Consolidated Financial
Statements 2021
This is a translation of the Icelandic original. In the event of discrepancies
between the Icelandic language version and any translation thereof,
the icelandic languagge version will prevail.
Page
3
6
9
10
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13
Appendices - unaudited:
41
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48
Non-Financial Information ......................................................................................................................................
Statement of Corporate Governance .....................................................................................................................
Quarterly Statement ...............................................................................................................................................
Contents
Endorsement and Statement by the Board of Directors and the CEO ...................................................................
Independent Auditors' Report .................................................................................................................................
Notes ......................................................................................................................................................................
Statement of Profit or Loss and Other Comprehensive Income .............................................................................
Statement of Financial Position ..............................................................................................................................
Statement of Changes in Equity .............................................................................................................................
Statement of Cash Flows .......................................................................................................................................
Consolidated Annual Financial Statements of Festi hf. 2021
2
Board of Directors and Corporate Governance
Operations of the Group
Endorsement and Statement by the Board of Directors and the CEO
Festi owns and operates companies which are leading in the food market, fuel and service station market and electronic equipment and
smart devices market. Operation of properties, purchase and sale of securities are also part of the operations of the Group.
The parent company Festi (“the Company”) owns the subsidiaries Krónan, which operates grocery stores under the names Krónan and Kr,
N1, which operates service stations for fuel and electricity sales and various facilities related to lubrication and motor vehicle services,
ELKO, which is the largest electronic equipment store in the country, Festi fasteignir, which owns and operates the Group’s properties, and
Bakkinn vöruhótel, which specialises in warehouse services and distribution.
The Board of Directors of Festi has established rules of procedure whereby it endeavours to comply with the "Guidelines on corporate
governance" issued by the Iceland Chamber of Commerce, NASDAQ OMX Iceland and the Confederation of Icelandic Employers, which
was issued in revised edition on 1 July 2021. The guidelines are accessible on the website www.leidbeiningar.is.
Þórður Már Jóhannesson, the former Chairman of the Board of Directors of the Company, resigned from the Board of Directors on 6
January 2022. Following the resignation, the Board of Directors divided the duties among its members and Guðjón Reynisson succeeded
as Chairman. The Annual General Meeting will be held in March 2022 and until then the Board of Directors will comprise four members,
three females and one male. According to the Articles of Association, the members of the Board of Directors should be five. Further
information about the Board of Directors and corporate governance is provided in the Statement of Corporate Governance, which is an
appendix to the annual financial statements.
The Group´s operating revenue for the year 2021 amounted to ISK 101,052 million (2020: ISK 87,918 million) and increased by 14.9%
between years. Operating profit before depreciation, amortisation and changes in value for the year 2021 amounted to ISK 10,118 million
(2020: ISK 7,057 million) and increased by 43.3% between years. According to the statement of profit or loss and other comprehensive
income, the profit for the year amounted to ISK 4,972 million (2020: ISK 2,266 million) and total comprehensive income for the year ISK
6,557 million (2020: ISK 2,481 million). The Company´s equity at year-end amounted to ISK 33,910 million (2020: ISK 29,784 million),
including share capital in the nominal value of ISK 316 million. Reference is made to the statement of changes in equity regarding changes
in equity during the year. The Company´s equity ratio at year-end was 39.4% (2020: 35.7%).
In connection with the publication of its annual financial statements for the year 2020, the Company released on 24 February 2021 an
earnings forecast for the year 2021, where projected EBITDA was ISK 7,500 – 7,900 million. The actual EBITDA amounted to ISK 10,118
million, which is considerably better than the amount assumed in the earnings forecast. Increased business activities of all subsidiaries
explain the better earnings but also optimisation was achieved in various areas, which resulted in lower operating costs. Also, it was not
assumed in the initial earnings forecast a gain on sale of assets in the amount of ISK 569 million and a profit from oil and currency hedges
in the amount of ISK 598 million, which are recognised in the annual financial statements.
The full-time equivalent number of employees was 1,176 and the gender ratio (male/female) was 61/39. An increase in demand in global
markets and difficulties in important supply chains have lead to a shortage in product supply and higher prices in the last semesters, which
will increase inflation, which is a matter of concern. Festi has a strong financial position and the Company is well prepared to address the
challenges ahead.
The Company's Board of Directors proposes that a dividend of ISK 5 per share of nominal value will be paid during the year 2022 or
approximately ISK 1,581 million.
Operations in 2021
The effect of COVID-19 on operations during the year
The COVID-19 pandemic had a significant effect on the operations of the Group during the year. Sales increased significantly in the market
for convenience goods and electronic equipment while the sale of fuel and refreshments in the Company’s service stations around the
country was less than in a normal year due to fewer tourists. The Group’s entities did not utilise the governmental support schemes relating
to participation in salary expenses during the term of notice for layoffs, due to decrease in employment ratio or other measures which were
offered.
