Skel fjárfestingafélag

Investor Presentation • Feb 8, 2024

Investor Presentation 2H 2023

Our mission is to develop opportunities, and target long-term value creation

2023

Focus on transformation

Kaldalón listed on Main Market VÍS grows stronger and advances

Styrkás launches its operations

Orkan takes the lead Klettagarðar sold

Orkufelagið and

Increased weight of real estate and listed assets

Restructuring of Heimkaup

Exploratory negotiations with Samkaup

Net profit million 5,410 ISK

billion ISK billion 50 38 ISK 16%

Total assets Equity Return on equity

Recent trades or listed prices

Cash and treasury bonds

Payments to shareholders

Portfolio

Cash and treasury bonds 11% Corporate Market 20% Consumer market 30% Income generating properties 18% 9% 6% Financial markets Infrastructure Total assets 49.745 m.kr. 6% Other assets

8

Focus on transformation and increased profitability of listed assets

Kaldalón
		Köllunarklettsvegur 1 acquired, 12,300 sq.m Share capital increased by 4 billion ISK		Targets prior to listing on Main Market • Investment	assets 50 billion ISK	 Base ISK bond  Interim with pure operations	prospectus for 30 billion framework financial statements real estate
Kaldalón a development to a real	transformed from company estate company			• Rental • Access to • Financial statements estate company	income 3,500 m. ISK market financing as a real			Kaldalón listed 16. Nov 2023	on Main Market Issuance of listed bonds
1H 2021	1H 2022		2H 2022				2H 2023
	2H 2021				1H 2023				2024
Jón Þór Gunnarsson hired as CEO	SKEL acquires 17,4% in company Emphasis formulated, strategy presented and infrastructure strengthened	the	Investment increased by the year, to at year-end Low debt ratio and position underpin growth of the	assets 131% over 41.7 billion ISK ratio, high rental strong equity further company	Income Operating Growing Kaldalón engages streamlined emphasising for the	increase 145% profit ratio over portfolio in a operation a light overhead future	 All targets to listing 80%	achieved prior	Value of 15,37% share 3,000 m. ISK

activities

Creation of a company servicing corporations across all industries

Styrkás

	Acquisition of Klettur	announced (equipment, tyres, machinery and maintenance services)	Styrkás and Klettur with 5 core divisions	established as a parent company of Skeljungur with the vision of becoming a leading service company across all industries		Final purchase agreement on Stólpi Gámar and related companies, with properties and sites
Q2 2022			Q4 2022		2H 2023
	Q3 2022			1H 2023		2024
"The mission is to extend services to the Icelandic corporate market through external and internal growth" "Triple Skeljungur's EBITDA (1,130 m.ISK.) and list in the		and services"	"Build on strong foundation and expand business though increased product offerings "Focus on organic growth and targeted acquisitions and	Horn IV enters into m.ISK and acquires 29.5% "Strong shareholders'	a 3,500 subscription agreement agreement targeting listing in the stock exchange in 2027"		EBITDA 2024E* 2,699 m.ISK
Main Market in 3-5 years"		partnerships" "Creation of a company all industries"	servicing corporations across

Styrkás

"Creation of a company servicing corporations across all industries"

Energy and chemical products Devices and equipment Environment Industry Asset

Ásmundur Tryggvason, CEO – board appointed – operations started

• Build on strong foundation and expand business though increased product offerings and services (complementary integration)
• Focus on organic growth and targeted acquisitions and partnerships
• Development of leading service company for the corporate market with 5 core divisions

Goals Stólpi - Gámar Future Vision

• Styrkás signs a purchase agreement on the acquisition of Stólpi Gámar ehf. and related companies
• The total price is 3,549 m. ISK, paid with cash and shares in Styrkás
• Máttarstólpi (the seller) acquires 8.7% of Styrkás

• The acquisition results in a strong company forming a new core in property management and rental activities

• Complete core activities Environment and Industry

• Achieve operational synergy through parent company
• Leverage the group's core capabilities for advances in the corporate market
• Present the company to customers and investors
• Shareholders' agreement targeting listing in the stock exchange in 2027

	Group 2024
management	Gross profit 9,435 m.ISK

2,699 m.ISK EBITDA

9,697 m.ISK Equity value (69.4%)

Acquisition of Stólpi

container services including storage and housing"

