2012-03-29 16:32:45 CEST

2012-03-29 16:33:47 CEST


REGULATED INFORMATION

English Islandic
Skipti hf. - Financial Statement Release

Skipti hf. financial results for 2011 


Net loss after taxes ISK 10,6 Billion

EBITDA ISK 6 billion



  -- Sales were ISK 27.6 billion, compared to ISK 33.6 billion in the preceding
     year. The decrease is mainly since Sirius IT was part of the consolidated
     accounts for the first half of 2010.
  -- Loss over the period was ISK 10.6 billion, mainly due to ISK 4.5 billion
     provision on claims Skipti owns on banks in moratorium.  Impairment of
     intangible assets was ISK 2.7 billion. Loss in 2010 was ISK 2.5 billion
  -- Earnings before depreciation and financial items (EBITDA) was ISK 6
     billion, compared to ISK 5.1 billion in 2010. The increase in EBITDA is
     mainly a result of streamlining measures. EBITDA ratio was 21,5%, but was
     14,9% in 2010.
  -- Cash from operations was ISK 4.5 billion, compared to ISK 6 billion in
     2010. After tax and interest, cash from operations was ISK 1.9 billion.
  -- Net financial expenses for the year were ISK 10.9 billion of which finance
     cost was ISK 5 billion and in addition the above mentioned provision was a
     part of net financial expenses. Exchange rate loss was ISK 1.6 billion.
  -- Interest-bearing debt  was ISK 60.8 billion at the turn of the year,
     compared to ISK 75.4 billion in the preceding year.
  -- Skipti's equity ratio is 14,5% and equity was ISK 11.5 billion at the end
     of 2011.
  -- Skipti hf. signed an agreement with lenders in April. A part of the
     agreement was that Skipti paid and upfront payment of ISK 17.4 billion. In
     total Skipti paid ISK 22.4 billion in interest and amortization payments in
     2011. Skipti has not defaulted on any loan commitments and has not received
     any write down on any loans.



Steinn Logi Björnsson, CEO of Skipti hf.:

“The results from Skipti's operations has improved, largely because of the
extensive streamlining measures taken by Skipti and its subsidiaries. As
before, the task we face is to maximise the profitability and thus the value of
the operating companies and secure Skipti's future financial structure. This
remains a challenge, as our financial position is weak, which narrows our scope
for action. Payments of non-current liabilities and interests were over ISK 20
billion in 2011.  Preparations for refinancing of Skipti is still in progress,
but it is important to note that the Group has always met its debt obligations
and has not defaulted on any payments. 

Statistics for the Icelandic communications market from the telecom regulator
show that the telecommunication market is contracting and has been contracting
for the last 3-4 years. The same applies for most of Europe. Skipti's market
share has, at the same time, decreased and domestic market share is now less
than half of the market. It's clear that the situation is challenging given the
difficult financial structure and the pressure on the company's earnings. We
think it's very important that government agencies realize this. In our
opinion, they overestimate Skipti's financial strength when it comes to
particular markets. Skipti continually has to find ways to streamline the
business and the result of these measures has been acceptable.  We will
continue on the same path 

Despite these financial challenges Skipti and its subsidiaries will use
additional headroom, that comes from little investment in new residential
areas, to invest almost ISK three billion over the next two years in completing
the next phase of the company's Ljósnet, FTTH and FTTC network.  When this
phase of the Ljósnet will be completed it will extend to approximately 89
thousand households in south-western Iceland.  Already, 40 thousand households
have the option to link to the Ljósnet.  This translates into greatly increased
internet speed and additional HD TV channels for a large part of the nation.
When we've reach that stepping-stone, 75% of Icelandic homes will be able to
connect to up to 100 Mb/s, which is considerably in excess of the targets set
in the government's telecommunications programme.  The Ljósnet project is going
very well and is appreciated by our customers. Therefore, and because of the
improved EBITDA, we believe we have a good reason to be optimistic on an
increasing value and the refinancing of Skipti.” 



Operating results for the year 2011


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 2011 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 2011. 


Operations

Net sales in 2011 were ISK 27,572 million, compared to ISK 33,633 million in 
the preceding year or 18% decrease. The decrease is mainly due to the sale of
Sirius IT in July, 2010. Sirius IT is included in the consolidated accounts
until the date of the sale. Skipti sold Já at the end of 2010 and sold
Tæknivörur in August 2011. 

EBITDA for the Group was ISK 6,006 million, compared to 5,076 million in 2010.
The increase in EBITDA is largely due to streamlining measures in Skipti's
operations. 

EBITDA ratio was 21,5%, but 22,3% excluding one-off items.

Depreciation was ISK 6,539 million, compared to ISK 9,097 million in 2010. This
is mainly due to less impairment of intangible assets. Impairment of intangible
assets was ISK 2,710 million in 2011. 

Loss for the year was ISK 10,573 million, compared to a loss of ISK 2,512
million in 2010.  The loss is mainly due to ISK 4.5 billion provision on claims
Skipti has on banks in moratorium and iimpairment of intangible assets for ISK
2,710 million. Exchange rate losses were ISK 1,628 million. Impairment of
intangible assets was ISK 4,916 million in 2010. 


Cash Flow

Cash provided by operations was ISK 4,451 million for the year, compared to ISK
5,964 million in the preceding year. 

Capital expenditures (CAPEX) was ISK 2,779 for the year, compared to ISK 3,264
million in 2010. 


Balance sheet

Skipti's total assets at 31 December 2011 were ISK 79,398 million, having
decreased by ISK 26.3 billion, or 25%, from the beginning of the year. This is
mainly due to upfront payment to lenders. Interest-bearing debt was ISK 60.8
billion at the turn of the year, compared to ISK 75.4 billion in 2010. 

Equity was ISK 11,538 million at the end of 2011, and equity ratio was 14.5%.



Further information:
Steinn Logi Björnsson, CEO. Tel: 5506003



About Skipti hf.

Skipti owns and operates companies in the telecommunications industry and
information technology. The Group comprises Síminn, Míla, Skjárinn, Sensa,
On-Waves Talenta, and Radiomiðun. Overseas subsidiary is the telecommunications
company Síminn DK and Sensa DK in Denmark.