Skipti hf. - Financial Statement Release

Skipti hf. results in the first half of 2012

Losses amounted to ISK 2.562 million


  --  Losses over the period came to ISK 2.6 billion, mainly due to financial
     expenses and impairment charges. The loss over the corresponding period of
     last year was ISK 1.9 billion.
  -- Sales increased by 4% and amounted to ISK 14.1 billion, as compared to ISK
     13.5 billion over the same period last year.
  -- Earnings before depreciation and financial items (EBIDTA) amounted to ISK
     3.4 billion, as compared to ISK 3.5 million in the corresponding period of
     2011.. The EBITDA RATIO was 23.6%.
  -- EBITDA in the first half of the year amounted to ISK 3.8 billion, as
     compared to ISK 3.1 in the corresponding period of 2011 which represent an
     increase of 23%, when adjusted for one-off items. One-off items is a a fine
     imposed by the Competition Authority in April, which has been appealed, and
     an reversal of provision in 2011 relating to a court settlement,
  -- Cash provided by operating activities amounted to ISK 3.0 billion, as
     compared to ISK 1.4 billion over the same period last year. After interest
     and taxes, cash provided by operating activities amounted to ISK 1.9
     billion.
  -- Financial expenses amounted to ISK 2.9 billion, including inflation
     adjustments in the amount of ISK 0.8 billion.
  -- Interest-bearing debt, net of deposits, amounted to ISK 55 billion at the
     end of the period, up by ISK 2 billion from ISK 53 billion at the beginning
     of the year.
  -- Skipti's equity stands at ISK 9.0 billion and the equity ratio at 12%.





Skipti CEO Steinn Logi Bjornsson:"The performance of the Skipti Group has been unacceptable owing primarily to
its excessive debt burden and the resulting financial cost. Nevertheless, the
company's management and staff have succeeded in significantly improving the
underlying operations of both Skipti and its subsidiaries from last year,
largely by means of extensive streamlining and structural changes. In addition,
we have launched a vigorous effort to develop our 

Ljósnet distribution system, which will extend to 75% of the country's
households as early as at the end of 2013, securing Iceland's position as one
of Europe's most advanced countries in terms of high speed connection.
Preparations for refinancing have begun, and the coming months will reveal the
Skipti hf// Ármúli 25// Reykjavik// 550 6000// www.skipti.is 2 success of this
effort; concurrently, we will continue to improve our basic operations and
strengthen the telecommunications infrastructure in Iceland."





Principal operating results in the first six months of 2012

Accounting Procedures

Accounting policies are the same as those used in the preparation of the annual
financial report for the year ended 31 December 2011 The board of directors of
Skipti has approved the interim financial statement for the first six months of
2012. 

Operation

Sales in the first half of 2012 amounted to ISK 14.079 million, as compared to
ISK 13.486 million over the same period last year, which represents an increase
of 4.4%. 

Earnings for the Group before depreciation (EBITDA) came to ISK 3.371 million,
as compared to ISK 3.519 million of the corresponding period of the preceding
year. The EBITDA ratio is now 23.6%%, as compared to 25.6% in the corresponding
period of last year. 

Adjusted for one-off items EBITDA was ISK 3.811 million compared to ISK 3.086
million in the corresponding period of last year, an increase of 23,5%. One-off
items is a fine imposed by the Competition Authority in April, which has been
appealed, and a reversal of provision in 2011 relating to a court settlement.
EBITDA ratio, excluding one-off items, was 26.7% in the first half of 2012, as
compared to 22,5% in the corresponding period of 2011. 

Earnings before interest and taxes (EBIT), net of impairment, amounted to ISK
1,521 million as compared to ISK 1,689 million in the corresponding period of
last year. 

The company's depreciation and amortization over the first six months of the
year amounted to ISK 3.162 million, as compared to ISK 2.070 million over the
corresponding period of last year. The charge to the accounts resulting from
impairment of intangible assets amounted to ISK 1.312 million over the period. 

Consolidated losses after taxes amounted to ISK 2.562 million, as compared to
ISK 1.914 million over the corresponding period of 2011. The present loss is
primarily a result of financial expense and impairment charges 



Cash provided by operations, net of interest and taxes, amounted to ISK 2.956
million over the period. Over the same period last year cash provided by
operations amounted to ISK 1.395 million. 

The Group's capital expenditures (CAPEX) amounted to ISK 1.403 million over the
period, as compared to ISK 1.328 million in the corresponding period of 2011. 



Balance Sheet

The Group's total assets amounted to ISK 77.747 million on 30 June 2012,
falling by just short of 2% over the period, by 1.621 million. 

The company's equity amounted to ISK 9.042 million at the end of the first half
of 2012, and the equity ratio was 11.6%. 





For further information on the financial accounts, please contact:

Steinn Logi Björnsson, CEO, tel. +354-550-6003.

Attachments:

Skipti 30 6 2012.pdf

Table - press release 30 06 2012.pdf

Press release -Skipti 1H 2012.pdf