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Syn Interim / Quarterly Report 2021
2210_rns_2021-05-12_968207d9-bd88-48a2-88fa-d14cdc724d14.pdf
Interim / Quarterly Report
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Sýn hf.
Condensed Consolidated Interim Financial Statements
1 January to 31 March 2021
vodafone
visir
SPORT
BYLGJAN
X
ENDOR
Sýn hf. Suðurlandsbraut 8 108 Reykjavik kl. 470805-1740
Table of contents
| Page | |
|---|---|
| Endorsement and Statement by the Board of Directors and the CEO | 3 |
| Key figures | 4 |
| Income Statement and Statement of Comprehensive income | 5 |
| Statement of Financial Position | 6 |
| Statement of Changes in Equity | 7 |
| Statement of Cash Flow | 8 |
| Notes | 9 |
Report by the Board of Directors and CEO
Sýn hf. is a fully comprehensive communications and media provider. The Company operates many of the most powerful media platforms in Iceland like Channel 2, Bylgjan Radio, Visir.is, FM957, the X and other well-known media. The Company provides individuals, companies, institution and public bodies with all the core aspects of communication services under the brand of Vodafone Iceland and its subsidiary Endor. The Company works in close global co-operation with Vodafone Group, which is one of the largest multinational communication company in the world.
The Consolidated Condensed Interim Financial Statements contains the Interim Financial Statements of Sýn hf., the Interim Financial Statements of the Company's subsidiary Endor ehf. and share in the joint operation of Sendafélagið ehf. These Consolidated Condensed Interim Financial Statements have been prepared in accordance with IAS 34, as adopted by the European Union and additional requirements in the Icelandic Financial Statement Act. The Condensed Interim Financial Statements of the Group from January 1st to March 31st, 2021 have not been reviewed by the Company's auditors.
According to the Income Statement, revenues from goods sold and service provided amounts to ISK 4,962 mill. Loss of the period amounts to ISK 231 mill. According to the Statement of Financial Position, assets of the Company amounts to ISK 29,536 millj. The equity position at the end of the period on March 31st 2021 amounts to ISK 8,208 millj. Thereof share capital amounts to ISK 2,964 millj. The equity ratio at period end is 27.79%.
The effects of the COVID-19 pandemic on the Group's operation and cash flow has been most notable in the decline of revenues from advertising and roaming as has been previously communicated. The Group has a portion of its operating cost in foreign currency. The weakening of the Icelandic Krona has therefore had material effect on operation. The Group's management have adopted various measures to minimize this effect on the Group's operations and cash flow but considering the uncertainty still following the pandemic, the actual short- and long-term effect cannot be fully assessed.
Sale of assets
On March 31st, the Group signed an agreement for the sale and leaseback of its passive mobile infrastructure. The transaction will strengthen the Group's balance sheet. Sales proceeds amounts to 7.1 billion and the expected sales gain exceeds ISK 6.5 billion. At the same time, a long-term lease agreement was made, which will ensure the Group's continued access to the passive mobile infrastructure. All active mobile equipment will remain owned by Sýn hf. In accordance with the requirement of International Financial Reporting Standards (IFRS), the transaction will be treated as a sale and leaseback of assets. For this reason, only part of the sales profit will be recognized through operations on the date of sale. The sales profit recognized will be proportional to the ratio of fair value of the asset sold to the present value of the expected lease liability on the acquisition date. The transaction is subject to the approval of the Competition agency.
On March 31st, an agreement was also signed for the sale of a 49.9% share in the Faroese associated company P/F 20.11.19. The purchase price was $2.5 mill. DKK. The purchase price was paid to the Group in full on April 21st. A service agreement will continue to exist between the companies. The book value of the investment was higher than the sale price and therefore a loss from the sale amounting to ISK 189 mill. ISK is recognized in the P/L.
The transactions has no effect on EBITDA but strengthens the Group's balance sheet and liquidity position.