Stólpi Gámar

588 m. ISK EBIT

Operating companies Real estate Financing (m. ISK)

• Revenue from container rent and services and housing units total ca. 700 m. ISK 2023
• Klettaskjól rents out a 902 sqm. housing unit for a pre-school – Leasing contract with the City of Reykjavík to 2032

• The operating companies service shipping companies, insurance companies, contractors and others needing repairs or storage

• Development of new premises for Stólpi at Gullhella in Hafnarfjörður

• About half of the sites are used for Stólpi's activities
• Paid road construction fees amount to 544 m. ISK for 15,500 sq.m construction rights

Total value	3,549
Acquired loans of operating
companies	273
Real estate loans	1,300
New shares in Styrkás	1,330
Cash	646

Exploratory negotioations with Samkaup

Transformation of retail assets

		Orkan acquires the electricity provider Straumlind buy another 20% after two years	a 34% share in with an option to	"Orkan's investments over the next three years in fast-charging, hydrogen and improved car washing stations around the country" Orkan plans to increase the number of 150 kW+ fast-charging stations in Iceland by 60% and supply connections by 143% Named by VR	company of the year in 2023	Heimkaup grocery stores.	reorganised with the acquisition of Lyfjaval and Gréta María Grétarsdóttir, CEO	Orkan is the high jumper on the customer satisfaction index of 2023 • EBITDA up by 75% between years • • • •	Results of operation streamlining Sold litres increased by 5.5% Car washes increased by 6% 6 fast-charging stations opened	Understanding signed on exploratory negotiations on the merger of Samkaup, Heimkaup and Orkan
Q2 2022				Q4 2022			2H 2023
			Q3 2022	1H 2023						2024
"Orkan next three years"	fit for listing in the						"Shareholders' target is to build a leading company in the retail
"Double EBITDA through internal and external growth" Auður	Daníelsdóttir	CEO	retail operations under consideration"	"Restructuring of Orkan's	Orkan acquires Lyfjaval in full		market with diversified revenues" "Achieve simplification, better procurement, streamlining and lower unit cost"		SKEL acquires Bjarmi ehf. which holds a 5% share in Samkaup Bjarmi ehf. is a party to a
of Orkan			transition"	"Participant in the energy	The only 24/7 pharmacy		"Both organic and external growth targeted"		shareholders' agreement providing for participation
					Sales growth 25% between years		"Listing planned after 5 years"		in the board and right of first refusal to majority holdings.

Dense network of retail outlets for neccessities

Strong competitor

	Merged company (pro forma)	Festi	Hagar
Income 2022	72 billion ISK	121 billion ISK	162 billion ISK
EBITDA Estimate 23*	6.2 billion ISK	11 billion ISK	12.9 - 13.4 billion ISK
Assets 2022	37 billion ISK	93 billion ISK	72 billion ISK
Product offerings (Main brands)
Full-time equivalent positions	848	1,269	1,454

Samkaup

64 grocery stores around the country under four brands, ranging from discount stores to convenience stores.

Orkan

73 energy stations, 14 Löður car washing stations, 6 fastcharging stations, 2 hydrogen stations and 1 methane station. Also, the company owns 32 real estates and sites around the country, in addition to other assets, such as Straumlind, an electricity supplier.

Heimkaup / Lyfjaval

7 pharmacies under the Lyfjaval brand and 9 convenience stores under the 10-11, Extra and Orkan brands and other assets.

Strong distribution of income

Retail (food)

Samkaup has an extensive network and strong position in many areas of the country.

SKEL estimates that Samkaup's turnover could increase significantly with the Heimkaup retail units and that there are excellent opportunities for synergy with the merger of these units.

A merged company would be well placed to invest and to strengthen its market position.

Fuel, charging and car washing

Orkan holds a strong market share in the fuel market and is targeting leadership in the energy transition. Also, Löður commands a dominant market share in car washing.

Pharmaceuticals

Ambitious plans for growth and specialisation for Lyfjaval have been revealed.

The company is the only pharmaceutical outlet that offers drive-through service. There is a significant and growing demand for this service, which the company intends to meet.

*Pharmaceuticals for Festi are estimated based on Lyfja's 2022 annual financial report.

**Festi's income from fuel and electricity in 2022 amounted to 39 billion ISK, so N1's figures could to some extent give a false picture.

