Advania hf. - Framtakssjóður Íslands...Advania hf. (the "Company") is a limited liability company...

Advania hf.

Consolidated Financial Statementsfor the year 2012

ISK

Advania hf.Guðrúnartún 10105 Reykjavík

Iceland

Reg. no. 590269-7199

_____________________________________________________________________________________________________________

Consolidated Financial Statements of Advania hf. 2012 2

3

5

6

7

8

9

10

32Corporate Governance Statement (unaudited) .................................................................................................

Notes to the Consolidated Financial Statements .............................................................................................

Contents

Endorsement and Statement by the Board of Directors and the CEO .............................................................

Independent Auditors’ Report .........................................................................................................................

Consolidated Statement of Comprehensive Income ........................................................................................

Consolidated Statement of Financial Position ...................................................................................................

Consolidated Statement of Changes in Equity .................................................................................................

Consolidated Statement of Cash Flows ...........................................................................................................

_____________________________________________________________________________________________________________

Consolidated Financial Statements of Advania hf. 2012 3

Operations in the year 2012

Share capital and Articles of Association

Endorsement and Statement by

The consolidated financial statements of Advania hf. are prepared in accordance with IFRS as adopted by the EU.

The financial statements comprise the consolidated finanical statements of Advania hf. (the "Company") and itssubsidiaries together referred to as the "Group". The Group operates in the IT sector.

On 27 February 2012 shareholders' meetings of HugurAx ehf. and Advania hf. confirmed the merger of Advania hf.and HugurAx hf. as at 1 January 2012, under the name of Advania hf. As a result of the merger with HugurAx ehf.,Sterna ApS in Denmark became a direct subsidiary of Advania hf. These financial statements show the collectiveoperation of the merged companies for the year 2012. At the end of 2012 Advania SIA in Latvia became a directsubsidiary of Advania hf. The objective is to sell the company during the year 2013 and as of 1 January 2013 it will beclassified as an asset held for sale.

the Board of Directors and the CEO

The Company's Board of Directors comprises five members and two alternate members elected on the annualgeneral meeting for a term of one year. Those persons willing to stand for election must give formal notice thereof tothe Board of Directors at least five days before the annual general meeting. The Company's Articles of Associationmay only be amended at a legitimate shareholders' meeting, provided that amendments and their main aspects areclearly stated in the invitation to the meeting. A resolution will only be valid if it is approved by at least 2/3 of votescast and is approved by shareholders controlling at least 2/3 of share capital represented at the shareholders' meeting.

Share capital at the end of 2012 is divided among 51 shareholders, compared with 46 at year end 2011. At the endof the year 2012 one shareholder held over 10% of outstanding shares, Framtakssjóður Íslands slhf. (The IcelandEnterprice Investment Fund slhf.) with 73.95% share.

Information on matters related to share capital is disclosed in note 26.

The Board of Directors proposes that no dividends will be paid to shareholders in the year 2013.

The Company's total issued capital amounted to ISK 564 million at year-end 2012. The share capital is divided intoshares of ISK 1, each with equal rights.

The operations of Advania AS, Norway in the year 2012 proved to be more challenging than expected. NegativeEBITDA during the year related to the operations in Norway amounted to ISK 718 million. The company underwentsignificant and costly restructuring during the year where almost all of the key management was replaced and theoverall headcount reduced. The future strategy of the company has been re-aligned in order to create focus andincreased future profitability. As described in note 12 changes were made to the company's pension scheme whichresulted in a reversal of accrued pension amounting to ISK 183 million. Impairment loss on intangible assets related toAdvania AS resulting from an impairment test amounting to ISK 696 million was realised at year-end 2012. Referenceis made to note 30 regarding information about future lease obligation and note 37 regarding an allowance for apossible revaluation of the Company’s tax asset. The Company has received enquiries from the Icelandic TaxAuthorities regarding the financial expenses related to loans taken by two of the Companys predecessors. Theallowance is based on the Company's estimate of the most extreme claims but does not constitute an acceptance ofsuch a claim in any way.

According to the consolidated statement of comprehensive income, loss for the year 2012 amounted to ISK 2,072million. When taking into account translation difference of foreign subsidiaries total comprehensive loss for the yearamounted to ISK 1,692 million. EBITDA for the year amounted to ISK 341 million whereas the EBITDA in Icelandamounted to ISK 639 million, EBITDA in Sweden amounted to ISK 418 million and the beforementioned negativeEBITDA in Norway amounted to ISK 718 million. According to the consolidated statement of financial position, equityat the end of the year amounted to ISK 1,819 million, including share capital in the amount of 564 million ISK.Reference is made to the notes to the consolidated financial statements regarding information on changes in equity.

_____________________________________________________________________________________________________________

Consolidated Financial Statements of Advania hf. 2012 6 Amounts are in ISK million

Note 2012 2011

Sales ................................................................................................................ 9 25.783 24.499 19.959 )( 19.327 )(

5.824 5.172

46 20 2.378 )( 1.819 )( 3.789 )( 2.920 )(

12 183 )( 0 Impairment losses on intangible assets .......................................................... 19,20 696 )( 20 )(

1.176 )( 433

134 42 567 )( 512 )(

13 433 )( 470 )(

1.609 )( 37 )(

14 463 )( 51 )(

2.072 )( 88 )(

380 108 1.692 )( 20

27 3,73 )( 0,17 )(

The notes on pages 10 to 31 are an integral part of these consolidated financial statements.

Continuing operations

Loss for the year ...........................................................................................

Finance income ...............................................................................................

Net finance costs ............................................................................................

Basic and diluted earnings per share of ISK 1 ................................................

Income tax ......................................................................................................

Other comprehensive incomeCurrency translation difference of foreign operations .....................................

Curtailment of defined benefit scheme ...........................................................Administrative expenses .................................................................................

Earnings per share

Consolidated Statement of Comprehensive Incomefor the year 2012

Loss before income tax ..................................................................................

Total comprehensive (loss) income for the year ..........................................

Results from operating activities ..................................................................

Finance expenses ............................................................................................

Cost of sales ....................................................................................................

Gross profit ......................................................................................................

Other income ...................................................................................................Sales expenses ................................................................................................

