Presentation of Q2 2019 result Eggert Kristfersson, CEO 29 August - - PowerPoint PPT Presentation

Presentation of Q2 2019 result

Eggert Kristófersson, CEO

29 August 2019

CONSOLIDATED HIGHLIGHTS

ISK 1 1.892 m 892 m 32, 32,7% 8,4 ,4%

EBITDA Q Q2 201 2 2019 Equi uity ty r rati tio Retur turn o n on e n equi uity ty

ISK 4 4.950 m 950 m 37 37,5% 5% 51 51,3% 3%

Cash a h and nd c cash e h equi uivalents nts EBIT ITDA/Gros

• ss p

prof

• fit

Sala larie ies/Gross p profit it

FINANCIALS

CONSOLIDATED OPERATIONS IN Q2 2019

Amounts are in ISK million Q2 2019 Q2 2018 Change % Chg. Gross profit 5.048 2.858 2.190 76,6% Lease revenue and operating income 639 124 516 417,3% Salaries and personnel expenses

• 2.588
• 1.237
• 1.351

109,2% Sales expenses

• 370
• 246
• 125

50,8% Other operating expenses

• 837
• 422
• 415

98,4% EBITDA 1.892 1.077 815 75,7% Key Figures EBITDA/Gross profit 37,5% 37,7%

• 0,2%
• 0,5%

Salaries/Gross profit 51,3% 43,3% 8,0% 18,4% Earnings per share 1,67 2,69

• 1,02
• 37,9%

Income statement

ISK 768 m ISK 1.077 m ISK 1.892 m 31,4% 37,7% 37,5% 0,0% 20,0% 40,0% 60,0% 80,0% 100,0%

• 500.000

1.000.000 1.500.000 2.000.000 Q2 2017 Q2 2018 Q2 2019 EBITDA EBITDA/Gross profit ISK 1.295 m ISK 1.325 m ISK 3.703 m ISK 1.152 m ISK 1.533 m ISK 1.345 m ISK 2.447 m ISK 2.858 m ISK 5.048 m

• 1.000.000

2.000.000 3.000.000 4.000.000 5.000.000 6.000.000 Q2 2017 Q2 2018 Q2 2019 Gross profit from other goods Gross profit from fuel

CONSOLIDATED OPERATIONS IN 6M 2019

Amounts are in ISK million 6M 2019 6M 2018 Change % Chg. Gross profit 9.279 4.847 4.432 91,4% Lease revenue and operating income 1.011 229 782 341,5% Salaries and personnel expenses

• 4.879
• 2.331

2.547 109,2% Sales expenses

• 628
• 457

171 37,4% Other operating expenses

• 1.562
• 810

752 92,8% EBITDA 3.222 1.477 1.744 118,0% Key Figures EBITDA/Gross profit 34,7% 30,5% 4,2% 13,9% Salaries/Gross profit 52,6% 48,1% 4,5% 9,3% Earnings per share 1,82 2,99

• 1,17
• 39,1%

Income statement

ISK 1.289 m ISK 1.477 m ISK 3.222 m 28,6% 30,5% 34,7% 0,0% 20,0% 40,0% 60,0% 80,0%

• 500.000

1.000.000 1.500.000 2.000.000 2.500.000 3.000.000 3.500.000 6M 2017 6M 2018 6M 2019 EBITDA EBITDA/Gross profit ISK 2.347 m ISK 2.347 m ISK 6.943 m ISK 2.160 m ISK 2.501 m ISK 2.336 m ISK 4.507 m ISK 4.847 m ISK 9.279 m

• 1.000.000

2.000.000 3.000.000 4.000.000 5.000.000 6.000.000 7.000.000 8.000.000 9.000.000 10.000.000 6M 2017 6M 2018 6M 2019 Gross profit from other goods Gross profit from fuel

HIGHLIGHTS

ISK 497 m 19,0% 0,0% 10,0% 20,0% 30,0% 40,0% 50,0% 60,0% 70,0% 80,0%

• 100.000

200.000 300.000 400.000 500.000 600.000 Q2 2019 EBITDA EBITDA/Gross profit ISK 2.610 m 40,4% 0,0% 50,0% 100,0% 150,0% 200,0%

• 2.000.000

4.000.000 6.000.000 8.000.000 10.000.000 Q2 2019 Gross profit Salaries/Gross profit ISK 329 m 3,6% 0,0% 10,0% 20,0% 30,0% 40,0% 50,0% 60,0% 70,0% 80,0%