It is the Board’s and management opinion that the Group is well prepared to address the circumstances relating to the COVID-19
pandemic. Management believes that the Company has the strength to reach its financial goals regarding profit and growth in the future.
Further information about the effect on the Company’s operations is provided in the appendix to the annual financial statements on non-
financial information.
Consolidated Annual Financial Statements of Festi hf. 2021
3
Share Change
Share capital capital from
in thousands of ISK in % 2020 in %
46.500
14,7% 4,2%
33.474
10,6% -1,0%
31.100
9,8% -0,3%
20.430
6,5% 3,3%
18.592
5,9% -0,1%
15.219
4,8% -0,1%
14.862
4,7% -2,0%
14.038
4,4% -2,4%
11.459
3,6% 0,0%
9.263
2,9% 0,1%
8.156
2,6% -0,9%
8.024
2,5% -0,3%
7.613
2,4% 0,1%
5.777
1,8% 1,8%
6.101
1,9% -0,1%
5.646
1,8% 0,8%
5.313
1,7% 0,7%
5.000
1,6% 0,2%
5.000
1,6% 1,6%
3.999
1,3% -1,6%
275.566
87,2% 4,4%
40.552
12,8% -4,4%
316.118
100,0%
Brú, lífeyrissjóður starfsmanna sveitarfélaga .................................................................................
Shareholders
Lífeyrissjóður starfsmanna Reykjavíkurborgar ..............................................................................
Stormtré ehf. ..................................................................................................................................
Frjálsi lífeyrissjóðurinn ...................................................................................................................
Festa - lífeyrissjóður .......................................................................................................................
Stapi lífeyrissjóður ..........................................................................................................................
Landsbréf .......................................................................................................................................
Sjóvá-Almennar tryggingar hf. .......................................................................................................
Lífsverk lífeyrissjóður .....................................................................................................................
Sjávarsýn ehf. ................................................................................................................................
Stefnir .............................................................................................................................................
Other shareholders ........................................................................................................................
Brekka Retail ehf ...........................................................................................................................
Endorsement and Statement by the Board of Directors and the CEO, contd.
The Company´s shareholdes at the end of the year were 1,037, compared to 880 at the beginning of the year and thus their number
increased by 157 during the year. Following are the Company's 20 largest shareholders at year-end:
The Company’s listed share capital amounted to ISK 324 million at the end of the year and it was decreased by ISK 9 million during the year
by redemption of treasury shares. Outstanding at year-end 2021 were ISK 316 million (2020: ISK 323 million). All share capital is in one
class and all shareholders enjoy the same rights. At the Company’s Annual General Meeting on 22 March 2021 the Company was granted
authorisation to repurchase up to 10% of the nominal amount of outstanding shares in accordance with Chapter VIII of the Act no. 2/1995
on Limited Liability Companies. The company purchased a total of 7 million shares during the year, about 2,2% of outstanding share capital,
further in note 22. The company purhcased a total of ISK 7 million shares or 2.2% of the outstanding share capitalThe authorisation is
valid for up to 18 months. By approving this proposal, a similar authorisation was cancelled, which was approved at the Company’s Annual
General Meeting on 23 March 2020. An extension for this authorisation will be requested at the Company’s Annual General Meeting next
March.
Those who intend to run for election for the Board of Directors of the Company must notify so in writing to the Board of Directors with at
least five days notice before the beginning of the Annual General Meeting. The Company's Articles of Association can only be amended
with the approval of 2/3 of votes cast in a lawfully called shareholders' meeting, provided that the intended amendment is thoroughly
mentioned in the agenda for the meeting and what it consists of.
Festi hf. is a public interest entity. According to the Act on Annual Accounts, the Company shall provide information necessary to assess its
development, scope, position and influence in relation to environmental, social and personnel matters, its human rights policies, how it
counteracts corruption and briberies in addition to a concise description of its business model, and more. In order to describe the current
status of its social responsibilities the Company has for the past few years issued a GRI G4 "Core" report on social responsibilities. Starting
from the year 2018 a report has been issued on non-financial parameters in accordance with Nasdaq´s ESG guidelines, among other
things, in order to enable Festi to assess its standing on these matters as a Group, based on accepted standards. The policies and results
of the Company with respect to those matters are described in the appendix to the annual financial statements on non-financial information.
Kjálkanes ehf. ................................................................................................................................
Non-financial information
Hlutafé og samþykktir
Söfnunarsjóður lífeyrisréttinda .......................................................................................................
Íslandsbanki hf. ..............................................................................................................................
Birta lífeyrissjóður ..........................................................................................................................
Lífeyrissjóður verslunarmanna .......................................................................................................
Lífeyrissjóður starfsmanna ríkisins A -, B - og S - deild .................................................................
Almenni lífeyrissjóðurinn ................................................................................................................
Gildi - lífeyrissjóður ........................................................................................................................