_____________________________________________________________________________________________________________


Note 31.12.2012 31.12.2011

15 1.348 1.047 19 7.134 7.226 21 160 185 22 744 974

Total non-current assets 9.386 9.432

7 290 301 23 384 492 24 6.573 5.359 25 443 811

Total current assets 7.690 6.963

Total assets 17.076 16.395

564 554 596 1.189

26 659 274 0 1.489

1.819 3.506

28 6.561 5.995 30 179 185 22 107 0

Total non-current liabilities 6.847 6.180

28 787 345 31 5.917 5.135 29 1.228 885 30 220 99 7 258 245

Total current liabilities 8.410 6.709

Total liabilities 15.257 12.889

Total equity and liabilities 17.076 16.395


Liabilities classified as held for sale .............................................................

Deferred tax asset ........................................................................................

Inventories ...................................................................................................Assets classified as held for sale ................................................................

Trade and other payables .............................................................................

Trade and other receivables .........................................................................

Loans and borrowings ..................................................................................

Deferred tax liability .....................................................................................

Retained earnings .......................................................................................Total equity

Reserves ......................................................................................................

Provisions .....................................................................................................

as at 31 December 2012

Deferred income ..........................................................................................

Consolidated Statement of Financial Position

Assets:

Equity:

Liabilities:

Operating assets ..........................................................................................

Cash and cash equivalents ...........................................................................

Share capital .................................................................................................Share premium .............................................................................................

Intangible assets ..........................................................................................Long term receivables ..................................................................................

Loans and borrowings ..................................................................................Provisions .....................................................................................................

_____________________________________________________________________________________________________________


Share Share RetainedNote capital premium Reserves* earnings Total

2011525 1.075 166 1.577 3.343

88 )( 88 )( 108 108

0 0 108 88 )( 20

29 114 143 29 114 0 0 143

554 1.189 274 1.489 3.506

2012554 1.189 274 1.489 3.506

2.072 )( 2.072 )(

380 380 0 0 380 2.072 )( 1.692 )(

10 207 217 )( 0 800 )( 800 0

5 5 10 593 )( 5 583 5

564 596 659 0 1.819

* See note 26


Issues of shares .......................................................

Other comprehensive income ..................................Loss for the year ......................................................

Consolidated Statement of Changes in Equityfor the year 2012

Balance at 1 January 2011 .......................................Total comprehensive income:

Total comprehensive income ...................................Transactions with owners of the Company, recognised directly in equity:

Total transactions with owners of the Company ......Balance at 31 December 2011 .................................

Balance at 31 December 2012 .................................

Balance at 1 January 2012 .......................................

Change in reserves ..................................................

Total comprehensive income:Loss for the year ......................................................Other comprehensive income ..................................Total comprehensive loss ........................................Transactions with owners of the Company, recognised directly in equity:

Total transactions with owners of the Company ......

Issues of shares .......................................................Settlement of losses ................................................

_____________________________________________________________________________________________________________


Note 2012 2011

34 597 759

40 41 450 )( 432 )(

27 )( 0 Net cash from operating activities 160 368

7 9 0 1 0 355 )(

15 647 )( 379 )( 19 655 )( 236 )(

115 )( 67 )( Net cash used in investing activities 1.410 )( 1.027 )(

0 143 5.985 80 5.329 )( 176 )(

208 386 Net cash from financing activities 864 433

Net change in cash and cash equivalents .................................................... 386 )( 226 )(

Cash and cash equivalents at 1 January ..................................................... 811 1.031

Effects of exchange rate fluctuations on cash held ..................................... 18 6

Cash and cash equivalents at 31 December ................................................ 443 811


Proceeds from issue of share capital .............................................................

Short term borrowings ..................................................................................

Consolidated Statement of Cash Flows for the year 2012

Cash generated from operations before interest and taxes ..........................Cash flows from operating activities:

Interest expenses paid ..................................................................................Interest income received ...............................................................................

Income tax paid ............................................................................................

Acquisiton of subsidiaries, net of cash acquired ............................................Acquisition of operating assets .....................................................................

Proceeds from sale of shares in other companies ........................................Proceeds from sale of operating assets ........................................................

Proceeds from non-current borrowing ..........................................................

Cash flows used in investing activities:

Repayment of loans and borrowings .............................................................

Change in long term receivables ..................................................................Acquisition of intangible assets ....................................................................

Cash flows from financing activities:

_____________________________________________________________________________________________________________


1. Reporting entity

2. Basis of preparationa. Statement of compliance

b. Basis of measurement

c. Functional and presentation currency

d. Use of estimates and judgements

3. Significant accounting policies

a. Basis of consolidation(i) Subsidiaries

(ii) Transactions eliminated on consolidation

Notes to the Consolidated Financial Statements

Advania hf. (the "Company") is a limited liability company incorporated and domiciled in Iceland. The address of theCompany’s registered office is at Guðrúnartún 10, Reykjavík. The consolidated financial statements of theCompany as at and for the year ended 31 December 2012 comprise the Company and its subsidiaries, togetherreferred to as the “Group” and individually as Group entities. The Group operates in the IT sector. A total of73.95% of the Company's share capital is owned by Framtakssjóður Íslands slhf. (The Iceland EnterpriceInvestment Fund slhf.).

The consolidated financial statements have been prepared in accordance with International Financial ReportingStandards (IFRS) as adopted by the EU.

The financial statements were approved by the Board of Directors on 29 April 2013.

The consolidated financial statements have been prepared on the historical cost basis. The methods used tomeasure fair value are discussed further in note 5.

These consolidated financial statements are presented in ISK, which is the Company’s functional currency. Allfinancial information presented in ISK has been rounded to the nearest million.

The accounting policies set out below have been applied consistently to all periods presented in theseconsolidated financial statements, and have been applied consistently by the Group's entities.

Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern thefinancial and operating policies of an entity so as to obtain benefits from its activities. In assessing control,potential voting rights that presently are exercisable are taken into account. The financial statements ofsubsidiaries are included in the consolidated financial statements from the date that control commences until thedate that control ceases.

Intra-group balances, and any unrealised income and expenses arising from intra-group transactions, areeliminated in preparing the consolidated financial statements. Unrealised losses are eliminated in the same way asunrealised gains, but only to the extent that there is no evidence of impairment.

The preparation of the consolidated financial statements in conformity with IFRS requires management to makejudgements, estimates and assumptions that affect the application of accounting policies and the reportedamounts 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 arerecognised in the period in which the estimate is revised and in any future periods affected.