Substitution of development projects with incomegenerating properties

Real estate trades – Stefnisvogur

Purchase agreement – 55 apartments delivered at year-end 2023

Cash	400	55 apartments
Stake in REIR Þróun	1,100	5,905 sq. m.
Borrowings and other expenses	3,468	840 thou. ISK price per sq. m.
Stamp duties paid in cash		Rental income per year 240 m.ISK
	4,968 m.ISK	NOI 205 m. ISK (4.1%)

Option agreement – 35 apartments delivered at year-end 2024

Cash	334	35 apartments
Stake in of REIR Þróun	640	3.816 sq. m.
Borrowings	2,270	850 thou. ISK price per sq. m.
	3,244 m.ISK

Summary

• We wanted to simplify the portfolio and we see that the demand for residences is not currently being met
• SKEL acquired 55 apartments that were delivered at year-end 2023. All acquired apartments have been rented out, returning a rental income of 240 m. ISK per year
• In all, SKEL's deferred gains on sales amount to c. 9.5 billion ISK, resulting from sold properties in 2021-2022
• As a result, SKEL has a deferred income tax liability amounting to 1,834 m. ISK at year-end 2023
• The deferred tax liability will become payable if the amount is not reinvested in comparable properties in 2023 and 2024
• The re-investment requirement for 2023 is met with the purchase of these 55 apartments
• Considering the tax incentive, the return on equity from the investment is estimated at about 18% at a fixed price level
• Concurrently, SKEL entered into an agreement on an option to buy an additional 35 apartments in 2024. If SKEL exercises the option, then the company will have sold its entire interest in Reir Þróun in exchange for the apartments

Financials

Balance Sheet

Price to book

Balance sheet 31.12.2023 Assets in m. ISK

ISK million	31.12.2023	31.12.2022
Cash	3,139	4,731
Government bonds	2,524	2,116
Listed securities	9,396	4,921
Other assets at fair value	27,138	23,137
Investment properties at fair value	6,107	690
Other assets	1,442	2,910
Total assets	49,745	38,505
Equity	37,610	33,430
Debts on real properties	3,674	0
Other debts to credit institutions	4,768	2,473
Deferred income tax liability	1,892	2,014
Other liabilities	1,949	589
Total liabilities	12,135	5,075
Total equity and liabilities	49,745	38,505

Assets in m. ISK
------------------	--	--	--

	6,316		5,663
9,697
	3,931	3,000		2,839
9,173	3,738		2,707	2,681

Overview of assets

Cash and listed assets

Cash and treasury bonds	5,663
Kaldalón	3,000
VÍS	2,681
Other listed assets	2,857
	14,767 m. ISK

Based on recent arm's length transactions

Styrkás	9,697
Income generating real estates	5,418
Other assets	1,134
	16,249 m. ISK

Based on valuation

Orkan, Löður	9,173
Heimkaup, Lyfjaval	3,931
Gallon	2,839
Loans, receivables and other assets	1,888
Income generating real estates	898
	18,729 m. ISK

Operation 2H 2023

Profit and Loss Account 11.7. - 31.12.23

ISK million	2H 2023	1H 2023
Fair value change of financial assets	3,874	2,065
Financial income (-expenses)	(191)	287
Other income	89	73
Investment income	3,772	2,424
Salaries and payroll expenses	(330)	(266)
Other operating expenses	(172)	(141)
Operating expenses	( 502)	( 407)
Profit before taxes	3,270	2,017
Income tax	79	43
Net profit	3,349	2,060

Profit 2H 2023

2,543 896

m.ISK m.ISK

Fair value change of unlisted assets

Fair value change of listed assets

Operation in 2023

Profit and Loss Account 1.1. - 31.12.23

ISK million	2023	2022
Fair value change of financial assets	5,939	18,850
Financial income (-expenses)	96	539
Other income	162	736
Investment income	6,198	20,125
Salaries and payroll expenses	(596)	(823)
Other operating expenses	(313)	(431)
Operating expenses	( 910)	( 1,253)
Profit before taxes	5,288	18,871
Income tax	122	(1,354)
Profit over the period	5,410	17,517

