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Festi Interim / Quarterly Report 2020
2195_rns_2020-11-04_46e52a06-6f85-41c3-8edb-f59ecd2e62b6.pdf
Interim / Quarterly Report
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FESTI
Condensed Consolidated Interim Financial Statements
1 January - 30 September 2020
Festi hf.
Dalvegur 10-14
201 Kópavogur
Iceland
Reg. no. 540206-2010
Consolidated Interim Financial Statements 30 September 2020
Contents
Page
Endorsement and Statement by the Board of Directors and the CEO ... 3
Consolidated Statement of Comprehensive Income ... 4
Consolidated Statement of Financial Position ... 5
Consolidated Statement of Changes in Equity ... 6
Consolidated Statement of Cash Flows ... 7
Notes to the Consolidated Financial Statements ... 8
- Reporting entity ... 8
- Basis of preparation ... 8
- Use of estimates and judgements ... 8
- Changes in accounting policies ... 9
- Operating segments ... 9
- Operating income ... 11
- Cost of goods sold ... 11
- Salaries and other personnel expenses ... 11
- Other operating expenses ... 11
- Finance income and finance costs ... 12
- Operating assets ... 12
- Business combination ... 12
- Loans from credit institutions ... 13
- Group entities ... 14
- Financial ratios ... 14
Endorsement and Statement by the Board of Directors and the CEO
Operations of the Group
The condensed consolidated interim financial statements of Festi hf. for the period from 1 January to 30 September 2020 have been prepared in accordance with International Accounting Standard IAS 34, Interim Financial Reporting and should be read in conjunction with the Group's Annual Consolidated Financial Statements as at and for the year ended 31 December 2019. The interim financial statements comprise the consolidated interim financial statements of Festi hf. (the "Company") and its subsidiaries together referred to as the "Group". The condensed consolidated interim financial statements have not been audited or reviewed by the Company's independent auditors.
Operations in the nine-month period ended 30 September 2020
For the period from 1 January to 30 September 2020, profit amounted to ISK 1,740 million. Total comprehensive income for the period was ISK 1,779 million. At the end of the period equity amounted to ISK 29,682 million, including share capital in the amount of ISK 327 million. Dividend was paid in the beginning of September in the amount of 648 million. Reference is made to the consolidated statement of changes in equity regarding information on changes in equity.
COVID-19
The Group's focus during the COVID-19 outbreak has been on maintaining productivity while keeping its employees and customers safe. The Group is a critical infrastructure company in Iceland with its network of supermarkets and convenience stores, electronics retail stores, fuel and service stations around Iceland. The Group is working tightly with its suppliers to ensure that customers will have the same range of products as before the outbreak and is committed to find new ways to serve its customers when faced by various quarantine restrictions.
In connection with the preparation of these financial statements the COVID-19 effects on the business was assessed, both financial and non financial. At the moment it is not known what the full economic impact of COVID-19 will be on the Group for the year but the management and the board monitor the situation closely.
The Group is balanced in exposure with its diversified business mix. Parts of the Group's operation are experiencing considerable business growth, like in sale of groceries and electronics, while other parts are experiencing considerable drop, like in sale of fuel and sale of fast food and refreshments in service stations around Iceland. That part of the business showed good signs of recovery in June and July as restrictions were lifted by the Government. Second wave of the outbreak started at the end of July and resulted in added restrictions again which significantly affected the operations in third quarter. Festi is committed to achieve its mid- and long term profit and growth targets.
Statement by the Board of Directors and the CEO
The Company's condensed consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union and, as applicable, additional requirements of the Icelandic Financial Statements Act.
According to the best of our knowledge, in our opinion the consolidated interim financial statements give a true and fair view of the financial performance of the Group for the nine month period ended 30 September 2020, its assets, liabilities and consolidated financial position as at 30 September 2020, and its consolidated cash flows for the period then ended.
Furthermore, in our opinion the consolidated interim financial statements and the statement and endorsement of the Board of Directors and the CEO give a true and fair view of the development and results of the Group's operations and its position and describes the principal risk and uncertainties faced by the Group.
The Board of Directors and the CEO have today discussed the Company's condensed consolidated interim financial statements of Festi hf. for the period from 1 January to 30 September 2020 and confirm them by means of their signatures.
Kópavogur, 4 November 2020.
