Finance

Report of the Board of Directors


The Company’s Core Activities
The role of Reykjavík University (RU) is to create and disseminate knowledge to strengthen competition and quality of life for individuals and society, with ethics, sustainability and responsibility as guiding principles. Reykjavík University is a comprehensive teaching and research university emphasising technology, business and law. RU’s core activities are teaching and research in solid connection with the economic sector and society, focusing on interdisciplinary, international standards, innovation and professional services. The activities are shaped by personal relationships and respect for society and the environment.

Teaching
Reykjavík University plays a crucial role in higher education in Iceland. In particular, the university has a significant role in Iceland’s economy. The number of students at the university has reached some equilibrium after a large increase in recent years, and no significant changes were made to the study options during the year. The changes that were made primarily aim to increase opportunities for interdisciplinary studies. The development of co-operation with the economic sector continues at full speed.

Research and Innovation
In recent years, research activity at Reykjavík University has grown rapidly. The university is at the forefront of research in its fields, but traditional criteria such as peer-reviewed publications for each academic position are recommended. During the year, RU was named one of the 400 best universities in the world according to the Times Higher Education list and was in 53rd place if only those established less than 50 years ago are considered. Reykjavík University has a history of just over 20 years, so it can honestly be said that the results achieved in that time are excellent.

Operating Results
Reykjavík University’s Articles of Association contain explicit provisions that profits from the company’s operations will only be used to strengthen the university’s activities. It is not permitted to allocate profits, rights, or assets of the university to anything other than enhancing the university itself. Therefore, according to the company’s Articles of Association, it is not allowed to pay dividends from the company.

There has been a positive turnaround in the operation of the parent company of Reykjavík University in recent years. The significant factors in that success have been increased income due to the increase in the number of students in parallel with considerable restraint in operations. Furthermore, the government has been increasing funding for universities, in line with its policy of achieving the average funding in the OECD and Nordic countries. There is still some way to go before these goals are achieved, but the state’s contribution is around half of what is common in the Nordic countries. This inevitably affects the work of the universities and Iceland’s competitive position in the future.

Reykjavík University’s increased income is used to strengthen the activities and, in particular, to increase the quality of teaching and the professional strength of the university. The results in 2021 were better than expected, primarily due to lower drop-out rates than expected, increased contributions due to an increase in the number of students and temporary funding for summer courses. The university’s activities were unusually high during the summer months due to the funds that the authorities added to the funding so that it was possible to offer summer studies and summer jobs within the university.

During the year, the subsidiary Grunnstoð completed the refinancing of the university’s premises at Menntavegur 1 through the sale of new social bonds in the amount of ISK 12 billion. These are 40-year indexed bonds. There was considerable demand for the bonds, but Icelandic pension funds, mutual funds, and professional investors were among the buyers. The bonds fall under the new social financing framework of Reykjavík University, which is certified by the international certification company S&P Global Ratings. In the social financing framework, the issuance of bonds and other financial instruments is linked to social goals. In the case of RU, it is based on the United Nations’ Global Goal of Sustainable Development.

The total income of Reykjavík University efh. was ISK 7,623 million in 2021 and ISK 6,816 million in 2020. The results for the year were negative by ISK 345 million and negative by ISK 166 million the year before. At the end of the year, the book value of equity was ISK 6,772 million, compared to ISK 7,117 million the year before. At the end of 2021, the equity ratio was 72%.

The impact of the COVID-19 pandemic on the company’s operations and position has been insignificant, and it is not expected that the pandemic will have a significant effect on its activities.

Income statement

Numbers in thousands of Icelandic krona (ISK)


2021 2020 
Operating income   
 Treasury contribution 4,097,5513,814,050 
 Tuition and other income 2,498,6172,261,193 
 Grants1,026,411 740,296 
 7,622,5796,615,539 
   
Operation expenses   
 Salaries and related expenses 4,844,7014,301,829 
 Housing expenses 1,239,203 1,209,614 
 Other operating expenses 1,296,390 938,198 
 Depreciation 152,367 158,652 
 7,535,661 6,608,293 
   
Operating result 89,918 207,246 
   
Financial income (expenses)  
 Net financial income 21,871 24,355 
   
Result before share of loss of subsidiaries                                                        111,789231,601 
 Share of loss of subsidiaries(457,242) (397,247) 
   
Result of the year (345,453)  (165,646)

Was the content helpful? Yes No