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Syn Interim / Quarterly Report 2022
2210_rns_2022-08-30_ac4ff81d-7bcd-4ec8-849b-aed9e9375103.pdf
Interim / Quarterly Report
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Sýn hf.
Condensed Consolidated Interim Financial Statements
1 January to 30 June 2022
vodafone
visir
SPORT
BYLGJAN 2022
MENSA
X
ENDOR
Sýn hf. Suðurlandsbraut 8 108 Reykjavík kt. 470905-1740
Table of contents
| Page | |
|---|---|
| Endorsement and Statement by the Board of Directors and the CEO | 3 |
| Key figures | 4 |
| Review Report on Interim Financial Information | 5 |
| Income Statement and Statement of Comprehensive income | 6 |
| Statement of Financial Position | 7 |
| Statement of Changes in Equity | 8 |
| Statement of Cash Flow | 9 |
| Notes | 10 |
| Appendices: | |
| Quarterly Statements | 14 |
Report by the Board of Directors and CEO
Sýn hf. is a fully comprehensive communications and media provider. The Company operates various of the most powerful media platforms in Iceland such as Stöð 2, Stöð 2 +, Stöð 2 Sport, 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 a share in the joint operation of Sendafélagið ehf, which are referred to combined as "the Group". 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 1 January to 30 June 2022 have been reviewed by the Company's auditors.
First half year results
According to the Income Statement, revenue from goods sold and service provided amounts to ISK 11,691 mill. Profit for the period amounts to ISK 273 mill. According to the Statement of Financial Position, assets of the Company amounts to ISK 32.528 mill. The equity position at the end of the period on 30 June 2022 amounts to ISK 8.888 mill. Thereof share capital amounts to ISK 2,684 mill. The equity ratio at period end is 27,3%.
The company's revenue increased by 13.6% for the first six months of the year compared to the same period in the previous year. The increase is largely due to good growth in mobile revenue, mainly driven by an increase in IoT and roaming revenue, in addition, Endor's revenue doubles between periods. Advertising revenue continues to rise and is now higher than before the pandemic. The margin ratio increases between periods despite the fact that the margin from Endor's operations is lower than from the parent company's operations. Operating cost has not increased during the first six months, even though inflation continues to rise. This results in an increase in operating profit, which was ISK 723 mill. in the first half of 2022, an increase of ISK 739 mill. compared to same period in 2021.
Reduction of share capital
On 12 April, the Company's share capital was reduced in accordance with the number of own shares. In the beginning of 2022, the Board of Directors decided to launch a buyback program that started with a reverse tender offer on 7 January and ended on 9 January. In addition, regular buyback of shares were launched, which lasted from 13 January to 3 March. The company bought a total of 28,064,512 shares or 9.47% of the issued share capital for ISK 1,860 mill. At the Company's general meeting on 18 March, the board's proposal to reduce the share capital in accordance with the number of own shares was approved. After the reduction on 12 April, the number of issued shares in the Company are 268,376,962.
Change in ownership and CEO resignation
On 24 July, CEO Heiðar Guðjónsson sold all shares in Sýn hf. which he owned through his holding company Ursus ehf. Consequently, he resigned but will continue to perform his duties during the contractual notice period until a new CEO has been appointed.
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 regulations 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 six month period ended on June 30th 2022, its financial position as of June 30th 2022 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 June 30th 2022 and confirm them by means of their signatures.
Reykjavík, 30 August 2022
Board of Directors
Hjörleifur Pálsson, Chairman of the Board
Petrea Ingileif Guðmundsdóttir, Vice Chairman of the Board.
Jóhann Hjartarson
Páll Gíslason
Sesselía Birgisdóttir
CEO
Heiðar Guðjónsson
Consolidated Condensed Interim Financial Statement of Sýn hf. 30. June 2022
Amounts are in ISK millions.