Statement
According to the best knowledge of the Board of Directors and the CEO, these Consolidated Condensed Interim Financial Statement of Sýn hf. are prepared and presented in accordance with International Financial Reporting Standards for Interim Financial Reporting, IAS 34, as adopted by the EU and additional requirements in Icelandic laws and rules for listed companies. It is The Board of Directors and CEO opinion that these Consolidated Condensed Interim Financial Statements give a true and fair view of the financial performance of the Group. for the three month period ended on March 31st 2021, its financial position as of March 31st 2021 and the Group's cash flows for the period.
The Board of Directors and the CEO of Sýn hf. have today discussed the Consolidated Condensed Interim Financial Statements of the Group for the period from January 1st to March 31st 2021 and confirm them by means of their signatures.
Reykjavík, 12. May 2021
Board of Directors
Hjörleifur Pálsson, Chairman of the Board
Páll Gíslason
Petrea Ingileif Guðmundsdóttir
Sigríður Vala Halldórsdóttir
Tanya Zharov
CEO
Heiðar Guðjónsson
Consolidated Condensed Interim Financial Statement of Sýn hf. 31. March 2021
Amounts are in ISK millions.
Key figures
| | 2021
Q1 | 2020
Q1 |
| --- | --- | --- |
| Financial information | | |
| Revenues | 4,962 | 4,995 |
| Operating profit (loss) | 42 | (21) |
| Loss before tax | (244) | (442) |
| Loss for the period | (231) | (350) |
| Loss per share | (0.78) | (1.18) |
| Investments | 231 | 263 |
| Investments in broadcasting license rights | 576 | 475 |
| Cash generated by operations | 542 | 1,053 |
| Performance evaluation | | |
| EBITDA for the period | 1,388 | 1,355 |
| EBITDA ratio for the period | 28.0% | 27.1% |
| Free cash flow* | (119) | 522 |
| | 2021
Q1 | 31.12
2020 |
| Net interest bearing debt | 15,686 | 15,419 |
*Free cash flow consist of cash from operations before interest and income tax less investment activities.
Consolidated Condensed Interim Financial Statement of Sjn hf. 31. March 2021
Amounts are in ISK millions.
Income statement and statement of Comprehensive income
- January to 31. March 2021
| Notes | 2021 Q1 | 2020 Q1 | |
|---|---|---|---|
| Revenue from sales of goods and services | 5 | 4,962 | 4,995 |
| Cost of sales | 6 | (3,337) | (3,350) |
| Gross profit | 1,625 | 1,645 | |
| Operating expense | 7 | (1,583) | (1,666) |
| Operating profit (loss) | 42 | (21) | |
| Finance income | 5 | 8 | |
| Finance expense | (144) | (219) | |
| Net exchange rate differences | 46 | (230) | |
| Net financial expense | (93) | (441) | |
| Effects of associates | (193) | 20 | |
| Loss before tax | (244) | (442) | |
| Income tax | 13 | 92 | |
| Loss for the period | (231) | (350) | |
| Items that may subsequently be reclassified to profit or loss | |||
| Translation difference | (37) | (2) | |
| Total comprehensive income for the period | (268) | (352) | |
| Loss per share | (0.78) | (1.18) |
Notes on pages 9-11 are an integral part of these Consolidated Condensed Interim Financial Statements.
Consolidated Condensed Interim Financial Statement of Sjn hf. 31. March 2021
Amounts are in ISK millions.