Board of Directors
Þórður Már Jóhannesson, Chairman
Guðjón Karl Reynisson, Vice-Chairman
Margrét Guðmundsdóttir
Kristín Guðmundsdóttir
Þórey G. Guðmundsdóttir
CEO
Eggert Þór Kristófersson
Consolidated Interim Financial Statements 30 September 2020
Consolidated Statement of Comprehensive Income for the period from 1 January to 30 September 2020
| | Notes | 2020
1.7.-30.9. | 2019
1.7.-30.9. | 2020
1.1.-30.9. | 2019
1.1.-30.9. |
| --- | --- | --- | --- | --- | --- |
| Sale of goods and services | 6 | 23.524.327 | 24.091.734 | 63.037.999 | 63.712.205 |
| Cost of goods sold | | (17.693.622) | (18.447.709) | (47.641.897) | (48.789.020) |
| Margin from sale of goods and services | 7 | 5.830.705 | 5.644.025 | 15.396.102 | 14.923.185 |
| Other operating income | 6 | 342.379 | 411.795 | 950.687 | 1.423.249 |
| Salaries and other personnel expenses | 8 | (2.475.192) | (2.371.105) | (7.588.141) | (7.249.646) |
| Other operating expenses | 9 | (1.111.479) | (1.067.328) | (3.448.418) | (3.257.773) |
| | | (3.244.292) | (3.026.638) | (10.085.872) | (9.084.170) |
| Operating profit before depreciation
and amortization (EBITDA) | | 2.586.413 | 2.617.387 | 5.310.230 | 5.839.015 |
| Depreciation and amortization | | (799.335) | (541.279) | (2.075.968) | (1.886.248) |
| Changes in value of investment property | | (875) | 62.325 | 59.032 | (54.956) |
| Operating profit (EBIT) | | 1.786.203 | 2.138.433 | 3.293.294 | 3.897.811 |
| Finance income | 10 | 957 | 68.064 | 180.510 | 156.737 |
| Finance costs | 10 | (520.981) | (536.244) | (1.575.795) | (1.807.391) |
| Share of profit of associates | | 168.528 | 139.215 | 237.843 | 284.061 |
| | | (351.496) | (328.965) | (1.157.442) | (1.366.593) |
| Profit before income tax (EBT) | | 1.434.707 | 1.809.468 | 2.135.852 | 2.531.218 |
| Income tax | | (272.318) | (329.843) | (395.392) | (450.478) |
| Profit for the period | | 1.162.389 | 1.479.625 | 1.740.460 | 2.080.740 |
| Other comprehensive income | | | | | |
| Items that are or may be reclassified subsequently to profit or loss: | | | | | |
| Translation differences of foreign operations | | 25.179 | (33.187) | 74.783 | 6.325 |
| Net change in fair value of equity investments | 12 | 0 | 0 | 30.000 | 0 |
| Effective portion of changes in fair value
of cash flow hedge, net of tax | 4 | (131.856) | 0 | (66.515) | 0 |
| Total other comprehensive income | | (106.677) | (33.187) | 38.268 | 6.325 |
| Total comprehensive income for the period | | 1.055.712 | 1.446.438 | 1.778.728 | 2.087.065 |
| Basic and diluted earnings per share in ISK | | 3,55 | 4,49 | 5,31 | 6,31 |
The notes on pages 8 to 14 are an integral part of these financial statements
Consolidated Interim Financial Statements 30 September 2020
Amounts are in thousands of ISK
Consolidated Statement of Financial Position as at 30 September 2020
| Notes | 30.9.2020 | 31.12.2019 | |
|---|---|---|---|
| Assets | |||
| Goodwill | 14.668.264 | 14.070.463 | |
| Other intangible assets | 4.987.967 | 4.649.850 | |
| Property and equipment | 11 | 31.908.424 | 31.433.757 |
| Leased assets | 5.269.893 | 3.862.182 | |
| Investment properties | 7.237.463 | 7.354.468 | |
| Shares in associates | 2.273.878 | 1.952.349 | |
| Shares in other companies | 11.559 | 109.059 | |
| Long-term receivables | 269.037 | 271.989 | |
| Non-current assets | 66.626.485 | 63.704.117 | |
| Inventories | 8.671.515 | 7.678.413 | |
| Trade receivables | 4.216.958 | 3.756.324 | |
| Other short-term receivables | 788.737 | 736.735 | |
| Cash and cash equivalents | 4.990.769 | 5.368.754 | |
| Current assets | 18.667.979 | 17.540.226 | |
| Total assets | 85.294.464 | 81.244.343 | |
| Equity | |||
| Share capital | 327.055 | 328.574 | |
| Share premium | 12.875.017 | 13.010.171 | |
| Other restricted equity | 6.310.717 | 5.815.161 | |
| Retained earnings | 10.169.653 | 9.534.338 | |
| Equity | 29.682.442 | 28.688.244 | |
| Liabilities | |||
| Loans from credit institutions | 13 | 29.635.391 | 29.942.470 |
| Lease liabilities | 5.041.752 | 3.585.949 | |
| Deferred tax liability | 4.730.139 | 4.270.952 | |
| Non-current liabilities | 39.407.282 | 37.799.371 | |
| Loans from credit institutions | 13 | 3.463.971 | 3.437.684 |
| Lease liabilities | 406.006 | 377.610 | |
| Trade payables | 7.341.778 | 6.803.236 | |
| Other short-term liabilities | 4.992.984 | 4.138.198 | |
| Current liabilities | 16.204.739 | 14.756.728 | |
| Total liabilities | 55.612.021 | 52.556.099 | |
| Total equity and liabilities | 85.294.464 | 81.244.343 |
The notes on pages 8 to 14 are an integral part of these financial statements
Consolidated Interim Financial Statements 30 September 2020
Amounts are in thousands of ISK
Consolidated Statement of Changes in Equity for the period from 1 January to 30 September 2020
| Other restricted equity | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Share capital | Share premium | Statutory reserve | Revaluation reserve | Unrealised profit of subsidiaries and associates | Other reserves | Retained earnings | Total equity | ||