Consolidated Annual Financial Statements of Festi hf. 2021
4
Guðjón Karl Reynisson, Chairman
Margrét Guðmundsdóttir, Vice-Chairman
Kristín Guðmundsdóttir
Þórey G. Guðmundsdóttir
Eggert Þór Kristófersson
CEO
Board of Directors of Festi hf.
Kópavogur, 9 February 2022.
Statement by the Board of Directors and the CEO
Endorsement and Statement by the Board of Directors and the CEO, contd.
The Company's consolidated 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 Act on Annual Accounts.
According to the best of our knowledge, in our opinion the consolidated annual financial statements give a true and fair view of the
operating performance of the Group for the year 2021, its assets, liabilities and financial position as at 31 December 2021, and changes in
cash and cash equivalents during the year 2021.
Furthermore, in our opinion the consolidated annual 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, its standing and describes the main risk factors
and uncertainty that the Group faces.
The Board of Directors and the CEO of Festi hf. have today discussed the Company's consolidated annual financial statements for the year
2021 and confirm them by means of their signatures. The Board of Directors and the CEO propose that the Annual General Meeting of the
Company approves the consolidated annual financial statements.
Consolidated Annual Financial Statements of Festi hf. 2021
5
To the Board of Directors and Shareholders of Festi hf.
Opinion
Basis for Opinion
Key Audit Matters
Key Audit Matters How the matter was addressed in our audit
Impairment of goodwill and trademarks
• Reviewed of variances from previous years budget.
• Assessed the discount rate for each unit.
No impairment loss has been recognized for intangible
assets. The trademark is amortized over 20 years.
Further information about goodwill and trademarks can
be found in notes 12 and 13 in the Consolidated Financial
Statement.
• We reviewed whether the methodology used in the
impairment test was in accordance with International
Financial Reporting Standards (IFRSs) and assessed the
adequacy of the disclosures for goodwill and trademarks.
Goodwill amounts to ISK 14.7 billion and the trademarks
of Krónan and Elko amount to ISK 3.4 billion.
In our audit of the valuation of goodwill and trademarks,
we and our valuation experts have examined the
company’s management impairment test. We examined
the methodology used in the impairment test and its
consistency with prior year. In our audit of the impairment
test, we performed the following work:
The value of goodwill and trademarks for the grocery and
electronic stores depend on key assumptions applied by
the management on estimated future cash flow of cash-
generating units, and other assumptions applied in the
discounting rate used in the valuation of the estimated
cash flow. The value of other goodwill depends on
management’s assumptions on fair value.
• Assessed the company’s valuation model and its
reliability.
• Assessed the assumptions in the management’s budget
that are used in calculations in the impairment test and
whether they are appropriate.
Goodwill and trademarks are significant items in the
consolidated balance sheet and depend on
management’s estimation and judgements. Due to the
importance of the valuation and its magnitude, we
consider goodwill and trademarks as key audit matter.
• Reviewed of assumptions for expected future growth
after the forecast period.
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
Consolidated Financial Statements of the current period. These matters were addressed in the context of our audit of the
Consolidated Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
INDEPENDENT AUDITOR’S REPORT
We have audited the Consolidated Financial Statements of Festi hf. for the year ended December 31, 2021 which
comprise the statement of comprehensive income, the consolidated statement of financial position, the consolidated
statement of changes in equity, the consolidated statement of cash flows for the year then ended and the notes to the
consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying Consolidated Financial Statements give a true and fair view of the consolidated financial
position of Festi hf. as at December 31, 2021, and its consolidated financial performance and its consolidated cash flows
for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU and
additional requirements in the Icelandic Financial Statement Act.
Our opinion in this report on the consolidated financial statements is consistent with the content of the additional report that
has been submitted to the parent company´s audit committee in accordance with the EU Audit Regulation 537/2014 Article
11.
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the consolidated Financial Statements
section of our report. We are independent of Festi hf. in accordance with the International Ethics Standards Board for
Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are
relevant to our audit of the financial statements in Iceland, and we have fulfilled our other ethical responsibilities in
accordance with these requirements and the IESBA Code. This includes that, based on the best of our knowledge and
belief, no prohibited services referred to in the EU Audit Regulation 537/2014 Article 5.1 has been provided to the audited
company or, where applicable, its parent company or its controlled companies within the EU . We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
6
Key Audit Matters How the matter was addressed in our audit
Valuation of real estate
Other information
Responsibilities of Management and Those Charged with Governance for the Financial Statements
Revaluation of the Company’s real estate is dependent
on the management’s assessment of the assumptions in
the expected future cash flow and other assumptions
used in discounting the estimated future cash flow. As the
real estate are significant item in the company’s balance
sheet and its valuation is based on management
estimation, we consider real estate as key audit matter.
• We assessed the company’s policies and processes
concerning revaluation.
• We have examined the valuation methodology was in
accordance with IFRS.
• We assessed whether the notes include all necessary
information in accordance with accounting policies.
Further information regarding real estate, we refer to note
14 and 16 in the Consolidated Financial Statements.
