Eimskipafélag Íslands — Interim / Quarterly Report 2021

Aug 19, 2021

EIMSKIP

Eimskipafélag Íslands hf.
Condensed Consolidated Interim Financial Statements
1 January to 30 June 2021
EUR

Eimskipafélag Íslands hf.
Sundabakka 2
104 Reykjavík
Iceland
Reg. no. 690409-0460

---

Contents

Endorsement and Statement by the Board of Directors and the CEO ... 3
Consolidated Income Statement ... 4
Consolidated Statement of Comprehensive Income ... 5
Consolidated Statement of Financial Position ... 6
Consolidated Statement of Changes in Equity ... 7
Consolidated Statement of Cash Flows ... 8
Notes to the Consolidated Financial Statements ... 9
Quarterly Statements ... 15

Condensed Consolidated Interim Financial Statements of Eimskipafelag Íslands hf. 30 June 2021

---

Endorsement and Statement by the Board of Directors and the CEO

Operations and significant matters

Eimskip is a leading transportation company in the North Atlantic with connections to international markets and is specialized in worldwide freight forwarding services, with the vision of providing excellence in transportation solutions and services. Eimskip specializes in shipping, logistics and supply chain management and offers its customers solutions on land, sea and air with special emphasis on the handling and storing of any type of temperature-controlled cargo, frozen or chilled, and dry cargo.

Net earnings for the first six months of the year 2021 amounted to EUR 6.0 million according to the Consolidated Income Statement. Total equity at 30 June 2021 amounted to EUR 225.7 million according to the Statement of Financial Position.

The operational performance of the first half of 2021 was strong with improvements in the container liner services as main driver as well as good performance in the international forwarding services. Focused revenue management and good volume growth are delivering results and the operation is leveraging on lower cost base following streamlining measures and integration. Albeit disruption in the global transportation, markets are challenging and affecting both revenues and cost with the net effect being positive on the result.

In June 2021, Eimskip and the Competition Authority reached a settlement regarding the competition case that had been under investigation since 2013. As a result, Eimskip agreed to pay a fine amounting to 1.5 billion ISK or approximately EUR 10 million. The fine has been expensed in Q2 but the payment date was July 15th. Please refer to note 13 for further information.

The Annual General Meeting of Eimskip approved on 25 March 2021 shareholder distributions which consisted of a dividend payment, reduction of treasury shares in relation to previous share buy back programs and a share capital reduction with a payment to shareholders. Please refer to note 14 for further information.

Statement by the Board of Directors and the CEO

The Condensed Consolidated Interim Financial Statements of Eimskipafélag Íslands hf. and its subsidiaries (together referred to as "Eimskip" or the "Group") for the period 1 January to 30 June 2021 are prepared and presented in accordance with International Financial Reporting Standards (IFRS) for Interim Financial Statements (IAS 34) as adopted by the EU and additional requirements for listed Icelandic companies. The Financial Statements are presented in thousands of EUR. The Condensed Consolidated Interim Financial Statements have not been audited or reviewed by the Company's independent auditors.

According to the best of our knowledge, it is our opinion that these Condensed Consolidated Interim Financial Statements give a true and fair view of the consolidated financial performance of Eimskip for the six months ended 30 June 2021, its assets, liabilities and consolidated financial position as at 30 June 2021 and its consolidated cash flows for the six month period ended 30 June 2021.

Further, in our opinion, the Consolidated Financial Statements and the Endorsement by the Board of Directors and the CEO give a fair view of the development and performance of Eimskip's operations and its position and describe the principal risks and uncertainties faced by Eimskip.

The Board of Directors and the CEO have today discussed the Condensed Consolidated Interim Financial Statements of Eimskipafélag Íslands hf. for the period 1 January to 30 June 2021 and confirm them by means of their signatures.

