Festi — Investor Presentation 2019

May 21, 2019

Presentation of Q1 2019 result

Eggert Kristófersson, CEO

21 May 2019

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CONSOLIDATED HIGHLIGHTS

| ISK 1,367 m
EBITDA Q1 2019 | 32.0%
Equity ratio | 0.8%
Return on equity |
| --- | --- | --- |
| ISK 1,329 m
EBITDA Q1 2019 | 32.3%
EBITDA/Gross profit | 54.1%
Salaries/Gross profit |

*EBITDA, excluding the cost related to the acquisition of Hlekkur ehf.

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KRONAN

Financials

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CONSOLIDATED OPERATIONS IN Q1 2019

Income statement

Amounts are in ISK million	Q1 2019	Q1 2018	Change	% Chg.
Gross profit	4.231	1.989	2.242	112,7%
Lease revenue and operating income	372	106	267	252,7%
Salaries and personnel expenses	-2.291	-1.094	1.196	109,3%
Sales expenses	-258	-211	46	21,9%
Other operating expenses	-725	-389	337	86,6%
EBITDA*	1.367	436	931	213,8%
Key Figures
EBITDA*/Gross profit	32,3%	21,9%	10,4%	47,5%
Salaries/Gross profit	54,1%	55,0%	-0,9%	-1,6%
Earnings per share	0,16	0,31	-0,15	-49,5%

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HIGHLIGHTS

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HIGHLIGHTS

N1

KRONAN

ELKO

• More business activities in Q2 and Q3
• Decrease in inventories from year-end due to decrease in business activities in JET fuel
• Sale less that expected in Q1 2019

• World market price development of fuel had a positive impact on gross profit in Q1 2019

• Positive development in Krónan’s operations and it’s sales more than expected in Q1 2019

• A new store opened at Skeifan in Q1 2019

• Opportunities available via opening of new stores

• Less sale than expected in Q1 2019

• A competitive market and difficult economic environment in Q1 2019

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Assets at the end of the period

Statement of Financial Position (Assets)

Amounts are in ISK million	Q1 2019	Q1 2018	Change	% Chg.
Goodwill	14.070	0	14.070	-
Other Intangible assets	4.519	206	4.313	2097,2%
Property and equipment	31.911	16.870	15.041	89,2%
Leased assets	3.798	0	3.798	-
Investment properties	8.725	0	8.725	-
Shares in associates	2.140	1.854	286	15,4%
Securities	137	132	5	4,0%
Non-current assets	65.301	19.062	46.239	242,6%
Inventories	7.092	3.252	3.840	118,1%
Trade receivables	3.607	3.051	556	18,2%
Receivable from related parties	0	155	-155	-
Other short-term receivables	791	391	400	102,1%
Cash and cash equivalents	4.411	2.387	2.024	84,8%
Current assets	15.900	9.236	6.664	72,2%
Total assets	81.201	28.298	52.903	187,0%

Current ratio

Inventory turnover

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Equity and liabilities at the end of the period

Equity ratio

Statement of Financial position (equity and liabilities)

Amounts are in ISK million	Q1 2019	Q1 2018	Change	% Chg.
Equity	26.021	13.873	12.148	87,6%
Payable to credit institutions	33.457	8.000	25.457	318,2%
Lease liabilities	3.327	0	3.327	-
Deferred tax liabilities	3.894	1.474	2.421	164,2%
Non-current liabilities	40.679	9.474	31.205	329,4%
Current tax	575	380	194	51,1%
Payable to the Icelandic State	2.776	2.676	101	3,8%
Payable to credit institutions	3.725	0	3.725	-
Lease liabilities	492	0	492	-
Trade payables	5.108	1.146	3.962	345,8%
Other short-term liabilities	1.825	749	1.075	143,5%
Current liabilities	14.501	4.951	9.550	192,9%
Total equity and liabilities	81.201	28.298	52.903	187,0%

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CONSOLIDATED STATEMENT OF CASH FLOWS

Amounts are in ISK million	Q1 2019	Q1 2018	Change	% Chg.
Cash at the beginning of the year	4.267	2.800	1.467	52,4%
Cash flows from operating activities	690	-252	942	-373,6%
Investing activities	-233	-163	-70	42,9%
Financing activities	-345	0	-345	-
FX difference on cash	32	2	30	1357,9%
Cash at the end of the period	4.410	2.387	2.024	84,8%

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OPERATING SEGMENTS OF THE GROUP