Management is responsible for the other information. The other information consists of the Endorsement and statement by
the board of directors and the CEO, non-financial reporting, quarterly statements and corporate governance statement,
which an appendix to the Consolidated Financial Statement.
Our opinion on the Consolidated Financial Statements does not cover the other information and we do not express any
form of assurance conclusion thereon, except the confirmation regarding the Endorsement and statement by the board of
directors and the CEO as stated below.
In connection with our audit of the Consolidated Financial Statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work
we have performed, we conclude that there is a material misstatement of this other information, we are required to report
that fact. We have nothing to report in this regard.
In accordance with Paragraph 2 article 104 of the Icelandic Financial Statement Act no. 3/2006, we confirm to the best of
our knowledge that the accompanying report of the board of directors includes all information required by the Icelandic
Financial Statement Act that is not disclosed elsewhere in the Consolidated Financial Statements.
Management is responsible for the preparation and fair presentation of the Consolidated Financial Statements in
accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU and additional requirements in
the Icelandic Financial Statement Act, and for such internal control as management determines is necessary to enable the
preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the Consolidated Financial Statements, management is responsible for assessing Festi hf.’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless management either intends to liquidate the company or to cease operations, or has no realistic
alternative but to do so. Those charged with governance are responsible for overseeing the Festi hf.’s financial reporting
process.
Real estate of the Group amounts to ISK 33 billion and
are classified on the balance sheet among property &
equipment and investment properties.
In our audit of the real estate valuation, we, and our
valuation experts have examined the management
valuation. We examined the methodology used in the
valuation and its consistency with prior year. In our audit
of the valuation, we performed the following work:
The investment properties that are part of Festi fasteignir
ehf., subsidiary of Festi hf., are those that are leased to
third parties. Investment properties are recognized at fair
value through profit or loss. The Group’s real estates,
those not classified as investment properties, are carried
at revalued amount.
• Assessed the company’s calculation model and its
reliability.
• Assessed the assumptions used in management’s
budget that are used in the calculations of the valuation
and whether they are appropriate.
Revaluation is performed on a regular basis, when
management assesses that its fair value has changed
significantly. The estimation of the value is based on
expected cash flow. The assets were revaluated at year-
end 2021.
• Assessed the assumptions and calculation of the
discount rate (WACC) and compared it to market
conditions.
7
Auditor’s Responsibilities for the Audit of the Financial Statements
Kópavogur, February, 9, 2022
Deloitte ehf.
Þorsteinn Pétur Guðjónsson Pétur Hansson
State Authorized Public Accountant State Authorized Public Accountant
Deloitte was appointed auditor of Festi hf. by the general meeting of shareholders on 22. march. 2021. Deloitte have been
elected since the general meeting 2019.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism
throughout the audit. We also:
• Identify and assess the risks of material misstatement of the Consolidated Financial Statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations,
or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Festi hf.'s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on
the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related disclosures in the Consolidated Financial Statements or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the
date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going
concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the
disclosures, and whether the Consolidated Financial Statements represent the underlying transactions and events in a
manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within
the Group to express an opinion on the consolidated and separate financial statements. We are responsible for the
direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably be
thought to bear on our independence, and where applicable, related safeguards.
In addition to our work as the auditors of Festi hf., Deloitte has provided the firm with permitted additional services such as
consultation on accounting matters, other assurance engagements, consultation on finance matters.
From the matters communicated with those charged with governance, we determine those matters that were of most
significance in the audit of the financial statements of the current period and are therefore the key audit matters. We
describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial statements.
8
Notes 2021 2020
5
6
5
7
8
10
16
11
11
11
17
26
Items that are or may be reclassified subsequently to profit or loss:
Effective portion of changes in fair value of cash flow hedges,
Items that will not be reclassified subsequently to profit or loss:
23
Translation difference arising from operations of a foreign
Profit for the year ..........................................................................................................
Revaluation of properties, net of income tax .........................................
Total comprehensive income for the year ..............................................................................................
Basic and diluted earnings per share in ISK ..........................................
The notes on pages 13 to 40 are an integral part of these annual financial statements
Net change in fair value of investments in shares .................................
net of income tax .................................................................................
Total other comprehensive income ..........................................................................
Other comprehensive income
associate ..............................................................................................
Changes in value of investment property ..............................................
Statement of Profit or Loss and Other Comprehensive Income
for the year 2021
Gross profit from sale of goods and services ................................................................................................................
Sale of goods and services ..................................................................
Cost of goods sold ................................................................................
Other operating income ........................................................................
Operating profit before depreciation, amortisation
Salaries and other personnel expenses ..............................................
Profit before income tax (EBT) ..........................................................................
Income tax .............................................................................................
Finance costs .......................................................................................
Share of profit of associates ................................................................
Other operating expenses ...................................................................
Finance income ...................................................................................
and changes in value (EBITDA) ...........................................................................................
and amortisation of intangible assets ..............................................
Depreciation of property and equipment and leased assets
Operating profit before finance items (EBIT) ...........................................................................................