Reykjavík, 19 August 2021

Board of Directors:

Baldvin Thorsteinsson, Chairman
Lárus L. Blöndal
Gudrún Ó. Blöndal
Margrét Guðmundsdóttir
Ólöf Hildur Pálsdóttir

CEO:

Vilhelm Már Thorsteinsson

Condensed Consolidated Interim Financial Statements of Eimskipafélag Íslands hf. 30 June 2021

---

Consolidated Income Statement

1 January to 30 June 2021

	Note:	2021	2020	2021	2020
		1.4. - 30.6.	1.4. - 30.6.	1.1. - 30.6.	1.1. - 30.6.
Revenue
Operating revenue	5	211,134	160,615	391,362	322,285
Expenses
Operating expenses		150,807	114,812	285,495	237,391
Settlement with the Icelandic Competition Authority	13	10,219	0	10,219	0
Salaries and related expenses		30,613	29,802	59,844	59,555
	5	191,639	144,614	355,558	296,946
Operating profit, EBITDA		19,495	16,001	35,804	25,339
Depreciation and amortization		(12,243)	(10,966)	(24,040)	(21,898)
Results from operating activities, EBIT		7,252	5,035	11,764	3,441
Finance income		161	246	328	316
Finance expense		(2,010)	(1,942)	(3,781)	(3,872)
Net foreign currency exchange loss		(211)	(706)	197	(1,486)
Net finance expense	6	(2,060)	(2,402)	(3,256)	(5,042)
Share of profit of equity accounted investees		957	473	1,178	156
Net earnings (loss) before income tax		6,149	3,106	9,686	(1,445)
Income tax		(3,031)	(651)	(3,734)	(1,051)
Net earnings (loss) for the period		3,118	2,455	5,952	(2,496)
Net earnings for the period attributable to:
Equity holders of the Company		2,748	2,368	5,338	(2,506)
Non-controlling interest		370	87	614	10
		3,118	2,455	5,952	(2,496)
Earnings per share:
Basic and diluted earnings (loss) per share (EUR per share)	7	0.0157	0.0131	0.0300	(0.0138)

The notes on pages 9 to 14 are an integral part of these Condensed Consolidated Interim Financial Statements.

Condensed Consolidated Interim Financial Statements of Eimskipafélag Íslands hf. 30 June 2021

---

Consolidated Statement of Comprehensive Income

1 January to 30 June 2021

	Notes	2021	2020	2021	2020
		1.4. - 30.6.	1.4. - 30.6.	1.1. - 30.6.	1.1. - 30.6.
Net earnings (loss) for the period		3,118	2,455	5,952	(2,496)
Other comprehensive income:
Items that are or may subsequently be reclassified to the income statement
Foreign currency translation difference
of foreign operations		(382)	784	2,343	(2,268)
Effective portion of changes
in fair value of cash flow hedges, net of income tax		1,031	2,252	1,218	(1,849)
Fair value changes
of non-controlling put option liability		(81)	(63)	(238)	(148)
Other comprehensive income (loss) for the period		568	2,973	3,323	(4,265)
Total comprehensive income (loss) for the period		3,686	5,428	9,275	(6,761)
Total comprehensive income for the period attributable to:
Equity holders of the Company		8,606	5,314	8,606	(6,585)
Non-controlling interest		383	114	669	(176)
		8,989	5,428	9,275	(6,761)

The notes on pages 9 to 14 are an integral part of these Condensed Consolidated Interim Financial Statements.

Condensed Consolidated Interim Financial Statements of Eimskipafelag Islands hf. 30 June 2021

---

Consolidated Statement of Financial Position as at 30 June 2021

	Notes	30.6.2021	31.12.2020
Assets:
Property, vessels and equipment		237,546	247,582
Right-of-use assets		72,061	67,376
Intangible assets		62,765	63,728
Equity accounted investees		13,180	11,649
Finance assets		7,174	7,354
Deferred tax assets		1,673	2,744
Total non-current assets		394,399	400,433
Inventories		6,873	4,606
Trade and other receivables	8	151,273	115,452
Cash and cash equivalents		15,385	15,640
Total current assets		173,531	135,698
Total assets		567,930	536,131
Equity:
Share capital		1,085	1,123
Share premium		137,236	148,369
Reserves		20,441	9,061
Retained earnings		62,069	67,847
Total equity attributable to equity holders of the parent company		220,831	226,400
Non-controlling interest		4,838	4,257
Total equity		225,669	230,657
Liabilities:
Loans and borrowings	9	151,099	145,781
Lease liabilities	10	57,088	53,292
Other long-term liabilities		5,465	5,227
Deferred tax liability		3,943	4,186
Total non-current liabilities		217,595	208,486
Loans and borrowings	9	13,343	15,236
Lease liabilities	10	13,114	10,861
Trade and other payables	11	87,990	70,891
Unpaid settlement with the Icelandic Competition Authority	13	10,219	0
Total current liabilities		124,666	96,988
Total liabilities		342,261	305,474
Total equity and liabilities		567,930	536,131

The notes on pages 9 to 14 are an integral part of these Condensed Consolidated Interim Financial Statements.