Information about assumption and estimation uncertainties that have a significant risk of resulting in a materialadjustment within the next financial year are included in the following notes:

• note 20 - measurement of the recoverable amounts of cash-generating units• note 22 - utilisation of tax losses• note 30 - provisions• note 37 - uncertainty

_____________________________________________________________________________________________________________


3. Significant accounting policies, continued:b. Foreign currency(i) Foreign currency transactions

(ii) Foreign operations

c. Financial instruments(i) Non-derivative financial assets

The Group classifies non-derivative financial assets into loans and receivables, other receivables and cash and cashequivalents.

The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or ittransfers the rights to receive the contractual cash flows in a transaction in which substantially all the risks andrewards of ownership of the financial asset are transferred. Any interest in such transferred financial assets that iscreated or retained by the Group is recognised as a separate asset or liability.

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when,and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or torealise the asset and settle the liability simultaneously.

The Group initially recognises loans and receivables and deposits on the date that they are originated. All otherfinancial assets are recognised initially on the trade date at which the Group becomes a party to the contractualprovisions of the instrument.

The assets and liabilities of foreign operations, including goodwill, are translated to ISK at exchange rates at thereporting date. The income and expenses of foreign operations, are translated to ISK at exchange rates at thedates of the transactions.

Foreign currency differences are recognised in other comprehensive income, and presented in the foreigncurrency translation reserve in equity.

Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an activemarket. Such assets are recognised initially at fair value plus any directly attributable transaction costs.Subsequent to initial recognition loans and receivables are measured at amortised cost using the effective interestmethod, less any impairment losses.

Cash and cash equivalents

Transactions in foreign currencies are translated to the respective functional currencies of Group entities atexchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currenciesat the reporting date are retranslated to the functional currency at the exchange rate at that date. The foreigncurrency gain or loss on monetary items is the difference between amortised cost in the functional currency at thebeginning of the year, adjusted for effective interest and payments during the year, and the amortised cost inforeign currency translated at the exchange rate at the end of the year.

Notes, continued:

Loans and receivables

Cash and cash equivalents comprise cash balances and call deposits with original maturities of three months.

_____________________________________________________________________________________________________________


3. Significant accounting policies, continued:c. Financial instruments, continued:(ii) Non-derivative financial liabilities

(iii) Share capital

d. Operating assets(i) Recognition and measurement

(ii) Subsequent costs

(iii) Depreciation

Items of operating assets are measured at cost less accumulated depreciation and impairment losses.

Cost includes expenditure that is directly attributable to the acquisition of the asset. Purchased software that isintegral to the functionality of the related equipment is capitalised as part of that equipment.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for asseparate items of property, plant and equipment.

Repurchase and reissue of share capital

Any gain or loss on disposal of an item of operating assets calculated as the difference between the net proceedsfrom disposal and the carrying amount of the item is recognised in profit or loss.

Notes, continued:

The Group derecognises a financial liability when its contractual obligations are discharged or cancelled or expired.

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when,and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or torealise the asset and settle the liability simultaneously.

The Group has the following non-derivative financial liabilities: loans and borrowings, bank overdrafts, and tradeand other payables.

Financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequentto initial recognition these financial liabilities are measured at amortised cost using the effective interest method.

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares arerecognised as a deduction from equity, net of any tax effects.

The Group initially recognises debt securities issued on the date that they are originated. All other financialliabilities are recognised initially on the trade date at which the Group becomes a party to the contractualprovisions of the instrument.

When share capital recognised as equity is repurchased, the amount of the consideration paid, including directlyattributable costs, is recognised as a deduction from equity. Repurchased shares are classified as treasury sharesand are presented as a deduction from total equity. When treasury shares are sold or reissued subsequently, theamount received is recognised as an increase in equity and the resulting surplus or deficit on the transaction istransferred to/from share premium or retained earnings.

The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of theitem if it is probable that the future economic benefits embodied within the part will flow to the Group and its costcan be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-dayservicing of property, plant and equipment are recognised in profit or loss as incurred.

Items of property, plant and equipment are depreciated from the date they are available for use. Depreciation isrecognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item ofproperty, plant and equipment, since this most closely reflects the expected pattern of consumption of the futureeconomic benefits embodied on the asset.

Ordinary shares

_____________________________________________________________________________________________________________


3. Significant accounting policies, continued:d. Operating assets, coninued:

33 years3-15 years

e. Intangible assets and goodwill(i) Goodwill

(ii) Other intangible assets

(iii) Subsequent expenditure

(iv) Amortisation

10-20 years2-8 years

f. Inventories

Machinery and other assets .................................................................................................................

Goodwill that arises on the acquisition of subsidiaries is presented with intangible assets.

The estimated useful lives for the current and comparative periods are as follows:

Goodwill is stated at cost less accumulated impairment losses.

Buildings ..............................................................................................................................................

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted ifappropriate.

Goodwill represents the excess of the cost of the acquisition over interest in the net fair value of the identifiableassets, liabilities and contingent liabilities of the acquiree. When the excess is negative, it is recognisedimmediately in profit or loss.

Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangibleassets, other than goodwill, from the date that they are available for use.

Customer relationships ........................................................................................................................

Amortisation methods, useful lives and residual values are reviewed at each financial year-end and adjusted ifappropriate.

Other intangible assets ........................................................................................................................

The estimated useful lives for the current period are as follows:

Notes, continued:

Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on thefirst-in first-out principle, and includes expenditure incurred in acquiring the inventories, production or conversioncosts, and other costs incurred in bringing them to their existing location and condition. Net realisable value is theestimated selling price in the ordinary course of business, less the estimated costs of completion and estimatedcosts necessary to make the sale.

Other intangible assets that are acquired by the Group and have finite useful lives are measured at cost lessaccumulated amortisation and accumulated impairment losses.

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in thespecific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill andbrands, is recognised in profit or loss when incurred.

_____________________________________________________________________________________________________________


3. Significant accounting policies, continued:g. Impairment(i) Non derivative-financial assets

(ii) Non-financial assets

h. Employee benefits(i) Defined contribution plans

(ii) Defined benefit plans

Notes, continued:

A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determinewhether there is any objective evidence that it is impaired. A financial asset is impaired if there is objectiveevidence of impairment as a result of one or more events that has occurred after the initial recognition of theasset, and that loss events had an impact on the estimated future cash flows of that asset can be estimatedreliably.