Statement of Financial Position
- March 2021
| Notes | 31.3.2021 | 31.12.2020 | |
|---|---|---|---|
| Non-current assets | |||
| Right-of-use assets | 4,899 | 5,227 | |
| Property, plant and equipment | 3,680 | 3,818 | |
| Goodwill | 8,890 | 8,932 | |
| Other intangible assets | 4,333 | 4,403 | |
| Shares in other companies | 9 | 120 | 1,398 |
| Deferred tax asset | 382 | 383 | |
| Total non-current assets | 22,304 | 24,161 | |
| Current assets | |||
| Broadcasting license rights | 1,828 | 1,876 | |
| Inventories | 288 | 241 | |
| Trade receivables and other short term receivables | 9 | 4,340 | 3,217 |
| Cash and cash equivalents | 240 | 831 | |
| Total current assets | 6,696 | 6,165 | |
| Assets classified for sale | 11 | 536 | 536 |
| Total assets | 29,536 | 30,862 | |
| Equity | |||
| Share capital | 2,964 | 2,964 | |
| Statutory reserves | 2,465 | 2,465 | |
| Other reserve | 184 | 310 | |
| Retained earnings | 2,595 | 2,810 | |
| Total equity | 8,208 | 8,549 | |
| Non-Current liabilities | |||
| Interest bearing debt | 9,472 | 9,492 | |
| Lease liabilities | 4,395 | 4,507 | |
| Other liabilities | 166 | 166 | |
| Deferred tax liabilities | - | 16 | |
| Total non-current liabilities | 14,033 | 14,181 | |
| Current liabilities | |||
| Interest bearing debt | 992 | 992 | |
| Lease liabilities | 1,067 | 1,259 | |
| Accounts payable and other short term liabilities | 10 | 5,067 | 5,699 |
| Current liabilities | 7,126 | 7,950 | |
| Liabilities connected to assets classified for sale | 11 | 169 | 182 |
| Total liabilities | 21,328 | 22,313 | |
| Total equity and liabilities | 29,536 | 30,862 |
Notes on pages 9-11 are an integral part of these Consolidated Condensed Interim Financial Statements.
Consolidated Condensed Interim
Financial Statement of Sjn hf. 31. March 2021
Amounts are in ISK millions.
Statement of Changes in Equity
- January to 31. March 2021
| Share Capital | Statutory reserve | Translation difference | Reserve | Retained earnings | Total equity | |
|---|---|---|---|---|---|---|
| 1.1. to 31.3.2020 | ||||||
| Total Equity 1.1.2020 | 2,964 | 2,465 | 7 | 105 | 3,257 | 8,798 |
| Loss for the period | - | - | - | - | (350) | (350) |
| Translation difference | - | - | (2) | - | - | (2) |
| Comprehensive Income | 0 | 0 | (2) | 0 | (350) | (352) |
| Profit of associate in excess of dividend received | 20 | (20) | 0 | |||
| Total Equity 31.3.2020 | 2,964 | 2,465 | 5 | 125 | 2,887 | 8,446 |
| 1.1. to 31.3.2021 | ||||||
| Total Equity 1.1.2021 | 2,964 | 2,465 | 163 | 147 | 2,810 | 8,549 |
| Loss for the period | - | - | - | - | (231) | (231) |
| Translation difference | - | - | (37) | - | - | (37) |
| Comprehensive Income | 0 | 0 | (37) | 0 | (231) | (267) |
| Translation difference | (73) | (73) | ||||
| Profit of associate in excess of dividend received | (16) | 16 | 0 | |||
| Total Equity 31.3.2021 | 2,964 | 2,465 | 53 | 131 | 2,595 | 8,208 |
Notes on pages 9-11 are an integral part of these Consolidated Condensed Interim Financial Statements.
Consolidated Condensed Interim Financial Statement of Sjn hf. 31. March 2021
Amounts are in ISK millions.
Statement of Cash Flow
- January to 31. March 2021
| Notes | 2021 Q1 | 2020 Q1 | |
|---|---|---|---|
| Loss for the period | (231) | (350) | |
| Adjustment for non-cash items: | |||
| Depreciation and amortization | 8 | 1,346 | 1,376 |
| Net financial expense | 93 | 441 | |
| Effects of associates | 193 | (20) | |
| Income tax | (13) | (92) | |
| Cash generated from operating activities | 1,388 | 1,355 | |
| Change in working capital: | |||
| Change in inventories | (48) | 25 | |
| Change in operating assets | (77) | (6) | |
| Change in operating liabilities | (575) | (114) | |
| Cash generated by operations before interest and tax | 688 | 1,260 | |
| Interest income received | 5 | 8 | |
| Interest expense paid | (143) | (215) | |
| Tax paid | (8) | - | |
| Cash generated by operations | 542 | 1,053 | |
| Investment activities | |||
| Investment in property, plant and equipment | (118) | (107) | |
| Investment in intangible assets | (113) | (156) | |
| Investment in broadcasting license rights | (576) | (475) | |
| Investment activities | (807) | (738) | |
| Financial activities | |||
| Instalment of interest bearing debts | (171) | (170) | |
| Change in revolving credit facility | 150 | (147) | |
| Instalment of lease liabilities | (299) | (273) | |
| Financial activities | (320) | (590) | |
| Change in cash and cash equivalents | (585) | (275) | |
| Cash and cash equivalents at the beginning of the year | 831 | 634 | |
| Effect of exchange rate changes on cash held | (6) | 26 | |
| Cash and cash equivalents at the end of the period | 240 | 385 |
Notes on pages 9-11 are an integral part of these Consolidated Condensed Interim Financial Statements.
