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Syn Annual Report 2022
2210_rns_2023-02-15_2f4ca5e1-ba7c-4d1f-b6f6-78cfd5b583f4.pdf
Annual Report
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Sýn hf.
Consolidated financial Statement
2022
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SPORT
BYLGJAN
EMDOR
Sýn hf. Suburlands braut tlf. 108 Reykjavík, kt. 470905-1740
Table of contents
This document includes an English translation of certain parts of Sýn hf. consolidated financial statements for the year 2022. If there is a discrepancy between the English translation and the related parts that are translated from the Icelandic consolidated financial statements, the Icelandic version shall prevail.
| Page | |
|---|---|
| Key figures | 3 |
| Independent Auditor's report | 4 |
| Income Statement and Statement of Comprehensive Income | 8 |
| Statement of Financial Position | 9 |
| Statement of Changes in Equity | 10 |
| Statement of Cash Flows | 11 |
| Notes | 12 |
| Appendices: | |
| Quarterly Statements | 34 |
Consolidated Financial Statements of Sýn hf. 2022
Key Figures
| REVENUES | ADJUSTED EBITDA AND EBITDA RATIO* | |
|---|---|---|
| 22.983 | 21.765 | 6.644 |
| 6.432 | ||
| 2022 | 2021 | 28.9% |
| 29.6% | ||
| PROFIT (LOSS) FOR THE PERIOD | NET INTEREST BEARING DEBT WITHOUT LEASE LIABILITIES | |
| 888 | 2.100 | 3.111 |
| 1.474 | ||
| 2022 | 2021 | 2022 |
| 2021 | ||
| INVESTMENTS (WITHOUT LICENCE RIGHTS) | INVESTMENTS IN LICENCE RIGHTS | |
| 1.681 | 1.214 | 2.291 |
| 2.541 | ||
| 2022 | 2021 | 2022 |
| 2021 | ||
| NET CASH FROM OPERATING ACTIVITIES | FREE CASH FLOW** | |
| 5.628 | 5.017 | 2.493 |
| 9.835 | ||
| 2022 | 2021 | 2022 |
| 2021 | ||
| * Adjusted EBITDA for the sale gain of the Group's passive mobile infrastructure | ||
| ** Free cash flow consists of cash from operations before interest and income tax less investment movements. |
Consolidated Financial Statements of Syn hf. 2022
Amounts are in ISK millions
INDEPENDENT AUDITOR'S REPORT
To the Shareholders and the Board of Directors of Sýn hf.
Opinion
We have audited the consolidated financial statements of Sýn hf. for the year ended December 31, 2022 which comprise, the consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of changes in equity, the consolidated statement of cash flows for the year then ended and the notes to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements give a true and fair view of the consolidated financial position of Sýn hf. as at December 31, 2022, and its consolidated financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU and additional requirements in Icelandic laws and rules for listed companies.
Our opinion in this report on the consolidated financial statements is consistent with the content of the additional report that has been submitted to the parent company’s audit committee in accordance with the EU Audit Regulation 537/2014 Article 11.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of Sýn hf. in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Iceland, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. This includes that, based on the best of our knowledge and belief, no prohibited services referred to in the EU Audit Regulation 537/2014 Article 5.1 has been provided to the audited company or, where applicable, its parent company or its controlled companies within the EU. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
| Key Audit Matters | How the matter was addressed in our audit |
|---|---|
| Revenue recognition | |
| The company’s revenue recognition is based on complex systems and large number of transactions in the revenue recognition system. | |
| Therefor revenue recognition is one of key audit matters in the audit of the financial statements. | |
| Further information about the revenue recognition can be found in note 3 in the financial statement. | Our audit procedures were designed to evaluate the design, implementation and functionality of automatic controls related to revenue recognition as well as we preformed substantive audit procedures to verify the accuracy and completeness of the recognised revenues. This audit work included among other things: |
| • The computer and information systems used for revenue recognition were evaluated and tested as well as testing of other significant controls in the revenue recognition process. | |
| • Testing of flow between the revenue systems and the finance system and the reconciliation process performed. | |
| • Examination of employee access in the information systems related to revenue recognition and the process of change management. | |
| • Testing the company’s revenue with an analysis tool where revenue entries are analyzed and unusual entries are taken for further examination. |
Consolidated Financial Statements of Sýn hf. 2022
Amounts are in ISK millions
INDEPENDENT AUDITOR'S REPORT, continued:
| Key Audit Matters | How the matter was addressed in our audit |
|---|---|
| Goodwill | |
| At year end, the Company's goodwill amounted to 8,9 billion Icelandic Krona. |
The estimate of the recoverable amount of goodwill is based on management estimate about the assumptions used in the future cash flow of the relevant cash generated unit as other assumptions used in the estimate. As the goodwill is a significant part of the balance sheet of the Company and depends on management assumptions it is a key audit matters.
Further information about goodwill can be found in note 12 in the financial statements. | In our audit we and our internal valuation specialist evaluated the assumptions used in management impairment testing. We reviewed management methodology used and changes between years, if any. The audit work included among other things:
• The calculation model was evaluated and its functionality tested.
• Key assumptions for projected cash flows and operating budgets were reviewed.
• Key assumptions regarding future growth following the projected period were evaluated.
• Review of management budget accuracy were reviewed.
• Key assumptions regarding cost of capital were reviewed and evaluated. WACC assumptions were compared to market related assumptions. |
Other information
The Board of Directors and the CEO are responsible for the other information. The other information comprises the report of board of directors, statement of corporate governance, non-financial information's and information about quarterly financial performance.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon, except the confirmation regarding report of the board of directors as stated below.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
In accordance with Paragraph 2 article 104 of the Icelandic consolidated financial Statement Act no. 3/2006, we confirm to the best of our knowledge that the accompanying report of the board of directors includes all information required by the Icelandic financial Statement Act that is not disclosed elsewhere in the consolidated financial statements.
Responsibilities of the Board of Directors and the CEO for the Consolidated Financial Statements
The Board of Directors and the CEO are responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International financial Reporting Standards (IFRSs) as adopted by the EU and additional requirements in the Icelandic financial Statement Act, and for such internal control as the Board of Directors and the CEO determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Board of Directors and the CEO are responsible for assessing Syn hf.'s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors and the CEO either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.
Consolidated Financial Statements of Syn hf. 2022
Amounts are in ISK millions
INDEPENDENT AUDITOR'S REPORT, continued:
Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
-
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
-
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Sýn hf.'s internal control.
-
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
-
Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
-
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
-
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated and separate financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with the Board of Directors and the Audit Committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Consolidated Financial Statements of Sýn hf. 2022
Amounts are in ISK millions
INDEPENDENT AUDITOR'S REPORT, continued:
Auditor's Responsibilities for the Audit of the Consolidated Financial Statements continued:
We also provide the Board of Directors and the Audit Committee a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
In addition to our work as the auditors of Sýn hf., Deloitte has provided the firm with permitted additional services such as review of interim financial statements, other assurance engagements, consultation on tax matters. Deloitte has in place internal procedures in order to ensure its independence before acceptance of additional services (valkvætt). Deloitte has confirmed in writing to the Audit Committee that we are independent of Sýn hf.
From the matters communicated with the Board of Directors and the Audit Committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Deloitte was appointed auditor of Sýn hf. by the general meeting of shareholders on the 18 March 2022. Deloitte have been elected since the general meeting 2016.
Kópavogur, 15th February 2023
Deloitte ehf.
Jóhann Óskar Haraldsson
State Authorized Public Accountant
Steina Dröfn Snorradóttir
State Authorized Public Accountant
Consolidated Financial Statements of Sýn hf. 2022
Amounts are in ISK millions
Income statement
| Notes | 2022 | 2021 | |
|---|---|---|---|
| Revenue from sales of goods and services | 3 | 22.983 | 21.765 |
| Cost of sales | 4 | (14.966) | (14.672) |
| Gross profit | 8.017 | 7.093 | |
| Gain from sale of passive mobile infrastructure | - | 2.552 | |
| Operating expense | 5 | (6.425) | (6.359) |
| Operating profit | 1.592 | 3.286 | |
| Finance income | 222 | 22 | |
| Finance expense | (998) | (613) | |
| Net exchange rate differences | (70) | 18 | |
| Net financial expense | 7 | (846) | (573) |
| Effects of associate | 13 | 0 | (251) |
| Profit before tax | 746 | 2.462 | |
| Income tax | 16 | 142 | (362) |
| Profit for the period | 888 | 2.100 | |
| Profit per share* | 21 | 3,3 | 7,1 |
Statement of Comprehensive Income
| 2022 | 2021 | |
|---|---|---|
| Profit for the period | 888 | 2.100 |
| Items that may subsequently be reclassified to profit or loss | ||
| Translation difference | 1 | (114) |
| Total comprehensive income for the period | 889 | 1.986 |
*Diluted profit per share is the same as profit per share
Notes on pages 12-33 are an integral part of these Consolidated Financial Statements.