Net profit for the year

1.9% 5,168 772

Operating expenses Includes options and incentives

of equity m.ISK m.ISK

Fair value change of unlisted assets

Fair value change of listed assets

Changes in fair value

Overview of fair value changes	1H	2H	2023	Assumptions regarding fair value changes
Orkan – Löður	2,527	1,711	4,238	Orkan - Löður
Styrkás – Skeljungur – Klettur	(725)	1,393	668
Gallon	(47)	(34)	(81)
Heimkaup - Lyfjaval	331	(292)	39
Other unlisted assets	102	(235)	(133)	Increased interest-bearing debt and required rate of return has a reduction effect.
Total unlisted	2,188	2,633	4,731	2023 and a subscription model is currently being tested.
				Styrkás
Kaldalón	(302)	537	235
VÍS	111	(66)	45
Other listed	67	425	492
Total listed	(124)	806	772	Gallon
				Operating budgets comparable to those used in earlier valuations.
Klettagarðar 8-10	0	436	436
Total sold	0	436	436	effect of an increase.
				Heimkaup - Lyfjaval
Total	2,065	3,874	5,939

Orkan - Löður

The increase from the earlier valuation of Orkan results from a significant improvement in operations. EBITDA 2023 was 56% better than forecasted and 2024 forecast is in line with 2023 results. Management anticipates less investment needs than before as investments in fast charging stations was largely finished in 2023. Increased interest-bearing debt and required rate of return has a reduction effect.

The valuation of Löður increases by over 10% year over year. Investment in new stations was considerable in 2023 and a subscription model is currently being tested.

Styrkás

Styrkás's companies are showing success, with EBITDA exceeding anticipations over the year. Further moderate growth is anticipated. At year-end, the parent company held 3,107 m. ISK in cash. The book value is based on the price of Styrkás in the deal with Stólpi, which is about 3% below the valuations results.

Gallon

A higher required rate of return has a reduction effect, but a change in non-trading assets (EBK) has the effect of an increase.

Heimkaup - Lyfjaval

Lyfjaval's revenue growth was good for 2023 as the performance of new pharmacies that have been opened in previous years is materialicing.

On the other hand, losses of the online store in 2023 has a reduction effect and for that reason the valuation was reduced by 600 m. ISK. Better control has been gained over the online store.

The value of 100% share in Heimkaup is 4,8 billion ISK, of which Lyfjaval is 2,9 billion, tax losses is 3 billion and share in Brauð & Co and Sbarro is valued at 500 m. ISK.

The retail operation, online store and 9 convenience stores that had revenues of about 6,4 billion ISK in 2023 are therefore valued at 1 billion ISK.

	Strategy	2023
Assets	Up to 50% listed	23%
	At least 50% unlisted	74%
	Up to 30% foreign	3%
Liabilities	25% on average	9% Bank debts
	Normal for real estate	7% Real estate liabilities
		4% Income tax liability
Operation	Less than 2% of equity (considering options and acquired entitlements)	1.9%
Payments to shareholders	1.5% of the company's total assets, net of the amount used to purchase own shares.	Paid dividends 600 m. ISK. Repurchase 742 m. ISK.Total 1,342 m. ISK (2,7%).

Sustainability

Environmental factors	Social factors	Governance
Implement policies: Environmental policy • Sustainability policy •	Implement policies: Human resource policy • • Equal Rights Plan Bullying policy • • Human rights policy Policy on diversity •	Implement policies: Actions against corruption and • bribery Remuneration policy • • Policy on suppliers and supplier assessment • Safety policy Code of Conduct •
Reduce weight of fossil fuel in product offerings Increase renewable energy sources in product offerings Increase environment sound product offerings	Unexplained gender-based wage differential +/ 4% Establish targets for employee gender ratios Job satisfaction measured	Implement good governance in line with Guidelines of the Iceland Chamber of Commerce

ESG grade table						2023
Enterprises	SKEL portfolio	Orkan	Skeljungur	VÍS	Kaldalón	Klettur
ESG total grade	58	54	62	80	54	37
Environmental factors	44	39	48	87	32	15
Social factors	74	75	73	90	78	52
Governance	59	52	66	75	55	46

SKEL has established a sustainability framework for its investment assets. SKEL is focused on seeing results between years and will monitor them using the following benchmarks in the table.