| 1 January to 30 September 2019 | |||||||||
| Equity 1.1.2019 | 329.574 | 13.140.383 | 82.393 | 3.654.286 | 1.642.560 | ( 121.191) | 7.241.841 | 25.969.846 | |
| Total comprehensive income for the period | 6.325 | 2.080.740 | 2.087.065 | ||||||
| Restricted due to subsidiaries and associates | 1.526.213 | ( 1.526.213) | 0 | ||||||
| Dissolution of revaluation of an associate | ( 19.076) | 19.076 | 0 | ||||||
| Dissolution of revaluation of property | ( 274.290) | 274.290 | 0 | ||||||
| Equity 30.9.2019 | 329.574 | 13.140.383 | 82.393 | 3.360.920 | 3.168.773 | ( 114.866) | 8.089.734 | 28.056.911 | |
| Total other restricted equity | 6.497.220 | ||||||||
| 1 January to 30 September 2020 | |||||||||
| Equity 1.1.2020 | 328.574 | 13.010.171 | 82.144 | 3.400.963 | 2.399.183 | ( 67.129) | 9.534.338 | 28.688.244 | |
| Transferred from statutory reserve | ( 380) | 380 | 0 | ||||||
| Total comprehensive income for the period | 38.268 | 1.740.460 | 1.778.728 | ||||||
| Restricted due to subsidiaries and associates | 555.397 | ( 555.397) | 0 | ||||||
| Dissolution of revaluation of an associate | ( 15.606) | 15.606 | 0 | ||||||
| Dissolution of revaluation of property | ( 82.122) | 82.122 | 0 | ||||||
| 328.574 | 13.010.171 | 81.764 | 3.303.235 | 2.954.580 | ( 28.861) | 10.817.510 | 30.466.972 | ||
| Transactions with shareholders: | |||||||||
| Issued new share capital | 3.126 | 403.265 | 406.391 | ||||||
| Purchase of own shares | ( 4.645) | ( 538.419) | ( 543.064) | ||||||
| Dividend paid (ISK 2.00 per share) | ( 647.857) | ( 647.857) | |||||||
| Equity 30.9.2020 | 327.055 | 12.875.017 | 81.764 | 3.303.235 | 2.954.580 | ( 28.861) | 10.169.653 | 29.682.442 | |
| Total other restricted equity | 6.310.717 |
The notes on pages 8 to 14 are an integral part of these financial statements
Consolidated Interim Financial Statements 30 September 2020
Amounts are in thousands of ISK
Consolidated Statement of Cash Flows for the period 1 January to 30 September 2020
| Note | 2020 | 2019 | 2020 | 2019 | |
|---|---|---|---|---|---|
| 1.7.-30.9. | 1.7.-30.9. | 1.1.-30.9. | 1.1.-30.9. | ||
| Cash flows from operating activities | |||||
| Operating profit before depreciation & amortization (EBITDA) | 2.586.413 | 2.617.387 | 5.310.230 | 5.839.015 | |
| Operating items not affecting cash flows: | |||||
| Loss (gain) on sale of property and equipment | 3.472 | (365) | 2.834 | (240.281) | |
| 2.589.885 | 2.617.022 | 5.313.064 | 5.598.734 | ||
| Changes in operating assets and liabilities: | |||||
| Inventories, (increase) decrease | (1.172.263) | 831.819 | (993.102) | 16.073 | |
| Trade and short-term receivables, decrease (increase) | 135.054 | (256.770) | (495.579) | (1.306.267) | |
| Trade and other short-term liabilities, increase (decrease) | 1.197.874 | (449.614) | 1.807.205 | 1.371.012 | |
| Changes in operating assets and liabilities | 160.665 | 125.435 | 318.524 | 80.818 | |
| Interest received | 11.583 | 29.497 | 76.336 | 89.674 | |
| Interest paid | (308.815) | (383.986) | (1.060.412) | (1.234.139) | |
| Income tax paid | 0 | (107.762) | (278.802) | (257.320) | |
| Net cash from operating activities | 2.453.318 | 2.280.206 | 4.368.710 | 4.277.767 | |
| Cash flows (used in) from investing activities | |||||
| Purchase of intangible assets | (275.870) | (100.487) | (706.359) | (390.318) | |
| Purchase of property and equipment | 11 | (1.015.796) | (427.012) | (1.869.073) | (1.066.665) |
| Sale of property and equipment | 54.377 | 14.499 | 68.169 | 248.160 | |
| Purchase of investment properties | (4.883) | 13.162 | (8.843) | (39.363) | |
| Sale of investment properties | 184.880 | 0 | 184.880 | 2.507.379 | |
| Purchase of shares in other companies | 0 | (12.500) | (27.911) | (110.000) | |
| Dividend received from associates | 0 | 194.000 | 0 | 194.000 | |
| Purchase of subsidiary, net of cash acquired | 12 | 0 | 0 | (76.094) | 0 |
| Long-term receivables and securities, change | 59.184 | 0 | 167 | 0 | |
| Net cash (used in) from investing activities | (998.108) | (318.338) | (2.435.064) | 1.343.193 | |
| Cash flows used in financing activities | |||||
| Dividend paid | (647.857) | 0 | (647.857) | 0 | |
| Purchase of own shares | 0 | 0 | (543.064) | 0 | |
| New long-term loans from credit institutions | 0 | 0 | 0 | 13.371.000 | |
| Repayment of long-term loans from credit institutions | 0 | 0 | (867.625) | (17.193.105) | |
| Payment of the principal portion of lease liabilities | (107.280) | (79.240) | (284.023) | (251.164) | |
| Short term loans, change | (930) | 0 | (2.444) | 1.000.000 | |
| Net cash used in financing activities | (756.067) | (79.240) | (2.345.013) | (3.073.269) | |
| Increase (decrease) in cash and cash equivalents | 699.143 | 1.882.628 | (411.367) | 2.547.691 | |
| Effect of movements in exchange rates on cash held | (2.678) | 6.149 | 33.382 | 24.444 | |
| Cash and cash equivalents at the beginning of the period | 4.294.304 | 4.950.283 | 5.368.754 | 4.266.925 | |
| Cash and cash equivalents at the end of the period | 4.990.769 | 6.839.060 | 4.990.769 | 6.839.060 | |