Condensed Consolidated Interim Financial Statements of Eimskipafélag Íslands hf. 30 June 2021

---

Consolidated Statement of Changes in Equity

1 January to 30 June 2021

	Notes	Attributable to equity holders of the Company
		Share capital	Share premium	Trans- lation reserve	Reserves			Retained earnings	Total	Non- controlling interest	Total equity
					Hedging reserve	Fair value changes of minority put options	Un- distributed profits
Changes in Equity 1 January to 30 June 2020:
Equity at 1 January 2020		1,137	149,713	(6,707)	(585)	150	25,293	56,947	225,948	4,920	230,868
Treasury shares purchased		(8)	(1,520)						(1,528)		(1,528)
Treasury shares received		(6)	6						0		0
Reversal of prior year dividend of treasury shares received			170						170		170
Other changes in non-controlling interest									0	(341)	(341)
Total comprehensive loss for the period				(2,082)	(1,849)	(148)		(2,506)	(6,585)	(176)	(6,761)
Profit of subsidiaries net of dividend received							4,558	(4,558)	0		0
Equity at 30 June 2020		1,123	148,369	(8,789)	(2,434)	2	29,851	49,883	218,005	4,403	222,408
Reserves							12,198
Changes in Equity 1 January to 30 June 2021:
Equity at 1 January 2021		1,123	148,369	(9,413)	193	(577)	18,858	67,847	226,400	4,257	230,657
Share capital reduction	14	(38)	(11,133)						(11,171)		(11,171)
Dividend declared (0.0166 EUR per share)	14							(3,004)	(3,004)		(3,004)
Other changes in non-controlling interest									0	(88)	(88)
Total comprehensive income for the period				2,288	1,218	(238)		5,338	8,606	669	9,275
Profit of subsidiaries net of dividend received							8,112	(8,112)	0		0
Equity at 30 June 2021		1,085	137,236	(7,125)	1,411	(815)	26,970	62,069	220,831	4,838	225,669
Reserves							20,441

The notes on pages 9 to 14 are an integral part of these Condensed Consolidated Interim Financial Statements.

Condensed Consolidated Interim Financial Statements of Eimskipafelag Islands hf. 30 June 2021