Key figures
| 2022 Q2 | 2021 Q2 | 2022 6M | 2021 6M | |
|---|---|---|---|---|
| Financial information | ||||
| Revenue | 6.009 | 5.289 | 11.691 | 10.289 |
| Operating profit (loss) | 322 | ( 58) | 723 | ( 16) |
| Profit (loss) before tax | 96 | ( 155) | 355 | ( 399) |
| Profit (loss) for the period | 66 | ( 117) | 273 | ( 348) |
| Profit (loss) per share | 0,12 | ( 0,42) | 0,79 | ( 1,32) |
| Investments | 454 | 360 | 740 | 592 |
| Investments in broadcasting license rights | 555 | 541 | 1.086 | 1.117 |
| Cash generated by operations | 1.580 | 1.431 | 2.688 | 1.975 |
| Performance evaluation | ||||
| --- | --- | --- | --- | --- |
| EBITDA for the period | 1.607 | 1.488 | 3.317 | 2.876 |
| EBITDA ratio for the period | 26,7% | 28,1% | 28,4% | 28,0% |
| Free cash flow* | 800 | 1.736 | 1.284 | 1.611 |
| 30.06. 2022 | 31.03. 2022 | 31.12. 2021 | 30.06. 2021 | |
| --- | --- | --- | --- | --- |
| Net interest bearing debt | 15.605 | 15.813 | 14.073 | 14.115 |
*Free cash flow consist of cash from operations before interest and income tax less investment activities.
Consolidated Condensed Interim Financial Statement of Sjn hf. 30. June 2022
Amounts are in ISK millions.
Review Report on Interim Financial Information
To the Board of Directors and Shareholders of Sýn hf.
We have reviewed the accompanying Consolidated Condensed Interim Statement of financial position of Sýn hf. and its subsidiaries (the "Group") as of 30 June 2022 and the related Consolidated Interim Income Statement, Consolidated Interim Statement of Comprehensive Income, Consolidated Interim Statement of changes in equity and Consolidated Interim Statement of cash flows for the six-month period then ended, and a summary of significant accounting policies and other explanatory notes.
The board of directors and CEO is responsible for the preparation and fair presentation of this interim financial information in accordance with International Financial Reporting Standards for Interim Financial Reporting, IAS 34, as adopted by the EU and additional requirements in the Icelandic Financial Statement Act.
Auditor's Responsibility
Our responsibility is to express a conclusion on this interim financial information based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements, ISRE 2410. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial information does not give a true and fair view of the financial position of the Group as at 30 June 2022, and of its financial performance and its cash flows for the six-month period then ended in accordance with International Financial Reporting Standards for Interim Financial Reporting, IAS 34, as adopted by the EU and additional requirements in the Icelandic Financial Statement Act.
Reykjavík, 30 August 2022
Deloitte ehf.
Jóhann Óskar Haraldsson
State Authorized Public Accountant
Consolidated Condensed Interim Financial Statement of Sýn hf. 30. June 2021
Income statement and statement of Comprehensive income
1 January to 30 June 2022
| Notes | 2022 Q2* | 2021 Q2* | 2022 6M | 2021 6M | |
|---|---|---|---|---|---|
| Revenue from sales of goods and services | 5 | 6.009 | 5.289 | 11.691 | 10.289 |
| Cost of sales | 6 | (4.124) | (3.759) | (7.790) | (7.134) |
| Gross profit | 1.885 | 1.530 | 3.901 | 3.155 | |
| Operating expense | 7 | (1.563) | (1.588) | (3.178) | (3.171) |
| Operating profit (loss) | 322 | (58) | 723 | (16) | |
| Finance income | 9 | 6 | 30 | 11 | |
| Finance expense | (248) | (145) | (469) | (289) | |
| Net exchange rate differences | 13 | 22 | 71 | 68 | |
| Net financial expense | (226) | (117) | (368) | (210) | |
| Effects of associates | 0 | 20 | 0 | (173) | |
| Profit (loss) before tax | 96 | (155) | 355 | (399) | |
| Income tax | (30) | 38 | (82) | 51 | |
| Profit (loss) for the period | 66 | (117) | 273 | (348) | |
| Items that may subsequently be reclassified to profit or loss | |||||
| Translation difference | (35) | (7) | (61) | (44) | |
| Profit (loss) for the period | 31 | (124) | 212 | (392) | |
| Profit (loss) per share | 0,12 | (0,42) | 0,79 | (1,32) |
*Quarterly information has not been reviewed by auditors.
Notes on pages 10 to 13 are an integral part of these Consolidated Condensed Interim Financial Statements.
Consolidated Condensed Interim
Financial Statement of Sjn hf. 30. June 2022
Amounts are in ISK millions.