Double materiality assessment conducted with stakeholders

• Well-run companies
• Know our impact on society
• Reduce climatic impact
• Exercise influence through boards and good governance

Valuation

Methodology of valuation

Kvika Banki was appointed to conduct a valuation of unlisted assets with a turnover above 1 billion ISK or valued at over 1 billion ISK. Where a recent acquisition price was available, this was used, as in the case of Styrkás.

SKEL's auditors, KPMG, categorise the valuation of unlisted assets as a key factor in auditing the Company's accounts. In addition to the auditors, valuation experts of the consultation division of KPMG conducted a detailed review of the valuations and assessed their underlying methods, assumptions and calculations.

Methodology

Estimates of the fair value of companies owned by SKEL were based on Discounted Cash Flow (DCF), using both Free Cash Flow to Firm (FCFF) and Dividend Discount Model DDM).

The valuation is largely based on management operating budgets and discussions between management and valuators.

Many of the estimates are based on actual changes in underlying figures and subsequently the inherent inflation premium of riskless interest is used for the estimate of future inflation of cash flow.

All operating figures are independent of IFRS 16 in this presentation

The impact of this is that all lease contracts are expensed among operating expenses through profit and loss, thereby reducing EBITDA instead of the right of use being expensed under depreciation, and interest being expensed under financial items, as required by IFRS 16.

Orkan consolidation - valuation

Orkan - Löður

Equity value of Orkan's consolidation

m.ISK 9,173

75% 7,186 1,987

m.ISK m.ISK

Orkan equity value Löður equity value

Increase in EBITDA between years

Orkan- valuation

Orkan excluding Löður

Equity value 7.2 billion ISK

Impact on value

Operational improvement

Capex need

Increased market share

Interest bearing debt

Performance and prediction

	2023*	2024E
Gross profit	3,962	4,061
EBITDA	1,927	1,813
EBIT	1,377	1,440
Depreciation	550	373
Investments	2,078	292
Change to NWC	(90)	(78)
EBITDA/Margin	48.6%	44.6%
Inv./Margin	34.8%	7.2%
ROIC	19.6%	16.5%

Yields nominal value

WACC	13.6%
Target leverage	35.0%

Comparables 2024E

Yield to maturity Neste Oyj Orkan Sunoco LP

*Based on draft financial statements

Löður- valuation

Equity value 2.0 billion ISK

Impact on value

Growth opportunity

New revenue model Strong market share

Recession in the economy Investments in new facilities

Performance and prediction

	2023*	2024E
Income	730	5,189
EBITDA	2,051	2,161
EBIT	1,468	1,710
Depreciation	517	451
Investments	1,409	733
Change to NWC	(90)	(67)
EBITDA/Margin	43.7%	41.7%
Inv./Margin	30.0%	14.1%
ROIC	30.3%	22.7%

Yields nominal value

WACC	14.3%
Target leverage	30.0%

Comparables 2024E

Löður Mister Car Wash, Inc

*Based on draft financial statements

Styrkás consolidation - valuation

Styrkás - Skeljungur - Klettur

Value of SKEL's holding in the Styrkás consolidation (69.4%)

m.ISK

3,107 5,613 2,921

m.ISK m.ISK

Parent company's cash Skeljungur equity value Klettur equity value

Skeljungur- valuation

Equity value 8.1 billion ISK

Impact on value

Good performance

Interest bearing debt

Synergy with a group

Real margin growth estimated at 0% for the future

Performance and prediction

	2023*	2024E
Gross profit	3,556	3,686
EBITDA	1,382	1,439
EBIT	1,227	1,285
Depreciation	155	154
Investments	152	126
Change to NWC	(69)	(4)
EBITDA/Margin	38.9%	39.1%
Inv./Margin	4.3%	3.4%
ROIC	20.5%	22.3%

Yields nominal value

WACC	13.2 %
Target leverage	(25.0%)

Comparables 2024E

EV/EBITDA

HF SinclairCorporation Skeljungur Sunoco LP

Klettur - valuation

Equity value 4.2 billion ISK

Impact on value

Good progress since the purchase of the company A new workshop in

Hafnarfjörður creates an opportunity for growth

WACC quite high for stable operation

Performance and prediction

	2023*	2024E
Income	11,094	12,112
EBITDA	566	636
EBIT	500	559
Depreciation	66	77
Investments	137	90
Change to NWC	291	(200)
EBITDA/Margin	5.1%	5.3%
Inv./Margin	1.2%	0.7%
ROIC	27.9%	22.9%

Yields nominal value

WACC	14.2%
Target leverage	30.0%

Comparables 2024E

Ferronordic AB Klettur Custom Truck One Source, Inc.