---

Consolidated Statement of Cash Flows

1 January to 30 June 2021

| | Notes | 2021
1.4. - 30.6. | 2020
1.4. - 30.6. | 2021
1.1. - 30.6. | 2020
1.1. - 30.6. |
| --- | --- | --- | --- | --- | --- |
| Cash flows from operating activities: | | | | | |
| Net earnings (loss) for the period | | 3,118 | 2,455 | 5,952 | ( 2,496) |
| Adjustments for: | | | | | |
| Depreciation and amortization | | 12,243 | 10,966 | 24,040 | 21,898 |
| Net finance expense | 6 | 2,060 | 2,402 | 3,256 | 5,042 |
| Share of profit of equity accounted investees | | ( 957) | ( 473) | ( 1,178) | ( 156) |
| Change in deferred taxes | | 1,341 | 41 | 821 | ( 1,268) |
| Other changes | | ( 310) | 71 | ( 894) | ( 248) |
| | | 17,495 | 15,462 | 31,997 | 22,772 |
| Changes in current assets and liabilities: | | | | | |
| Inventories, change | | ( 776) | 1,703 | ( 2,198) | 919 |
| Receivables, change | | ( 18,832) | 2,248 | ( 32,876) | 5,413 |
| Payables, change | | 16,716 | 4,520 | 27,306 | ( 1,400) |
| Change in current assets and liabilities | | ( 2,892) | 8,471 | ( 7,768) | 4,932 |
| Interest paid | | ( 1,862) | ( 1,896) | ( 3,753) | ( 3,778) |
| Interest received | | 110 | 449 | 307 | 518 |
| Taxes paid | | ( 515) | ( 521) | ( 1,091) | ( 1,230) |
| Net cash from operating activities | | 12,336 | 21,965 | 19,692 | 23,214 |
| Cash flows used in investing activities: | | | | | |
| Acquisition of property, vessels and equipment | | ( 2,658) | ( 20,031) | ( 3,617) | ( 24,103) |
| Acquisition of intangible assets | | ( 541) | ( 787) | ( 1,043) | ( 1,648) |
| Proceeds from the sale of property, vessels and equipment | | 448 | 553 | 1,954 | 9,784 |
| Investment in equity accounted investees | | 0 | 0 | 0 | 67) |
| Proceed from the sale of equity accounted investees | | 0 | 0 | 0 | 588 |
| Changes in finance assets | | 229 | ( 205) | 436 | ( 287) |
| Net cash used in investing activities | | ( 2,522) | ( 20,470) | ( 2,270) | ( 15,733) |
| Cash flows from financing activities: | | | | | |
| Share capital reduction paid | | ( 11,171) | 0 | ( 11,171) | 0 |
| Dividend paid to equity holders of the Company | | ( 3,004) | 0 | ( 3,004) | 0 |
| Treasury shares purchased | | 0 | 0 | 0 | ( 1,528) |
| Dividend paid to non-controlling interest | | ( 109) | ( 201) | ( 514) | ( 797) |
| Proceeds from non-current loans and borrowings | | 8,776 | 24,477 | 9,480 | 24,712 |
| Repayment of non-current loans and borrowings | | ( 3,877) | ( 16,546) | ( 6,943) | ( 18,742) |
| Repayment of lease liabilities | | ( 3,067) | ( 3,505) | ( 6,426) | ( 8,072) |
| Short term borrowings, change | | 743 | ( 192) | 645 | ( 46) |
| Net cash (used in) provided by financing activities | | ( 11,709) | 4,033 | ( 17,933) | ( 4,473) |
| Changes in cash and cash equivalents | | ( 1,895) | 5,528 | ( 511) | 3,008 |
| Cash and cash equivalents at the beginning of the period | | 17,212 | 18,563 | 15,640 | 20,737 |
| Effects of exchange rate fluctuations on cash held | | 68 | ( 187) | 256 | 159 |
| Cash and cash equivalents at the end of the period | | 15,385 | 23,904 | 15,385 | 23,904 |
| Investing and financing activities not affecting cash flows: | | | | | |
| Acquisition of right-of-use assets | | ( 9,820) | ( 3,186) | ( 15,605) | ( 31,336) |
| New or renewed leases | | 9,820 | 3,186 | 15,605 | 31,336 |
| Investment in finance assets | | 0 | 0 | 0 | ( 5,409) |
| Proceeds from the sale of property, vessels and equipment | | 0 | 0 | 0 | 5,409 |

The notes on pages 9 to 14 are an integral part of these Condensed Consolidated Interim Financial Statements.

Condensed Consolidated Interim Financial Statements of Eimskipafelag Islands hf. 30 June 2021

---

Notes to the Consolidated Financial Statements

1. Reporting entity

Eimskipafélag Íslands hf. (the "Company" or the "Parent Company") is a public limited liability company domiciled in Iceland. The address of the Company's registered office is Korngardar 2, 104 Reykjavík. The Condensed Consolidated Interim Financial Statements of the Company for the period 1 January to 30 June 2021 comprise the Company and its subsidiaries (together referred to as "Eimskip" or the "Group"). The Parent Company is an investment company focused on investments in shipping and logistics services. The Company's shares are listed at Nasdaq Iceland.

2. Basis of preparation

a. Statement of compliance

The Condensed Consolidated Interim Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and additional Icelandic disclosure requirements for consolidated financial information of listed companies in accordance with Icelandic Financial Statements Act No. 3/2006 and rules for issuers of financial instruments on Nasdaq Iceland.

The Condensed Consolidated Interim Financial Statements do not include all of the information required for a complete set of consolidated annual financial statements and should be read in conjunction with the Consolidated Financial Statements of the Company as at and for the year ended 31 December 2020, which is available on the Company's website, www.eimskip.com, and in the company news release distribution network of Nasdaq Nordic.