Statement of Financial Position
30 June 2022
| Notes | 30.6.2022 | 31.12.2021 | |
|---|---|---|---|
| Non-current assets | |||
| Right-of-use assets | 7.971 | 8.049 | |
| Property, plant and equipment | 3.209 | 3.212 | |
| Goodwill | 8.847 | 8.888 | |
| Other intangible assets | 4.408 | 4.469 | |
| Shares in other companies | 9 | 67 | 62 |
| Deferred tax asset | 25 | 26 | |
| Total non-current assets | 24.527 | 24.706 | |
| Current assets | |||
| Broadcasting license rights | 1.652 | 1.762 | |
| Inventories | 585 | 356 | |
| Trade receivables and other short term receivables | 10 | 3.512 | 5.463 |
| Cash and cash equivalents | 2.252 | 4.214 | |
| Total current assets | 8.001 | 11.795 | |
| Total assets | 32.528 | 36.501 | |
| Equity | |||
| Share capital | 2.684 | 2.964 | |
| Statutory reserves | 885 | 2.465 | |
| Other reserve | 30 | 69 | |
| Retained earnings | 5.289 | 5.037 | |
| Total equity | 8.888 | 10.535 | |
| Non-Current liabilities | |||
| Interest bearing debt | 4.936 | 4.965 | |
| Lease liabilities | 11.308 | 11.393 | |
| Other liabilities | 180 | 180 | |
| Deferred tax liabilities | 89 | 19 | |
| Total non-current liabilities | 16.513 | 16.557 | |
| Current liabilities | |||
| Interest bearing debt | 475 | 723 | |
| Lease liabilities | 1.138 | 1.206 | |
| Accounts payable and other short term liabilities | 11 | 5.514 | 7.480 |
| Current liabilities | 7.127 | 9.409 | |
| Total liabilities | 23.640 | 25.966 | |
| Total equity and liabilities | 32.528 | 36.501 |
Notes on pages 10 to 13 are an integral part of these Consolidated Condensed Interim Financial Statements.
Consolidated Condensed Interim
Financial Statement of Sjn hf. 30. June 2022
Amounts are in ISK millions.
Statement of Changes in Equity
1 January to 30 June 2022
| Share Capital | Statutory reserve | Translation difference | Reserve | Retained earnings | Total equity | |
|---|---|---|---|---|---|---|
| 1.1. to 30.6.2021 | ||||||
| Total Equity 1.1.2021 | 2.964 | 2.465 | 163 | 147 | 2.810 | 8.549 |
| Loss for the period | - | - | - | - | (348) | (348) |
| Translation difference | - | - | (44) | - | - | (44) |
| Comprehensive Income | 0 | 0 | (44) | 0 | (348) | (392) |
| Translation diff. exported | (73) | (73) | ||||
| Profit of associate in excess of dividend received | - | - | - | (54) | 54 | 0 |
| Total Equity 30.6.2021 | 2.964 | 2.465 | 46 | 93 | 2.516 | 8.084 |
1.1. to 30.6.2022
| Total Equity 1.1.2022 | 2.964 | 2.465 | 49 | 20 | 5.037 | 10.535 |
|---|---|---|---|---|---|---|
| Profit for the period | - | - | - | - | 273 | 273 |
| Translation difference | - | - | (61) | - | - | (61) |
| Comprehensive Income | 0 | 0 | (61) | 0 | 273 | 212 |
| Own shares purchased | (280) | (1.580) | - | - | - | (1.860) |
| Profit of associate in excess of dividend received | - | - | - | 22 | (22) | 0 |
| Total Equity 30.6.2022 | 2.684 | 885 | (12) | 42 | 5.289 | 8.888 |
Notes on pages 10 to 13 are an integral part of these Consolidated Condensed Interim Financial Statements.
Consolidated Condensed Interim
Financial Statement of Sjn hf. 30. June 2022
Amounts are in ISK millions.
