Skipti hf.
Skipti results in 2010

Skipti hf. 

25.03.2011 11:04
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- EBITDA amounted to ISK 5.1 billion


  -- Sales amounted to ISK 33.6 billion, as compared to ISK 39.7 billion in the
     preceding year. This is mainly due to the sale of Sirius IT in July, 2010.
     Sirius IT is not included in the consolidated accounts from the time of the
     sale.
      
  -- Earnings before depreciation and financial items (EBITDA) amounted to ISK
     5.1 billion, as compared to ISK 8.7 billion for 2009. The reduction in
     EBITDA is partly a result of the sale of Sirius IT in July. Also, fines
     significantly impact the Company's accounts for 2010 and the Company has,
     as a precautionary measure, recognized a provision due to a ruling of
     arbitration tribunal. The EBITDA ratio was 15%, but 20% excluding one-time
     costs.
      
  -- Loss over the period came to ISK 2.5 billion, mainly due to impairment of
     intangible assets, which amounted to ISK 4.9 billion. Loss in 2009 was ISK
     10.2 billion.
      
  -- Cash from operations amounted to ISK 6.0 billion, as compared to ISK 9.1
     billion in 2009. After tax and interest, cash from operations came to ISK
     3.5 billion.
      
  -- Financial gain for the year came to ISK 1.4 billion. Gain from sale of
     subsidiaries came to ISK 5.2 billion.
      
  -- Net interest-bearing debts (interest bearing debts net of deposits)
     amounted to ISK 44.3 billion at the turn of the year, as compared to ISK
     54.4 billion in the preceding year. This is mainly due to sale of
     subsidiaries.
      
  -- Skipti's equity ratio is 21% and equity stood at ISK 22.3 billion at the
     end of 2010.
      
  -- Skipti hf. has reached an agreement on all major terms with its lenders and
     documentation is in its final stages. Payments on all of Skipti's loans
     remain current and in 2010 the Company paid a total of ISK 7.9 billion on
     its loans and interest payments.


Kristín Guðmundsdóttir, CEO of Skipti hf.

'The year 2010 got off to a good start, and over the first months of the year
there were little signs of any significant decline among Skipti's subsidiaries.
The situation changed as spring passed, and the drop in demand is reflected in
Skipti's bottom line. However, the Company has been engaged in systematic
cost-cutting efforts in recent years, and these efforts served to mitigate the
impact of the reduced income on the Company's results. Skipti has sold most of
its operations outside Iceland at significant gains. The task ahead is to
continue to concentrate on the Company's core operations in Iceland.' 



Highlights of 2010

  -- The economic crisis impacted operations in the course of the year. A number
     of measures were taken in the operations to strengthen the results for the
     Company
      
  -- Síminn and the Telecommunications Fund completed the high-speed network
     connection of the entire country in 2010, which means that all Icelanders
     now have access to high-speed connections
      
  -- Síminn also continued the development of its GSM and 3G systems, with 54
     new transmitters installed over the course of the year, giving users access
     to widespread high-speed connections in Iceland and off the Icelandic
     coast. In addition, Síminn continued its installation of the Ljósnet cable
     network in the metropolitan area of Reykjavík; on completion of this work
     over 40 thousand households will have the option of accessing the network
      
  -- The telecommunications company Tal was granted virtual access to Síminn's
     network. The company's customers will share Síminn's GSM and 3G network,
     the largest distribution system in Iceland
      
  -- Míla's outsourcing plans were completed in January, when an agreement was
     concluded with OSI concerning work on projects in the metropolitan area of
     Reykjavík. Upgrading of the trunk network continued over the year, and in
     addition the company introduced a new service Hradbraut,a broadband urban
     network
      
  -- SkjáMidlar passed the milestone of establishing SkjárEinn as a subscription
     broadcasting service after operating as an open station from its
     establishment.


Operating results for the year 2010

Accounting Polices

The Consolidated Financial Statements are prepared in accordance with
International Financial Reporting Standards as adopted by the EU. The
Consolidated Financial Statements of Skipti hf. for the year 2010 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 2010. 

Operation

Sales in 2010 came to ISK 33,633 million, as compared to ISK 39,682 million in 
the preceding year. The decrease is mainly due to the sale of Sirius IT in
July, 2010. Sirius IT is not included in the consolidated accounts from the
date of the sale. 

EBITDA for the Group came to ISK 5,076 million, as compared to 8,678 million in
2009. The reduction in EBITDA is partly a result of the sale of Sirius IT in
July. Also, fines significantly impact the Company's accounts for 2010 and the
Company has, as a precautionary measure, recognized a provision due to a ruling
of arbitration tribunal. The Company will explore to seek legal recourse before
the Icelandic Courts to annul the decision of the majority of the Arbitration
Tribunal. 

The EBITDA ratio was 15%, but 20% excluding one-time costs.

Depreciation amounted to ISK 9,097 million, as compared to ISK 11,578 million
in 2009. This is mainly explained by impairment of intangible assets. 

The Group's loss was ISK 2,512 million, as compared to a loss of ISK 10,204
million in 2009. The loss is mainly due to impairment of intangible assets
which amounted to ISK 4.9 billion. In 2009 impairment of intangible assets
amounted to ISK 7.3 billion. 

Cash Flow

Cash provided by operations came to ISK 5,964 million for the year, as compared
to ISK 9,094 million in the preceding year. 

The Group's capital expenditures (CAPEX) amounted to ISK 3,264 over the year,
as compared to ISK 3,161 million in 2009. 