The Condensed Consolidated Interim Financial Statements were approved and authorized for issue by the Company's Board of Directors on 19 August 2021.

b. Functional and presentation currency

These Condensed Consolidated Interim Financial Statements are presented in Euro (EUR), which is the Company's functional currency. All financial information presented in EUR has been rounded to the nearest thousand.

3. Significant accounting policies

The accounting policies applied in these Condensed Consolidated Interim Financial Statements are the same as those applied in the Group's Consolidated Financial Statements as at and for the year ended 31 December 2020. IFRS standards effective as at 1 January 2021 had immaterial effects on the Consolidated Financial Statements.

4. Use of estimates and judgements

The preparation of the Condensed Consolidated Interim Financial Statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

In preparing these Condensed Consolidated Interim Financial Statements, the significant judgements made by management in applying the Group's accounting policies and key sources of estimation uncertainty were the same as those described in the last annual Consolidated Financial Statements as at and for the year ended 31 December 2020.

The Company has, from the beginning of the COVID-19 pandemic, strived to secure the safety and health of employees and to maintain and secure the logistic chain and customer services. The impact of the pandemic on global economies, including in the North-Atlantic Region which is the Company's core market area, remains uncertain. The pandemic could have a significant impact on the estimates and assumptions within the current financial year and risk of causing a material adjustments to the carrying amounts of assets and liabilities as discussed below. As to date, it is management's assessment that assumptions applied in the 2020 financial statements remain unchanged but would like to emphasize the following:

Intangible assets

Eimskip annually tests whether the carrying amount of intangible assets is impaired. At the end of each reporting period, the Company assesses whether there is any indication of impairment. Management has reviewed the impairment tests performed at year-end 2020. Please refer to note 13 in the Financial Statements of 2020. To date, there is no indication of impairment but management would like to point out the increased uncertainty due to COVID-19 which may affect future valuation of intangible assets.

Condensed Consolidated Interim Financial Statements of Eimskipafélag Íslands hf. 30 June 2021

---

Notes

4. Use of estimates and judgements, continued

Impairment loss on trade receivables and finance assets

Eimskip establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables and finance assets. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based on historical data of payment statistics for similar financial assets. As to date, there has not been any development indicating increase in payment defaults and therefore there have not been made any specific loss provisions on credit losses due to COVID-19 but management closely monitors collections.

5. Segment reporting

Business segments	Liner services	Forwarding services	Un-allocated*	Consolidated
1 January to 30 June 2021
Revenue, external	229,032	162,330	0	391,362
Inter-segment revenue	8,741	16,717	0	25,458
Total	237,773	179,047	0	416,820
Expenses, external	(190,033)	(155,306)	(10,219)	(355,558)
Inter-segment expense	(16,717)	(8,741)	0	(25,458)
EBITDA	31,023	15,000	(10,219)	35,804
Depreciation and amortization	(20,637)	(3,403)	0	(24,040)
EBIT	10,386	11,597	(10,219)	11,764
Net finance expense	(1,910)	(1,346)	0	(3,256)
Share of profit of equity accounted investees	1,113	65	0	1,178
Income tax	(1,109)	(2,625)	0	(3,734)
Net earnings for the period	8,480	7,691	(10,219)	5,952

• The unallocated segment represents the settlement with the Icelandic Competition Authority.

1 January to 30 June 2020

Revenue, external	195,691	126,594	0	322,285
Inter-segment revenue	8,122	14,707	0	22,829
Total	203,813	141,301	0	345,114
Expenses, external	(175,253)	(121,693)	0	(296,946)
Inter-segment expense	(14,707)	(8,122)	0	(22,829)
EBITDA	13,853	11,486	0	25,339
Depreciation and amortization	(18,474)	(3,424)	0	(21,898)
EBIT	(4,621)	8,062	0	3,441
Net finance expense	(4,075)	(967)	0	(5,042)
Share of (loss) profit of equity accounted investees	96	60	0	156
Income tax	827	(1,878)	0	(1,051)
Net (loss) earnings for the period	(7,773)	5,277	0	(2,496)
Information on assets and liabilities	Liner services	Forwarding services	Consolidated
---	---	---	---
Segment assets as at 30 June 2021	437,246	130,684	567,930
Segment assets as at 31 December 2020	410,675	125,456	536,131
Segment liabilities as at 30 June 2021	251,829	90,432	342,261
Segment liabilities as at 31 December 2020	225,130	80,344	305,474
Non-lease capital expenditure for the period 1 January to 30 June 2021	4,273	387	4,660
Non-lease capital expenditure for the period 1 January to 30 June 2020	25,416	335	25,751

Condensed Consolidated Interim Financial Statements of Eimskipafélag Íslands hf. 30 June 2021

---

Notes

5. Segment reporting, continued

Geographical segments

In presenting information on the basis of geographical segments, segment revenue and assets are based on the geographical location of assets.