• 100.000

200.000 300.000 400.000 500.000 600.000 Q2 2019 EBITDA EBITDA/sales ISK 59 m 2,3% 0,0% 10,0% 20,0% 30,0% 40,0% 50,0% 60,0% 70,0% 80,0%

• 100.000

200.000 300.000 400.000 500.000 600.000 Q2 2019 EBITDA EBITDA/sales ISK 9.139 m 9,3% 0,0% 10,0% 20,0% 30,0% 40,0% 50,0% 60,0% 70,0% 80,0% 2000000 4000000 6000000 8000000 10000000 Q2 2019 Sales Salaries/sales ISK 2.527 m 11,1% 0,0% 10,0% 20,0% 30,0% 40,0% 50,0% 60,0% 70,0% 80,0%

• 2.000.000

4.000.000 6.000.000 8.000.000 10.000.000 Q2 2019 Sales Salaries/sales

HIGHLIGHTS

• Sale of gasoline and diesel fuel decreased

by 3.9% in Q2 2019 compared to Q2 2018

• The company sold the operations of

Dælan which explains most of the decrease, but the rural area is similar between the time periods

• Less sale of goods other than the fuel
• Development in world market price of oil

had positive impact on gross margin in Q2 2019

• Sales exceeded expectations in Q2

2019

• Profit margin was less than expected

in Q2 2019

• Growth opportunities in opening of

new stores

• Krónan received the “Kuðungurinn” (e.

Conch) award for outstanding contribution to environmental matters

• Sales and gross margin were below

expectations in Q2 2019

• Leifsstöð (at Keflavik Airport) with over

20% less business between the years

• Much competition and difficult economic

environment in Q2 2019

• USD strengthens by 1.6% against ISK

and difference between lowest and highest exchange rate is 6.5%

• EUR strengthens by 2.9% against ISK

and differnce between lowest and highest exchange rate is 6.1%

115,0 120,0 125,0 130,0 115,0 125,0 135,0 145,0 1.1.2019 1.2.2019 1.3.2019 1.4.2019 1.5.2019 1.6.2019

USD/ISK EUR/ISK

Exchange rate development

EUR/ISK USD/ISK

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

1,4 1,5 1,3 2,0 1,9 1,7 1,1 1,1 1,1 1,1 0,0 0,5 1,0 1,5 2,0 2,5 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019

Current ratio

7,9 7,9 7,0 5 10 Q2 2019 Q2 2018 Q2 2017

Inventory turnover

Amounts are in ISK million Q2 2019 Q2 2018 Change % Chg. Goodwill 14.070 14.070

• Other Intangible assets

4.579 196 4.383 2232,0% Property and equipment 31.370 16.887 14.483 85,8% Leased assets 3.623 3.623

• Investment properties

6.944 6.944

• Shares in associates

2.264 1.908 356 18,7% Securities 187 118 69 58,3% Non-current assets 63.039 19.109 43.929 229,9% Inventories 8.432 4.028 4.405 109,4% Trade receivables 4.622 3.761 862 22,9% Other short-term receivables 401 421

• 20
• 4,8%

Cash and cash equivalents 4.950 3.319 1.631 49,2% Current assets 18.406 11.529 6.877 59,7% Total assets 81.445 30.638 50.806 165,8% Statement of Financial Position (Assets)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

ISK 4.350 m ISK 5.284 m ISK 28.197 m 5,7 4,9 14,9 0,0 5,0 10,0 15,0 20,0 25,0 30,0 35,0 40,0 45,0 50,0 5.000.000 10.000.000 15.000.000 20.000.000 25.000.000 30.000.000 Q2 2017 Q2 2018 Q2 2019 Average net interest bearing liabilities Average net interest bearing liabilities / EBITDA

Amounts are in ISK million Q2 2019 Q2 2018 Change % Chg. Equity 26.610 14.554 12.056 82,8% Payable to credit institutions 30.393 8.000 22.393 279,9% Lease liabilities 3.169 3.169

• Deferred tax liabilities

3.745 1.448 2.297 158,7% Non-current liabilities 37.307 9.448 27.859 294,9% Current tax 761 406 355 87,6% Payable to the Icelandic State 3.382 2.927 454 15,5% Payable to credit institutions 4.471 1.100 3.371 306,4% Lease liabilites 504 504