| Investing and financing activities not affecting cash flows | |||||
| Purchase of shares in other companies | 0 | 0 | (406.391) | 0 | |
| Issued new share capital | 0 | 0 | 406.391 | 0 | |
| Acquisition of right-of-use assets | (1.768.255) | 0 | (1.768.255) | 0 | |
| New and renewed leases | 1.768.255 | 0 | 1.768.255 | 0 |
The notes on pages 8 to 14 are an integral part of these financial statements
Consolidated Interim Financial Statements 30 September 2020
Amounts are in thousands of ISK
Notes to the Consolidated Financial Statements
1. Reporting entity
Festi hf. (the "Company") is an Icelandic public limited liability company incorporated and domiciled in Iceland. The Company's headquarters are located at Dalvegur 10-14, Kópavogur, Iceland. The main operation of the Company consists of sale of fuel, goods and service to entities, groceries and related products, sale of electronic equipment and leasing of properties. These consolidated interim financial statements of the Company as at and for the nine months ended 30 September 2020 comprise of the Company and its subsidiaries (together referred to as the "Group" and the Group's interests in associates. The Company is listed on Nasdaq Iceland.
The Group's consolidated financial statements as at and for the year ended 31 December 2019 is available at its website address, www.festi.is and at The Icelandic Stock Exchange website www.nasdaqomx.com.
2. Basis of preparation
The condensed consolidated interim financial statements for the nine months ended 30 September 2020 have been prepared in accordance with International Accounting Standard IAS 34, Interim Financial Reporting, as adopted by the European Union and, as applicable, additional requirements of the Icelandic Financial Statements Act. The condensed consolidated interim Financial Statements have been prepared under the historical cost convention, except for financial assets and liabilities, which are valued at fair value through other Comprehensive Income and the Company's real estate are revalued to fair value. They do not include all the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual consolidated financial statements as at and for the year ended 31 December 2019.
The accounting policies and methods of computation applied in these consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2019 except for the changes stated in note 4.
The consolidated financial statements are prepared and presented in Icelandic krona (ISK), which is the Company's functional currency. All amounts are presented in thousand of Icelandic krona unless otherwise stated.
The Board of Directors of Festi hf. approved the consolidated interim financial statements on 4 November 2020.
3. Use of estimates and judgements
The preparation of the consolidated financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions, which affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.
The significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were in all major matters the same as those applied to the consolidated financial statements as at and for the year ended 31 December 2019. The estimates and assumptions that are affected by COVID-19 and have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the current financial year are the following:
Estimated impairment
The Group annually tests, in accordance with the Group's accounting policies whether the financial and non-financial assets, including goodwill are impaired. At the end of each reporting period, the Group assesses whether there is any indication that an asset may be impaired. COVID-19 classifies as such an impairment indicator and therefore the financial and non-financial assets, including goodwill, were assessed if there was any indication of impairment. The Group's goodwill is allocated on three Cash Generating Units ("CGU"), grocery stores, electronic equipment stores and the Group as a whole. Both business in grocery stores and electronic equipment are experiencing considerable growth but sale in fuel and sale of fast food and refreshments in service stations around Iceland has experienced considerable drop. In management opinion the market should recover there fully in the next 9 to 15 months given the introduction of vaccine. A full impairment test on goodwill was therefore not performed.
The buildings and investment properties of the Group are real estate used for its own business and as rented space to third parties. Investment properties are recognised at fair value at the reporting date. Fair value measurement is based on discounted cash flows of individual assets. The forecast period applied in the model is 50 years. All the lessees were evaluated based on COVID-19 effects on their business and possible contract termination. The result showed that with lower weighted average cost of capital (WACC) which the Group is experiencing, there is no impairment on these assets and therefore no reason to deviate from the conclusion at year-end 2019.