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions intoa separate entity and will have no legal or constructive obligation to pay further amounts. Obligations forcontributions to defined contribution pension plans are recognised as an employee benefit expense in profit orloss when they are due.

The carrying amounts of the Group’s non-financial assets other than inventories and deferred tax assets, arereviewed at each reporting date to determine whether there is any indication of impairment. If any such indicationexists then the asset’s recoverable amount is estimated. Goodwill and intangible assets that have indefinite livesare tested annually for impairment.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value lesscosts to sell. In assessing value in use, the estimated future cash flows are discounted to their present valueusing a pre-tax discount rate that reflects current market assessments of the time value of money and the risksspecific to the asset. For impairment testing, assets are grouped together into the smallest group of assets thatgenerates cash inflows from continuing use that are largely independent of the cash inflows of other assets orgroups of assets (the "cash-generating unit"). The goodwill acquired in a business combination is allocated to cash-generating units that are expected to benefit from the synergies of the combination.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds itsestimated recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses recognisedin respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated tothe units and then to reduce the carrying amount of the other assets on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. For other assets impairment losses are reversed only tothe extent that the asset’s carrying amount does not exceed the carrying amount that would have beendetermined, net of depreciation or amortisation, if no impairment loss had been recognised.

An impairment loss in respect of financial asset measured at amortised cost is calculated at the differencebetween its carrying amount and the present value of the estimated future cash flows dicounted at the asset'soriginal effective interest rate. Losses are recognised in profit or loss and reflected in an allowance accountagainst receivables. Interest on the impaired asset continues to be recognised. When an event occurring after theimpairment recognised causes the amount of impairment loss to decrease, the decrease in impairment loss isreversed throught profit or loss.

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Group's netobligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount offuture benefit that employees have earned in return for their service in the current and prior periods; that benefitis discounted to determine its present value. Any unrecognised past service costs and the fair value of any planassets are deducted. The discount rate is the yield at the reporting date on bonds that have maturity datesapproximating the terms of the Group's obligations and that are denominated in the currency in which the benefits are expected to be paid. The calculation is performed annually by a qualified actuary using the projected unit creditmethod.

_____________________________________________________________________________________________________________


3. Significant accounting policies, continued:h. Employee benefits, continued:(iii) Short-term benefits

(iv) Termination benefits

i. Provisions

(i) Onerous contracts

j. Revenue(i) Sale of goods

(ii) Rendering of services

(iii) Commissions

k. Leases(i) Leased assets

(ii) Lease payments

When the Group acts in the capacity of an agent rather than as the principal in a transaction, the revenuerecognised is the net amount of commission made by the Group.

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of thelease.

All leases are operating leases and the leased assets are not recognised on the Group’s statement of financialposition.

Notes, continued:

Revenue from rendering of services is recognised in profit or loss in proportion to the stage of completion of thetransaction at the reporting date. The stage of completion is assessed by reference to surveys of work performed.

A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from acontract are lower than the unavoidable cost of meeting its obligations under the contract. The provision ismeasured at the present value of the lower of the expected cost of terminating the contract and the expected netcost of continuing with the contract. Before a provision is established, the Group recognises any impairment losson the assets associated with that contract.

A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans ifthe Group has a present legal or constructive obligation to pay this amount as a result of past service provided bythe employee, and the obligation can be estimated reliably.

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligationthat can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle theobligation.

Termination benefits are recognised as an expense when the Group is committed demonstrably, without realisticpossibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirementdate, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy.Termination benefits for voluntary redundancies are recognised as an expense if the Group has made an offer ofvoluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can beestimated reliably. If benefits are payable more than 12 months after the reporting period, then they arediscounted to their present value.

Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net ofreturns and allowances, trade discounts and volume rebates. Revenue is recognised when the significant risksand rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, theassociated costs and possible return of goods can be estimated reliably, there is no continuing managementinvolvement with the goods and the amount of revenue can be measured reliably.

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the relatedservice is provided.

_____________________________________________________________________________________________________________


3. Significant accounting policies, continued:l. Finance income and expenses

m. Income tax

(i) Current tax

(ii) Deferred tax

(ii) Deferred tax, continued

n. Earnings per share

o. Segment reporting

Income tax in profit or loss comprises current and deferred tax. Income tax is recognised in profit or loss except tothe extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Deferred tax is recognised using the balance sheet method, providing for temporary differences between thecarrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxationpurposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of assetsor liabilities in a transaction that is not a business combination and that affects neither accounting nor taxableprofit, and differences relating to investments in subsidiaries to the extent that it is probable that they will notreverse in the foreseeable future. In addition, deferred tax is not recognised for taxable temporary differencesarising on the initial recognition of goodwill.

Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when theyreverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred taxassets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, andthey relate to income taxes levied by the same tax authority on the same taxable entity, or on different taxentities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilitieswill be realised simultaneously.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be availableagainst which tax losses and temporary difference can be utilised. Deferred tax assets are reviewed at eachreporting date and are reduced to the extent that it is no longer probable that the related tax benefit will berealised.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted orsubstantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Notes, continued:

Foreign currency gains and losses are reported on a net basis as either finance income or finance cost dependingon whether foreign currency movements are in a net gain or net loss position.

Finance income comprises interest income on funds invested and dividend income. Interest income is recognisedas it accrues, using the effective interest method. Dividend income is recognised in profit or loss on the date thatthe Group’s right to receive payment is established.

Finance expenses comprise interest expense on borrowings and impairment losses recognised on financialassets. All borrowing costs are recognised in profit or loss using the effective interest method.

An operating segment is a component of the Group that engages in business activities from which it may earnrevenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group'sother components. Operating segments' operating results are reviewed regularly by the Group's CEO to makedecisions about resources to be allocated to the segment and assess its performance, and for which discretefinancial information is available.

The Group presents basic earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividingthe profit or loss attributable to ordinary shareholders of the Company by the weighted average number ofordinary shares outstanding during the period adjusted for own shares held.

_____________________________________________________________________________________________________________


4. New standards and interpretations not yet adopted

5. Determination of fair values

The fair value of customer relationships acquired in a business combination is determinded using the multi-periodexcess earnings method, whereby the subject asset is valued after deducting a fair return on all other assets thatare part of creating the related cash flows. The fair value of other intangible assets is based on the discountedcash flows expected to be derived from the use and eventual sale of the assets.