Statement of Cash Flow
1 January to 30 June 2022
| Notes | 2022 Q2 | 2021 Q2 | 2022 6M | 2021 6M | |
|---|---|---|---|---|---|
| Profit (loss) for the period | 66 | (117) | 273 | (348) | |
| Adjustment for non-cash items: | |||||
| Gain on sale of assets | 0 | 0 | (2) | 0 | |
| Depreciation and amortization | 8 | 1.285 | 1.546 | 2.594 | 2.892 |
| Net financial expense | 226 | 117 | 368 | 210 | |
| Effects of associates | 0 | (20) | 0 | 173 | |
| Income tax | 30 | (38) | 82 | (51) | |
| Cash generated from operating activities | 1.607 | 1.488 | 3.315 | 2.875 | |
| Change in working capital: | |||||
| Change in inventories | (128) | 7 | (221) | (41) | |
| Change in operating assets | 297 | (161) | 1.893 | (238) | |
| Change in operating liabilities | 34 | 239 | (1.873) | (343) | |
| Cash generated by operations before interest and tax | 1.810 | 1.572 | 3.114 | 2.254 | |
| Interest income received | 9 | 5 | 30 | 10 | |
| Interest expense paid | (241) | (146) | (456) | (289) | |
| Income taxes paid | 2 | 0 | 0 | 0 | |
| Cash generated by operations | 1.580 | 1.431 | 2.688 | 1.975 | |
| Investment activities | |||||
| Investment in shares of other companies | 9 | (1) | 0 | (6) | 0 |
| Sale of associate | 9 | 0 | 1.065 | 0 | 1.065 |
| Investment in property, plant and equipment | (251) | (52) | (419) | (171) | |
| Investment in intangible assets | (203) | (308) | (321) | (421) | |
| Investment in broadcasting license rights | (555) | (541) | (1.086) | (1.117) | |
| Proceeds from sale of fixtures and equipment | 0 | 0 | 2 | 0 | |
| Investment activities | (1.010) | 164 | (1.830) | (643) | |
| Financial activities | |||||
| Instalment of interest bearing debts | (119) | (668) | (237) | (839) | |
| Change in revolving credit facility | 0 | (475) | (40) | (325) | |
| Instalment of lease liabilities | (288) | (285) | (672) | (584) | |
| Purchased own shares | 0 | 0 | (1.860) | 0 | |
| Financial activities | (407) | (1.428) | (2.808) | (1.748) | |
| Change in cash and cash equivalents | 163 | 167 | (1.951) | (416) | |
| Cash and cash equivalents at the beginning of the year | 2.093 | 240 | 4.214 | 831 | |
| Effect of exchange rate changes on cash held | (4) | (5) | (11) | (13) | |
| Cash and cash equivalents at the end of the period | 2.252 | 402 | 2.252 | 402 |
Consolidated Condensed Interim Financial Statement of Sjn hf. 30. June 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 Condensed Interim Financial Statements of the Company for the six months ended on 30 June 2022 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”.
2. 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 June 30th, 2022 have 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 2021. The Condensed Consolidated Interim Financial Statements does not include all the information required for complete set of IFRS financial statements and should be read in the context of the Company's Financial Statements for 2021. The Financial Statements for 2021 can be found on the Company's website www.syn.is. and on Nasdaq Nordic; 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.
The difference between fair value and book value of financial assets and financial liabilities is insignificant.
3. 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.
4. 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.
5. Net sales
| 2022 | 2021 | 2022 | 2021 | |
|---|---|---|---|---|
| Sales of goods and service is specified as follows: | Q2 | Q2 | 6M | 6M |
| Sales of goods | 323 | 311 | 597 | 604 |
| Sales of service | 5.686 | 4.978 | 11.094 | 9.685 |
| Total sales of goods and service | 6.009 | 5.289 | 11.691 | 10.289 |
| Revenue | Media | Broadband Mobile | Fixed line | Hosting and operating solutions |
| --- | --- | --- | --- | --- |
| 1.1. to 30.6.2022 | ||||
| Revenue | 4.254 | 2.231 | 2.683 | 251 |
| 1.1. to 30.6.2021 | ||||
| Revenue | 4.070 | 2.261 | 2.000 | 274 |
Consolidated Condensed Interim Financial Statement of Sýn hf. 30. June 2022
Amounts are in ISK millions.
