H1 2023 Investor Presentation

17 August 2023 Ásgeir Helgi Reykfjörð Gylfason, CEO

Kalkofnsvegur 2 101 Reykjavík

Our objective is to develop opportunities targeting long-term value creation

We are active investors with the clear objective of supporting strong management teams and entrepreneurs in enhancing and developing enterprises and business ideas

H1 2023

FROM INVESTOR PRESENTATIONS 2022:			" Reduced weight of fossil fuel in the investment portfolio "
" Restructuring of Orkan's retail section under review"	" Emphasis on transformation and increased profitability in listed investments"	" Development of leading service enterprise "	96% 47%	" Active participant in the energy transition"
		Klettur Purchase of Klettur finalised
Lyfjaval	VÍS The merger of Fossar og VÍS announced and later approved by shareholders and by the competition authorities	Styrkás Holding company of Skeljungur and Klettur. The goal is to develop a leading service enterprise	Orkufelagið Settlement for the sale of shares in SP/F Orkufelag completed on	Orkan The first fast-charging station opened in Birkimelur in July, planned to open 16 stations in the next 12 months
Orkan buys all shares in Lyfjaval Heimkaup Gréta María appointed CEO of Heimkaup. The purchase of Orkan's retail section and all shares in Lyfjaval announced	Kaldalón When publishing their interim financial statements on August 31st 2023 the company will have achieved two of the four goals for listing on the main market	Horn IV strong co-investor Horn IV signed a subscription agreement for new equity in Styrkás for a value of ISK 3,500 million and thereby becomes the owner of 29.54% of the company's total	3. August 2023	Vetnisfélagið The share capital increase in Íslenska Vetnisfélagið has been completed and preparations for the construction of 4 hydrogen stations have begun.

share capital

Portfolio

Styrkás

company servicing corporations across all industries " "

EBITDA 1,981 m.kr.

HORN IV INVESTS FOR ISK 3.5 BILLION AND WILL RECEIVE 29.5% OF ISSUED SHARES

VALUATION IS BASED ON PURCHASE PRICE

The purchase price is based on the enterprice value of the group being ISK 11,200 million and the value of assets ISK 8,350 million
Horn IV slhf., private equity fund managed by Landsbréfa hf. signed a subscription agreement for new equity in Styrkás worth ISK 3,500 million (29.54%)
Book value is based on the purchase price. The equity value after the share capital increase is ISK 11,850 million and SKEL will own 69.8% in Styrkás after the equity increase

THE PHILOSOPHY

New leading service enterprise
Strong growth in key industries such as; energy production, tourism, aquaculture and heavy industry
Increased demand for specialized services and equipment as a service
An opportunity to combine many smaller service providers into one strong entity

THE VISION

Build on strong foundations and expand operations with increased product offerings and customer focused services
Emphasis on internal growth and targeted acquisitions and partnerships
Get partners invested in the journey i.e. Horn IV private equity fund
A strong shareholder agreement, where the aim is to be listed on the Icelandic Stock Exchange in 2027

Equity value (69,8%) 8,266 m.kr.

Assets

100% Skeljungur 100% Klettur – S&Þ

Heimkaup

Orkan

Servicing vehicles in a simple way " "

SIMPLE BUSINESS MODEL WITH MINIMAL OVERHEAD AFTER THE RETAIL SEC TION WAS SOLD

PURPOSE OF THE COMPANY

A company that services vehicles;

In a simple way
With good locations (network effect)
With smart automated services

It must be doable;

At scale
With technology

SMART SERVICES THE VISION

Smart payment solutions, Orkan recently introduced the Orkan Card to Apple/Google Wallet
Gas cylinder vending machines
Screen wash on pump
Faster charging– 16 fast charging stations in the next 12 months
Cheaper electricity at night with Straumlind
Active participant in the energy transition
Whether the vehicle needs energy, cleaning or other common services, Orkan will offer a service that takes care of its needs
Investments in fast charging, hydrogen and better washing stations throughout the country over the next 3 years
The share capital increase in Íslenska Vetnisfélagið has been completed and preparations for the construction of 4 hydrogen stations have begun

GROUP 2023E

Profit margin

4,109million ISK

EBITDA 1,897million ISK

Total value of equity

7,462million ISK

72 energy stations 15 car washing stations 18 real estates 38 employees

Listed companies

SKEL has played a strategic role in the developement of Kaldalón as the fourth Icelandic real estate company on the market. We believe that company´s focus on simple operation, simple portfolio and minimal infrastructure will be successful in the long term.