	North Atlantic	Other territories	Consolidated
Revenue, external for the period 1 January to 30 June 2021	341,481	49,881	391,362
Revenue, external for the period 1 January to 30 June 2020	299,085	23,200	322,285
Geographical location of assets as at 30 June 2021	547,335	20,595	567,930
Geographical location of assets as at 31 December 2020	520,482	15,649	536,131
Non-lease capital expenditure for the period 1 January to 30 June 2021	4,624	36	4,660
Non-lease capital expenditure for the period 1 January to 30 June 2020	25,716	35	25,751

6. Finance income and expense

| | 2021
1.4. - 30.6. | 2020
1.4. - 30.6. | 2021
1.1. - 30.6. | 2020
1.1. - 30.6. |
| --- | --- | --- | --- | --- |
| Finance income is specified as follows: | | | | |
| Interest income | 85 | 201 | 214 | 264 |
| Dividend received | 76 | 45 | 114 | 52 |
| Finance income | 161 | 246 | 328 | 316 |
| Finance expense is specified as follows: | | | | |
| Interest on long-term loans | (778) | (753) | (1,485) | (1,478) |
| Interest on lease liabilities | (942) | (1,033) | (1,825) | (1,981) |
| Other finance expense | (290) | (156) | (471) | (413) |
| Finance expense | (2,010) | (1,942) | (3,781) | (3,872) |
| Net foreign currency exchange (loss) gain | (211) | (706) | 197 | (1,486) |
| Net finance expense | (2,060) | (2,402) | (3,256) | (5,042) |

7. Earnings per share

Basic and diluted earnings per share

The calculation of basic earnings per share was based on earnings attributable to shareholders and a weighted average number of shares outstanding during the period. Diluted earnings per share is equal to earnings per share whereas Eimskip has not issued convertible bonds nor granted stock options. Calculations are as follows:

| | 2021
1.4. - 30.6. | 2020
1.4. - 30.6. | 2021
1.1. - 30.6. | 2020
1.1. - 30.6. |
| --- | --- | --- | --- | --- |
| Net profit (loss) attributable to equity holders of the Company | 2,748 | 2,368 | 5,338 | (2,506) |
| Number of issued shares at 1 January in thousands | 187,000 | 187,000 | 187,000 | 187,000 |
| Effect of treasury shares at 1 January in thousands | (6,133) | (4,122) | (6,133) | (4,122) |
| Effect of share capital reduction | (5,700) | 0 | (2,913) | 0 |
| Effect of treasury shares purchased in thousands | 0 | (1,935) | 0 | (1,425) |
| Weighted average number of outstanding shares in thousands | 175,167 | 180,943 | 177,954 | 181,453 |
| Basic and diluted earnings (loss) per share (EUR) | 0.0157 | 0.0131 | 0.0300 | (0.0138) |

Condensed Consolidated Interim Financial Statements of Eimskipafelag Islands hf. 30 June 2021

---

Notes

8. Trade and other receivables

30.6.2021 31.12.2020

Trade and other receivables are specified as follows:

Trade receivables 130,643 102,534

Restricted cash 628 442

Other receivables 20,002 12,476

Trade and other receivables total 151,273 115,452

9. Loans and borrowings

This note provides information on the contractual terms of Eimskip's interest bearing loans and borrowings.