Balance sheet

The group's total assets at 31 December 2010 came to ISK 105,672 million,
having decreased by ISK 15.0 billion, or 12%, from the beginning of the year.
This is partly due to sale of assets. Net interest-bearing debt (interest
bearing debts, net of deposits) amounted to ISK 44.3 billion at the turn of the
year, as compared to 54.4 billion in the preceding year. 

Equity stood at ISK 22,338 million at the end of 2010, and the equity ratio was
21%. 

Market position and outlook

Síminn and the Telecommunications Fund completed the high-speed network
connection of the entire country in 2010 with the result that all Icelanders
now have access to high-speed connections Also, the NMT system was closed down
in September 2010, to be replaced entirely by Síminn's GSM and 3G systems.
Síminn continued its development of its GSM and 3G systems, with 54 new
transmitters installed over the course of the year, giving users access to
widespread high-speed connections in Iceland and its territorial waters In
addition, Síminn continued its installation of the Ljósnet cable network in the
metropolitan area of Reykjavík; on completion of this work over 40 thousand
households will have the option of accessing the network The Ljósnet enables an
effective connection of up to 100 MB/s. The telecommunications company Tal was
granted virtual access to Síminn's network. The company's customers will share
Síminn's GSM and 3G network, the largest distribution system in Iceland
Management and hosting services saw significant growth in 2010. The increase in
income between 2009 and 2010 was 16%, and similar growth is anticipated in
2011. There have also been significant changes in the volume of services sold
through Síminn's VIST hosting services and Símavist IP telephone network, with
revenues growing by 9% between years. The introduction of mobile telephones in
Símavist was completed, giving Síminn's hosted IP telephone service a
significant advantage in the market. 

Work was begun on the sales of VSAT services in Denmark, which proceeded
according to plan in 2010. The service has been extremely successful in
Iceland, but with the Icelandic market nearing saturation there are hopes of
further growth in the Danish market. 

HD programming was introduced in SkjárBío in the course of the year, with the
promotion of the service linked to the fifth anniversary of the SkjárBío
service. Video on Demand (VoD) grew rapidly in popularity, with use increasing
over 100%. Síminn's television service now has over 40 thousand customers. 

Traffic on the Landshringur IP network has increased rapidly in recent years.
The increase last year is estimated at about 90-100%. It is anticipated that
the current network will need to be enlarged this year to cope with all the
traffic. Overseas Internet traffic increased by 78% over the year. Síminn
enlarged its connections significantly over the year on all three submarine
cables, Danice, Farice and Greenland Connect. 

Sales of Android telephones exceeded all expectations. The forecast is that
telephones using Android operating systems will soon be the most sold mobiles
in the world. 

Míla's operations were successful over the year, which proved to be an
exceptionally eventful one. Míla's outsourcing plans were completed in January,
when an agreement was concluded with OSA concerning work on projects in the
metropolitan area of Reykjavík. Upgrading of the trunk network was in progress
over the year to fulfil a contract with Farice hf. Also, Míla launched a new
service, the Hradbraut, a broadband urban network intended for IT companies,
telecommunication companies and data centres. 

When a volcanic eruption began in Fimmvörduháls, Míla set up web cameras in the
area. These became extremely popular, and by the end of the eruption Míla's
website had received 8.6 million hits. When the government of Iceland launched
a market initiative under the heading of 'Inspired by Iceland', Míla set up web
cameras in the metropolitan area of Reykjavík and at attractive tourist
locations. Míla's operations have been streamlined and the company is now
prepared to take on the competition in the markets where the company operates. 

SkjáMidlar passed the milestone of establishing SkjárEinn as a subscription
broadcasting service after operating as an open station since its
establishment. On the whole, SkjárEinn's position improved significantly
between years. In the fall, SkjárGolf began its existence as a new subscription
station. The reception has been promising, as the number of golf enthusiasts in
Iceland is large. Both SkjárHeimur and SkjárBíó maintained their strong
position, and the growth of SkjárBíó, which has been steady over the last five
years, has shown no signs of abating. 

On-Waves, a Síminn subsidiary, specialises in offering mobile telephone
services aboard ocean liners and ferries, as well as cargo vessels and
industrial vessels. The company has grown significantly since its launch just
over three years ago. The year 2010 was comparable to 2009 in terms of
revenues, but over the past year the growth of the company has primarily been
in services to industrial vessels, providing crews with access to on-board GSM
services. 

Skipti hf sold its information technology company Sirius IT, which has
operations in Denmark, Norway and Sweden. Skipti's total profit from the
investment in Sirius IT amounted to approximately ISK 5.5 billion, which was
capitalised for the most part in 2010. The payment for the share was made in
cash. Skipti also sold Já upplýsingaveitur, a telephone directory service, in
the course of the year at a gain of approximately ISK 1.3 billion. The price
for Já was also paid in cash. 

Skipti hf. has reached an agreement on all major terms with its lenders and
documentation is in its final stages. Payments on all of Skipti's loans remain
current and in 2010 the Company paid a total of ISK 7.9 billion on its loans
and interest payments. 



Further information:

Óskar Hauksson, CFO, Tel. 550-6000.



About Skipti hf.

Skipti owns and operates companies in the telecommunications industry and
information technology. The Group comprises Síminn, Míla, Skjárinn, Sensa,
On-Waves and Radiomiðun. Overseas subsidiary is the telecommunications company
Síminn Danmark in Denmark.
News Source: NASDAQ OMX



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