Foreign currency differences ...............................................................
Consolidated Annual Financial Statements of Festi hf. 2021
9
Amounts are in thousands of ISK
Notes 2021 2020
Assets
12
13
14
15
16
17
18
Non-current assets 66.777.503 67.257.696
19
28
20
21
Current assets 19.194.254 16.106.848
Total assets 85.971.757 83.364.544
Equity
Equity
22
Liabilities
24
25
26
Non-current liabilities 37.388.286 38.919.021
24
25
27
Current liabilities 14.673.076 14.661.898
Total liabilities 52.061.362 53.580.919
Total equity and liabilities 85.971.757 83.364.544
Lease liabilities .....................................................................................
Trade payables .....................................................................................
Other intangible assets .........................................................................
Shares in other companies ...................................................................
Trade receivables .................................................................................
Inventories ............................................................................................
Long-term receivables ..........................................................................
Shares in associates .............................................................................
Loans from credit institutions ................................................................
Loans from credit institutions ................................................................
Cash and cash equivalents ...................................................................
Other restricted equity ..........................................................................
Deferred tax liability ..............................................................................
Share capital .........................................................................................
Other short-term liabilities .....................................................................
The notes on pages 13 to 40 are an integral part of these annual financial statements
Other short-term receivables ................................................................
Statement of Financial Position as at 31 December 2021
Goodwill ................................................................................................
Leased assets .......................................................................................
Investment properties ...........................................................................
Property and equipment .......................................................................
Share premium .....................................................................................
Retained earnings .................................................................................
Lease liabilities .....................................................................................
Consolidated Annual Financial Statements of Festi hf. 2021
10
Amounts are in thousands of ISK
Unrealised
profit of Other
Share Share Statutory Revaluation subsidiaries restricted Retained Total
capital premium reserve reserve and associates accounts earnings equity
Year 2020
Equity 1.1.2020 .......................................................
Profit for the year ....................................................
Total other comprehensive income ........................
Restricted due to subsidiaries and associates ......
Dissolution of revaluation of an associate .............
Dissolution of revaluation of property and equip. ...
Transactions with shareholders:
Issued new share capital ........................................
Purchased own shares ..........................................
Transferred from statutory reserve ........................
Dividend paid to shareholders (ISK 2 per share) ....
Equity 31.12.2020 ...................................................
Total other restricted equity ...................................
Year 2021
Equity 1.1.2021 .......................................................
Profit for the year ....................................................
Total other comprehensive income ........................
Restricted due to subsidiaries and associates ......
Dissolution of revaluation of an associate .............
Dissolution of revaluation of property and equip. ...
Transactions with shareholders:
Purchased own shares ..........................................
Transferred from statutory reserve ........................
Dividend paid to shareholders (ISK 3 per share) ....
Equity 31.12.2021 ...................................................
Total other restricted equity ...................................
Statement of Changes in Equity for the year 2021
Other restricted equity
The notes on pages 13 to 40 are an integral part of these annual financial statements
Consolidated Annual Financial Statements of Festi hf. 2021
11
Amounts are in thousands of ISK
Notes 2021 2020
Cash flows from operating activities
Operating items not affecting cash flows:
Changes in operating assets and liabilities:
Cash flows from investing activities
13
14
14
16
16
Cash flows from financing activities
24
25
24
Foreign currency difference on cash and cash equivalents .................................................................................................................
Investing and financing activities not affecting cash flows
50.000)( 406.391)(
0 406.391
1.281.504)( 2.037.547)(
1.281.504 2.037.547
174.000)( 0
50.000 0
174.000 0
7.000.000 0
7.000.000)( 0
Interest received .......................................................................................
Income tax paid .........................................................................................
New lease contracts and their remeasurement .............................................
Net cash from operating activities
Purchased intangible assets .........................................................................
Purchased property and equipment ..............................................................
Net cash used in financing activities
Dividend paid .................................................................................................
Short-term loans, change ..............................................................................
Dividend received .........................................................................................
Net cash from (used in) investing activities
Sold property and equipment ........................................................................
Acquisition of subsidiary, net of cash acquired .............................................
Statement of Cash Flows for the year 2021
Changes in operating assets and liabilities
Profit before depreciation, amortisation and finance items .............................
Trade and other short-term receivables, decrease (increase) ...................
Inventories, (increase) decrease ................................................................
Trade and other short-term liabilities, increase ..........................................
(Gain) loss on sale of property and equipment ...........................................
Gain on sale of shares in companies .........................................................
Interest paid ..............................................................................................
Other short-term liabilities .............................................................................
New long-term loans ......................................................................................
Long-term receivables, change .....................................................................
Sale of investment properties .......................................................................
Purchase of investment properties ...............................................................
Repayment of lease liabilities ........................................................................
Change in shares in companies .....................................................................
Purchase of shares in companies ..................................................................
The notes on pages 13 to 40 are an integral part of these annual financial statements
Purchased own shares .................................................................................
