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Segment Reporting

5. Segment Reporting

"Segment information is presented in the consolidated financial statements in respect of the Group's business segments, which are the primary basis of segment reporting. The business segment reporting format reflects the Group's management and internal reporting structure and is divided into four segments, scheduled airline operations, global capacity solutions and aircraft trading, travel and tourism infrastructure and shared services.

Inter-segment pricing is determined on an arm's length basis.

Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis."           
            
Scheduled airlines operations            
            
"Four companies are categorized as being part of the Scheduled Airline Operation focus of the Group: Icelandair, the international full-service airline with a hub in Iceland; Icelandair Cargo, a full-service air-freight company; Icelandair Ground Services, which handles airlines and passenger services at Keflavik Airport and Icelandair Technical Services, which provides maintenance for Icelandair and other airlines. These companies work closely together and have long historical ties."            
                 
Global capacity solutions and aircraft trading            
            
The four companies forming this part of Icelandair Group hf. are Loftleiğir-Icelandic, a capacity provider for the international airline and tour operator industry, Bluebird Cargo, a transportation services provider and Icelease, which handles the buying, selling and leasing of aircraft using IG Invest as its holding company. The four companies are grouped together to emphasize Icelandair Group’s increased focus on international expansion in this field. Their role is to capitalize on internal know-how by offering aircraft operation services to third parties and taking advantage of trading opportunities in a fast-growing world market, as well as looking for opportunities for mergers and acquisitions.            
            
         
Travel and tourism infrastructure            
            
Three companies; Iceland Travel, a tour operator and travel agency in in-coming tourism, Icelandair Hotels, which markets and operates two hotel chains, Icelandair Hotels and Edda Hotels, and Air Iceland a scheduled  domestic carrier which also offers regular flights to Greenland and the Faeroe Islands form the travel and tourism part of the Group.  These companies all provide strategic support to the international scheduled operations, their main focus is on profitable operations.             
            
           
Shared services            
            
This segment comprises IceCap Guernsey and Icelandair Shared Services ehf. besides operations of the Parent Company.  Icelandair Shared Services handles the accounting, reporting and salary processing for the companies within Icelandair Group.  Icecap underwrites a part of Icelandair Group’s insurance risk.            


Business segments for the period from 1 October to 31 December 2006:
Scheduled airline operations Global capacity and aircraft trading Travel and tourism infrastructure Shared services Eliminations Consolidated
External revenue 11.806  3.033  1.481  148  ( 3.878 ) 12.590 
Intersegment revenue (  2.512 )     (  2 ) 2.514   
Total segment revenue 9.294  3.033  1.481  146  (  1.364 ) 12.590 
Segment EBITDA ( 216 ) 675  ( 45 ) ( 76 )   338 
Segment results ( 625 ) 589  ( 169 ) ( 189 )   ( 394 )
Net finance cost 109  ( 113 ) ( 74 ) ( 354 )   ( 432 )
 Share of profit  of associates 0  67  2  0    69 
Income tax 126  ( 52 ) 46  87    207 
(Loss) profit for the period . ( 390 ) 491  ( 195 ) ( 456 )   ( 550 )
Segment assets 33.997  19.965  5.232  48.539  ( 33.174 ) 74.559 
Investments in associates 0  2.058  0  0    2.058 
Total assets 33.997  22.023  5.232  48.539  ( 33.174 ) 76.617 
Segment liabilities 27.750  19.682  4.202  21.882  ( 22.903 ) 50.613 
Capital expenditure 3.698  915  1.130  (  23 )   5.720 
Depreciation 380  70  120  3    573 
Amortisation of intangible assets 57  90  8  4    159 

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