

The operation of Sirius IT was very successful during the year. The company now
enjoys a good backlog of projects, and last year the company concluded a number
of large business contracts with new and existing customers. Sirius IT's
customers include various public entities, government agencies, municipalities
and pension funds. They also include large private companies, mostly in service
sectors such as energy, security alert services, insurance, pharmaceuticals and
media. The core of Sirius IT's operations consists mainly in the maintenance
and operation of large information systems which typically form the basis of
the operations of the customers in question. In general, the operating
prospects for Sirius IT are quite favourable. 

Skipti  is engaged in discussions with creditors with the aim of paying up the
company's debts faster than provided for in loan agreement terms. Skipti's
liquidity position is strong, with the company holding a net cash position of
over ISK 20 billion at the turn of the year. However, the company's debts have
increased with the fall of the Icelandic króna, as a part of the company's
borrowings are in foreign currencies.  Skipti had entered into currency swap
agreements with the Icelandic banks to hedge against the fall of the króna, but
the banks have failed to fulfil the contracts.  When the debts increased, it
was the assessment of the creditors that the terms of the loan agreements had
been disrupted, and they requested that Skipti should pay the loans faster
using its available cash. 

There is uncertainty regarding the outlook of economic affairs in the near
future. Demand has fallen and it is reasonable to expect the downward trend to
continue. Skipti hf and its subsidiaries have responded to the new
circumstances by taking various actions designed to achieve even greater
efficiency. In 2009 extensive measures were taken to streamline the Company's
operations. These measures, all designed to prepare the Company for the
uncertainty ahead, have already resulted in lower costs and a clearer strategy
for the future. 

Further information:
Brynjólfur Bjarnason, CEO
Tel: +354 550-6003
Pétur Þ. Óskarsson, VP Corporate Communication
Tel: +354 863-6075

News Source: NASDAQ OMX



22.03.2010 Ad hoc announcement, Financial News and Media Release distributed by DGAP.
Media archive at www.dgap-medientreff.de and www.dgap.de

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Language:     English
Company:      Skipti hf.
              
               
              Iceland
Phone:        
Fax:          
E-mail:       
Internet:     
ISIN:         IS0000011948
WKN:          
 
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