Consolidated Financial Statements of Syn hf. 2022
Amounts are in ISK millions
Statement of Financial Position
| Notes | 31.12.2022 | 31.12.2021 | |
|---|---|---|---|
| Non-current assets | |||
| Right-of-use assets | 8 | 8.620 | 8.049 |
| Property, plant and equipment | 9 | 2.866 | 3.212 |
| Long term lease receivables | 157 | 166 | |
| Goodwill | 12 | 8.906 | 8.888 |
| Other intangible assets | 12 | 4.389 | 4.469 |
| Shares in other companies | 13 | 185 | 62 |
| Deferred tax asset | 17 | 158 | 26 |
| Total non-current assets | 25.281 | 24.872 | |
| Current assets | |||
| Broadcasting license rights | 14 | 1.809 | 1.762 |
| Inventories | 18 | 559 | 356 |
| Trade receivables and other short term receivables | 19 | 3.650 | 5.297 |
| Cash and cash equivalents | 2.063 | 4.214 | |
| Total current assets | 8.081 | 11.629 | |
| Assets classified for sale | 28 | 564 | - |
| Total assets | 33.926 | 36.501 | |
| Equity | |||
| Share capital | 2.668 | 2.964 | |
| Statutory reserves | 806 | 2.465 | |
| Other reserve | 129 | 69 | |
| Retained earnings | 5.866 | 5.037 | |
| Total equity | 20 | 9.469 | 10.535 |
| Non-Current liabilities | |||
| Interest bearing debt | 22 | 4.801 | 4.965 |
| Lease liabilities | 8 | 11.820 | 11.393 |
| Other liabilities | 0 | 180 | |
| Deferred tax liabilities | 17 | 0 | 19 |
| Total non-current liabilities | 16.621 | 16.557 | |
| Current liabilities | |||
| Interest bearing debt | 23 | 373 | 723 |
| Lease liabilities | 8 | 1.295 | 1.206 |
| Trade and other current payables | 24 | 6.168 | 7.480 |
| Current liabilities | 7.836 | 9.409 | |
| Total liabilities | 24.457 | 25.966 | |
| Total equity and liabilities | 33.926 | 36.501 |
Notes on pages 12-33 are an integral part of these Consolidated Financial Statements.
Consolidated Financial Statements of Syn hf. 2022
Amounts are in ISK millions
Statement of Changes in Equity
| Share Capital | Statutory reserve | Translation difference | Reserve | Retained earnings | Total equity | |
|---|---|---|---|---|---|---|
| 2021 | ||||||
| Total Equity 1.1.2021 | 2.964 | 2.465 | 163 | 147 | 2.810 | 8.549 |
| Profit for the period | - | - | - | - | 2.100 | 2.100 |
| Translation difference | - | - | (114) | - | - | (114) |
| Comprehensive Income | 0 | 0 | (114) | 0 | 2.100 | 1.986 |
| Profit of associate in excess of dividend received | - | - | - | (127) | 127 | 0 |
| Total Equity 31.12.2021 | 2.964 | 2.465 | 49 | 20 | 5.037 | 10.535 |
| 2022 | ||||||
| Total Equity 1.1.2022 | 2.964 | 2.465 | 49 | 20 | 5.037 | 10.535 |
| Profit for the period | - | - | - | - | 888 | 888 |
| Translation difference | - | - | 1 | - | - | 1 |
| Comprehensive Income | 0 | 0 | 1 | 0 | 888 | 889 |
| Own shares purchased | (296) | (1.659) | (1.955) | |||
| Change in restricted share in profit of associate | - | - | - | 59 | (59) | 0 |
| Total Equity 31.12.2022 | 2.668 | 806 | 50 | 79 | 5.866 | 9.469 |
Notes on pages 12-33 are an integral part of these Consolidated Financial Statements.
Consolidated Financial Statements of Syn hf. 2022
Amounts are in ISK millions
Statement of Cash Flows
| Notes | 2022 | 2021 | |
|---|---|---|---|
| Loss for the period | 888 | 2.100 | |
| Adjustment for non-cash items: | |||
| Depreciation and amortization | 10 | 5.053 | 5.698 |
| Gain from sale of passive mobile infrastructure | (2) | (2.552) | |
| Net financial expense | 7 | 846 | 573 |
| Effects of associate | 13 | 0 | 251 |
| Income tax | 16 | (142) | 362 |
| Cash generated from operating activities | 6.643 | 6.432 | |
| Change in working capital: | |||
| Change in inventories | 18 | (193) | (117) |
| Change in operating assets | 19 | 1.577 | (653) |
| Change in operating liabilities | 23 | (1.542) | (65) |
| Cash generated by operations before interest and tax | 6.485 | 5.597 | |
| Interest income received | 122 | 22 | |
| Interest expense paid | (976) | (602) | |
| Tax paid | (3) | 0 | |
| Cash generated by operations | 5.628 | 5.017 | |
| Investment activities | |||
| Proceeds from sale of passive mobile infrastructure | - | 6.946 | |
| Proceeds from sale of shares in other companies | - | 1.065 | |
| Investment in shares in other companies | (22) | (18) | |
| Investment in property, plant and equipment | 9 | (1.000) | (400) |
| Investment in intangible assets | 12 | (681) | (814) |
| Investment in broadcasting license rights | 14 | (2.291) | (2.541) |
| Proceeds from sale of fixtures and equipment | 2 | - | |
| Investment activities | (3.992) | 4.238 | |
| Financial activities | |||
| Instalment of interest bearing debts | (474) | (3.161) | |
| Change in revolving credit facility | (40) | (1.635) | |
| Instalment of lease liabilities | (1.326) | (1.106) | |
| Purchased of own shares | (1.955) | - | |
| Financial activities | (3.795) | (5.902) | |
| Change in cash and cash equivalents | (2.159) | 3.353 | |
| Cash and cash equivalents at the beginning of the year | 4.214 | 831 | |
| Effect of exchange rate changes on cash held | 8 | 29 | |
| Cash and cash equivalents at the end of the year | 2.063 | 4.214 |
Notes on pages 12-33 are an integral part of these Consolidated Financial Statements.
Consolidated Financial Statements of Syn hf. 2022
Amounts are in ISK millions
Notes
1. The Company
Sýn hf. (“the Company”) is an Icelandic limited liability company. The address of its registered office is Sudurlandsbraut 8, Reykjavik. The main operation of the Company is communication and media service. The consolidated financial statements of the Company for the year ended on December 31st 2022 incorporates the financial statements of the Company, its subsidiaries and share in joint operation of Sendafelagid ehf, which are jointly referred to as “the Group”.
2. Accounting Policies
This part of the consolidated financial statements contains information on the basis of preparation of the consolidated financial statements. Detailed information on the Group's accounting policies is provided under each item in the notes.
a. Basis of accounting
The Group's consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and additional information required by Icelandic laws and regulation listed companies. The consolidated financial statements of the Group are prepared in accordance with the same accounting principles as the financial statements for 2021.
To increase the value of information disclosed in the notes to the consolidated financial statements, information disclosed in the notes are relevant and material. That means that information that are neither relevant nor material for the reader are not disclosed.
b. Subsidiaries
Subsidiaries are entities ultimately controlled by the Company. Control is achieved when the Company has power over the investee, is exposed, or has rights, to variable returns from its involvement with the investee; and has the ability to use its power to affect its returns. The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries. Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary.
| Subsidiaries of the Company are three at year end: | Ownership | Functional currency | |
|---|---|---|---|
| 2022 | 2021 | ||
| Endor ehf. | 100% | 100% | EUR |
| EC Sweden AB. | 100% | 100% | SEK |
| EC Germany GmbH | 100% | 100% | EUR |
| Pardus | 100% | 100% | ISK |
The assets and liabilities of the Company's foreign operations are expressed in the presentation currency using exchange rates prevailing at the balance sheet date. Income and expense items are translated at the average exchange rates for the year. Translation differences, if any, are classified within equity translation reserve.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
c. Joint operations
Sendafelagid ehf. is a joint operation for the telecommunication systems of Sýn hf. and Nova ehf., with each party owning 50% of the shares. Sýn hf. recognises the assets it controls, and expenses and liabilities it incurs, and its share of income earned, in its consolidated financial statements by applying the relevant IFRSs.
Consolidated Financial Statements of Sýn hf. 2022
Amounts are in ISK millions
Notes, continued:
2. Accounting Policies, continued.
d. Use of estimates and judgements
The preparation of consolidated financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. Information about significant areas of estimation where uncertainty in applying accounting policies has the most significant effect on the amounts recognised in the financial statements is included in note 12 on measurement of the recoverable amounts of cash generating units containing goodwill and in note 8 on measurement of the lease term and the interest rate implicit in the lease.
e. Fair value estimate
The consolidated financial statements are presented in Icelandic krona, which is the presentation currency of the Group. All amounts are rounded to the nearest million, except when otherwise indicated.
f. Fair value estimate
Part of the accounting policies and disclosures of the Group requires a fair value estimate, both with regards to financial instruments as well as other assets and liabilities.