New lease liabilities and their remeasurement ...............................................
Cash and cash equivalents at the beginning of the year .................................................................................................................
Cash and cash equivalents at the end of the year .................................................................................................................
Increase (decrease) in cash and cash equivalents .................................................................................................................
Repayment of long-term loans from credit institutions ..................................
Issued new share capital ..............................................................................
Repayment of long-term loans from credit institutions ..................................
Sold property and equipment ........................................................................
Trade and other short-term receivables .........................................................
Consolidated Annual Financial Statements of Festi hf. 2021
12
Amounts are in thousands of ISK
1. Operations of the Group
2. Basis of preparation
2.1 Statement of compliance with International Financial Reporting Standards
2.2 Presentation of accounting policies and other notes
Standard
Note 4.
IFRS 8
Note 5.
IFRS 15
Note 12.
IAS 36
IFRS 13
Note 15.
IFRS 16
2.3 Change in accounting policies and change in presentation of operating revenue and expenses
2.4 Going concern
Notes
Festi hf. ("the Company" or "the Group") is an Icelandic limited liability company. The Group's headquarters are
located at Dalvegur 10-14, Kópavogur, Iceland. The main operations of the Group consist of sale of fuel, goods and
service to businesses, groceries and related products, sale of electronic equipment and leasing of buildings. These
consolidated annual financial statements consists of the annual financial statements of the Company and its
subsidiaries. Further information about individual companies within the Group and their operations is disclosed in
Note 3.
Item
Notes
Accounting policies are presented along with financial information in the notes for the applicable items. Management
believes that such presentation provides a clearer view and improved context between accounting policies and
financial information. As applicable, notes disclosing information that relate to both the Statement of Profit or Loss
and Other Comprehensive Income and the Statement of Financial Position are presented in conjunction, such as
income from sale of goods and trade receivables on the one hand, and income tax expense and deferred tax on the
other.
Operating segments
Impairment testing
Revenue from sale of goods and services
Management has evaluated the Group's going concern. It is the opinion of management that its operations is
ensured and that it is able to meet its obligations in the foreseeable future. Therefore, the financial statements are
presented on a going concern basis.
The classification of certain operating revenue and expenses was changed in the last quarter of the year 2020 to
harmonise the classification of operating revenue and expenses by the companies within the Group. The
comparison amounts in the interim financial statements for the year 2020 have been changed in accordance with the
new classification in the Quarterly Statement, which is an appendix to the annual financial statements. The change
has no effect on the financial results of the Group, assets, liabilities, equity or cash flows.
The Group has applied the same accounting policies during the years 2020 and 2021.
An overview of the Group's risk management is disclosed in a separate section (see Note 28). When relevant, cross
references are made between notes regarding individual items and notes on risk management applicable to those
same items. The Group endeavors to describe in these annual financial statements the accounting policies in a clear
manner instead of repeating the actual text of paragraphs in IFRS. The following accounting standards are the most
important ones for the Group:
The Company's consolidated annual financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS) as adopted by the European Union and, as applicable, additional
requirements of the Act on Annual Accounts.
The Board of Directors of Festi hf. approved the consolidated annual financial statements on 9 February 2022.
Operating segments
Operating revenue
Goodwill
Fair value measurement of properties and
investment properties
Notes 14. and 16.
Property and equipment and Investment
properties
Lease contracts
Lease contracts
Consolidated Annual Financial Statements of Festi hf. 2021
13
Amounts are in thousands of ISK
2.5 Basis of measurement
2.6 Presentation and functional currency
2.7 Use of estimates and judgements
Notes
12. and 13.
14.
15.
16.
28.
3. Group entities
Entities within the Group
The consolidated annual financial statements have been prepared on the historical cost basis, except for investment
properties, securities and derivative contracts, which are recognised at fair value, and properties, which are
recognised at revalued cost.
The consolidated annual financial statements are prepared and presented in Icelandic krona (ISK), which is the
Company's functional currency. All amounts are presented in thousands of Icelandic krona unless otherwise stated.
Notes, contd.:
The preparation of the consolidated annual financial statements in accordance with IFRS 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. Information
about judgements applied and estimation uncertainty, as applicable, is disclosed in the notes about the individual
accounting items. The following table specifies the items which are most challenging for the application of judgement
and use of estimates by management:
Item
Estimation of fair value of revalued properties, their useful lives
and residual values
Estimation of impairment of goodwill and other intangible
assets
Goodwill and other intangible
assets
Intra-group balances and transactions and any unrealised income and expenses arising from intra-group
transactions, are eliminated in preparing the consolidated financial statements.
The consolidated annual financial statements include the following entities. All subsidiaries are directly or indirectly
fully owned by the Parent Company, Festi.
Estimation of allowance for expected credit losses on trade
receivables
Property and equipment
Estimation of fair value of investment properties
Investment property
Determination of lease term and discount rates used in the
calculation of lease liabilities
Lease contracts
Risk management
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, and it has right
to, variable returns from its involvement with the entity and has the ability to affect those returns through its power
over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from
the date on which control commences until the date on which control ceases.