*Based on draft financial statements

Heimkaup consolidation - valuation

Lyfjaval - Heimkaup

Value of SKEL's holding in the Heimkaup consolidation (81%)

m.ISK

Increase in income of Lyfjaval since 2022

25% 2,352 2,037

m.ISK m.ISK

Lyfjaval equity value Heimkaup equity value

Lyfjaval- valuation

Equity value 2.9 billion ISK ISK

Impact on value

Continued investments in new pharmacies

Increased market share

Performance and prediction

	2023*	2024E
Income	3,393	3,971
EBITDA	163	363
EBIT	120	330
Depreciation	(43)	(33)
Investments	624	(139)
Change to NWC	7	(103)
EBITDA/Margin	4.8%	9.2%
Inv./Margin	-18.4%	3.5%
ROIC	6.7%	28.7%

Yields nominal value

WACC	13.9%
Target leverage	20.0%

Comparables 2024E

CVS Health Corporation Lyfjaval Walgreens Boots Alliance, Inc. Lyfja, based on new acq. price

Heimkaup - valuation

Equity value 2.5 billion ISK

Impact on value

High growth expected

Opportunities in the retail market

Substantial investments

WACC high to reflect ambitious plans

Performance and prediction

	2023*	2024E
Income	6,400	8,995
EBITDA	152	(168)
EBIT	(102)	(299)
Depreciation	(254)	(131)
Investments	(990)	(1,193)
Change to NWC	(154)	(108)
EBITDA/Margin	2.4%	-1.9%
Inv./Margin	15.5%	13.3%
ROIC		-7.6%

Yields nominal value

WACC	21.9%
Market leverage	20.0%

Comparables 2024E

Casey's General Stores, Inc. Heimkaup Carrefour SA

*Based on draft financial statements

Gallon- valuation

Impact on value

Increase in non-operating assets The 2023 projections realised Safety supplies

Higher yield to maturity

An underutilized investment

Performance and forecast

	2023*	2024E
Income	580	598
EBITDA	285	289
EBIT	155	159
Depreciation	(130)	130
Investments	(74)	200
Change to NWC	19	(1)
EBITDA/Margin	49.1%	48.4%
Inv./Margin	12.8%	33.4%
ROIC	9.5%	10.8%

WACC	11.8%
Target leverage	50.0%

Companies, Inc.

Comparables 2024E

Shareholders

Payments to shareholders in ISK million

Equity and market value since listing m.kr.

Shareholders 31.12.23

10 largest shareholders 31.12.23

Strengur hf.	50.06%
Birta Pension Fund	8.93%
Frjálsi Pension Fund	8.62%
TCA ECDF III Holding S.á.r.l.	5.00%
NO.9 Investments Limited	2.65%
RES 9 ehf.	2.01%
FÍA Retirement Fund	1.24%
Hofgarðar ehf.	0.84%
Gildi – Pension Fund	0.63%
Fossar Investment Bank hf.	0.53%

Disclaimer

SKEL Investment Company notes that this presentation is intended solely for information purposes and its receipt should not be construed as investment advice. Under no circumstances should the presentation be perceived or construed as a promise of success in the operation of the company or returns on assets.

Information contained in this presentation is based on sources that the company considers to be reliable at each time, and statements contained in the presentation may be based on the assessments and estimates of the company's management and not on facts that can be verified in the presentation. Statements made in this presentation are valid only at the point in time that this presentation is made public, and their validity is limited by the substance of this disclaimer.

Investors should note that a number of factors can have the effect of the company's business operations and performance deviating from the assumptions made in the presentation. The presentation will not be revised in this regard following its publication.

Any statement in this presentation that refers to the company's estimated or anticipated future results represents only a forecast of the company's future prospects based on current trends, available information and estimates. The company's future prospects are subject to a number of risks and uncertainties that could cause actual results to differ from the prospects forecast in this presentation. These include factors such as changes in the economic environment, financial risk, oil price risk and increased competition.

By the receipt of this presentation the recipient acknowledges his/her acceptance of being bound by the above reservations and restrictions.