A number of the Group’s accounting policies and disclosures require the determination of fair value, for bothfinancial and non-financial assets and liabilities. Fair values have been determined for measurement and/ordisclosure purposes based on the following methods. Where applicable, further information about theassumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

Notes, continued:

A number of new standards, amendments to standards and interpretations are effective for annual periodsbeginning after 1 January 2012, and have not been applied in preparing these consolidated financial statements.None of these is expected to have a significant effect on the consolidated financial statements of the Group.

_____________________________________________________________________________________________________________


6. Segment reporting

Geographical information

Iceland Sweden Norway Other Consolidated

2012

10.397 11.431 3.938 17 25.783 639 418 718)( 2 341

9.689 4.958 2.150 279 17.076

2011

9.866 10.277 4.356 0 24.499 945 339 217)( 1 1.068

7.715 5.203 3.176 301 16.395

7. Non-current assets held for sale

8. Acquisitions of subsidiaries

9. Sale of goods and servicesSale of goods and services are specified as follows: 2012 2011

16.231 16.016 9.552 8.483

25.783 24.499

10. Personnel expensesPersonnel expenses are specified as follows:

9.754 8.832 841 844

1.755 2.072 12.350 11.748

1.018 1.014

EBITDA ..........................................

Other salary related expenses ...................................................................................Contributions to defined contribution plans .............................................................

Segment sales and assets are based on the geographical location of the assets.

The subsidiary Kogun USA Inc. is presented as an asset held for sale following the commitment of the Group'smanagement to sell the subsidiary. Efforts to sell the disposal company will continue in the year 2013. At 31December 2012 the disposal company comprised assets of ISK 290 million (2011: ISK 301 million) less liabilitiesof 258 million (2011: ISK 245 million).

EBITDA ..........................................

Average number of employees during the year .......................................................

Notes, continued:

Segment information is presented in respect of the Group's business segments. The segment format isorganised by the nature of the operations and is based on the Group's management and internal reportingstructure. The only segment in the Group's operation is information technology.

Total .........................................................................................................................

Salaries .....................................................................................................................

Included in the EBITDA for Iceland is an increase in the lease obligation amounting to ISK 211 million, see note30. In Norway the EBTIDA includes expenses amounting to ISK 183 million due to a curtailment in the pensionagreement as mentioned in note 12.

Sales ..............................................

Assets ............................................

Sales ..............................................

Assets ............................................

Sale of goods ............................................................................................................Sale of services .........................................................................................................

Total sale of goods and services ...............................................................................

Purchase price allocation due to the acquisition of Thor Data Center ehf. at year en 2011 was finalised during theyear 2012. The allocation resulted in customers relationships amounting to ISK 41 million and deferred tax assetamounting to ISK 61 million.

_____________________________________________________________________________________________________________


11. Personnel expenses are allocated as follows on operating items: 2012 2011

9.215 9.171 1.860 1.474 1.275 1.103

12.350 11.748

12. Employee benefits

13. Finance income and expenseFinance income and expenses are specified as follows:

39 42 95 0

134 42

492)( 446)( 49)( 19)(

0 45)( 26)( 2)(

567)( 512)(

433)( 470)(

14. Income taxIncome tax recognised in the income statement is specified as follows:

49 76 414 25)( 463 51

Reconciliation of effective tax rate: 2012 2012 2011 2011

1.609)( 37)(

20,0% 322)( 20,0% 7)( 0,2% 4)( 0,0% 0 0,0% 0 2,7%)( 1)( 9,5% 153 97,3% 36 0,0% 0 70,3%)( 26)(

Current year losses for which no deferred 11,7% 189 173,0% 64 25,7% 414 59,5%)( 22)(

2,1% 33 18,9% 7 69,2% 463 176,7% 51

Net foreign exchange gain ........................................................................................

Notes, continued:

Interest expense on long-term interest bearing financial liabilities ..........................

Interest income from loans and receivables .............................................................

Impairment of other investments ............................................................................

Total ..........................................................................................................................

Net foreign exchange loss .......................................................................................

Net finance income and expense .............................................................................

Administrative expenses ...........................................................................................

tax asset recognised .............................................Change in estimates related to prior years ..............

Tax exempt income ................................................

Impairment of tax asset (reversal of impairment) ......................................................

Finance expenses ....................................................................................................

As a result of a curtailment in the pension arrangement for the employees of Advania AS, Norway, ISK 183 millionis expensed in the consolidated statement of comprehensive income.

Other items ..............................................................

Non-deductible expenses ........................................

Origination and reversal of temporary differences ....................................................

Adjustment for prior period ......................................

Income tax using the Company's domestic tax rate Effect of tax rates in foreign jurisdictions ................

Interest expense on short-term interest bearing financial liabilities .........................

Total income tax .......................................................................................................

Loss before income tax ...........................................

Cost of services sold .................................................................................................

Finance income ........................................................................................................

Deferred tax:

Sales expenses .........................................................................................................

_____________________________________________________________________________________________________________


15. Operating assetsMachinery

and other Buildings assets Total

Cost0 1.902 1.902 0 379 379 0 58)( 58)(

0 283 283 0 6 6 0 2.512 2.512

0 2.512 2.512 0 433 433

210 437 647 0 231)( 231)( 0 102 102

210 3.253 3.463

Depreciation and impairment losses0 1.205 1.205 0 316 316 0 55)( 55)( 0 1)( 1)( 0 1.465 1.465

0 1.465 1.465 0 433 433 6 373 379 0 229)( 229)( 0 67 67 6 2.109 2.115

Carrying amounts0 697 697 0 1.047 1.047

204 1.144 1.348

3% 7-33%

16. Insurance value

17. The Group's depreciation and amortisation charge in the income statement is specified as follows:

2012 2011

379 316 440 298 819 614

Depreciation ratios ...........................................................................

Depreciation and amortisation recognised in the income statement ........................

Balance at 31 December 2012 .........................................................

At 1 January 2011 ............................................................................

At 31 December 2012 ......................................................................At 31 December 2011 ......................................................................

Insurance value of machine and other assets amounted to ISK 3,618 million at year end 2012 (2011: ISK 3,760million) and official value for the building amounts to ISK 237 million at year end 2012.

Amortisation of intangible assets, see note 19 .........................................................

Balance at 31 December 2011 .........................................................

Balance at 1 January 2012 ...............................................................