Notes, continued:
6. Cost of sales
| Cost of sales is specified as follows: | 2022 | 2021 | 2022 | 2021 |
|---|---|---|---|---|
| Q2 | Q2 | 6M | 6M | |
| Cost of goods and service sold | 2.577 | 1.963 | 4.636 | 3.743 |
| Salaries and related expense | 610 | 562 | 1.225 | 1.136 |
| Capitalised work | (63) | (25) | (98) | (62) |
| Depreciation and amortization | 1.000 | 1.260 | 2.027 | 2.317 |
| Total cost of sales | 4.124 | 3.759 | 7.790 | 7.134 |
7. Operating expense
| Operating expense is specified as follows: | 2022 | 2021 | 2022 | 2021 |
|---|---|---|---|---|
| Q2 | Q2 | 6M | 6M | |
| General and administrative expense | 369 | 326 | 775 | 682 |
| Sales and marketing expense | 73 | 127 | 153 | 245 |
| Salary and related expense | 908 | 904 | 1.834 | 1.769 |
| Capitalised work | (72) | (55) | (151) | (99) |
| Depreciation and amortization | 285 | 286 | 567 | 575 |
| Total operating expenses | 1.563 | 1.588 | 3.178 | 3.171 |
8. Depreciation and amortization
| 2022 | 2021 | 2022 | 2021 | |
|---|---|---|---|---|
| Depreciation and amortization are specified as follows: | Q2 | Q2 | 6M | 6M |
| Depreciation of fixed assets | 223 | 251 | 442 | 508 |
| Amortization of intangible assets | 180 | 181 | 360 | 362 |
| Amortization of right-of-use assets | 284 | 285 | 596 | 569 |
| Amortization of broadcasting license rights | 598 | 829 | 1.196 | 1.453 |
| Total depreciation and amortization | 1.285 | 1.546 | 2.594 | 2.892 |
9. Shares in other companies
| Shares in associates are specified as follows: | 30.6.2022 | 31.12.2021 |
|---|---|---|
| Book value 1.1. | 39 | 1.375 |
| Sale of investment in associate | 0 | (1.103) |
| Effects of associates | (1) | (251) |
| Investments during the year | 1 | 18 |
| Book value in shares in associates total | 39 | 39 |
| Shares in other companies | 28 | 23 |
| Book value in the end of period total | 67 | 62 |
Consolidated Condensed Interim Financial Statement of Sjn hf. 30. June 2022
Amounts are in ISK millions.
Notes, continued:
- Trade receivables and other receivables
| Trade receivables and other receivables are specified as follows: | 30.6.2022 | 31.12.2021 |
|---|---|---|
| Trade receivables | 3.097 | 3.326 |
| Receivable from sale of passive mobile infrastructure | 0 | 1.649 |
| Other receivables | 319 | 392 |
| Lease receivables | 186 | 187 |
| Allowance for trade receivables | (90) | (91) |
| Total trade receivables and other receivables | 3.512 | 5.463 |
- Operating liabilities
| Operating liabilities are specified as follows: | 30.6.2022 | 31.12.2021 |
|---|---|---|
| Trade payables | 3.828 | 3.867 |
| VAT payable | 283 | 360 |
| VAT payable from sale of passive mobile infrastructure | 0 | 1.649 |
| Pre-collected revenues | 403 | 485 |
| Accrued expense and other short-term liabilities | 1.000 | 1.119 |
| Total operating liabilities | 5.514 | 7.480 |
- 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 progressed during the accounting period, or if applicable, after the accounting date. In other respects, reference is made to notes in the financial statements for the operating year 2021.
Siminn v The Electronic Communications Office of Iceland (ECOI), Sýn and Gagnaveita Reykjavíkur and counterclaim
In this case the applicant, Siminn hf., demands that ECOI's decision no 10/2018 will be dismissed. As a secondary claim, Siminn has requested that section 6, regarding the decision to impose an administrative fine, will be annulled or the fine reduced. At last, Siminn has also brought a claim that the defendants will pay its accrued legal costs.
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. Sýn, Siminn and ECOI have all appealed the judgement to the Court of Appeal. Sýn demanded that the Court of Appeal would dismiss all of Siminn's claims and rule that Siminn should pay Sýn's legal costs, before both the District court and the Court of Appeal. The Court of Appeals rendered its judgement on 24 June 2022 and acquitted Sýn and ECOI of all claims made by Siminn. The parties each bear their own legal fees for the proceedings before the District Court and the Court of Appeals. Siminn has made a request to appeal the case to the Supreme Court.
If the judgement of the Court of Appeals isn't overturned, ECOI's original decision will stand and Siminn will be considered in violation of Article 45(5) of the Icelandic Media Act. The judgement can also lay the foundation for claims against Siminn for damages.
Consolidated Condensed Interim Financial Statement of Sýn hf. 30. June 2022
Amounts are in ISK millions.
Notes, continued:
13. Other matters, continued:
Claims for damages from Síminn hf.
Sýn hf. has filed a subpoena to a District Court for damages against Síminn for the financial damage caused by Síminn in relation to its violation of Article 45(5) of the Icelandic Media Act no. 38/2011. The case relates to the damages the Company sustained due to the actions of Síminn during the period of 1st of October 2015 until 1st of December 2017.