The Group uses market assumptions whenever they are available but whenever such information is not available management applies judgement for estimating fair value.
Consolidated Financial Statements of Sýn hf. 2022
Amounts are in ISK millions
Notes, continued:
3. Revenue from sales of goods and services
| Sales of goods and service is specified as follows: | 2022 | 2021 |
|---|---|---|
| Sales of goods | 1.267 | 1.267 |
| Sales of service | 21.716 | 20.498 |
| Total sales of goods and service | 22.983 | 21.765 |
The Group defines segments based on management internal reporting. Based on that the Group is one segment as a whole.
Revenue
Revenues are disclosed based on their nature and internal reporting of the Group.
The Company's operation is divided into seven revenue streams which are different by nature. The revenue streams are:
Revenue
Media - Revenue from media consist of revenue from the operation of broadcast media, TV subscriptions, advertisement, distribution systems, set-top boxes, TVOD, SVOD and PPV. Performance obligation for monthly subscriptions is fulfilled over time. Revenues from advertisement are recognized when the performance obligation has been fulfilled. Revenues from rental of certain movies or episodes are recognized 48 hours after the purchase. Revenues from lease of equipment, such as cable boxes, are recognised on a monthly basis in line with customer agreements.
Broadband - Revenue from internet service in fixed-line networks, including fiber optic cables, xDSL service and other data connections. Contracts with the customer are usually for one month and includes fixed and variable revenues. The performance obligation is fulfilled over time as the customer receives the service.
Mobile - Revenue for use of cell phones, including data transfer within the mobile network, subscription revenue from individuals, prepaid sim cards, roaming revenue from travelers, interconnection revenues etc. The performance obligation is fulfilled over time as the customer receives the service.
Consolidated Financial Statements of Sjn hf. 2022
Amounts are in ISK millions
Notes, continued:
3. Revenue from sales of goods and services, continued:
Fixed line - Revenue from home phone usage and corporate fixed line usage, interconnection revenue from fixed line. Contracts with the customer are usually for one month and include fixed and variable revenues. The performance obligation is fulfilled over time as the customer receives the service.
Hosting and operating solutions - Revenue from operations and services for cloud solutions and specialized sales of centralized solutions for data-centre related activities, as well as resource management and consulting for data-centre related services. Performance obligations for operations and services are fulfilled over a period of time where a customer uses the service in parallel with it being provided. Revenues from equipment sales are recognized at the time when control over the product is transferred to the customer, which is the delivery date.
Retail sale - Revenue from sale of equipment and accessories. Revenues from retail sale are recognized at point in time, which is usually the delivery date.
Other revenue - Service revenues, revenues from software and other revenues.
Revenue from the sale of goods and service in the course of ordinary business is measured at the fair value of the payment received or receivable, net of trade discounts and refunds. Revenue is recognized in the statement of comprehensive income when a significant portion of the risks and rewards of ownership are transferred to the buyer, it is probable that the consideration will be collected and the cost of sale and possible return of goods can be estimated reliably.
Consolidated Financial Statements of Sjn hf. 2022
Amounts are in ISK millions
Notes, continued:
4. Cost of sales
| Cost of sales is specified as follows: | 2022 | 2021 |
|---|---|---|
| Service sold | 7.616 | 6.876 |
| Cost of goods | 1.198 | 1.168 |
| Salaries and related expenses | 2.442 | 2.208 |
| Capitalised salaries | (207) | (128) |
| Depreciation and amortization | 3.917 | 4.548 |
| Total cost of sales | 14.966 | 14.672 |
5. Operating expense
| Operating expense is specified as follows: | 2022 | 2021 |
|---|---|---|
| General and administrative expense | 1.575 | 1.384 |
| Sales and marketing expenses | 415 | 568 |
| Salaries and related expense | 3.760 | 3.521 |
| Capitalised salaries | (321) | (264) |
| Depreciation and amortization | 1.136 | 1.150 |
| Change in fair value due to purchase of a subsidiary | (140) | 0 |
| Total operating expenses | 6.425 | 6.359 |
6. Salaries and related expenses
| Salaries and related expenses are specified as follows: | 2022 | 2021 |
|---|---|---|
| Salaries | 5.032 | 4.783 |
| Pension fund contribution expense | 668 | 615 |
| Other salary related expenses | 502 | 426 |
| Salaries related to sale of passive mobile infrastructure | - | (95) |
| Salaries and related expenses | 6.202 | 5.729 |
| Average full-time equivalents during the period | 460 | 462 |
At year end 60% of managers were male and 40% were female (2021: 60% / 40%).
The company pays pension contributions for its employees but has no further legal or constructive obligations to pay further contributions if the pension fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods. The contribution is expensed over the work period of employee.
7. Net financial expense
Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.
Interest expense from a financial liability and lease liabilities is accrued on a time basis, by reference to the principal outstanding based on effective interest rate.
Exchange rate gain and loss is offset and presented net for the period.
| Financial income and expenses are specified as follows: | 2022 | 2021 |
|---|---|---|
| Interest income from loans and receivables | 111 | 18 |
| Changes in fair value | 102 | 0 |
| Other interest income | 9 | 4 |
| Total financial income | 222 | 22 |
| Interest expense and other service charges | (348) | (299) |
| Interest expense from lease liabilities | (650) | (314) |
| Net exchange rate difference | (70) | 18 |
| Total net financial expense | (846) | (573) |
Consolidated Financial Statements of Syn hf. 2022
Amounts are in ISK millions
Notes, continued:
8. Lease liabilities
The Group recognizes assets and liabilities due to lease agreements for office premises, warehouses, cars, telco towers and servers.
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, and subsequently at cost less accumulated depreciation and impairment and adjusted for certain remeasurements of the lease liability (indexation).
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate plus estimated margin for certain lease agreement based on its nature. The weighted average incremental borrowing rate is 5.13%.
The lease liability is increased due to interest payments and decreased due to lease payments. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group's estimate of the amount expected to be payable under a residual value guarantee, if the Group changes its assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease payment. The Group has exercised judgment in determining lease periods of some leases where the Group is a lessee and the contracts contain extension options. Assessment of whether the Group is reasonably certain that it will exercise extension options affects the lease period, which significantly effects the amount of recognised lease liabilities and assets.
| Right of use asset | Buildings | Cars | Telco towers | Servers | Total |
|---|---|---|---|---|---|
| Balance at 1. January 2021 | 2.268 | 50 | 800 | 2.109 | 5.227 |
| Indexation | 80 | 2 | 13 | - | 95 |
| Effects of foreign exchange rates | - | - | 1 | (111) | (110) |
| Revaluation of contract life | 66 | - | 212 | - | 278 |
| Additions due to new contracts | - | 26 | 3.740 | 47 | 3.813 |
| Cancelled contracts | - | (3) | (81) | - | (84) |
| Depreciation for the year | (229) | (37) | (157) | (747) | (1.169) |
| Balance at 31. December 2021 | 2.185 | 38 | 4.528 | 1.298 | 8.049 |
| Indexation | 211 | 5 | 808 | - | 1.024 |
| Effects of foreign exchange rates | - | - | (4) | (33) | (37) |
| Revaluation of contract life | - | - | - | - | 0 |
| Additions due to new contracts | 83 | 44 | 134 | 649 | 910 |
| Cancelled contracts | (61) | - | - | - | (61) |
| Depreciation for the year | (241) | (45) | (273) | (706) | (1.265) |
| Balance at 31. December 2022 | 2.177 | 42 | 5.193 | 1.208 | 8.620 |
| Amounts recognised in the income statement | 2022 | 2021 | |||
| Depreciation (right of use asset) | 1.265 | 1.169 | |||
| Interest expense (lease liability) | 650 | 314 | |||
| Exchange rate difference | (37) | 1 | |||
| Interest income (lease receivables) | (10) | (8) | |||
| Total recognised in the income statement | 1.868 | 1.476 | |||
| Lease liabilities | 31.12.2022 | 31.12.2021 | |||
| Within a year | 1.295 | 1.206 | |||
| After a year but within five years | 2.244 | 2.282 | |||
| Five years of later | 9.576 | 9.111 | |||
| Total | 13.115 | 12.599 |
Total lease payments related to the leases entered in accordance with ifrs 16 amounted to 1.976 million. ISK. (2021: 1.42 million ISK).
Consolidated Financial Statements of Syn hf. 2022
Amounts are in ISK millions
Notes, continued:
9. Property, plant and equipment
Property, plant and equipment which qualify for recognition as an asset are initially measured at cost. The cost of a property, plant and equipment comprises its purchase price and any directly attributable cost of bringing the asset to working condition for its intended use. Software which is directly linked to operation of certain property, plant and equipment's is recognized as part of its cost.