Notes, continued:

Operating assets and their depreciation is specified as follows:

Disposals due to de-merger .............................................................Currency adjustments ......................................................................

Additions ..........................................................................................Disposals ..........................................................................................

Depreciation of operating assets, see note 15 ..........................................................

Depreciation for the year ..................................................................Disposals ..........................................................................................Currency adjustments ......................................................................

Disposals ..........................................................................................Acquired through business combination .........................................Currency adjustments ......................................................................Balance at 31 December 2011 .........................................................

Balance at 1 January 2012 ...............................................................

Balance at 1 January 2011 ...............................................................Additions ..........................................................................................

Reclassification ................................................................................

Reclassification ................................................................................

Currency adjustments ......................................................................Balance at 31 December 2012 .........................................................

Balance at 1 January 2011 ...............................................................Depreciation for the year ..................................................................

_____________________________________________________________________________________________________________


18. 2012 2011

402 338 64 18

353 258 819 614

19. Intangible assetsThe Group’s intangible assets are specified as follows: Other

Customer intangible Goodwill relationships assets Total

Cost 12.536 1.800 1.039 15.375

466)( 855 218)( 171 102 0 236 338

0 0 63 63 0 0 12)( 12)(

74 0 3 77 12.246 2.655 1.111 16.012

12.246 2.655 1.111 16.012 0 0 190 190

102)( 40 0 62)( 0 0 655 655 0 0 106)( 106)(

258 126 106 490 12.402 2.821 1.956 17.179

Amortisation and impairment losses7.580 396 504 8.480

0 190 108 298 20 0 0 20

0 0 12)( 12)( 7.600 586 600 8.786

7.600 586 600 8.786 0 0 190 190 0 215 225 440

697 0 0 697 0 0 106)( 106)( 0 0 38 38

8.297 801 947 10.045

Carrying amounts4.956 1.404 535 6.895 4.646 2.069 511 7.226 4.105 2.020 1.009 7.134

Balance at 1 January 2011 .......................................Amortisation for the year .........................................


Sales expenses .........................................................................................................Administrative expenses ...........................................................................................

Depreciation is allocated as follows on operating items:

Amortisation for the year .........................................Impairment losses on intangible assets ...................

Reclassification ........................................................

Currency adjustments ..............................................Sales and disposals due to de-merger .....................

At 31 December 2011 .............................................

Purchase price allocation .........................................

Currency adjustments ..............................................Balance at 31 December 2012 .................................


Acquisitions during the year ....................................Purchase price allocation .........................................

Sales and disposals during the year .........................


Reclassification ........................................................

Acquisitions during the year ....................................Acquired through business combination .................

Notes, continued:

Cost of services sold .................................................................................................

Balance at 31 December 2012 .................................Currency adjustments ..............................................

Total .........................................................................................................................



Impairment losses on intangible assets ...................

At 31 December 2012 .............................................

At 1 January 2011 ....................................................

Sales and disposals during the year .........................

Sales and disposals due to de-merger .....................

_____________________________________________________________________________________________________________


20. Impairment tests

2012 2011

1.5-4.9% 2.0-3.5%Revenue growth:

5.4% 8.6%4.3% 2.3%

11.9-16.4% 12.1-14.3%40.0-47.0% 22.0-43.5%

6.5-8.8% 6.1-7.7%

83 )( 392 )( 247 )( 150 )(

21. Long term receivables

22. Deferred tax asset and liabilityDeferred tax asset and liability are attributable to the following:

2012 2011 2012 2011Assets Assets Liabilities Liabilities

99 )( 42 )( 9 0 7 )( 232 )( 264 )( 0

29 20 15 0 0 57 80 0

64 59 0 0 759 1.155 64 0

2 )( 43 )( 11 )( 0 744 974 107 )( 0

Notes, continued:

Long term receivables are related to long term service agreements in Sweden. (2011: Long term receivables aredefined benefit plans related to the operations in Norway).

Impairment loss amounting to ISK 696 million is recognised related to the operations in Norway (2011: ISK 20million).

WACC +1% ..............................................................................................................

2013-2017 / 2012-2016 .......................................................................................

Total ........................................................................

Long term growth rate ..............................................................................................

EBITDA ratio -1% ......................................................................................................

Changes in key assumptions would have the following impact on the carrying amount of goodwill due tooperations in Norway:

Interest rate ...............................................................................................................

Tax loss carry-forwards amounting to ISK 1,462 million related to the operations in Norway is not included in thedeferred tax asset even though that loss does not have an expiring date.

The values assigned to key assumptions represent management's assessment of future trends in the IT sectorand are based on both external and internal sources (historical data). Value in use was based on the following keyassumptions:

Debt leverage ............................................................................................................WACC .......................................................................................................................

Weighted average 2012 / 2011 ...........................................................................

Operating assets ......................................................Intangible assets ......................................................Trade and other receivables .....................................Provisions ................................................................Trade and other payables .........................................Tax loss carry-forwards ............................................Other items ..............................................................

For the purpose of impairment testing, goodwill is allocated to the subsidiaries which represent the lowest levelwithin the Group at which the goodwill is monitored for internal management purposes.

The recoverable amount of cash generating units was based on their value in use. Value in use was determinedby discounting the future cash flows generated from the continuing use of the units. Cash flows were projectedbased on actual operating results and a five year business plan. Cash flows were extrapolated for determining theresidual value using a constant nominal growth rate which was consistent with the long-term average growth ratefor the industry. Management believes that this forcast period was justified due to long-term nature of thebusiness.

Goodwill and other intangible assets that have indefinite live are tested annualy for impairment. These assetswere recognised at fair value on aquisition date.

_____________________________________________________________________________________________________________


23. InventoriesInventories consist of computer equipment for sale.

24. Trade and other receivables2012 2011

5.347 4.225 1.396 1.217

170)( 83)( 6.573 5.359

25. Cash and cash equivalentsCash and cash equivalents are specified as follows:

284 576 159 235 443 811

26. EquityIssued capital and share premium

Translation reserve

Reserves are specified as follows:

487 107 131 132

41 35 659 274

27. Earnings per shareBasic earnings per share:

2.072 )( 88 )(

554 525 1 2

555 527

3,73)( 0,17)(

Foreign exchange differences arising on translation of financial statements of foreign subsidiary are recogniseddirectly in a separate component of equity. When a foreign operation is disposed of, in part or in full, the relevantamount in the translation reserve is transferred to profit or loss.