Loans and borrowings consist of the following:

30.6.2021 31.12.2020

Secured bank loans 163,686 160,906

Bank overdraft and short term borrowing 756 111

Total loans and borrowings 164,442 161,017

Current maturities of secured bank loans (12,587) (15,125)

Bank overdraft and short term borrowing (756) (111)

Current loans and borrowings (13,343) (15,236)

Non-current loans and borrowings 151,099 145,781

The loan agreements of Eimskip contain restrictive covenants. At the end of June 2021 and at the year-end 2020 Eimskip complied with all restrictive covenants.

| Secured bank loans
Secured bank loans are as follows: | 30.6.2021 | | 31.12.2020 | |
| --- | --- | --- | --- | --- |
| | Nominal interest | Carrying amount | Nominal interest | Carrying amount |
| Loans in EUR | 1.6% | 157,896 | 1.6% | 154,369 |
| Loans in USD | 5.4% | 3,289 | 5.4% | 3,725 |
| Loans in ISK | 3.2% | 1,686 | 1.6% | 1,809 |
| Loans in other currencies | - | 815 | - | 1,003 |
| Total secured bank loans | | 163,686 | | 160,906 |
| Aggregated annual maturities of secured bank loans are as follows: | | | 30.6.2021 | 31.12.2020 |
| On demand or within 12 months | | | 12,587 | 15,125 |
| 12 - 24 months | | | 12,100 | 13,337 |
| 24 - 36 months | | | 22,726 | 13,123 |
| 36 - 48 months | | | 10,494 | 11,380 |
| 48 - 60 months | | | 10,568 | 11,275 |
| After 60 months | | | 95,211 | 96,666 |
| Total secured bank loans | | | 163,686 | 160,906 |

Condensed Consolidated Interim Financial Statements of Eimskipafélag Íslands hf. 30 June 2021

---

Notes

10. Lease liabilities

Lease liabilities are as follows:

	30.6.2021	31.12.2020
Lease Liabilities in NOK	27,141	26,666
Lease Liabilities in ISK	16,531	10,526
Lease Liabilities in USD	10,311	10,778
Lease Liabilities in EUR	7,967	7,236
Lease Liabilities in other currencies	8,252	8,947
Total	70,202	64,153
Current maturities	( 13,114)	( 10,861)
Non-current maturities	57,088	53,292

Maturity analysis:

	30.6.2021	31.12.2020
Within 12 months	13,114	10,861
12 - 24 months	6,526	6,863
24 - 36 months	5,288	5,419
36 - 48 months	3,067	3,811
48 - 60 months	1,763	1,953
After 60 months	40,444	35,246
Total	70,202	64,153

11. Trade and other payables

Trade and other payables are attributable to the following:

Trade payables	56,837	43,003
Income tax payable	186	1,763
Other payables	30,967	26,125
Total	87,990	70,891

12. Group entities

At period-end the Company owned directly nine subsidiaries that are all included in the consolidation. The direct subsidiaries owned 62 subsidiaries at period-end. The Company holds the majority of voting power in all of its subsidiaries. Assets, liabilities, revenues and expenses in Consolidated Financial Statements that include a non-controlling interest are immaterial to the Group.

The Group's direct subsidiaries are as follows:

	Country of incorporation	Ownership Interest	Ownership Interest
		30.6.2021	31.12.2020
Eimskip Island ehf.	Iceland	100%	100%
TVG-Zimsen ehf.	Iceland	100%	100%
Eimskip USA, Inc.	USA	100%	100%
Eimskip UK Ltd.	England	100%	100%
Eimskip Holding B.V.	The Netherlands	100%	100%
Eimskip Asia B.V.	The Netherlands	80%	80%
P/f Skipafélagid Føroyar	Faroe Islands	100%	100%
Harbour Grace CS Inc.	Canada	51%	51%
Sæferdir ehf.	Iceland	100%	100%

Condensed Consolidated Interim Financial Statements of Eimskipafélag Islands hf. 30 June 2021

---

Notes

13. Other matters

Investigation of the Icelandic Competition Authority

In June 2021, Eimskip and the Competition Authority reached a settlement regarding the competition case that had been under investigation since 2013, where the main period of investigation was 2008 to 2013. As a result, Eimskip agreed to pay a fine amounting to 1.5 billion ISK or approximately EUR 10 million. The fine has been expensed in Q2 but the payment date was July 15th 2021. This settlement concludes the investigation towards Eimskip and there will be no further investigation or proceedings against the Company or its employees on behalf of the Icelandic Competition Authority regarding the matter.

The Environment Agency of Iceland

The Environment Agency of Iceland reported the Company to the District Prosecutors for alleged violation of the Icelandic Waste Management Act due to the vessels Godafoss and Laxfoss being recycled in India. The Company rejects these allegations as the Company complied with all laws and regulations in the sale process.