Sales gain or loss at disposal of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and recognized in the consolidated income statement.
Cost of maintenance is recognized as assets if it is probable that future economic benefits associated with the asset will flow to the company. All other expense is recognized in the consolidated income statement when incurred.
Property, plant and equipment is specified as follows:
| Telecom & Broadcasting Property Equipment | Appliances automobiles & Interiors | Total | ||
|---|---|---|---|---|
| Cost | ||||
| Total cost 1.1.2021 | 35 | 9.589 | 1.888 | 11.511 |
| Additions during the year | - | 331 | 89 | 421 |
| Sold and discontinued during the year | (35) | (313) | (10) | (358) |
| Effects of foreign exchange rates | - | - | (1) | (1) |
| Total cost 31.12.2021 | 0 | 9.607 | 1.967 | 11.574 |
| Additions during the year | - | 927 | 73 | 1.000 |
| Sold and discontinued during the year | - | - | (1) | (1) |
| Effects of foreign exchange rates | - | (564) | - | (564) |
| Total cost 31.12.2022 | 0 | 9.970 | 2.039 | 12.009 |
| Depreciation and impairment | ||||
| Accumulated depreciation 1.1.2021 | 15 | 6.542 | 1.137 | 7.693 |
| Depreciation for the year | - | 825 | 152 | 977 |
| Sold and discontinued during the year | (15) | (285) | (10) | (311) |
| Effects of foreign exchange rates | - | - | 2 | 2 |
| Total depreciation 31.12.2021 | 0 | 7.082 | 1.280 | 8.361 |
| Depreciations during the year | - | 651 | 132 | 783 |
| Total depreciation 31.12.2022 | 0 | 7.733 | 1.412 | 9.144 |
| Book value | ||||
| 31.12.2021 | 0 | 2.525 | 687 | 3.212 |
| 31.12.2022 | 0 | 2.237 | 627 | 2.866 |
| Depreciation rates | 3% | 5-33% | 15-33% |
Consolidated Financial Statements of Syn hf. 2022
Amounts are in ISK millions
Notes, continued:
10. Depreciation and amortization
The depreciable amount of the asset is allocated on a straight-line basis over its useful life. The depreciation charge for each period is recognized as an expense. Depreciation starts when the assets are available for their intended use.
The following useful lives are used in the calculation of depreciation of property, plant and equipment's:
| Buildings | 33 years |
|---|---|
| Telecom equipment's | 3 to 20 years |
| Broadcasting equipment's | 4 to 7 years |
| Appliances, automobiles and interior | 3 to 7 years |
The estimated useful lives, residual values and depreciation method are reviewed at each balance sheet date, with the effect of any changes in estimate accounted for on a prospective basis. At each balance sheet date, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Amortization of intangible assets, other than goodwill, is recognized on a straight-line basis in the income statement based on their estimated useful life.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss.
Impairment previously recognized can be reversed for all assets, except for goodwill, if the estimated recoverable amount is higher than book value. The book value of assets can not be higher after the reversal than it would have been if no impairment would have occurred. Amortization starts when the assets are ready for their intended use. Estimated useful life is stated as follows:
| Software | 3-10 years |
|---|---|
| Trademark and customer relationship | 10 to 33 years |
| Depreciation and amortization in the income statement are specified as follows: | 2022 |
| --- | --- |
| Depreciation of property, plant and equipment, - note 10 | 783 |
| Amortization of intangible assets - note 13 | 761 |
| Depreciation of right of use assets - note 9 | 1.265 |
| Depreciation of broadcasting rights - note 15 | 2.244 |
| Depreciation amd amortization recognized in the income statement | 5.053 |
| Depreciation and amortization is classified by functional category as follows: | 2022 |
| Cost of goods and services sold, see note 5 | 3.917 |
| Other operating costs and impairment, see note 6 | 1.136 |
| Total | 5.053 |
11. Real estate and insurance value
At 2022 year-end the official real estate value of other equipment- and telecommunication structures amounted to 97 million ISK (2021: 86 million ISK) and their insurance value amounted to 154 million ISK (2021: 131 million ISK). The insurance value of other property, plant and equipment amounted to 6,397 million ISK at 2022 year-end (2021: 7,106 million ISK).
Consolidated Financial Statements of Syn hf. 2022
Amounts are in ISK millions
Notes, continued:
12. Intangible assets
Goodwill arising on acquisition is recognized as an asset and initially measured at cost, being the excess of the purchase price of the business combination over the Group's interest in the net fair value of the identifiable assets, liabilities, contingent liabilities, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree. Goodwill is initially recognized as an asset at cost and is subsequently measured at cost less any accumulated impairment losses.
Goodwill is not amortized but is reviewed for impairment at least annually. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognized directly in profit or loss. An impairment loss recognized for goodwill is not reversed in a subsequent period.
Other intangible assets with finite useful lives are reported at cost less accumulated amortization and accumulated impairment losses. Amortization is allocated on a straight-line basis over their estimated useful lives.
Subsequent expenditure is only recognized as assets if it is probable that future economic benefits associated with the asset will flow to the Company and the cost of the asset can be measured in a reliable manner. Other expenses, including those relating to goodwill and trademarks that are generated within the Group, are recognised in profit or loss as incurred.
| Intangible assets are specified as follows: | ||||
|---|---|---|---|---|
| Trademark and Customer | Software | Total | ||
| Goodwill | relationships | |||
| Cost | ||||
| Total cost 1.1.2021 | 14.223 | 3.293 | 4.163 | 21.679 |
| Adjustment from provisional PPA | - | - | 814 | 814 |
| Effects of foreign exchange rates | (44) | - | - | (45) |
| Total cost 31.12.2021 | 14.179 | 3.293 | 4.977 | 22.448 |
| Additions during the year | - | - | 681 | 681 |
| Effects of foreign exchange rates | 18 | - | - | 18 |
| Total cost 31.12.2022 | 14.197 | 3.293 | 5.658 | 23.148 |
| Amortization and impairment | ||||
| Amortization and impairment 1.1.2020 | 5.291 | 613 | 2.440 | 8.344 |
| Amortized during the year | - | 199 | 549 | 747 |
| Effects of foreign exchange rates | - | - | - | 0 |
| Total depreciation 31.12.2020 | 5.291 | 812 | 2.989 | 9.091 |
| Amortized during the year | - | 204 | 557 | 761 |
| Impact of currency exchange rate | - | - | - | 0 |
| Total depreciation 31.12.2021 | 5.291 | 1.016 | 3.546 | 9.853 |
| Book value | ||||
| 31.12.2021 | 8.888 | 2.481 | 1.988 | 13.357 |
| 31.12.2022 | 8.906 | 2.277 | 2.112 | 13.295 |
| Amortization rates | - | 3-11% | 10-33% |
Consolidated Financial Statements of Syn hf. 2022
Amounts are in ISK millions
Notes, continued:
12. Intangible assets, continued
Impairment testing for cash generating units that contain goodwill
For the purpose of impairment testing, goodwill has been allocated to cash generating units as detailed below.
The book value of goodwill is specified by area as follows:
| 2022 | 2021 | |
|---|---|---|
| Goodwill related to Sýn hf. | 8.194 | 8.194 |
| Goodwill related to Endor ehf. | 712 | 694 |
| Goodwill total | 8.906 | 8.888 |
The recoverable amount of the cash-generating units is determined based on a value in use calculation which uses cash flow projections for the next 5 years. According to the Group's updated future plan, the recoverable amount of goodwill exceeds book value of goodwill, and no impairment has been recognized.
The following assumptions were used for estimating the recoverable amount for Sýn hf.:
| 2022 | 2021 | |
|---|---|---|
| Nominal growth of revenue 2022 / 2021 | 2,9% | 8,5% |
| Average growth of revenue 2023 to 2027 / 2022 to 2026 | 4,2% | 6,0% |
| Future growth, excluding effects of price changes | 4,2% | 3,0% |
| Average EBITDA 2023 to 2027 / 2022 to 2026 | 7,5% | 9,5% |
| WACC | 11,9% | 10,0% |
It is management estimate that reasonable changes to the main assumptions of the impairment test would not cause the recoverable amount to be lower than book value.