Notes, continued:

Impairment losses on trade receivables ................................................................... Trade and other receivables .....................................................................................

Other receivables .....................................................................................................

Bank balances .........................................................................................................

The Company's share capital, according to its Articles of Association, amounts to ISK 564 million at year end2012. Shareholders are entitled to one vote per share at meetings of the Company.

Marketable securities ............................................................................................... Cash and cash equivalents .......................................................................................

Restricted equity due to composition agreement......................................................

Effect of issue of shares ..........................................................................................

Other reserves total...................................................................................................

Legal reserve..............................................................................................................

Share capital at the beginning of the period ..............................................................

Calculated average share capital ...............................................................................

Loss for the year attributable to equity holders of the parent ...................................

Earnings per share of ISK 1 .......................................................................................

Translation reserve.....................................................................................................

Trade and other receivables are specified as follows:

Trade receivables .....................................................................................................

_____________________________________________________________________________________________________________


28. Non-current interest-bearing liabilities: 2012 2011

6.556 5.960 5 35

6.561 5.995

Current interest-bearing liabilities:240 114

6 14 236 0

46 0 259 217 787 345

7.348 6.340

Average Carrying Average CarryingCurrency interest rate amount interest rate amount

ISK 7,4% 5.735 7,3% 4.156 SEK 3,6% 1.030 3,8% 764 EUR - 0 6,2% 1.155 NOK - 32 - 33 DKK - 11 - 15

6.808 6.123 NOK 6,4% 236 - 0

ISK 7,5% 46 - 0 NOK 6,3% 234 5,0% 202

ISK 12,1% 24 10,8% 15 7.348 6.340

2012 2011

- 128 246 776

2.460 119 240 1.253 240 0

3.622 3.847 6.808 6.123

29. Deferred income

Bank overdraft ...............................

Total ........................................................................................................................

Current portion of secured bank loans ....................................................................

Secured bank loan .......................

Bank overdraft ..........................................................................................................

20112012

Other long-term liabilities .........................................................................................

Loans amounting to 5,172 million ISK were paid in full with two new loans during the year. With this refinancingthe Company enjoyed more favorable terms and conditions than in previous loan agreements. The Company hasan extension warranty until 1 September 2018 for a loan amounting to ISK 2,000 million with Landsbankinn hf.,that is due on 1 February 2014.

Landsbankinn hf. has granted Advania hf. a temporary exemption from the covenants in the loan agreements as itwas not fulfilled at year end 2012. The exemption is valid until year-end 2013.

Repayments in 2014 ................................................................................................

Deferred income is related to billing in advance of work in uncompleted, service agreements and other customeradvances.

Repayments in 2012 ................................................................................................ Repayments in 2013 ................................................................................................

Repayments in 2015 ................................................................................................

Secured bank loans ..................................................................................................


Other long term liabilities ..............

Subsequent repayments ......................................................................................... Total ........................................................................................................................

Terms and conditions of outstanding loans were as follows:

Bank overdraft ............................... Total .............................................

Repayments in 2016 ................................................................................................

Repaymens of borrowings are specified as follows:

Total interest-bearing liabilities .................................................................................


Other long term liabilities ..............

Total ........................................................................................................................

Notes, continued:

Current portion of other long-term liabilities ............................................................ Secured bank loan .................................................................................................... Finance lease liabilities .............................................................................................

Secured bank loan ........................ Finance lease liabilities .................

_____________________________________________________________________________________________________________


30. Provision for onerous contracts

31. Trade and other payables2012 2011

2.806 2.114 3.111 3.021 5.917 5.135

32. Financial instruments Overview

- Credit risk - Liquidity risk - Market risk

(i) Exposure to credit risk

Note 2012 2011

24 6.573 5.359 25 443 811

7.016 6.170

1.659 1.463 4.029 3.100

848 779 37 17

6.573 5.359

Sweden ...................................................................................................................

The carrying amount of financial assets represents the maximum credit risk exposure. The maximum exposure tocredit risk at the reporting date was:

Cash and cash equivalents ..............................................................

Total trade and other payables .................................................................................

This note presents information about the Group's exposure to each of the above risks, the Group's objectives,policies, and processes for measuring and managing risk, and the Group's management of capital. Furtherquantitative disclosures are included throughout these consolidated financial statements.

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails tomeet its contractual obligations and arises principally from the Group's receivables from customers andinvestment securities.

Carrying amount

The Board of Directors has overall responsibility for the establishment and oversight of the Group's riskmanagement framework. The Group's risk management policies are established to identify and analyse the risksfaced by the Group, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Riskmanagement policies and systems are reviewed regularly to reflect changes in market conditions and the Group'sactivities. The Group, through its training and management standards and procedures, aims to develop adisciplined and constructive control environment in which all employees understand their roles and obligations.

The maximum exposure to credit risk for loans and receivables at the reporting date by geographic region was:

Iceland ......................................................................................................................

The Group has entered into non-cancellable leases for office buildings which the Group had to some extentceased to use by 31 December 2012. Market conditions have meant that the rental income for these buildings islower than the rental expense. The obligation for the discounted future payments, net of expected rental income,has been provided for, amounting to ISK 399 million (2011: ISK 284 million), of which ISK 220 million (2011: ISK99 million) is classified as a current liability.

Norway .................................................................................................................... Other European countries .......................................................................................

The Group has exposure to the following financial risks:

Trade payables .........................................................................................................

Notes, continued:

Trade and receivables .....................................................................

Other payables .........................................................................................................

Trade and other payables are specified as follows:

_____________________________________________________________________________________________________________


32. Financial instruments, continued:(ii) Trade and other receivables

(iii) Guarantees

(iv) Impairment losses

Gross Impairment Gross Impairment2012 2012 2011 2011

4.512 0 3.746 9)( 362 12)( 218 1)(

94 12)( 62 2)( 179 87)( 88 35)( 114 24)( 61 17)(

86 35)( 50 19)( 5.347 170)( 4.225 83)(

2012 2011

83 86 0 20

20)( 23)( 107 0 170 83

Liquidity risk

Not past due ...........................................................

Notes, continued:

Past due 0-60 days .................................................

The aging of trade receivables at the reporting date was:

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect oftrade and other receivables and investments. The main components of this allowance are a specific losscomponent that relates to individually significant exposures, and a collective loss component established forgroups of similar assets in respect of losses that have been incurred but not yet identified. The collective lossallowance is determined based on historical data of payment statistics for similar financial assets.