Kaldalón recently completed the phase of issuing a bond framework for debt instruments. This is a big milestone for the company so it can later aquire market financing. Kaldalón´s CEO announced recently that the management´s plan and goals to list the company on the main market will be ready this quarter and preperation will begin as soon as goals are met.

SKEL's position in Kaldalón has increased since the beginning of the year by ISK 300 m. in nominal value and has decreased in market value by ISK 302 m. since 31.12.2022.

(15.37%) 2,464 m. ISK (9.25%) 2,747 m. ISK

SKEL is interested in participating in the journey that the board of directors have started to change a well-established insurance company to a growing company in the financial market. Although larger havoc and rising interest rates affect the company's performance, we are pleased that in a short time asset management and fund operations have been set up at SIV, a merger with Fossa investment bank hf. was approved with the decisive support of shareholders and the company has announced that there has been a turnaround in sales after 6 years of continuous decline.

We believe that the original reasons for the investment are still there. The company is in an ideal position to grow beyond the market as the brand is strong, the number of customers is significant, the company's finances are strong and there has been significant investment in the company's infrastructure in recent years. The company's managers have also managed to attract powerful managers to the company in recent months.

SKEL's position in VÍS is unchanged from the beginning of the year, ISK 157 m. in nominal value and has increased in market value by ISK 111 m. since 31.12.2022.

Financials

Income Statement H1 2023

INCOME STATEMENT 1.1. - 30.6.23

ISK million	H1 2023	H1 2022
Fair value change of financial assets	2,065	496
Financial income (–expenses)	287	302
Other income	73	6,051
Investment income	2,424	6,849
Salaries and related expenses	( 266)	(406)
Other operating expenses	(141)	(230)
Operating expenses	( 407)	( 636)
Profit before tax	2,017	6,213
Income tax	43	( 1,274)
Net profit for the period	2,060	4,939

Profit after tax

OPERATING EXPENSES FAIR VALUE CHANGES ANNUALISED, ADJUSTED FOR STOCK OPTIONS

OF OTHER INVESTMENT ASSETS

FAIR VALUE CHANGES OF LISTED SHARES

2% of equity 2,189 m.ISK ( 124) m.ISK

Changes in fair value

BREAKDOWN OF FAIR VALUE CHANGES

Orkan	2,601
Löður	(74)
Lyfjaval	331
Styrkás – Skeljungur – Klettur	(724)
Kaldalón	(302)
Gallon	(47)
VÍS	111
Other inv.assets	102
Other listed inv.assets	67
	2,065 m.kr.

ORKAN CHANGES

Orkan – Löður - Lyfjaval 31.12.22	8,671
Fair value change Lyfjaval	331
Lyfjaval og retail section sold	(4,067)
Fair value change Orkan	2,601
Fair value change Löður	(74)
Fair value of Orkan – Löður 30.6.2023
7,462	m.kr.

RATIONALE FOR FAIR VALUE CHANGES

Orkan is valued without the retail operations that were sold to Heimkaup during the period

Orkan's emphasis on lower operating costs, a simpler operating model and low prices have resulted in EBITDA being higher than budgeted. The budget was therefore updated for the valuation and the estimated EBITDA for 2023 will be ISK 1,648 million

Löður was slightly below budget, that can mainly be explained by constructions on new and larger washing facilities that have been delayed, but it is expected that they will now open in the second half of the year

42% share in Lyfjaval was purchased last March, but there were purchase and sale option agreements on shares that affected the value. The purchase price was ISK 331 million lower than the book value of the company at the end of last year

Styrkás: the purchase price is based on the enterprise value of the group being ISK 11,200 million and the value of assets ISK 8,350 million

Horn IV slhf., private equity fund managed by Landsbréfa hf. signed a subscription agreement for new equity in Styrkás worth ISK 3,500 million (29.54%)

Book value is based on the purchase price. The equity value after the share capital increase is ISK 11,850 million and SKEL will own 69.8% in Styrkás after the equity increase

Gallon was on budget in the first half of the year. The updated valuation is ISK 47 million. lower than the previous valuation. In the first half of the year, Gallon paid ISK 80 m. in dividends to SKEL