Expected credit losses
Under IFRS 9, loss allowances are measured based on Expected Credit Losses ("ECL") that result from all possible default events over the expected life of a financial instrument. As a result of COVID-19, the Group reassessed the ECL used in calculating its loss allowances. Based on the industry which the Group operates in and current market insights, it is expected that impairment losses will increase slightly short term, which is reflected in these financial statements.
Consolidated Interim Financial Statements 30 September 2020
Amounts are in thousands of ISK
Notes, continued:
4 Changes in the accounting policies
Except for the changes below, the Group has consistently applied the accounting policies to all periods presented in these consolidated interim financial statements.
IFRS 9 Financial Instruments
IFRS 9 "Financial Instruments" became effective as of 1 January 2018, and replaced IAS 39 "Financial Instruments: Recognition and Measurement". The standard's three main projects are classification and measurement, impairment, and hedge accounting. In 2017 Festi performed a review and an assessment of the effects on financial assets and liabilities. The conclusion was that there was no impact of IFRS 9 on the financial reporting at that time.
In 2020 the Group entered into forward swap agreements in fuel and foreign currency. The Group is now applying cash flow hedge accounting, whereby the effective portion of changes in fair value of the forward swap agreements is recognised in other comprehensive income, net of tax and accumulated in hedging reserve in equity. Any ineffective portion of changes in the fair value of the agreements is recognised immediately in profit or loss. Since the Group did not apply hedge accounting in prior accounting periods, it recognised the changes in fair value of forward agreements directly in profit and loss. At the end of September 2020, ISK 67 million was the cumulative net change in hedging reserve in equity with respect to forward swap agreements.
5 Operating segments
An operating segment is a component of the Group that engages in business activity from which it may earn revenue and incur expenses, including revenue and expenses relating to transactions with other segments of the Group. Segments are determined by the Company's management, which regularly reviews the Group's segments so as to decide upon how assets are allocated as well as to monitor their financial performance.
Operating results of segments, their assets and liabilities consist of items directly attributable to individual segments as well as those items which can be allocated in a logical way. Capital expenditure of segments consist of the total cost of acquisition of operating and intangible assets. Transactions between segments are priced on an arm's length basis.
The operating companies of N1, Krónan and ELKO in the Group are individual operating segments. Íslensk Orkumidlun which was acquired on 1st of June 2020 is included in N1 segment as part of its operation. The Group's other entities comprise the fourth segment. That segment consists of the operations of the parent company Festi, Bakkinn Vöruhótel and Festi fasteignir.
Reportable segments for the nine months ended 30 September 2020
| N1 | Krónan | ELKO | Other companies | Total | |
|---|---|---|---|---|---|
| External revenue | 23.500.523 | 30.893.994 | 8.861.963 | 732.206 | 63.988.686 |
| Intra-group revenue | 199.705 | 87.049 | 10.602 | 4.257.232 | 4.554.588 |
| Total segment revenue | 23.700.228 | 30.981.043 | 8.872.565 | 4.989.438 | 68.543.274 |
| Operating profit before depreciation, and amortization (EBITDA) | 2.401.463 | 2.177.421 | 762.035 | 2.456.415 | 7.797.334 |
| Segment depreciation and amortisation | (1.722.757) | (1.087.307) | (264.025) | (1.092.518) | (4.166.607) |
| Changes in value of investment properties | 0 | 0 | 0 | 59.032 | 59.032 |
| Operating profit of segments (EBIT) | 678.706 | 1.090.114 | 498.010 | 1.422.929 | 3.689.759 |
| Net finance costs | (639.181) | (346.251) | (60.160) | (1.556.447) | (2.602.039) |
| Share of profit of associates | 0 | 0 | 0 | 237.843 | 237.843 |
| Income tax | (10.063) | (159.665) | (89.433) | 25.827 | (233.334) |
| Profit for the period | 29.462 | 584.198 | 348.417 | 130.152 | 1.092.229 |
| 30 September 2020 | |||||
| Segment assets | 30.789.462 | 15.061.436 | 4.318.582 | 35.124.984 | 85.294.464 |
| Segment capital expenditure | 556.039 | 860.473 | 178.678 | 989.085 | 2.584.275 |
| Segment liabilities | 17.351.906 | 13.522.957 | 3.305.138 | 21.432.020 | 55.612.021 |
Consolidated Interim Financial Statements 30 September 2020
Amounts are in thousands of ISK
Notes, continued:
5 Operating segments, continued:
Reportable segments for the nine months ended 30 September 2019
| N1 | Krónan | ELKO | Other companies | Total | |
|---|---|---|---|---|---|
| External revenue | 29.125.186 | 27.234.320 | 7.624.406 | 1.151.542 | 65.135.454 |