The following assumptions were used for estimating the recoverable amount for Endor ehf.:
| 2022 | 2021 | |
|---|---|---|
| Nominal growth of revenue 2022 / 2021 | 38,1% | (30,5%) |
| Average growth of revenue 2023 to 2027 / 2022 to 2026 | 1,0% | 13,3% |
| Future growth, excluding effects of price changes | 2,5% | 2,5% |
| Average EBITDA 2023 to 2027 / 2022 to 2026 | 17,6% | 18,7% |
| WACC | 9,6% | 8,3% |
Consolidated Financial Statements of Sýn hf. 2022
Amounts are in ISK millions
Notes, continued:
13. Investments in associates
Investments in associates are accounted for in the Consolidated Financial Statements using the equity method. An associate is an entity over which the Company has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but not control or joint control over those policies. Under the equity method, investments in associates are initially recognized at cost and adjusted for post-acquisition changes in the Company's share of the net assets of the associate, less any impairment in the value of individual investments. Investment in other companies are of immaterial amounts and recorded at cost.
| 2022 | 2021 | |
|---|---|---|
| Book value at 1.1. | 39 | 1.375 |
| Sale of investment in associate | - | (1.103) |
| Effects of associates | - | (251) |
| Translation difference | - | - |
| Investments during the year | 17 | 18 |
| Dividend received | - | - |
| Book value 31.12. | 56 | 39 |
| Investment in other company's | 129 | 23 |
| Book value 31.12. | 185 | 62 |
14. Broadcasting rights
Broadcasting rights consist of own productions and purchased broadcasting rights. Broadcasting rights are recognized at cost, which includes the purchase/production price and other direct costs for preparing the assets for their intended use. Useful life is estimated based on the nature of the rights (linear / SVOD) and their contractual time. Amortization starts when the broadcasting rights is available to air. Sport broadcasting rights are amortized over the airing period of the events.
| Broadcast rights at year end is specified as follows: | 2022 | 2021 |
|---|---|---|
| Book value at 1.1. | 1.762 | 1.876 |
| Foreign broadcasting license | 1.500 | 1.924 |
| Domestic content | 791 | 766 |
| Depreciation of the period | (2.244) | (2.805) |
| Book value 31.12. | 1.809 | 1.762 |
The Group's off balance sheet commitments for broadcasting rights amount to 1,692 million ISK (2021: 2,046 million ISK)
15. Fee to auditors
| Group auditors | Other auditors | |||
|---|---|---|---|---|
| Services provided are specified as follows: | 2022 | 2021 | 2022 | 2021 |
| Auditing and review | 26 | 19 | - | - |
| Other services | 11 | 5 | 5 | 3 |
| Total fee to auditors during the year | 37 | 24 | 5 | 3 |
Consolidated Financial Statements of Syn hf. 2022
Amounts are in ISK millions
Notes, continued:
16. Income tax
Income tax expense represents the sum of the tax currently payable and deferred tax. Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity.
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from goodwill.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
| Effective income tax is specified as follows: | 2022 | 2021 | ||
|---|---|---|---|---|
| Profit before income tax | 746 | 2.462 | ||
| Income tax according to current tax ratio | (20,0%) | (149) | (20,0%) | (492) |
| Effects of associates | 2,1% | 16 | (2,3%) | (56) |
| Tax depreciation of goodwill | 26,4% | 197 | 8,0% | 197 |
| Changes in fair value | 6,4% | 48 | - | - |
| Other items | 4,0% | 30 | (0,4%) | (11) |
| Effective income tax | 19,0% | 142 | (14,7%) | (362) |
17. Deferred tax liability / assets
| Deferred tax assets (deferred tax liability) is specified as follows: | 2022 | 2021 | ||
|---|---|---|---|---|
| Tax asset | Tax liabilities | Tax asset | Tax liabilities | |
| Deferred tax assets (tax liability) 1.1. | 7 | - | (16) | 383 |
| Income tax in the income statement | 142 | - | 8 | (370) |
| Other items | 9 | - | 34 | (32) |
| Tax liability / tax asset at year end | 158 | 0 | 26 | (19) |
| Deferred tax assets (liability) is specified as follows: | 2022 | 2021 | ||
| --- | --- | --- | --- | --- |
| Property, plant and equipment | (1.128) | - | 6 | (979) |
| Current assets | 76 | - | 3 | 101 |
| Right-of-use assets | 864 | - | - | 845 |
| Other items | 7 | - | 17 | 14 |
| Tax loss carry forward | 339 | - | - | - |
| Deferred tax at year end | 158 | 0 | 26 | (19) |
Consolidated Financial Statements of Syn hf. 2022
Amounts are in ISK millions
Notes, continued:
18. Inventories
Inventories are stated at the lower of cost and net realizable value. Inventory cost is based on first in - first out rule. Cost of inventories include it's purchase price and all directly related cost. Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.
| Inventories are specified as follows: | 2022 | 2021 |
|---|---|---|
| Telecommunications equipment for resale | 544 | 286 |
| Other equipment (supplies) | 15 | 70 |
| Inventories at year end | 559 | 356 |
19. Trade and other receivables
Trade and other receivables are recognized in the balance sheet when the Company becomes a party to the contractual provisions of the instrument. Trade and other receivables are subsequently measured at amortized cost, net of impairment losses. The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. Trade receivables and other receivables in foreign currency are translated using the exchange rate prevailing at balance sheet date.
| Trade and other receivables are specified as follows: | 2022 | 2021 |
|---|---|---|
| Trade receivables | 3.314 | 3.326 |
| Receivable from sale of passive mobile infrastructure | - | 1.649 |
| Other receivables | 401 | 392 |
| Lease receivables | 24 | 21 |
| Allowance for trade receivables | (89) | (91) |
| Total trade and other receivables | 3.650 | 5.297 |
At each reporting date the Group determines whether objective evidence of impairment of trade receivables is present. A financial asset is impaired if one or more events that have occurred and have a negative impact on the expected future cash flows of the financial instruments.
Impairment is the difference between book value of a receivable and the present value of its expected future cash flows, discounted at the original effective interest rate. Impairment is recognised in profit or loss, and only reversed if the reversal relates to events occurring after the impairment was originally recognised.
| Change in allowance for doubtful trade receivables is specified as follows: | 2022 | 2021 |
|---|---|---|
| Balance at 1.1. | (91) | (99) |
| Change in impairment for claims that may be lost | (35) | (46) |
| Receivables written off during the year | 37 | 54 |
| Allowance for doubtful trade receivables at 31.12. | (89) | (91) |
Consolidated Financial Statements of Syn hf. 2022
Amounts are in ISK millions
Notes, continued:
20. Equity
Share capital
Issued share capital at year-end was 2,684 million ISK (2021: 2,964 million). The nominal amount of each share is 10 ISK. Shareholders are entitled to dividends in proportion with their share at ex-dividend date. According to the Company's articles of association there are no restrictions regarding sale or transfer of shares. The Company holds own shares amounting to nominal value of ISK 16,1 million at the end of the fiscal year or a total of 0,6% of the issued share capital.
Share premium
Share premium is the amount paid by shareholders above the nominal value of shares. According to the Limited Liability Company Act the Company shall retain 25% of Share Capital as statutory reserves which are restricted earnings. The statutory reserves are included in share premium.
Translation reserve
Translation difference that arises upon translation of foreign operations into the Group's presentation currency (ISK) is recorded in other comprehensive income and accumulated in a reserve account in equity. If foreign operations are sold or discontinued, in part or in full, the accumulated translation differences for those operations are reclassified from equity to profit or loss.
Dividend
The board proposes to pay dividends to shareholders in the amount of ISK 300 million for the operating year 2022. No dividends were distributed from 2021 net results.
Restricted earnings
In accordance with article 41 of the Icelandic Financial Statements Act the Company has transferred its accumulated share in profit of its subsidiaries and associates in excess of dividends received to a restricted retained earnings account. The requirements came in effect on 1 January 2016.
21. Profit per share
Profit per share is the ratio of profit belonging to the groups shareholders and weighted average number of active shares during the year. Diluted earnings per share are based on profit allocated to shareholders in the group and the weighted average number of active shares, taking into account the dilutive effects of expected issued shares on employee stock options. Diluted earnings per share are equal to earnings per share, as the Company has not taken loans that are convertible into share capital or entered into stock option agreements.
| Profit per share is specified as follows: | 2022 | 2021 |
|---|---|---|
| Profit for the year | 888 | 2.100 |
| Shares at beginning of the year | 2.964 | 2.964 |
| Weighted average of outstanding shares during the year | 2.687 | 2.964 |
| Profit per share and diluted profit per share | 3,3 | 7,1 |
| Earnings and diluted earnings per ISK of share capital | 0,33 | 0,71 |
Consolidated Financial Statements of Syn hf. 2022
Amounts are in ISK millions
Notes, continued:
22. Interest bearing liabilities
Interest bearing liabilities are recognized when the Group becomes a party to the contractual provisions of the instrument. The financial liabilities are initially recognized at fair value plus any direct transaction cost. The liabilities are measured subsequently at amortized cost using the effective interest method
The Group derecognizes financial liabilities when, and only when, the Group's obligations are discharged, cancelled or have expired.
| Interest bearing debts are specified as follows: | 2022 | 2021 |
|---|---|---|
| Liabilities to financial institutions | 5.174 | 5.688 |
| Current maturities of borrowings | (373) | (723) |
| Total interest bearing long-term liabilities | 4.801 | 4.965 |
| Liabilities due to financing activities | 2022 | 2021 |
| Starting balance | 5.688 | 10.484 |
| Instalment | (474) | (3.161) |
| Operating loan | (40) | (1.635) |
| Final balance | 5.174 | 5.688 |
Interest bearing debts at year end are in ISK and non-indexed. Weighted average interest rate is 7,79% (2021: 3.59%)
| Instalment of long-term liabilities are specified in the following years: | 2022 | 2021 |
|---|---|---|
| Payments in 2022 | - | 723 |
| Payments in 2023 | 373 | 4.965 |
| Payments in 2024 | 338 | - |
| Payments in 2025 | 338 | - |
| Payments in 2026 | 338 | - |
| Later payments | 3.787 | - |
| Total | 5.174 | 5.688 |
The Company's loan agreements include certain covenants. The covenants relate to both certain restrictions of the Group's actions without the prior consent of the lender as well as the financial ratios that the Company must fulfil. At year end, the Group fulfilled all requirements relating to financial ratios in its operations.