Tax related matters

The Icelandic Directorate of Internal Revenue ruled in December 2017 regarding the taxation of the operation of foreign vessel subsidiaries of Eimskip. The Internal Revenue Board confirmed the ruling in March 2019. Due to this ruling Eimskip expensed EUR 3.4 million in the Income Statement in the first quarter of 2019 and has paid EUR 0.7 million as well as utilized EUR 2.7 million of tax-losses carried forward.

Eimskip disagreed with the ruling of the Internal Revenue Board and referred the case to Reykjavik District Court which ruled against claims made by the Company on April 8th 2021 which had no effect on the Company's financial statements. The Company decided on April 29th 2021 to refer the case to the Court of Appeal.

Impact of COVID-19

Under current funding structure, current financial position and assuming no major disruptions or significant decrease in demand for cargo flow, there is insignificant risk that Eimskip's loan covenants will be breached. Eimskip has good liquidity headroom with positive short-term outlook. Currently, Eimskip is not fully utilizing its revolving credit facilities and in Q1 Eimskip completed extending such facilities to be able to meet any future setbacks in its operations due to COVID-19.

14. Shareholder distributions

Dividend payment

The Annual General Meeting of Eimskip approved on 25 March 2021 a dividend payment of ISK 2.47 per share to shareholders. The dividend payment amounted to ISK 446.7 million or EUR 3.0 million. The payment date was 15 April 2021.

Reduction of treasury shares in relation to previous share buy back programs

The reduction of treasury shares was executed on April 7th. The Company's treasury shares were reduced by ISK 6,100,000, or from ISK 187,000,000 to ISK 180,900,000 nominal value.

Reduction of share capital with a payment to shareholders

The share capital reduction with a payment to shareholders consisted of a share capital reduction of 5,700,000 million shares or from 180,900,000 to 175,200,000 issued shares with a payment to shareholders in the amount of ISK 1,675.0 million or EUR 11.2 million. The payment date was 30 April 2021.

Subsequent to the shareholder distributions above share capital is ISK 175,200,000 and each share is divided into one ISK. Treasury shares are ISK 32,757 and outstanding shares are ISK 175,167,243. Prior to the reduction in treasury shares they amounted to 3.28% of total issued shares, but is after the reduction 0.00018% of total issued share capital.

15. Subsequent events

There are no subsequent events to report.

Condensed Consolidated Interim Financial Statements of Eimskipafélag Íslands hf. 30 June 2021

---

Quarterly statements

Year 2021	Q1 2021	Q2 2021
Revenue	180,228	211,134
Expenses*	163,919	191,639
Operating profit, EBITDA	16,309	19,495
Depreciation and amortization	( 11,797)	( 12,243)
Results from operating activities, EBIT	4,512	7,252
Net finance expense	( 1,196)	( 2,060)
Share of profit of equity accounted investees	221	957
Net earnings before income tax	3,537	6,149
Income tax	( 703)	( 3,031)
Net earnings	2,834	3,118

• Expenses in Q2 2021 included settlement with the Icelandic Competition Authority in the amount of EUR 10.2 million.

Year 2020	Q1 2020	Q2 2020	Q3 2020	Q4 2020	2020
Revenue	161,670	160,615	170,378	175,653	668,316
Expenses	152,332	144,614	148,968	160,724	606,638
Operating profit, EBITDA	9,338	16,001	21,410	14,929	61,678
Depreciation and amortization	( 10,932)	( 10,966)	( 10,964)	( 11,728)	( 44,590)
Results from operating activities, EBIT	( 1,594)	5,035	10,446	3,201	17,088
Net finance expense	( 2,640)	( 2,402)	( 2,759)	( 773)	( 8,574)
Share of (loss) earnings of equity accounted investees	( 317)	473	201	( 95)	262
Net earnings (loss) before income tax	( 4,551)	3,106	7,888	2,333	8,776
Income tax	( 400)	( 651)	( 1,724)	( 1,550)	( 4,325)
Net (loss) earnings	( 4,951)	2,455	6,164	783	4,451

Condensed Consolidated Interim Financial Statements of Eimskipafélag Íslands hf. 30 June 2021