| Intra-group revenue | 38.424 | 56.022 | 535 | 9.030.341 | 9.125.322 |
| Total segment revenue | 29.163.610 | 27.290.342 | 7.624.941 | 10.181.883 | 74.260.776 |
| Operating profit before depreciation, and amortization (EBITDA) | 2.896.321 | 1.920.523 | 364.654 | 7.917.081 | 13.098.579 |
| Segment depreciation and amortisation | (1.650.303) | (907.864) | (242.939) | (1.108.564) | (3.909.670) |
| Changes in value of investment properties | 0 | 0 | 0 | (54.956) | (54.956) |
| Operating profit of segments (EBIT) | 1.246.018 | 1.012.659 | 121.715 | 6.753.561 | 9.133.953 |
| Net finance costs | (750.477) | (321.708) | (63.146) | (1.801.646) | (2.936.977) |
| Share of profit of associates | 0 | 0 | 0 | 284.061 | 284.061 |
| Income tax | (99.360) | (138.190) | (11.714) | (991.178) | (1.240.442) |
| Profit for the period | 396.181 | 552.761 | 46.855 | 4.244.798 | 5.240.595 |
| 30 September 2019 | |||||
| Segment assets | 32.021.328 | 12.833.260 | 3.533.943 | 34.342.431 | 82.730.962 |
| Segment capital expenditure | 257.375 | 522.485 | 72.047 | 644.439 | 1.496.346 |
| Segment liabilities | 18.337.824 | 11.254.582 | 2.614.740 | 22.466.905 | 54.674.051 |
Reconciliations of reportable segment revenues, profit or loss, assets and liabilities, and other material items
| 1.1.-30.9.2020 | |||
|---|---|---|---|
| Reportable segment totals | Intercompany adjustments | Consolidated totals | |
| EBITDA | 7.797.334 | (2.487.104) | 5.310.230 |
| Depreciation and amortisation | (4.166.607) | 2.090.639 | (2.075.968) |
| Changes in value of investment property | 59.032 | 59.032 | |
| EBIT | 3.689.759 | (396.465) | 3.293.294 |
| Net finance costs | (2.602.039) | 1.206.754 | (1.395.285) |
| Share of profit of associates | 237.843 | 237.843 | |
| Income tax | (233.334) | (162.058) | (395.392) |
| Profit for the period | 1.092.229 | 648.231 | 1.740.460 |
| 1.1.-30.9.2019 | |||
| Reportable segment totals | Intercompany adjustments | Consolidated totals | |
| EBITDA | 13.098.579 | (7.259.564) | 5.839.015 |
| Depreciation and amortisation | (3.909.670) | 2.023.422 | (1.886.248) |
| Changes in value of investment properties | (54.956) | (54.956) | |
| EBIT | 9.133.953 | (5.236.142) | 3.897.811 |
| Net finance costs | (2.936.977) | 1.286.323 | (1.650.654) |
| Share of profit of associates | 284.061 | 284.061 | |
| Income tax | (1.240.442) | 789.964 | (450.478) |
| Profit for the period | 5.240.595 | (3.159.855) | 2.080.740 |
Consolidated Interim Financial Statements 30 September 2020
Amounts are in thousands of ISK
Notes, continued:
6. Operating income
Sale of goods and services
Sale of goods and services are recognised based on the fundamental principle of recognising revenue as or when control of goods and services are transferred to the customer.
Income from lease of real estate
Real estate leased to parties outside the Group are classified as investment properties. An investment property is a real estate held to earn rentals or for capital appreciation or both. Investment properties are recognised at fair value. Fair value changes of investment properties are presented separately in the income statement, and therefore presented separately from lease income from those same assets.
Other operating revenue
Revenue from warehouse activities, commissions, gain on sale of assets and other income are presented in other operating income.
| Operating income is specified as follows: | Restated | Restated | ||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| 1.7.-30.9. | 1.7.-30.9. | 1.1.-30.9. | 1.1.-30.9. | |
| Sale of goods and services: | ||||
| Grocery and convenience goods | 12.520.251 | 11.246.610 | 34.683.317 | 31.048.541 |
| Fuel and electricity | 5.930.365 | 8.317.926 | 14.640.780 | 20.296.709 |
| Electronic equipment | 3.363.741 | 2.804.188 | 8.850.698 | 7.620.716 |
| Other goods and services | 1.709.970 | 1.723.010 | 4.863.204 | 4.746.239 |
| Total sale of goods and services | 23.524.327 | 24.091.734 | 63.037.999 | 63.712.205 |
Changes have been made where goods previously classified as fuel and sale of other goods and services are now included in other segments. Amounts from Q3 2019 and Q1-Q3 2019 have been restated accordingly. This affects also amounts in note 7 which have been restated accordingly.
Other operating income:
| Lease income from leasing of real estate | 196.947 | 287.419 | 580.282 | 738.590 |
|---|---|---|---|---|
| Warehouse services | 96.224 | 114.302 | 259.838 | 319.673 |
| Other operating income | 49.208 | 10.074 | 110.567 | 364.986 |
| Total other operating income | 342.379 | 411.795 | 950.687 | 1.423.249 |
| Total operating revenue | 23.866.706 | 24.503.529 | 63.988.686 | 65.135.454 |
7. Cost of goods sold
Cost of goods sold consists of the purchase price of inventories sold together as well as related transportation cost, excise tax, duties and distribution costs. Any decrease of inventories to net realisable value is expensed as part of cost of goods sold.