Collateral
A collateral amounting to IS 6,287 million ISK (2021: 6,287 million ISK) is in place between the Group and its lender. The collateral relates to among others current assets, property, plant and equipment's inventory and accounts receivables.
23. Trade and other current payables
Trade and other payables are recognized when the Company becomes a party to the contractual provisions of the instrument. The financial liabilities are initially recognized at fair value plus any direct cost. The liabilities are measured subsequently at amortized cost using the effective interest method.
Trade and other payables in foreign currency are translated using the exchange rate prevailing at balance sheet date.
| Trade and other current payables are specified as follows: | 2022 | 2021 |
|---|---|---|
| Trade payables | 4.241 | 3.867 |
| VAT payable | 319 | 360 |
| VAT payable from sale of passive mobile infrastructure | - | 1.649 |
| Pre-collected revenues | 560 | 485 |
| Accrued expense and other short-term liabilities | 1.048 | 1.119 |
| Total trade and other current payables | 6.168 | 7.480 |
Deferred revenues
Deferred revenues are generated by pre-paid phone usage and other pre-payments from customers. The majority of deferred revenues are released one month after the reporting date.
Consolidated Financial Statements of Syn hf. 2022
Amounts are in ISK millions
Notes, continued:
24. Risk management
a. Overview
The Group's financial instruments are exposed to the following risk:
- Credit risk
- Liquidity risk
- Market risk
Information on the above mentioned risks and the objectives, policies and methods applied by the Group to assess and limit the risks, are provided below. Additionally, quantitative information can be found elsewhere in the financial statements.
The Group's objective with risk management is to detect and analyse risks in its business and to set and monitor the risk appetite. The Group's risk appetite and methods are regularly reviewed to analyse changes in risks related to the Group's markets and business.
b. Credit risk
Credit risk is the risk that a counterparty to a financial instrument will cause a loss for the Group by failing to pay for its obligation. The Group's credit risk is mainly due to trade receivables and is determined by the financial position and operations of individual customers. Management has implemented a policy for collections for which risks are monitored on a monthly basis. Estimates on collections are performed regularly and necessary allowances recorded.
The Group has rules in place for reviewing credit quality of new customers before granting terms of payment. Collection processes have been defined for all groups of trade receivables, which are reviewed regularly and receivables evaluated.
The Group reviews an age analysis of accounts receivables monthly and recognizes an allowance for doubtful accounts based on expected credit losses. The allowance is based on past due status, historical collections and current economic conditions for customers. The Group reviews receivables that are considered high risk and estimates a specific allowance if appropriate.
Maximum credit risk
The maximum credit risk for the Group as a result of financial assets is the book value which was specified at year end as follows:
| Notes | 2022 | 2021 | |
|---|---|---|---|
| Trade and other receivables | 19 | 3.650 | 3.648 |
| Receivable for sale of passive mobile infrastructure | - | 1.649 | |
| Cash and cash equivalents | 2.063 | 4.214 | |
| Total | 5.713 | 9.511 |
At year end accounts receivables for the five biggest customers amounted to 597 million ISK (2021: 921 million ISK).
Impairment of trade receivables
| The age of trade receivables was specified at year end as follows: | Gross amount | Allowance | ||
|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |
| Not due | 3.493 | 5.173 | (34) | (33) |
| 0-90 days past due | 123 | 63 | (12) | (9) |
| >90 days past due | 123 | 152 | (43) | (48) |
| Total trade receivables at year end | 3.739 | 5.388 | (89) | (91) |
Consolidated Financial Statements of Syn hf. 2022
Amounts are in ISK millions
Notes, continued:
24. Risk management, continued
c. Liquidity risk
Liquidity risk is the risk that the Group will have difficulties in paying its financial liabilities. The Group manages liquidity risk by maintaining adequate liquid assets to meet its financial obligations and thereby avoiding reputational damage.
The Group has implemented a management policy for liquidity risk, which determines the Group's handling and use of liquid funds and aims to minimize risks. Cash flow projections that predict the needs for liquid funds are prepared monthly. The Group has unused revolving facilities at year-end of 200 million ISK at year end (2020: 1,810 million ISK).
The table below shows undiscounted contractual payments of financial liabilities, including interest payments: (the amounts are not discounted):
| Book Value | Contractual cash-flows | Within a year | 1 to 2 years | 2 to 5 years | More than 5 years | |
|---|---|---|---|---|---|---|
| 31 December 2022 | ||||||
| Liabilities: | ||||||
| Interest bearing debts | 5.174 | 6.933 | 762 | 701 | 1.322 | 4.148 |
| Trade and other current payables | 6.168 | 6.168 | 6.168 | - | - | - |
| Lease liabilities | 13.115 | 24.453 | 1.779 | 1.779 | 2.567 | 18.329 |
| Total | 24.457 | 37.554 | 8.709 | 2.480 | 3.889 | 22.477 |
31 December 2021
Liabilities:
| Interest bearing debts | 5.688 | 6.049 | 714 | 5.335 | - | - |
|---|---|---|---|---|---|---|
| Trade and other current payables | 7.480 | 7.480 | 7.480 | - | - | - |
| Lease liabilities | 12.599 | 23.423 | 1.694 | 1.694 | 2.525 | 17.510 |
| Total | 25.767 | 36.952 | 9.888 | 7.029 | 2.525 | 17.510 |
d. Market risk
Market risk is the risk that changes in foreign exchange rates, interests and equity price will affect the net results of the Group and book value of its investments. The objectives of managing market risk is to control and limit risk at a predetermined limit, and at the same time maximizing profits.
Consolidated Financial Statements of Syn hf. 2022
Amounts are in ISK millions
Notes, continued:
24. Risk management, cont.:
e. Exchange rate risk
The Groups presentation currency is ISK, but part of its revenue and purchases are in other currencies. The Group is mainly exposed to currency risk with regards to EUR, USD, GBP and SDR. Finance- and operations is responsible for monitoring exchange rates of the essential currencies with regards to impact of financial assets and liabilities denominated in foreign currencies on the financial statements.
The Group's exchange rate risk is as follows (in ISK millions).
| 31 December 2022 | EUR | USD | GBP | SDR |
|---|---|---|---|---|
| Trade receivables | 279 | 4 | - | 73 |
| Cash and cash equivalents | 191 | 401 | 1 | - |
| Trade payables | (1.586) | (1.391) | (43) | (18) |
| Risk in the balance sheet | (1.117) | (986) | (42) | 56 |
| 31 December 2021 | EUR | USD | GBP | SDR |
| --- | --- | --- | --- | --- |
| Trade receivables | 333 | 3 | - | 31 |
| Cash and cash equivalents | 101 | 47 | - | - |
| Trade payables | (1.398) | (899) | (9) | (52) |
| Risk in the balance sheet | (964) | (850) | (9) | (21) |
The exchange rate of the major currencies during the year was as follows:
| Average rate | Year end rate | |||
|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |
| EUR | 142,33 | 154,52 | 151,50 | 147,60 |
| USD | 135,46 | 135,27 | 142,04 | 130,38 |
| GBP | 181,00 | 188,52 | 189,68 | 182,50 |
| SDR | 166,90 | 173,59 | 170,81 | 175,73 |
Sensitivity analysis
10% strengthening of ISK against the relevant currencies would increase pre-tax net profit of the Group by 209 million ISK (2021: 184 million). A 10% weakening of the ISK would have the opposite effect. The analysis is based on the same assumptions as in the prior year.
10% weakening of ISK against the relevant currencies would have the same effect but in the opposite direction, provided that all other variables had remained unchanged.
f. Interest rate risk
The Group's borrowings are all with variable interest rates.
| The Group is exposed to interest rate risks as funds are borrowed at variable interest rates. | 2022 | 2021 |
|---|---|---|
| Borrowings with variable interest | 5.174 | 5.688 |
A 100 bps change in interest would effect the pre-tax profit by 51,7 million ISK (2021: 56,8 million). The Group has no fixed rate borrowings.
g. Fair value
The difference between fair value and book value of financial assets and financial liabilities is insignificant.