Consolidated Annual Financial Statements of Festi hf. 2021
14
Amounts are in thousands of ISK
3. Group entities, cont.:
Festi fasteignir ehf.
N1 Rafmagn ehf.
N1 Rafmagn is a company that purchases electricity on the
wholesale market and sells it on the retail market to individuals
and companies in Iceland.
Notes, contd.:
Krónan is a retail company that operates convenience stores in
Iceland. The company operates stores throughout the country
under the brand names of Krónan, Kr. and smart shop with
home deliveries.
Krónan ehf.
Festi is a holding company that specialises in operating
companies that are leading in the retail and fuel sale in Iceland.
Festi's role is to support its operating companies in fulfilling
customers´ demands so as to enable them to continue to be at
the forefront in providing goods and services across the country.
Festi provides its subsidiaries with supporting services, among
other things in the area of finance, operations and business
development.
Festi hf.
Company
Activity
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.
ELKO ehf.
Bakkinn vöruhótel specialises in product storage, packaging,
labelling and distribution of products for customers that elect to
outsource their warehouse activities.
Bakkinn vöruhótel ehf.
ELKO specialises in selling household appliances and electronic
equipment. The company operates stores in the capital region,
Akureyri and at the Leifur Eiríksson International Airport in
Keflavik, as well as an online shop.
Festi fasteignir specialises in leasing of non-residential real
estate to retail companies.
Consolidated Annual Financial Statements of Festi hf. 2021
15
Amounts are in thousands of ISK
Notes, contd.:
4.
Operating segments
Other Segments
N1 Krónan ELKO companies total
Year 2021
External revenue .............................................. 37.437.574 46.784.415 15.430.741 1.399.653 101.052.383
Intra-group revenue .......................................... 317.796 39.714 13.640 5.868.089 6.239.239
Total segment revenue ..................................... 37.755.370 46.824.129 15.444.381 7.267.742 107.291.622
Operating profit before depreciation, amor-
tisation and changes in value (EBITDA) ..... 4.207.902 3.937.720 1.719.866 3.738.122 13.603.610
Segment depreciation and amortisation ........... 2.456.059)( 1.514.085)( 484.893)( 1.115.306)( 5.570.343)(
Changes in value of investment properties ...... 736.006 736.006
Operating profit of segments (EBIT) ................. 1.751.843 2.423.635 1.234.973 3.358.822 8.769.273
Net finance costs .............................................. 842.517)( 418.414)( 94.494)( 1.981.591)( 3.337.016)(
Share of profit of associates ............................ 300.702 300.702
Income tax ........................................................ 203.912)( 396.754)( 228.047)( 274.700)( 1.103.413)(
Profit for the year .............................................. 705.414 1.608.467 912.432 1.403.233 4.629.546
31 December 2021
Segment assets ................................................ 26.464.903 17.663.670 5.135.377 36.707.807 85.971.757
Segment capital expenditure ............................ 863.740 699.589 214.601 603.386 2.381.316
Segment liabilities ............................................. 16.479.933 12.622.608 3.552.606 19.406.215 52.061.362
The operating companies N1, Krónan and ELKO in the Group are individual operating segments and 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 (see Note 3 for further information).
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 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 to segment in a logical way. Capital expenditure of segments consist of
the total cost of acquisition of property and equipment and intangible assets. Transactions between segments are
priced on an arm's length basis.
Consolidated Annual Financial Statements of Festi hf. 2021
16
Amounts are in thousands of ISK
Notes, contd.:
4.
Operating segments, contd.: Other Segments
N1 Krónan ELKO companies total
Year 2020
External revenue .............................................. 30.969.400 43.104.229 13.100.667 743.699 87.917.995
Intra-group revenue .......................................... 129.953 10.817 11.433 5.949.705 6.101.908
Total segment revenue ..................................... 31.099.353 43.115.046 13.112.100 6.693.404 94.019.903
Operating profit before depreciation, amor-
tisation and changes in value (EBITDA) ..... 2.968.709 3.067.053 1.167.547 3.193.016 10.396.325
Segment depreciation and amortisation ........... 2.317.039)( 1.463.866)( 382.665)( 1.028.739)( 5.192.309)(
Changes in value of investment properties ...... 240.028 240.028
Operating profit of segments (EBIT) ................. 651.670 1.603.187 784.882 2.404.305 5.444.044
Net finance costs .............................................. 926.281)( 461.848)( 103.478)( 2.028.586)( 3.520.193)(
Share of profit of associates and loss from
sale of shares .............................................. 267.662 267.662
Income tax ........................................................ 54.492 238.746)( 138.302)( 71.649)( 394.205)(
(Loss) profit for the year ................................... 220.119)( 902.593 543.102 571.732 1.797.308
31 December 2020
Segment assets ................................................ 28.889.584 15.663.519 4.971.425 33.840.016 83.364.544
Segment capital expenditure ............................ 909.704 1.417.822 313.858 1.200.959 3.842.343
Segment liabilities ............................................. 15.371.113 13.759.655 3.752.851 20.697.300 53.580.919
Year 2021 According to
Segments financial
total Eliminations statements
13.603.610 3.485.996)( 10.117.614
5.570.343)( 2.377.082 3.193.261)(
736.006 736.006
8.769.273 1.108.914)( 7.660.359
3.337.016)( 1.537.124 1.799.892)(
300.702 300.702
1.103.413)( 85.642)( 1.189.055)(
4.629.546 342.568 4.972.114
Year 2020
10.396.325 3.339.783)( 7.056.542
5.192.309)( 2.324.420 2.867.889)(
240.028 240.028
5.444.044 1.015.363)( 4.428.681
3.520.193)( 1.601.607 1.918.586)(
267.662 267.662
394.205)( 117.249)( 511.454)(
1.797.308 468.995 2.266.303
Share of profit of associates .........................................................................