Margin from sale of goods and services is specified as follows:
| Restated | Restated | |||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| 1.7.-30.9. | 1.7.-30.9. | 1.1.-30.9. | 1.1.-30.9. | |
| Grocery and convenience goods | 3.147.412 | 2.979.630 | 8.099.444 | 7.461.666 |
| Fuel and electricity | 1.304.731 | 1.448.256 | 3.202.555 | 3.938.509 |
| Electronic equipment | 773.188 | 653.562 | 2.197.588 | 1.715.811 |
| Other goods and services | 605.374 | 562.577 | 1.896.515 | 1.807.199 |
| Total margin from sale of goods and services | 5.830.705 | 5.644.025 | 15.396.102 | 14.923.185 |
Consolidated Interim Financial Statements 30 September 2020
Amounts are in thousands of ISK
Notes, continued:
8. Salaries and other personnel expenses
Salaries and other operating expenses are specified as follows:
| 2020 | 2019 | 2020 | 2019 | |
|---|---|---|---|---|
| 1.7.-30.9. | 1.7.-30.9. | 1.1.-30.9. | 1.1.-30.9. | |
| Salaries | 2.054.027 | 1.944.695 | 5.938.077 | 5.638.965 |
| Salary-related expenses | 340.130 | 344.380 | 1.347.252 | 1.336.085 |
| Other personnel expenses | 81.035 | 82.030 | 302.812 | 274.596 |
| Total salaries and other personnel expenses | 2.475.192 | 2.371.105 | 7.588.141 | 7.249.646 |
9. Other operating expenses
Other operating expenses are specified as follows:
| Operating costs of real estate | 381.590 | 435.746 | 1.161.320 | 1.236.304 |
|---|---|---|---|---|
| Maintenance expenses | 152.246 | 155.909 | 507.864 | 469.800 |
| Sales and marketing expenses | 177.628 | 181.701 | 549.582 | 568.608 |
| Communication expenses | 154.160 | 139.409 | 448.873 | 369.481 |
| Office and administrative expenses | 81.029 | 101.096 | 353.931 | 385.147 |
| Bad debt and change in allowance for bad debt | 27.754 | 28.431 | 64.919 | 10.117 |
| Other expenses | 137.072 | 25.036 | 361.929 | 218.316 |
| Total other operating expenses | 1.111.479 | 1.067.328 | 3.448.418 | 3.257.773 |
10. Finance income and finance costs
| 2020 | 2019 | 2020 | 2019 | |
|---|---|---|---|---|
| Finance income is specified as follows: | 1.7.-30.9. | 1.7.-30.9. | 1.1.-30.9. | 1.1.-30.9. |
| Interest income on cash and cash equivalents | (4.781) | 32.244 | 27.337 | 37.280 |
| Interest income on long-term receivables | (1.063) | 1.250 | 11.175 | 1.250 |
| Interest income on other receivables | 6.801 | 10.299 | 32.531 | 40.200 |
| Dividend income | 0 | 0 | 6.600 | 0 |
| Net foreign exchange gain | 0 | 24.271 | 102.867 | 78.007 |
| Total finance income | 957 | 68.064 | 180.510 | 156.737 |
| Finance costs are specified as follows: | ||||
| Interest expense and CPI-index on loans | 431.870 | 449.296 | 1.296.703 | 1.547.570 |
| Interest expense on lease liabilities | 74.449 | 48.724 | 207.710 | 146.171 |
| Other interest expense | 13.970 | 38.224 | 71.382 | 113.650 |
| Net foreign exchange loss | 692 | 0 | 0 | 0 |
| Total finance costs | 520.981 | 536.244 | 1.575.795 | 1.807.391 |
11. Operating assets
Acquisition of operating assets in the first nine months of 2020 amounted to ISK 1,878 million. Thereof investment in buildings is ISK 710 million, interiors, equipment and tools was ISK 787 million and investment in computers and other IT hardware was ISK 129 million.
12. Business combination
On 1st of March 2020 the Company bought the 85% outstanding shares in Íslensk Orkumiðlun for ISK 723 million making it a fully owned subsidiary. The purchase price of Íslensk Orkumiðlun will be allocated to identifiable assets and liabilities acquired in accordance with IFRS 3 Business Combinations. Total purchase price for 100% share of the company was ISK 850 million. Change in fair value of ISK 30 million on 15% shares previously bought is identified through other comprehensive income. Following is breakdown of the purchase price:
Fair value of previously purchased 15% shares 127.500
Issued new share capital 1 June 2020 406.391
Cash payment on 1 June 2020 316.109
Total purchase price 850.000
The operation of Íslensk Orkumiðlun is included in these Financial Statements from 1 June 2020 when all conditions of the purchase agreement were met. The impact on Comprehensive Income is increase in revenues from sales by ISK 546 million, EBITDA is increased by ISK 32 million and profit for the period by ISK 24 million.