25. Capital management
The Group's objective is to maintain a strong equity ratio to support stability in future operations. In the long term the target equity ratio is 30%. The equity ratio at year end was 27,9% (2021: 28,9%).
Consolidated Financial Statements of Syn hf. 2022
Amounts are in ISK millions
Notes, continued:
26. Related parties
Related parties are those that have direct or indirect control in the Company or have the power to govern financial and operational policies. Among parties related to the Company are: key management, close family members of key management and entities over which key management or their family members have control or significant influence. Shareholders that have control or significant influence over the entity are also considered related parties.
Trading with the Board and key management
| Salaries and benefits to the Group management due to work for the Group's companies and shares in the company are specified as follows: | 2022 Fixed terms | 2022 Variable terms | 2021 Fixed terms | 2021 Variable terms | No. Of shares at the end of 2022 |
|---|---|---|---|---|---|
| Board: | |||||
| Jón Skaftason, chairman. | 2,3 | - | - | - | 42.147.128 |
| Hákon Stefánsson, board member. | 1,0 | - | - | - | 51.397.128 |
| Páll Óskar Gíslason, board member. | 4,5 | - | 3,6 | - | - |
| Rannveig Eir Einarsdóttir, board member | 1,1 | - | - | - | 20.650.000 |
| Sesselía Birgisdóttir, board member. | 3,2 | - | - | - | 50.000 |
| Hjörleifur Pálsson, former chairman. | 5,9 | - | 8,5 | - | - |
| Petrea Guðmundsdóttir, former chairm. | 5,9 | - | 5,0 | - | - |
| Hilmar Kristinsson, former board member | - | - | 0,7 | - | - |
| Jóhann Hjartarson, former board member | 2,4 | - | - | - | - |
| Sigríður V. Halldórsdóttir, former board m | 0,9 | - | 4,1 | - | - |
| Tanya Zharov, former board member | 1,5 | - | 5,5 | - | - |
| 0,7 |
Key management:
| Yngvi Halldórsson, CEO of Sýn hf. | 14,5 | 9,6 | - | - | 334.000 |
|---|---|---|---|---|---|
| Heiðar Guðjónsson, former CEO of Sýn hf | 46,9 | - | 54,5 | 9,2 | - |
| Executive members | 165 | 17,1 | 159 | 35,3 | 70.000 |
Included are shares of spouses, children not legally competent to manage their financial affairs and entities controlled by board and management.
Other transactions with board of directors and key management are immaterial. Terms and conditions for transactions with board member and key management are on the same basis as transaction with unrelated parties and are therefore classified as such.
Transactions with related parties
Sale of goods and services to related parties and entities related to them amounted to 16 million ISK in the year 2022 (2021: 75 million ISK), and purchases of goods and services amounted to 100 million ISK (2021: 70 million ISK).
Consolidated Financial Statements of Sýn hf. 2022
Amounts are in ISK millions
Notes, continued:
27. Other matters
Sýn hf. (“company”) is engaged in legal proceedings against individuals, other undertakings, and surveillance authorities concerning the Icelandic telecommunication and media market. The company recognizes obligations and/or claims due to legal proceedings in its accounts once future payments and other benefits can be assessed in a reliable manner. Due to uncertainties regarding future developments of legal proceedings, judicial decision, rulings, appeals and settlements, the outcome can lead to additional commitments and costs for the company. Below is a summary of matters that affect the interest of Sýn directly or indirectly.
Siminn v The Electronic Communications Office of Iceland (ECOI), Sýn and Gagnaveita Reykjavíkur and counterclaim
In the Supreme Court of Iceland’s case no. 50/2022 (case no. 438/2020 at the Court of Appeal and no. E-3251/2018 at district level) the applicant, Siminn hf., demands that ECOI’s decision no 10/2018 will be annulled entirely or alternatively that section 6 of the decision, to impose an administrative fine, will be annulled or the fine reduced.
The dispute mainly relates to the interpretation of Article 45(5) of the Icelandic Media Act no. 38/2011 and whether Siminn is in breach of that provision by solely offering its content provider to those who purchase telecommunication services from Siminn’s group, with the objective to attracting more customers for Siminn’s telecommunication services. By judgement dated 1 July 2020, Reykjavík District Court reduced the administrative fine, however the court dismissed every other claim that Siminn demanded. Siminn appealed the judgement requesting a complete acquittal and remuneration for legal fees. The Court of Appeals rendered its judgement on 24 June 2022 and acquitted Sýn and ECOI of all claims made by Siminn but all claims to procedural legal fees were dismissed. Siminn’s appeal to the Supreme Court of Iceland has been approved but the case has not yet been entered into the court’s agenda.
Sýn against ECOI, Siminn hf., Mila hf., Nova hf. and Ljósløirinn hf.
In case no. E-1846/2021 the company has demanded that the Electronic Communications and Postal appeals board’s ruling no. 7/2019 shall be annulled. The ruling repealed ECOIS’s prior decision no. 27/2019, which had levied administrative fines on Siminn hf. due to what the ECOI considered a violation of Art. 45(5) of the Icelandic Media Act no. 38/2011, which prohibits media outlets from directing business of its clients to a related telecommunication company. ECOI considered Siminn in violation with its activities in the market up until 1 October 2019. The disputed ruling is based on the reasoning that ECOI’s decision had not been rendered in accordance with legal formalities. The company did not consider this basis to be sound and initiated the court proceedings to annul the ruling. It should be noted that ECOI also initiated court proceedings for the same purpose and the two cases have been merged. The case process is delayed pending judgement in case regarding ECOI’s decision no. 10/2018.
Claims for damages from Siminn hf.
In case E-2362/2020, the company has claimed damages against Siminn for the financial damage caused by Siminn in relation to its violation of Article 45(5) of the Icelandic Media Act no. 38/2011 during the period of 1st of October 2015 until 1st of December 2017. The company bases its claim on the reasoning that Siminn’s violation of the aforementioned provision has gained Siminn hf. considerable financial advantages in the form of boosted sale of telecommunication services with comparable losses for Sýn. Siminn’s actions should be considered culpable and unlawful and the company’s loss a likely result thereof. The claim is based on a court appointed assessor’s report, dated 17 March 2020, as per case no. M-2957/2019. The primary claim is of a payment of ISK 125,084,713 as well as interests and penalty interests, the 1st alternative claim is for the payment of ISK 100,067,773 ISK as well as interests and penalty interest, 2nd alternative claim is for the payment of ISK 75,050,829 as well as interests and penalty interests and the 3rd alternative claim is for the payment of damages as assessed by the court as well as penalty interests, as further stated in the subpoena. Additionally a claim has been made for procedural legal fees from Siminn hf. Siminn hf. has submitted a rebutter and seeks acquittal as well a procedural legal fees from Sýn. The case has been delayed pending judgment in the case regarding ECOI’s decision no. 10/2018.
Consolidated Financial Statements of Sýn hf. 2022
Amounts are in ISK millions
Notes, continued:
27. Other matters continued:
Claims for damages from Siminn hf., continued:
In case no. E-5072/2022 the company has claimed damages from Siminn hf. due to financial losses sustained by the company from Siminn's violation of Art. 45(5) of the media act no. 38/2011 and the competition act no. 44/2005 or certain conditions of a settlement between Siminn hf. and the competition authorities with regard to the period of 2 December 2017 to 31 December 2019. The company argues that Siminn's violation of the aforementioned provision has gained Siminn hf. considerable financial advantages in the form of boosted sale of telecommunication services with comparable losses for Sýn. Siminn's actions are to be considered culpable and unlawful and the company's loss is a likely result thereof. The claim is based on a court appointed assessor's report, dated 3 August 2022 as per case no. M-2361/2021. The primary claim is for the payment of ISK 270.027.938 as well as interests and penalty interests, the 1st alternative claim is for the payment of ISK 216,022,351 as well as interests and penalty interests, 2nd alternative claim is for the payment of ISK 162,016,763 as well as interests and penalty interests, and the 3rd alternative claim is for the payment of damages as assessed by the court as well as penalty interests, as further stated in the subpoena. Additionally a claim has been made for procedural legal fees from Siminn hf. Siminn hf. has submitted a rebutter and seeks dismissal as well a procedural legal fees. The dismissal claim will be argued on the 9th of March.
Claim towards Ingibjörg Pálamdóttir, Jón Ásgeir Jóhannesson and 365 hf.