Consolidated Condensed Interim
Financial Statement of Sjn hf. 31. March 2021
Amounts are in ISK millions.
Notes
- 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 Condensed Interim Financial Statements of the Company for the three months ended on March 31st 2021 contain the Interim Financial statements of the Company, the Company's subsidiary Endor ehf., and share in the joint operation of Sendafélagið ehf. which are referred to combined as “the Group”.
- Summary of Significant Accounting Policies
a. Basis of accounting
These Consolidated Condensed Interim Financial Statements have been prepared in accordance with IAS 34, as adopted by the European Union and additional requirements in the Icelandic Financial Statement Act. These Consolidated Condensed Interim Financial Statements for the period from January 1st to March 31st, 2021 have not been reviewed by the Company's auditors.
The Condensed Interim Financial Statements are prepared in accordance with the same accounting principles as the Financial Statements for 2020. The Condensed Consolidated Interim Financial Statements does not include all the information required for a complete set of IFRS financial statements and should be read in the context of the Company's Financial Statements for 2020. The Financial Statements for 2020 can be found on the Company's website www.syn.is. and on the ICEX website; www.nasdaqomxnordic.com.
b. Critical accounting judgments and key sources of estimation uncertainty
In the application of the Company's accounting policies, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
- Functional and presentation currency
The Consolidated Condensed Interim 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.
- Segment reporting
The Group defines its segments based on internal reporting to the chief operating decision maker. Based on that the Group is defined as one operating segment.
- Net sales
| 2021 | 2020 | |
|---|---|---|
| Sales of goods and service is specified as follows: | Q1 | Q1 |
| Sales of goods | 293 | 235 |
| Sales of service | 4,669 | 4,760 |
| Total sales of goods and service | 4,962 | 4,995 |
| Revenue | Media | Broadband Mobile |
| --- | --- | --- |
| 1.1. to 31.3.2021 | ||
| Revenue | 1,918 | 1,145 |
| Revenue | ||
| 1.1. to 31.3.2020 | ||
| Revenue | 1,935 | 1,160 |
Consolidated Condensed Interim Financial Statement of Sýn hf. 31. March 2021
Amounts are in ISK millions.
Notes, continued:
- Cost of sales
| Cost of sales is specified as follows: | 2021 | 2020 |
|---|---|---|
| Q1 | 1Q | |
| Cost of goods and service sold | 1,742 | 1,724 |
| Salaries and related expense | 574 | 616 |
| Capitalised work | (37) | (42) |
| Depreciation and amortization | 1,058 | 1,053 |
| Total cost of sales | 3,337 | 3,350 |
- Operating expense
| Operating expense is specified as follows: | 2021 | 2020 |
|---|---|---|
| Q1 | Q1 | |
| General and administrative expense | 354 | 372 |
| Sales and marketing expense | 118 | 104 |
| Salary and related expense | 865 | 899 |
| Capitalised work | (43) | (32) |
| Depreciation and amortization | 289 | 323 |
| Total operating expenses | 1,583 | 1,666 |
- Depreciation and amortization
| Depreciation and amortization are specified as follows: | 2021 | 2020 |
|---|---|---|
| Q1 | Q1 | |
| Depreciation of fixed assets | 257 | 306 |
| Amortization of intangible assets | 181 | 199 |
| Amortization of right-of-use assets | 285 | 290 |
| Amortization of broadcasting license rights | 625 | 581 |
| Total depreciation and amortization | 1,346 | 1,376 |
- Trade receivables and other receivables
| Trade receivables and other receivables are specified as follows: | 31.3.2021 | 31.12.2020 |
|---|---|---|
| Trade receivables | 2,707 | 2,823 |
| Receivable for the sale of share in the Faroese associated | 1,065 | - |
| Other receivables | 494 | 347 |
| Sublease receivables | 193 | 166 |
| Sublease classified as held for sale | (20) | (20) |
| Write-down of accounts receivables | (99) | (99) |
| Total trade receivables and other receivables | 4,340 | 3,217 |
On March 31st, an agreement was also signed for the sale of a 49.9% share in the Faroese associated company P/F 20.11.19. The purchase price was 52.5 mill. DKK. The purchase price was paid to the Group on April 21st.
