Eimskipafélag Íslands — Interim / Quarterly Report 2021

May 11, 2021

EIMSKIP

Eimskipafélag Íslands hf.
Condensed Consolidated Interim Financial Statements
1 January to 31 March 2021
EUR

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

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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 Islands hf. 31 March 2021

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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 three months of the year 2021 amounted to EUR 2.8 million according to the Consolidated Income Statement. Total equity at 31 March 2021 amounted to EUR 222.0 million according to the Statement of Financial Position.

The performance of the first quarter of 2021 was above management expectations due to leveraging from streamlining measures, strong volume of the quarter and higher margins.

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 31 March 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 three months ended 31 March 2021, its assets, liabilities and consolidated financial position as at 31 March 2021 and its consolidated cash flows for the three month period ended 31 March 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 31 March 2021 and confirm them by means of their signatures.

Reykjavik, 11 May 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. 31 March 2021

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Consolidated Income Statement

1 January to 31 March 2021

| | Notes | 2021
1.1. - 31.3. | 2020
1.1. - 31.3. |
| --- | --- | --- | --- |
| Revenue | | | |
| Operating revenue | 5 | 180,228 | 161,670 |
| Expenses | | | |
| Operating expenses | | 134,688 | 123,086 |
| Salaries and related expenses | | 29,231 | 29,246 |
| | 5 | 163,919 | 152,332 |
| Operating profit, EBITDA | | 16,309 | 9,338 |
| Depreciation and amortization | | (11,797) | (10,932) |
| Results from operating activities, EBIT | | 4,512 | (1,594) |
| Finance income | | 167 | 70 |
| Finance expense | | (1,771) | (1,930) |
| Net foreign currency exchange gain (loss) | | 408 | (780) |
| Net finance expense | 6 | (1,196) | (2,640) |
| Share of earnings (loss) of equity accounted investees | | 221 | (317) |
| Net earnings (loss) before income tax | | 3,537 | (4,551) |
| Income tax | | (703) | (400) |
| Net earnings (loss) for the period | | 2,834 | (4,951) |
| Net earnings (loss) for the period attributable to: | | | |
| Equity holders of the Company | | 2,590 | (4,874) |
| Non-controlling interest | | 244 | (77) |
| | | 2,834 | (4,951) |
| Earnings per share: | | | |
| Basic and diluted earnings (loss) per share (EUR per share) | 7 | 0.0143 | (0.0268) |

The notes on pages 9 to 15 are an integral part of these Condensed Consolidated Interim Financial Statements.

Condensed Consolidated Interim Financial Statements of Eimskipafelag Islands hf. 31 March 2021

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Consolidated Statement of Comprehensive Income

1 January to 31 March 2021

	Notes	2021	2020
		1.1. - 31.3.	1.1. - 31.3.
Net earnings (loss) for the period		2,834	( 4,951)
Other comprehensive income:
Items that are or may subsequently be reclassified the income statement
Foreign currency translation difference of foreign operations		2,725	( 3,052)
Effective portion of changes in fair value of cash flow hedges, net of income tax		187	( 4,101)
Fair value changes of non-controlling put option liability		( 157)	( 85)
Other comprehensive income (loss) for the period		2,755	( 7,238)
Total comprehensive income (loss) for the period		5,589	( 12,189)
Total comprehensive income (loss) for the period attributable to:
Equity holders of the Company		5,303	( 11,899)
Non-controlling interest		286	( 290)
		5,589	( 12,189)

The notes on pages 9 to 15 are an integral part of these Condensed Consolidated Interim Financial Statements.

Condensed Consolidated Interim Financial Statements of Eimskipafelag Islands hf. 31 March 2021

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Consolidated Statement of Financial Position as at 31 March 2021

	Notes	31.03.2021	31.12.2020
Assets:
Property, vessels and equipment		241,625	247,582
Right-of-use assets		68,324	67,376
Intangible assets		63,453	63,728
Equity accounted investees		12,290	11,649
Finance assets		7,460	7,354
Deferred tax assets		3,085	2,744
Total non-current assets		396,237	400,433
Inventories		6,122	4,606
Trade and other receivables	8	132,968	115,452
Cash and cash equivalents		17,212	15,640
Total current assets		156,302	135,698
Total assets		552,539	536,131
Equity:
Share capital		1,085	1,123
Share premium		137,234	148,369
Reserves		12,726	9,061
Retained earnings		66,481	67,847
Total equity attributable to equity holders of the parent company		217,526	226,400
Non-controlling interest		4,496	4,257
Total equity	14	222,022	230,657
Liabilities:
Loans and borrowings	9	145,045	145,781
Lease liabilities	10	54,039	53,292
Other long-term liabilities		5,384	5,227
Deferred tax liability		3,996	4,186
Total non-current liabilities		208,464	208,486
Loans and borrowings	9	13,958	15,236
Lease liabilities	10	12,134	10,861
Trade and other payables	11	81,784	70,891
Shareholder distribution payables	14	14,177	0
Total current liabilities		122,053	96,988
Total liabilities		330,517	305,474
Total equity and liabilities		552,539	536,131

The notes on pages 9 to 15 are an integral part of these Condensed Consolidated Interim Financial Statements.