Balance at 1 January ................................................................................................

The movement in the allowance for impairment in respect of trade receivables during the year was as follows:

Past due 181-360 days ........................................... Past due 91-180 days .............................................

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. TheGroup's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidityto meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable lossesor risking damage to the Group's reputation.

The Group monitors cash flow requirements and optimises its cash return on investments. Typically the Groupensures that it has sufficient cash on demand to meet expected operational expenses for a period of 60 days.

Net change in allowance .......................................................................................... Losses during the period ..........................................................................................

Based on historical default rates, the Group believes that, apart from the above, no impairment allowance isnecessary in respect of trade receivables. A significant part of the balance relates to customers that have a goodpayment record with the Group.

Balance at 31 December ..........................................................................................

Past due more than one year ..................................

Past due 61-90 days ...............................................

The Group's policy is to provide financial guarantees only to wholly-owned subsidiaries.

The Group's exposure to credit risk is influenced mainly by the individual characteristics of each customer.

Effect of merger ......................................................................................................

_____________________________________________________________________________________________________________


32. Financial instruments, continued:Liquidity risk, continued

Carrying Contractual Within 12 More than2012 amount cash flows months 1-2 years 2-5 years 5 years

Non-derivative financial liabilities

Secured bank- loans ....................... 7.001 7.990 476 2.730 3.754 1.030 Finance lease ........... liabilities .................. 46 46 46 0 0 0 Other long-term loans ....................... 43 43 11 32 0 0 Bank overdraft .......... 258 258 258 0 0 0 Trade and other payables ................. 5.917 5.917 5.917 0 0 0

13.265 14.254 6.708 2.762 3.754 1.030

2011

Non-derivative financial liabilities

Secured bank- loans ....................... 6.075 8.058 507 1.583 2.062 3.906 Other long-term loans ....................... 48 49 44 5 0 0 Bank overdraft .......... 217 217 217 0 0 0 Trade and other payables ................. 5.135 5.135 5.135 0 0 0

11.475 13.459 5.903 1.588 2.062 3.906

Market risk

(i) Currency risk

SEK NOK USD Other

3.999 1.006 50 104 13 127 15 24

1.030)( 502)( 0 11)( 2.614)( 1.007)( 648)( 269)(

368 376)( 583)( 152)(

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equityprices will affect the Group's income or the value of its holdings of financial instruments. The objective of marketrisk management is to manage and control market risk exposures within acceptable parameters, while optimisingthe return.

Net exposure .........................................................

Loans and other financial liabilities .........................

Trade and other receivables ................................... Cash .......................................................................

It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or atsignificantly different amounts.

The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a currencyother than the respective functional currencies of Group entities.

The following are the contractual maturities of financial liabilities, including estimated interest payments andexcluding the impact of netting agreements:

Trade payables, other payables ...............................

The Group's exposure to foreign currency risk was as follows based on notional amounts at 31 December 2012:

Notes, continued:

_____________________________________________________________________________________________________________


32. Financial instruments, continued:(i) Currency risk, continued

SEK NOK USD Other

3.100 801 100 78 106 165 0 158 764)( 234)( 0 1.173)(

2.273)( 989)( 265)( 180)( 169 257)( 165)( 1.117)(

Reportingdate spot

Average rate rate

18,5 19,7 21,5 23,0 21,6 22,7

125,0 128,4 160,7 169,3

1,6 1,5 133,4 140,3

Sensitivity analysis

(ii) Interest rate risk

Fair values versus carrying amounts

33. Operating leasesLeases as lessee

2012 2011

1.048 616 2.868 2.351 3.267 3.315 7.183 6.282

Notes, continued:

Trade and other receivables ...................................

Net exposure ......................................................... Trade payables, other payables ...............................

USD ..........................................................................................................................EUR ..........................................................................................................................

During the year ended 31 December 2012 ISK 962 million was recognised as an expense in the incomestatement in respect of operating leases (2011: ISK 650 million).

The Group leases a number of cars under operating leases. The leases typically run for a period of three years,with an option to renew the lease after that date. Each lease contract is cancellable due to penalty.

The following significant exchange rates applied during the year 2012:

NOK ..........................................................................................................................

Cash ....................................................................... Loans and other financial liabilities .........................

The Group leases a number of properties under operating leases. The leases vary between properties but run fora period of seven to fifteen years, with an option to renew the lease after that date. Leases provide for additionalrent payments that are based on changes in a local price index. Each lease contract is non-cancellable.

SEK ..........................................................................................................................

JPY ...........................................................................................................................

The difference between fair values and carrying amounts of financial assets and liabilites is not material.

10% strengthening of the ISK against the foreign currencies would have increased equity and profit or loss by ISK60 million (2011: ISK 110 million). The analysis assumes that all other variables, in particular interest rates, remainconstant and ignores any impact of forecasted sales and purchases. 10% weakening of the ISK against theforeign currencies would have had the same effect, but in the opposite direction.

DKK ..........................................................................................................................

Non-cancellable operating lease rentals are payable as follows:

Less than one year ....................................................................................................Between one and five years ......................................................................................More than five years .................................................................................................

The Group's loans and borrowings are almost solely with 3-6 months variable interest rate. A change of 100 basispoints in interest rates would increase or decrease equity and profit or loss by ISK 73 million.

Currency risk due to borrowings is deemed not significant.

CHF ..........................................................................................................................

The Group's exposure to foreign currency risk was as follows based on notional amounts at 31 December 2011:

Total ..........................................................................................................................

_____________________________________________________________________________________________________________


34. Statement of Cash Flows

2012 2011

2.073)( 88)( Adjustments for:

379 316 440 298 696 20 435 470 177 23)(

5)( 5)( 463 51 111 46)( 719)( 523)( 693 289 597 759

35. Related parties

Transactions with management and key personnel

Transactions with other related parties

Gain on sale of property, plant and equipment .......................................................

Operating loss for the year .......................................................................................

Impairment losses on goodwill ...............................................................................

Depreciation ............................................................................................................ Amortisation of intangible assets .................................

Date post:	23-Oct-2020
Category:	Documents
Upload:	others
View:	1 times
Download:	0 times

Advania hf. - Framtakssjóður Íslands...Advania hf. (the "Company") is a limited liability company...

Documents