Consolidated Condensed Interim Financial Statement of Sjn hf. 31. March 2021
Amounts are in ISK millions.
Notes, continued:
10. Operating liabilities
| Operating liabilities are specified as follows: | 31.3.2021 | 31.12.2020 |
|---|---|---|
| Accounts payable | 3,543 | 3,599 |
| Unpaid VAT | 360 | 345 |
| Pre-collected revenues | 340 | 360 |
| Accrued expense and other short-term liabilities | 824 | 1,395 |
| Total operating liabilities | 5,067 | 5,699 |
11. Assets classified as held for sale
Disposal groups are classified are held for sale when management is committed to a plan to sell, the asset is available for immediate sale and the sale is highly probable, within 12 months of classification as held for sale. A 'disposal group' is a group of assets, possibly with some associated liabilities, which an entity intends to dispose of in a single transaction. Immediately before the initial classification of the asset as held for sale, the carrying amount of the asset will be measured in accordance with applicable IFRSs. After classification as held for sale disposal groups are measured at the lower of carrying amount and fair value less costs to sell land not further depreciated.
On 31st of March the Group signed an agreement for the sale of sale and leaseback of passive mobile infrastructure. The transaction is subject to the approval of the regulatory institution. For this reason, assets and liabilities related to the sale are classified for sale in the balance sheet.
| Assets classified for sale are specified as follows: | 2021 |
|---|---|
| Right-of-use assets | 144 |
| Sublease | 20 |
| Property, plant and equipment | 372 |
| Assets classified for sale total | 536 |
| Liabilities connected to assets classified for sale are specified as follows: | 2021 |
| Non-Current lease liabilities | 31 |
| Current lease liabilities | 138 |
| Liabilities connected to assets classified for sale total | 169 |
12. Other matters
Sýn hf. is engaged in legal proceedings against individuals, other companies and supervisory authorities in the Icelandic telecommunication and media market. The Company recognizes obligations due to such legal proceedings in its financial statements once future payments and other benefits can be evaluated in a reliable manner. Due to uncertainties regarding future development of legal proceedings, judicial decisions, rulings, appeals and settlements, the outcome can lead to additional commitments and costs for the Company.
Below is a description of main developments in relation to legal proceedings during and after the term of the first quarter. Please refer to the annual account of 2020 for more extensive description.
Sýn hf. vs. PFS, Síminn hf., Míla ehf., Nova hf. and Gagnaveita Reykjavíkur ehf.
Sýn hf. requests the ruling of the Appeals Committee, that anulled decision of the PTA no. 27/2019, be reversed. According to the PTA's decision, Síminn hf. infringed paragraph 5 of Article 45 of the Media Act as of the time that previous infringement according to PTA decision no. 10/2018 lapsed. Sýn hf. contends that the PTA's decision is valid, and the infringement ongoing. The PTA has also requested the ruling of the Appeals Committee be reversed and issued a supena against Síminn hf., Míla ehf., Nova hf., Sýn hf. and Gagnaveita Reykjavíkur ehf. to that effect.
At this time, the Company is unable to estimate any future liabilities that may result from the above legal procedures, partially because it can take 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 in this regards on its Consolidated Financial Statement.
Consolidated Condensed Interim Financial Statement of Sýn hf. 31. March 2021
Amounts are in ISK millions.