Condensed Consolidated Interim Financial Statements of Eimskipafelag Islands hf. 31 March 2021

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Consolidated Statement of Changes in Equity

1 January to 31 March 2021

	Notes	Attributable to equity holders of the Company
		Share capital	Share premium	Reserves				Retained earnings	Total	Non-controlling interest	Total equity
				Trans-lation reserve	Hedging reserve	Fair value changes of minority put options	Un-distributed profits
Changes in Equity 1 January to 31 March 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)
Other changes in non-controlling interest									0	(137)	(137)
Total comprehensive loss for the period				(2,839)	(4,101)	(85)		(4,874)	(11,899)	(290)	(12,189)
Profit of subsidiaries net of dividend received							1,072	(1,072)	0		0
Equity at 31 March 2020		1,129	148,193	(9,546)	(4,686)	65	26,365	51,001	212,521	4,493	217,014
Reserves							12,198
Changes in Equity 1 January to 31 March 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)	(11,135)						(11,173)		(11,173)
Dividend declared (0.0166 EUR per share)	14							(3,004)	(3,004)		(3,004)
Other changes in non-controlling interest									0	(47)	(47)
Total comprehensive income for the period				2,683	187	(157)		2,590	5,303	286	5,589
Profit of subsidiaries net of dividend received							952	(952)	0		0
Equity at 31 March 2021		1,085	137,234	(6,730)	380	(734)	19,810	66,481	217,526	4,496	222,022
Reserves							12,726

The notes on pages 9 to 15 are an integral part of these Condensed Consolidated Interim Financial Statements.

Condensed Consolidated Interim Financial Statements of Eimskipafelag Islands hf. 31 March 2021

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Consolidated Statement of Cash Flows

1 January to 31 March 2021

	Notes	2021	2020
		1.1. - 31.3.	1.1. - 31.3.
Cash flows from operating activities:
Net earnings (loss) for the period		2,834	( 4,951)
Adjustments for:
Depreciation and amortization		11,797	10,932
Net finance expense	6	1,196	2,640
Share of (earnings) loss of equity accounted investees		( 221)	317
Change in deferred taxes		( 520)	( 1,309)
Other changes		( 584)	( 319)
		14,502	7,310
Changes in current assets and liabilities:
Inventories, change		( 1,422)	( 784)
Trade and other receivables, change		( 14,044)	3,165
Trade and other payables, change		11,004	( 5,920)
Change in current assets and liabilities		( 4,462)	( 3,539)
Interest paid		( 1,891)	( 1,882)
Interest received		197	69
Taxes paid		( 576)	( 709)
Net cash from operating activities		7,770	1,249
Cash flows used in investing activities:
Acquisition of property, vessels and equipment		( 959)	( 4,072)
Acquisition of intangible assets		( 502)	( 861)
Proceeds from the sale of property, vessels and equipment		1,506	9,231
Proceeds from the sale of equity accounted investees		0	588
Investment in subsidiaries net of cash acquired		0	( 67)
Changes in finance assets		( 207)	( 82)
Net cash (used in) provided by investing activities		( 162)	4,737
Cash flows from financing activities:
Purchased treasury shares		0	( 1,528)
Dividend paid to non-controlling interest and other changes		( 405)	( 596)
Proceeds from non-current loans and borrowings		704	235
Repayment of non-current loans and borrowings		( 3,066)	( 2,419)
Repayment of lease liabilities		( 3,359)	( 4,344)
Short term borrowings, change		( 98)	146
Net cash used in financing activities		( 6,224)	( 8,506)
Changes in cash and cash equivalents		1,384	( 2,520)
Cash and cash equivalents at the beginning of the year		15,640	20,737
Effects of exchange rate fluctuations on cash held		188	346
Cash and cash equivalents at the end of the period		17,212	18,563
Investing and financing activities not affecting cash flows:
Investment in finance assets		0	( 5,409)
Proceeds from the sale of property, vessels and equipment		0	5,409
Acquisition of right-of-use assets		( 5,785)	( 28,150)
New or renewed leases	10	5,785	28,150
Dividend declared	14	3,004	0
Payables, change		( 3,004)	0
Share capital reduction	14	11,173	0
Payables, change		( 11,173)	0

The notes on pages 9 to 15 are an integral part of these Condensed Consolidated Interim Financial Statements.