Balance Sheet 30.6.2023

Return on equity for the period

12.5%

BALANCE SHEET 30.6.2023 ASSETS IN MILLION ISK

M.kr.	30.6.2023	31.12.2022
Cash and cash equivalents	3,904	4,731
Treasury bonds	1,008	2,116
Listed shares	5,876	4,921
Sold inv.assets at fair value	2,917	0
Other inv. assets at fair value	24,627	23,137			2,917	2,873
Investment properties at fair value	1,140	690
Other assets	2,603	2,910
Total assets	42,074	38,505	8,266	4,911 Cash and cash equivalents and
Equity	34,946	33,430		treasury bonds		2,464
Debts to credit institutions	2,806	2,515			2,747
Deferred income tax liability	2,014	2,014
Other liabilities	2,308	547					1,294
Total liabilities	7,127	5,075					Loans,
						1,753	receivables and other
			7,462	4,099	2,623		assets
Total equity and liabilities	42,074	38,505			Real estate and land	Other listed assets	665

Overview of assets

CASH AND LISTED ASSETS

Cash and cash equivalents and treasury bonds	4,911
VÍS	2,746
Kaldalón	2,463
Other listed assets	709

10,830 m.kr.

RECENT TRANSACTIONS WITH UNRELATED PARTIES

8,266
2,917
1,023
450

12,656 m.kr.

INVESTMENT ASSETS AT FAIR VALUE

Orkan, Löður	7,461
Heimkaup, Lyfjaval, 10-11 and more	4,099
Gallon	2,873
Reir þróun	1,753
Loans, receivables and other assets	1,250
Real estate and land	1,317

18,587 m.kr.

56%

ASSETS BOOKED AT LISTED PRICE OR BASED ON TRANSACTIONS BETWEEN UNRELATED PARTIES

Summarized

SUMMARY

The operating companies that previously formed Skeljungur are performing well

AHEAD

The development of Styrkás is off to a good start with cooperation with Horn and is fully funded for the medium term

The majority of the company's assets are now valued based on known market value or on the basis of transactions between unrelated parties

The sale of S/pf Orkufelagið has been completed

However, the right to sell still exists and a loan in the initial amount of ISK 460m

The company looks, among other things, to increase investments in registered bonds, to northern Europe and to the real estate market in the coming seasons

Liquidity is strong and the share of listed assets, which by their nature can be sold at short notice, will increase

Questions?

Nánari upplýsingar veitir: [email protected]

Additional material

Methodology of valuation

The companies that have not been part of recent transactions were valued, they are Orkan, Löður, which is part of Orkan, and Gallon. Kvika Bank's consulting department was hired for the project, and the bank's valuation experts reviewed the companies' performance in the first half of the year. When deviations were significant, the companies' future budget were adjusted.

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 to a large extent based on management's operating budgets and discussions between the appraisers and management.

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

All operating figures exclude the impact of IFRS 16 in this presentation

The effect of that is that leases are charged among operating costs in the income statement and reduce EBITDA instead of the right of use being charged with depreciation and interest charged among capital items as required by the IFRS16 standard.

Orkan – valuation

EXCLUDES LÖÐUR, LYFJAVAL AND RETAIL OPERATION

RESULT OF VALUATION VALUE OF EQUITY 5.7 BILLION ISK PERFORMANCE AND FORECAST

IMPACT ON VALUE

Better results in operation Simple model Increased market share

Investments relating to energy transition Real margin growth projected at 0%

	2023E	2024E
Gross profit	3,633	3,450
EBITDA	1,648	1,461
EBIT	1,217	816
Depreciation	431	645
Investments	601	999
Change to NWC	(62)	(56)
EBITDA / margin	45.4%	42.3%
Inv./margin	16.5%	29.0%
ROIC	21.3%	13.3%

YIELDS NOMINAL VALUE

WACC	12.2%
Target leverage	40.0%

COMPARABLES 2023E

Löður – valuation

RESULT OF VALUATION VALUE OF EQUITY 1.75 BILLION ISK

Leading brand

Growth opportunities

Investments

Increased environmental awareness

PERFORMANCE AND FORECAST

	2023E	2024E
Gross profit	840	1,088
EBITDA	249	411
EBIT	149	307
Depreciation	100	85
Investments	1,030	460
Change to NWC	(84)	(210)
EBITDA / margin	29.6%	37.8%
Inv./margin	122.6%	42.3%
ROIC	18.8%	20.6%

YIELDS NOMINAL VALUE

WACC	13.6%
Target leverage	30.0%

IMPACT ON VALUE COMPARABLES 2023E

Löður Mister Car Wash

Gallon – valuation