First quarter 2019

Amounts are in ISK million	Festi	Krónan	Elko	Real estate	Other	Elimination entries	Application of IFRS 16	Total
Operating revenue	7.626	8.319	2.292	0	0	-7	0	18.230
Other revenue	64	3	0	1.010	692	-1.397	0	372
Total segment revenue	7.690	8.322	2.292	1.010				18.602
Total operating expenses of segments	-7.622	-7.949	-2.286	-182	-768	1.404	131	-17.272
Segment EBITDA	68	373	6	827	-768	1.404	131	1.329
Segment depreciation and amortisation	-199	-125	-41	-216	-38	0	-102	-721
Fair value changes of investment properties	0	0	0	-45	0	0	0	-45
Share of profit from associates	0	0	0	0	60	0	0	60
Operating result of segments	-131	248	-35	566	-746	1.404	29	623
Segment assets	16.442	8.952	3.521	36.496	13.657	-4.800	3.798	78.066
Unallocted assets	0	0	0	0	0	0	0	3.135
Total assets								81.201

Segment EBITDA

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REAL ESTATE OPERATIONS OF THE GROUP

Properties, key figures	Q1 2019
NOI*	ISK 827 m
NOI ratio	82%
Utization ratio	97%
LTV**	51%
Number of Festi's properties	90
Total square meters	112 thousand m²
Own use	78%
Leased to third parties	22%

• Net operating income
  ** Loan-to-Value

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SHARE PRICE DEVELOPMENT

Shareholders (10 largest)
| Stefnir | 11,7% |
| --- | --- |
| Lifeyrissjöður verslunarmanna | 10,1% |
| Gildi - lifeyrissjöður | 8,9% |
| Lifeyrissjöður starfsmanna riksins A-division, B-division & S-division | 7,4% |
| Lansdowne Icav Lansdowne Euro | 6,1% |
| Birta lifeyrissjöður | 5,4% |
| Almenni lifeyrissjöðurinn | 4,8% |
| Landsbréf | 4,1% |
| Stapi lifeyrissjöður | 4,0% |
| Global Macro funds (Eaton) | 2,9% |

Market information
| Issued shares | 330 M |
| --- | --- |
| Market cap at the end of March 2019 | ISK 37.077 M |
| Market cap at the end of March 2018 | ISK 29.750 M |
| Number of shareholders | 846 |
| Annual return from the beginning of the year | 28,8% |
| Annual return from 2015 | 32,6% |

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POSITION AND OUTLOOK

Financial forecast for the year 2019

• Unchanged estimate of EBITDA, expected to be in the range of ISK 7,400 to 7,700 million in 2019, excluding expenses related to the acquisition of Hlekkur, which has for the most part already been realised

EBITDA forecast 2019 ISK million	Operations	Real estate	IFRS 16	Total
Lower limit	3.750	3.150	500	7.400
Higher limit	4.000	3.200	500	7.700

Assumptions:

• Operations related to tourism expected to be similar to 2018
• Uncertainty with respect to the number of tourists visiting the country 2019
• Turmoil in the oil market and ISK exchange rate can lead to fluctuations of gross margin and working capital

Intergration:

• Operations of N1 transferred to an operating company on 1.1.2019
• N1 warehouse operations transferred to Bakkinn on 1.1.2019
• Combining of headquarters at Dalvegur in 2019
• Realisation of synergy well underway

Investments:

• Annual consolidated investments of approximately ISK 1,900 million
• Operations of Dælan sold in Q1 2019
• Real estate sold at the beginning of April in the amount of approximately ISK 2,500 million

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DISCLAIMER

• All information in this presentation is based on sources which Festi hf. considers reliable at the time of publication, but it cannot be guaranteed that the information is infallible.
• All information in this presentation is owned by Festi hf. It is not permitted to copy, change or distribute in any way information from this presentation, in part or in its entirety.
• This presentation is only intended for information purposes and is not part of, or a basis for, any decisions made by the recipient. Recipients should not interpret information in this presentation as a promise or as instructions. Festi hf. is not obliged to provide recipients of this presentation with further information about the company or to make changes or corrections to the presentation if information upon which it is based changes.
• The company's future outlook is dependent on a number of risks and uncertainties which may have the effect that the actual result in the future is considerably different to the scenario described in this presentation. This includes factors such as exchange rates, the global price of fuel, the availability of funding, new legislation coming into effect and the impact of regulators, etc.
• Festi hf. wishes to point out that recipients of the presentation should not rely on statements contained within in the future since they are only applicable on the date of publication of the presentation. All statements concerning the company's future prospects are entirely valid with respect to this proviso.
• By receiving this presentation the recipient agrees that they are bound by the above provisos and limitations.

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