• Trade payables

6.663 1.211 5.452 450,2% Other short-term liabilities 1.747 992 755 76,1% Current liabilities 17.527 6.636 10.891 164,1% Total equity and liabilities 81.445 30.638 50.806 165,8% Statement of Financial position (equity and liabilites)

46,7% 46,4% 46,4% 49,9% 49,0% 47,5% 32,0% 33,4% 32,0% 32,7% 0% 10% 20% 30% 40% 50% 60% Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019

Equity ratio

CONSOLIDATED STATEMENT OF CASH FLOWS

Amounts are in ISK million Q2 2019 Q2 2018 Change % Chg. Cash at the beginning of the year 4.267 2.800 1.467 52,4% Cash flows from operating activities 1.998 780 1.218 156,2% Investing activities 1.662

• 275

1.937

• 703,5%

Financing activities

• 2.994
• 2.994
• FX difference on cash

18 15 4 25,7% Cash at the end of the period 4.950 3.319 1.631 49,2%

OPERATING SEGMENTS OF THE GROUP

N1 565 Krónan 637 Elko 65 Real estate 1.584 Other

• 114

Segment EBITDA

First half of the year 2019

Amounts are in ISK million Festi Krónan Elko Real estate Other Elimination entries Application

• f IFRS 16

Total Operating revenue 17.376 17.458 4.819

• 32

39.620 Other revenue 130 69 1 1.946 1.409

• 2.543

1.011 Total segment revenue 17.505 17.527 4.819 1.946 40.632 Total operating expenses of segments

• 16.940
• 16.890
• 4.754
• 362
• 1.523

2.806 254

• 37.410

Segment EBITDA 565 637 65 1.584

• 1.523

2.806 254 3.222 Segment depreciation and amortisation

• 308
• 256
• 83
• 398
• 96
• 204
• 1.345

Fair value changes of investment properties

• 117
• 117

Share of profit from associates 145 145 Operating result of segments 257 381

• 18

1.068

• 1.475

2.806 50 1.904 Segment assets 18.403 9.655 3.390 37.120 13.699

• 6.493

3.623 79.396 Unallocted assets 2.048 Total assets 81.445

REAL ESTATE OPERATIONS OF THE GROUP

* Net operating income ** Loan-to-Value

Properties, key figures Q2 2019 NOI* ISK 756 m NOI ratio 81% Utization ratio 97% LTV** 56% Number of Festi's properties 90 Total square meters 112 thousand m2 Own use 80% Leased to third parties 20%

ISK 756 m 81% 1 1 1 1 2 2 2 100.000 200.000 300.000 400.000 500.000 600.000 700.000 800.000 2F 2019 NOI NOI %

SHARE PRICE DEVELOPMENT

0,0 20,0 40,0 60,0 80,0 100,0 120,0 140,0 01.01.2016 01.04.2016 01.07.2016 01.10.2016 01.01.2017 01.04.2017 01.07.2017 01.10.2017 01.01.2018 01.04.2018 01.07.2018 01.10.2018 01.01.2019 01.04.2019 01.07.2019

Shareholders (10 largest) Market information Stefnir 14,2% Issued shares 330 M Lífeyrissjóður verslunarmanna 10,1% Market cap at the end of March 2019 ISK 41.856 M Gildi - lífeyrissjóður 8,9% Market cap at the end of March 2018 ISK 27.750 M Lífeyrissjóður starfsmanna ríksins A-division, B-division & S-division 8,1% Number of shareholders 765 Lansdowne Icav Lansdowne Euro 6,1% Annual return from the beginning of the year 27,5% Birta lífeyrissjóður 5,4% Annual return from 2015 30,3% Almenni lífeyrissjóðurinn 4,8% Stapi lífeyrissjóður 4,7% Landsbréf 4,4% Kvika banki hf. 2,6%

POSITION AND OUTLOOK

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 acquistion of Hlekkur, which has for the most part already been realised Assumptions:

• Operations related to tourism expected to be similar to 2018
• Uncertainty with respect to the number of tourists visiting the country 2019
• Depreciation of the ISK had a negative impact on the gross margin of ELKO and

Krónan

• Turmoil in the oil market and ISK exchange rate can lead to fluctuations of gross

margin and working capital Intergration:

• Combining of headquartes at Dalvegur in October 2019
• Realisation of synergy well underway
• Opportunity to integrate the business of the Group
• Ongoing work on decreasing operating expenses

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

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

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 it 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
• f 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.