SKEL fjárfestingafélag hf.: 1Q 2023 announcement

PERFORMANCE OF OPERATING COMPANIES AND LISTED SHARES IN 1Q 2023

The operating companies owned by SKEL are Skeljungur and Klettur - sala and þjónusta and subsidiaries, Orkan IS, Lyfjaval and Löður as well as Gallon.

The operations of the abovementioned companies went well in the first quarter of 2023 and the combined EBITDA of the companies amounted to 973 million ISK according to their unaudited management accounts.

For comparison, the estimated EBITDA of the companies for the first quarter was 547 million ISK. The result is therefore somewhat stronger than expected. The profit estimates of the companies were presented together with detailed assumptions regarding the valuation of the assets in SKEL's annual accounts and investor presentation for the last year.

Estimated EBITDA of the operating companies for the entire year 2023 amounts to 3,970 million ISK and the companies have therefore achieved around 25% of the year's estimation after the first quarter, which has historically been worse than the second and third quarters.

The operating figures in this press release exclude impact from the IFRS 16 accounting standard. The effect of that is that leases are charged among operating costs in the income statement – with the effect that EBITDA will be lower – instead of the right-of-use being charged with depreciation and interest charged among financial items as required by the IFRS 16 standard. The impact of IFRS 16 on the companies’ EBITDA is about ISK 249 million increase during the quarter.

Profit from the company's listed assets amounted to 232 million ISK in the first quarter of 2023. The main listed equity holdings at the end of the quarter are 2,951 million ISK in VÍS and 2,513 million ISK in Kaldalón.

MAIN NEWS OF SKEL’S PORTFOLIO IN 1Q 2023

On February 10,  Skeljungur’s acquisition of Klettur - sala og þjónusta ehf. was finalised. At the same time, SKEL finalised the acquisition of Klettagarðar 8-10 ehf., the company that owns and operates the premises that house Klettur’s business operations. The estimated EBITDA of Klettur in 2023 is 499 million ISK. The operations of Klettur are going well and bear all the signs of a company that has been well run for a long time.

A new purchase agreement was entered into on 15 February for the sale of all of SKEL’s shares in Sp/f Orkufelagið, the holding company for P/F Magn in the Faroe Islands. The pre-emption round has now ended and several shareholders have exercised their pre-emptive rights and subsequently paid their purchase price into an escrow account. The transaction is being examined by the competition authority in the Faroe Islands and SKEL expects that the transaction will be finalised and the purchase price will be paid in the first half of the year.

On March 6, SKEL acquired 200 million shares in Kaldalón. Following the acquisition, SKEL is the largest shareholder in Kaldalón with 1,410 million shares, representing a total of 14.47% of the share capital.

On March 22, SKEL invested in the Swedish fintech company Focalpay for approximately 15 million SEK, acquiring a nearly 10% stake in the company. Focalpay was founded two years ago and has developed groundbreaking infrastructure that combines payment and retail processes into one system. Focalpay already has customers in Scandinavia and plans to enter the European market this fall.

On March 29, Orkan acquired a 42% stake in Lyfjaval and subsequently owns the entire share capital of the company. Lyfjaval operates seven pharmacies, including four drive-in outlets.

ÁSGEIR HELGI REYKFJÖRD GYLFASON, CEO:

"The year 2023 is off to a good start and the results of the operating companies in the first quarter are pleasing. It must be taken into account that strikes and other events posed challenges for the companies – which were resolved in a good way.

In the strategy phase for the operating companies last year, the focus was on creating independent, sales-driven companies with a clear strategy and differentiation in their respective markets. It is gratifying that this work is resulting in the companies’ performance exceeding our plans for the first three months of the year.

Completing the acquisition of Klettur during the quarter was an important step. The acquisition represents a strategic transaction that forms a part of building up a strong universal service company for the Icelandic economy. We have acquired a strong company that we believe can grow even stronger alongside Skeljungur. We have used the time well and had discussions with interested parties to join us on our journey ahead.

Ahead are the months that have historically been the largest in terms of sales for the operating companies. The outlook for the summer is good.

We have announced preparation of a new force in the retail market during the first quarter and the appointment of Gréta María Grétarsdóttir as CEO of Heimkaup. We want to increase competition in retail and thus creating value for our shareholders.

Overall, we are pleased with the results and the development of the portfolio. Our strategy is to continue unabated on the path that has been set and advance in the markets in which our companies operate."

DISCLAIMER:
It should be noted that the aim of this press release is mainly to give investors and others an insight into the operation of unlisted companies owned by SKEL, as well as to report on other significant matters related to SKEL’s operations. This is not a quarterly statement, as SKEL has informed that it will not publish quarterly statements for the first and third quarters. An announcement comparable to this one will be published on Q3. Furthermore, information on the performance of the operating companies is based on information from the management that has not been audited or reviewed. All operating figures in this press release are without effects of IFRS16.

Financial results for 1H  will be published 16 August. 
For further information, fjarfestar@skel.is