Consolidated Interim Financial Statements 30 September 2020
Amounts are in thousands of ISK
Notes, continued:
12 Business combination, continued:
The effect on Financial Position is the values of assets and liabilities recognized on acquisition as their estimated fair values. Purchase price allocation of calculated goodwill on acquisition has not been finalized. The following table describes the consideration paid for Íslensk Orkumiðlun and the recognized provisional amount of assets acquired and liabilities assumed at the acquisition date:
| Property and equipment | 4.936 |
|---|---|
| Trade and other receivables | 200.935 |
| Cash and cash equivalents | 240.015 |
| Deferred tax liability | ( 1.930) |
| Trade and other payables | ( 195.338) |
| Total net identified assets | 248.618 |
| Goodwill | 601.382 |
| Purchase price | 850.000 |
13 Loans from credit institutions
All loans from credit institutions are denominated in Icelandic krona. The loans are secured by pledge in real estate and inventories. The loans are specified as follows:
| 30.9.2020 | 31.12.2019 | |
|---|---|---|
| Long-term loans | ||
| Balance at the beginning of the year | 29.942.470 | 33.593.033 |
| Repayments | ( 867.625) | ( 17.913.413) |
| New loans | 0 | 13.429.328 |
| Amortisation of borrowing costs | 21.765 | 31.610 |
| CPI-indexation | 567.512 | 516.622 |
| Change in current portion | ( 28.731) | 285.290 |
| Balance at the end of the period | 29.635.391 | 29.942.470 |
| Short-term loans | ||
| Current portion of long-term loans | 1.463.971 | 1.435.240 |
| Short-term loans from bank | 2.000.000 | 2.002.444 |
| Balance at the end of the year | 3.463.971 | 3.437.684 |
| Total loans from credit institutions | 33.099.362 | 33.380.154 |
| Interest rate at 30.9.2020 | ||
| Non-indexed loans on floating interest rates | 2,1% | 8.988.484 |
| CPI-indexed loans on floating interest rates | 2,3% | 22.110.878 |
| Short-term loan on floating interest rates | 2,0% | 2.000.000 |
| Total loans from credit institutions | 33.099.362 | 33.380.154 |
| The maturities of the loans are specified as follows: | ||
| Year 2020 (3 months) (2019: 12 months) | 2.738.757 | 3.437.684 |
| Year 2021 | 1.464.323 | 1.436.647 |
| Year 2022 | 1.465.730 | 1.438.054 |
| Year 2023 | 1.467.137 | 1.439.461 |
| Year 2024 | 1.468.544 | 1.440.868 |
| Due for payment onwards | 24.494.871 | 24.187.440 |
| Total loans from credit institutions | 33.099.362 | 33.380.154 |
As at 30 September 2020, the Group had undrawn credit lines in the amount of ISK 1,000 million.
Consolidated Interim Financial Statements 30 September 2020
Amounts are in thousands of ISK
Notes, continued:
14 Group entities
At 1 January 2020, the Company merged Hlekkur and Ego, two of its subsidiaries with its operation. In March 2020 the Company bought the remaining 85% outstanding shares in Íslensk Orkumiðlun. At 1 June 2020 all conditions of the purchase were met and the company became a fully owned subsidiary. The operations and financial position of Íslensk Orkumiðlun are included from that day in the interim Financial Statements as a subsidiary of N1. The Company held five subsidiaries at end of September 2020. The subsidiaries are all fully owned by the parent.
| Company | Activity |
|---|---|
| Bakkinn vöruhótel ehf. | Bakkinn vöruhótel specialises in product storage, packing, labeling and distribution of products for customers that elect to outsource their warehouse activities. |
| Elko ehf. | Elko is an electronic equipment retail store which operates stores in the capital region and at Keflavik Airport as well as an online shop. |
| Festi fasteignir ehf. | Festi fasteignir specialises in leasing of non-residential real estate to retail companies. |
| Krónan ehf. | Krónan is a retail company that operates supermarkets and convenience stores in Iceland. The company operates stores throughout the country under the brand names of Krónan, Kr., Kjarval and Nóatún. |
| N1 ehf. | N1 specialises in wholesale and retail of fuel, operation of service stations including tire and lubrication service stations around the country. The Company's service stations sell fuel in addition to refreshments and sale of various convenience goods. It's subsidiary Íslensk Orkumidlun is a retail company that buy's electricity on the wholesale market and sells to end users in Iceland |
15 Financial ratios
The Group's key financial ratios
| 2020 | 2019 | |
|---|---|---|
| Operations | 1.1.-30.9. | 1.1.-30.9. |
| Turnover rate of inventories | ||
| Utilisation of goods / average balance of inventories during the period | 8,3 | 8,5 |
| Sales days in trade receivables: | ||
| Average balance of trade receivables during the period / goods and services sold | 13,6 | 14,9 |
| EBITDA / margin from sales of goods and services | 34,5% | 39,1% |
| Salaries and personnel expenses / margin from sales of goods and services | 49,3% | 48,6% |
| Other operating expenses / margin from sales of goods and services | 22,4% | 21,8% |
| 30.9.2020 | 31.12.2019 | |
| Financial position | ||
| Current ratio: current assets / current liabilities | 1,15 | 1,19 |
| Liquidity ratio: (current assets - inventories) / current liabilities | 0,62 | 0,67 |
| Intrinsic value of share capital | 90,76 | 87,31 |
| Equity ratio: equity / total capital | 34,8% | 35,3% |
Consolidated Interim Financial Statements 30 September 2020
Amounts are in thousands of ISK