The company has demanded damages from 365 hf., Jón Ásgeir Jóhannesson and Ingibjörg Stefania Pálamdóttir under case no. 512/2022 of the Court of Appeal (case no. E-2982/2020 at district level). The parties entered into a purchase agreement concerning the company's purchase of large portion of 365 hf. operations. Within the purchase agreement there was a non-competition clause as well as a provision that gave Sýn the right to claim penalties/damages should the non-competition clause be breached. 365 hf. and other relevant parties undertook personal liabilities regarding this matter. Sýn's claim is based on the non-competition clause being breached and that the defendants are liable in-solidum. Sýn claimed penalties/damages, based on the aforementioned provisions in the agreement, for a total of ISK 1.698.810.718 plus interest and penalty interest as stated in the subpoena. Sýn also claims that the defendants should pay in solidum Sýn's accrued legal costs. The District Court of Reykjavik rendered its judgement on 14 July 2022 in which it acquitted the defendants and Sýn was made to pay their legal fees in the amount of one million to each defendant. Sýn has appealed the case to the Court of Appeals and has made the same claims as it did before the District court. The case has not yet been entered into the Court of Appeal's agenda.
Matters before supervisory authorities
Complaint to the EFTA Surveillance Authority (ESA) concerning unlawful aid
By letter dated 23 February 2021 Sýn lodged a formal complaint to the EFTA Surveillance Authority (ESA) concerning an unlawful state aid to Farice ehf. which neither had been notified to nor approved by ESA. The state aid relates to payments based on a service agreement that were not in accordance with the subject of the agreement and other payments to Farice ehf. for preparatory actions taken to install a new telecommunication submarine cable. ESA is still investigating the complaint.
Should ESA accept Sýn's argument and confirm that this constituted an unlawful state aid, such decision could have a positive impact on Sýn's financial position if it were to lead to a change in the operation and list of tariffs. Sýn could also claim damages due to the unlawful conduct.
Appeal of ESA Decision from 26 March 2021 to the EFTA Court regarding state aid to Farice ehf. for the third telecommunications submarine cable between Iceland and Europe
On 26 March 2021, ESA adopted a decision where ESA concluded that a 50 million EUR share capital increase in Farice to finance a submarine cable between Iceland and Ireland, was compatible with the state aid functions of the EEA Agreement as per decision no. 023/21/COL from 26 March 2021.
Sýn maintained its view that the aid to Farice constituted an unlawful aid and requested that the EFTA Court would annul ESA's decision. The case is expected to be argued on 10th of February.
The EFTA Court rendered its decisions on 1 June 2022 and annulled ESA's decision no E4/21. ESA was also ordered to pay the legal fees sustained by Sýn. This causes ESA to be obligated to take a decision on the investigation of the case whereas affected parties may provide comments on the state aid. The investigation could result in the decision that the state aid is considered unlawful or that conditions will be imposed on the aid. The result of the investigation may therefore lead to a change in Farice's operation and list of tariffs which may have a positive impact on Sýn's financial position.
Consolidated Financial Statements of Sýn hf. 2022
Amounts are in ISK millions
Consolidated Financial Statements of Sýn hf. 2022
Amounts are in ISK millions
Notes, continued:
27. Other matters continued:
At any time, various matters are being processed by various domestic surveillance authorities. At no time has any administrative fines and/or other significantly onerous measures been proclaimed.
At this time, Sýn is unable to estimate any future liabilities or claims that may result from the aforementioned legal procedures, partially because it can take an extensive amount of time before these cases will be concluded, as well as the fact that they could go into any different directions going forward. Therefore, the company has not accounted any liabilities or claims in this regard in its interim financial statement.
Post accounting date events
Authorization to purchase own shares
The company is authorized to purchase up to 10% of its own shares for the purpose of establishing market making with respect to shares in the company and/or to establish a formal buyback program. The buyback program was initiated the 7th of January 2022 and is ongoing. The buybacks will amount to a maximum 4,958,678 shares, or approximately 1.85% of the total issued shares in the company, notwithstanding that the total buyback amount will not exceed ISK 300 million.
Sale of core network
The 20th of December 2022, Sýn and Ljósleiðarinn signed a purchase agreement on the Ljósleiðarinn's purchase of Sýn's trunk network and a service agreement between the companies. The purchase price is ISK 3,000 million. The payment of the purchase price will be paid in installments and the purchase price will be paid no later than 12 months from delivery of the sold assets. The sold assets' book value is ISK 564 million and the capital gains are therefore ISK 2,436 million which will be fully entered into the companies books upon delivery.
Simultaneous to the purchase agreement a service agreement has been entered into by the parties for 12 year retail access and services through the trunk- and access network, as well as services relating to cross-border internet connections.
The transaction is expected to have a positive effect on Sýn's operating expenses to the effect of around ISK 100 million per year. The annual investment requirements should likewise be reduced to around ISK 120 million throughout the contract period.
The transaction is subject to the condition precedence that the Icelandic Competition Authorities permit the sale whereas a merger notification will be sent to the Competition Authorities shortly.
Quarterly statements*
Operations by quarters
| | 2022
1Q | 2022
2Q | 2022
3Q | 2022
4Q | Total |
| --- | --- | --- | --- | --- | --- |
| Revenue from sales of goods and services | 5.682 | 6.009 | 5.501 | 5.791 | 22.983 |
| Cost of sales | (3.666) | (4.124) | (3.480) | (3.696) | (14.966) |
| Gross profit | 2.016 | 1.885 | 2.021 | 2.095 | 8.017 |
| Operating expense | (1.615) | (1.563) | (1.535) | (1.712) | (6.425) |
| Operating profit (loss) | 401 | 322 | 486 | 383 | 1.592 |
| Finance income | 21 | 9 | 56 | 136 | 222 |
| Finance expense | (221) | (248) | (262) | (267) | (998) |
| Net exchange rate differences | 58 | 13 | (66) | (75) | (70) |
| Net financial expense | (142) | (226) | (272) | (206) | (846) |
| Effects of associates | 0 | 0 | - | 0 | 0 |
| Profit before tax | 259 | 96 | 214 | 177 | 746 |
| Income tax | (52) | (30) | (33) | 257 | 142 |
| Profit for the period | 207 | 66 | 181 | 434 | 888 |
| Translation difference | (26) | (35) | 10 | 52 | 1 |
| Total comprehensive income | 181 | 31 | 191 | 486 | 889 |
| EBITDA | 1.710 | 1.607 | 1.799 | 1.528 | 6.644 |
| EBITDA % | 30,1% | 26,7% | 32,7% | 26,4% | 28,9% |
| Cash generated by operations | 1.107 | 1.580 | 1.249 | 1.692 | 5.628 |
| Investment activities | (819) | (1.010) | (842) | (1.321) | (3.992) |
| Financial activities | (2.402) | (407) | (467) | (519) | (3.795) |
Consolidated Financial Statements of Syn hf. 2022
Amounts are in ISK millions
Quarterly statements*
Operations by quarters
| | 2021
1Q | 2021
2Q | 2021
3Q | 2021
4Q | Total |
| --- | --- | --- | --- | --- | --- |
| Revenue from sales of goods and services | 5.000 | 5.289 | 5.533 | 5.943 | 21.765 |
| Cost of sales | (3.375) | (3.759) | (3.654) | (3.884) | (14.672) |
| Gross profit | 1.625 | 1.530 | 1.879 | 2.059 | 7.093 |
| Gain from sale of passive mobile infrastructure | | | | 2.552 | 2.552 |
| Operating expense | (1.583) | (1.588) | (1.457) | (1.731) | (6.359) |
| Virðisrýmun | - | - | - | - | 0 |
| Operating profit (loss) | 42 | (58) | 422 | 2.880 | 3.286 |
| Finance income | 5 | 6 | 5 | 6 | 22 |
| Finance expense | (144) | (145) | (146) | (178) | (613) |
| Net exchange rate differences | 46 | 22 | (70) | 20 | 18 |
| Net financial expense | (93) | (117) | (211) | (152) | (573) |
| Effects of associates | (193) | 20 | - | (78) | (251) |
| Loss before tax | (244) | (155) | 211 | 2.650 | 2.462 |
| Income tax | 13 | 38 | (39) | (374) | (362) |
| (Loss) / profit for the period | (231) | (117) | 172 | 2.276 | 2.100 |
| Translation difference | (37) | (7) | 19 | (89) | (114) |
| Total comprehensive income | (268) | (124) | 191 | 2.187 | 1.986 |
| EBITDA adjusted for sale of passive mobile infrastructure | 1.388 | 1.488 | 1.886 | 1.670 | 6.432 |
| EBITDA | 1.388 | 1.488 | 1.886 | 4.222 | 8.984 |
| EBITDA % | 27,8% | 28,1% | 34,1% | 71,0% | 41,3% |
| Cash generated by operations | 542 | 1.432 | 1.756 | 1.287 | 5.017 |
| Investment activities | (807) | 164 | (1.043) | 5.924 | 4.238 |
| Financial activities | (320) | (1.428) | (691) | (3.463) | (5.902) |
Consolidated Financial Statements of Sýn hf. 2022
Amounts are in ISK millions