Condensed Consolidated Interim Financial Statements of Eimskipafelag Islands hf. 31 March 2021

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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 31 March 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.is, 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 11 May 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 during the year 2020 strived to secure the safety and health of employees and to maintain and secure the logistic chain and customer services. Impact of the COVID 19 pandemic on global economies, including in the North-Atlantic Region which is the Company's core market area, is still 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. 31 March 2021

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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	Consolidated
1 January to 31 March 2021
Revenue, external	101,924	78,304	180,228
Inter-segment revenue	3,108	6,674	9,782
Total	105,032	84,978	190,010
Expenses, external	(88,743)	(75,176)	(163,919)
Inter-segment expense	(6,674)	(3,108)	(9,782)
EBITDA	9,615	6,694	16,309
Depreciation and amortization	(10,113)	(1,684)	(11,797)
EBIT	(498)	5,010	4,512
Net finance expense	(591)	(605)	(1,196)
Share of earnings of equity accounted investees	189	32	221
Income tax	423	(1,126)	(703)
Net (loss) earnings for the period	(477)	3,311	2,834
1 January to 31 March 2020
Revenue, external	97,160	64,510	161,670
Inter-segment revenue*	3,201	6,821	10,022
Total	100,361	71,331	171,692
Expenses, external	(89,146)	(63,186)	(152,332)
Inter-segment expense*	(6,821)	(3,201)	(10,022)
EBITDA	4,394	4,944	9,338
Depreciation and amortization	(9,223)	(1,709)	(10,932)
EBIT	(4,829)	3,235	(1,594)
Net finance expense	(2,564)	(76)	(2,640)
Share of (loss) earnings of equity accounted investees	(327)	10	(317)
Income tax	473	(873)	(400)
Net (loss) earnings for the period	(7,247)	2,296	(4,951)
Information on assets and liabilities
Segment assets as at 31 March 2021	423,568	128,971	552,539
Segment assets as at 31 December 2020	410,675	125,456	536,131
Segment liabilities as at 31 March 2021	242,240	88,277	330,517
Segment liabilities as at 31 December 2020	225,130	80,344	305,474
Non-lease capital expenditure for the period 1 January to 31 March 2021	1,364	97	1,461
Non-lease capital expenditure for the period 1 January to 31 March 2020	4,669	264	4,933

*Inter-segment revenue and expenses have been restated for 2020.

Condensed Consolidated Interim Financial Statements of Eimskipafelag Islands hf. 31 March 2021

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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 31 March 2021	156,656	23,572	180,228
Revenue, external for the period 1 January to 31 March 2020	149,281	12,389	161,670
Geographical location of assets as at 31 March 2021	534,550	17,989	552,539
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 31 March 2020	1,455	6	1,461
Non-lease capital expenditure for the period 1 January to 31 March 2021	4,929	4	4,933

6. Finance income and expense

	2021	2020
	1.1. - 31.3.	1.1. - 31.3.
Finance income is specified as follows:
Interest income	129	63
Dividend received	38	7
Finance income	167	70
Finance expense is specified as follows:
Interest on long-term loans	(707)	(725)
Interest on lease liabilities	(883)	(948)
Other finance expense	(181)	(257)
Finance expense	(1,771)	(1,930)
Net foreign currency exchange gain (loss)	408	(780)
Net finance expense	(1,196)	(2,640)

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	2020
	1.1. - 31.3.	1.1. - 31.3.
Net earnings (loss) attributable to equity holders of the Company	2,590	(4,874)
Number of issued shares at 1 January in thousands	187,000	187,000
Effect of treasury shares at 1 January in thousands	(6,133)	(4,122)
Effect of share capital reduction	(126)	0
Effect of treasury shares purchased in thousands	0	(902)
Weighted average number of outstanding shares in thousands	180,741	181,976
Basic and diluted earnings (loss) per share (EUR)	0.0143	(0.0268)

Condensed Consolidated Interim Financial Statements of Eimskipafelag Islands hf. 31 March 2021

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Notes

8. Trade and other receivables

Trade and other receivables are specified as follows:

Trade receivables ... 115,840 102,534
Restricted cash ... 279 442
Other receivables ... 16,849 12,476
Trade and other receivables total ... 132,968 115,452

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:

Secured bank loans ... 158,990 160,906
Bank overdraft and short term borrowing ... 13 111
Total loans and borrowings ... 159,003 161,017

Current maturities of secured bank loans ... ( 13,945) ( 15,125)
Bank overdraft and short term borrowing ... ( 13) ( 111)
Current loans and borrowings ... ( 13,958) ( 15,236)
Non-current loans and borrowings ... 145,045 145,781

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

Secured bank loans

Secured bank loans are as follows:	31.3.2021		31.12.2020
	Nominal interest	Carrying amount	Nominal interest	Carrying amount
Loans in EUR	1.6%	152,777	1.6%	154,369
Loans in USD	5.4%	3,602	5.4%	3,725
Loans in ISK	1.7%	1,775	1.6%	1,809
Loans in other currencies	-	836	-	1,003
Total secured bank loans		158,990		160,906

9. Loans and borrowings

Aggregated annual maturities of secured bank loans are as follows:

	31.3.2021	31.12.2020
On demand or within 12 months	13,945	15,125
12 - 24 months	12,750	13,337
24 - 36 months	12,641	13,123
36 - 48 months	13,707	11,380
48 - 60 months	11,262	11,275
After 60 months	94,685	96,666
Total secured bank loans	158,990	160,906

10. Lease liabilities

Lease liabilities are as follows:

Lease Liabilities in NOK	27,753	26,666
Lease Liabilities in ISK	11,159	10,526
Lease Liabilities in USD	9,839	10,778
Lease Liabilities in EUR	8,673	7,236
Lease Liabilities in other currencies	8,749	8,947
Total	66,173	64,153
Current maturities	( 12,134)	( 10,861)
Non-current maturities	54,039	53,292

Condensed Consolidated Interim Financial Statements of Eimskipafelag Islands hf. 31 March 2021

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Notes

10. Lease liabilities, continued

Maturity analysis:	31.3.2021	31.12.2020
Within 12 months	12,134	10,861
12 - 24 months	6,729	6,863
24 - 36 months	5,520	5,419
36 - 48 months	3,324	3,811
48 - 60 months	1,857	1,953
After 60 months	36,609	35,246
Total	66,173	64,153

11. Trade and other payables

Trade and other payables are attributable to the following:

Trade payables	42,304	43,003
Other payables	38,005	26,125
Income tax payable	1,475	1,763
Total	81,784	70,891

12. Group entities

At period-end the Company owned directly ten subsidiaries that are all included in the consolidation. The direct subsidiaries owned 65 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
		31.3.2021	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%

13. Other matters

Investigation of the Icelandic Competition Authority

Eimskipafélag Íslands hf. and its subsidiaries, Eimskip Ísland ehf. and TVG-Zimsen ehf., have been under investigation of the Icelandic Competition Authority (ICA) for nearly a decade.

On 13 December 2019 Eimskip received second statement of objections from ICA, which granted the Company a continuance until 15 March 2020 to submit its objections to statement of objections I, and a continuance to submit objections to statement of objections II until 15 June 2020. Eimskip submitted its objections on both 15 March 2020 and 15 June 2020. Any elaboration on the potential outcome of the investigation is premature, and no information is available on potential fines, or if they will materialize. The investigation has had immaterial effect on the Company's Financial Statements.

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.

Condensed Consolidated Interim Financial Statements of Eimskipafélag Islands hf. 31 March 2021

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Notes

13. Other matters, continued

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 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 will after the reduction amount to 0.00018% of total issued share capital.

15. Subsequent events

With the exception of the shareholder distributions explained in note 14 there are no subsequent events to report.

Condensed Consolidated Interim Financial Statements of Eimskipafelag Islands hf. 31 March 2021

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Quarterly statements

Year 2021	Q1 2021
Revenue	180,228
Expenses	163,919
Operating profit, EBITDA	16,309
Depreciation and amortization	( 11,797)
Results from operating activities, EBIT	4,512
Net finance expense	( 1,196)
Share of earnings of equity accounted investees	221
Net earnings before income tax	3,537
Income tax	( 703)
Net earnings	2,834
Year 2020	Q1 2020
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Revenue	161,670
Expenses	152,332
Operating profit, EBITDA	9,338
Depreciation and amortization	( 10,932)
Results from operating activities, EBIT	( 1,594)
Net finance expense	( 2,640)
Share of (loss) earnings of equity accounted investees	( 317)
Net earnings (loss) before income tax	( 4,551)
Income tax	( 400)
Net (loss) earnings	( 4,951)

Condensed Consolidated Interim Financial Statements of Eimskipafelag Islands hf. 31 March 2021