The Company has also asked for court appointed assessors to evaluate the damages Sýn sustained due to the conduct of Síminn in the marketplace, among other things in relation to its violation of Article 45(5) of the Icelandic Media Act no. 38/2011 during the period of 2 December 2017 until 31 December 2019. Court appointed assessors delivered their assessment on 3 August 2022 and they considered the financial damages, that the Company sustained during the period of 1 October to 31 December 2019, to amount to ISK 270.027.938.
Claim towards Ingibjörg Pálmadóttir, Jón Ásgeir Jóhannesson og 365 hf.
Sýn brought a claim before the District Court with request for damages from 365 hf., Jón Ásgeir Jóhannesson and Ingibjörg Stefania Pálmadóttir. The parties entered into a purchase agreement concerning the Company's purchase of a 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 the defendants should carry in solidum responsibility. 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. Sýn also claims that the defendants should pay in solidum Sýn's accrued legal costs. The District Court of Reykjavík rendered its judgement on 14 July 2022 in which it acquitted the defendants and Sýn was made to pay their legal fees. Sýn has appealed the case to the Court of Appeals and has made the same claims as it did before the District court.
Matters before surveillance 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 to Farice regarding public service compensation from the Icelandic authorities, including compensation for costs related to surveys conducted in preparation for a possible third telecommunication submarine cable. ESA is still investigating the complaint.
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 an investment in a third submarine cable between Iceland and Ireland, constituted state aid that was compatible with the function of the EEA Agreement.
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 EFTA Court rendered its decisions on 1 June 2022 and annulled ESA's decision. ESA had found that the share capital increase was "State aid" according to Article 61(1) of the European Economic Area Agreement (EEA), but that it was compatible with the EEA, citing section C of Arcticle 61(3) of the EEA. The Court did not find the aid to be compatible with the EEA and annulled ESA's decision. ESA was also ordered to pay the legal fees of Sýn.
At any time, various matters are being processed by various domestic surveillance authorities. This has however never resulted in any administrative fines and/or other significantly onerous measures.
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.
Consolidated Condensed Interim Financial Statement of Sýn hf. 30. June 2022
Amounts are in ISK millions.
Quarterly statements*
| | 2021
1Q | 2021
2Q | 2021
3Q | 2021
4Q | 2022
1Q | 2022
2Q |
| --- | --- | --- | --- | --- | --- | --- |
| Revenue from sales of goods and services | 5.000 | 5.289 | 5.533 | 5.943 | 5.682 | 6.009 |
| Cost of sales | (3.375) | (3.759) | (3.654) | (3.884) | (3.666) | (4.124) |
| Gross profit | 1.625 | 1.530 | 1.879 | 2.059 | 2.016 | 1.885 |
| Gain from sale of passive mobile infrastructure | - | - | - | 2.552 | - | - |
| Operating expense | (1.583) | (1.588) | (1.457) | (1.731) | (1.615) | (1.563) |
| Operating profit (loss) | 42 | (58) | 422 | 2.880 | 401 | 322 |
| Finance income | 5 | 6 | 5 | 6 | 21 | 9 |
| Finance expense | (144) | (145) | (146) | (178) | (221) | (248) |
| Net exchange rate differences | 46 | 22 | (70) | 20 | 58 | 13 |
| Net financial expense | (93) | (117) | (211) | (152) | (142) | (226) |
| Effects of associates | (193) | 20 | 0 | (78) | 0 | 0 |
| Income tax | 13 | 38 | (39) | (374) | (52) | (30) |
| Profit (loss) for the period | (231) | (117) | 172 | 2.276 | 207 | 66 |
| Translation difference | (37) | (7) | 19 | (89) | (26) | (35) |
| Profit (loss) for the period | (268) | (124) | 191 | 2.187 | 181 | 31 |
| EBITDA | 1.388 | 1.488 | 1.886 | 4.222 | 1.710 | 1.607 |
| EBITDA % | 27,8% | 28,1% | 34,1% | 71,0% | 30,1% | 26,7% |
| EBITDA adjusted for sale of passive mobile infrastructure | 1.388 | 1.488 | 1.886 | 1.670 | 1.710 | 1.607 |
*Quarterly information has not been reviewed by auditors.
Consolidated Condensed Interim
Financial Statement of Sjn hf. 30. June 2022
Amounts are in ISK millions.