changes in value (EBITDA) .....................................................................
and amortisation of intangible assets ......................................................
Changes in value of investment property ......................................................
Operating profit (EBIT) ..................................................................................
Net finance costs ...........................................................................................
Reconciliation of operating segments to revenue, profit and loss and other material items in the statement of
profit or loss
Operating profit before depreciation, amortisation and
Depreciation of property and equipment and leased assets
Income tax .....................................................................................................
Profit for the year ...........................................................................................
Profit for the year ...........................................................................................
changes in value (EBITDA) .....................................................................
and amortisation of intangible assets ......................................................
Changes in value of investment property ......................................................
Operating profit (EBIT) ..................................................................................
Net finance costs ...........................................................................................
Share of profit of associates and loss from sale of shares ...........................
Income tax .....................................................................................................
Operating profit before depreciation, amortisation and
Depreciation of property and equipment and leased assets
Consolidated Annual Financial Statements of Festi hf. 2021
17
Amounts are in thousands of ISK
Notes, contd.:
5.
Operating income
Operating income is specified as follows:
2021 2020
Sale of goods and services:
51.860.754 47.679.540
23.798.175 18.638.945
15.326.281 12.941.243
7.750.802 6.999.970
98.736.012 86.259.698
Other operating income:
742.204 751.180
394.047 337.585
316.960 260.985
569.112 0
294.048 308.547
2.316.371 1.658.297
101.052.383 87.917.995
6.
Cost of goods sold
Gross profit from sale of goods and services is specified as follows:
2021 2020
12.334.098 10.615.585
5.233.813 3.997.070
3.984.579 3.141.057
3.093.140 2.930.398
24.645.630 20.684.110
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.
Lease income from properties
Properties leased to parties outside the Group are recognised as investment properties. Investment properties are properties
held to earn rentals or for capital appreciation. Investment properties are recognised at fair value. Fair value changes of
investment properties are presented separately in the statement of profit or loss, and therefore presented separately from
lease income from those same assets. Further information about investment properties is provided in Note 16.
Other operating income
Total other operating income .................................................................................................
Total operating revenue .........................................................................................................
Cost of goods sold consists of the purchase price of inventories sold 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.
Fuel and electricity .................................................................................................................
Convenience goods ...............................................................................................................
Electronic equipment ..............................................................................................................
Electronic equipment ..............................................................................................................
Sale of other goods and services ...........................................................................................
Total sale of goods and services ............................................................................................
Lease income from properties ................................................................................................
Warehouse services ..............................................................................................................
Income from leases, warehouse services, commissions, gain on sale of property and equipment, market grants and other
income are presented in other operating income.
Fuel and electricity .................................................................................................................
Convenience goods ...............................................................................................................
Commissions ..........................................................................................................................
Gain on sale of property and equipment ................................................................................
Other operating income ..........................................................................................................
Other goods and services ......................................................................................................
Total gross profit from sale of goods and services ................................................................
Consolidated Annual Financial Statements of Festi hf. 2021
18
Amounts are in thousands of ISK
7. 2021 2020
9.182.394 8.247.000
1.160.710 1.050.591
811.287 767.170
504.488 456.169
11.658.879 10.520.930
1.956 1.819
1.176 1.117
61/39 64/36
Contributions to defined contribution pension plans
8.
2021 2020
1.518.830 1.530.308
908.338 671.762
1.217.354 990.536
417.226 476.961
698.934 652.893
200.902 154.197
204.580 269.806
19.344 18.472
5.185.508 4.764.935
9.
63.485 70.183
454 18.469
63.939 88.652
10.
Depreciation and amortisation
751.073 631.437
1.896.455 1.756.289
545.733 480.163
3.193.261 2.867.889
Amortisation of intangible assets, as per Note 13 ..................................................................
Other operating expenses are specified as follows:
Depreciation of property and equipment, as per Note 14 .......................................................
Depreciation of leased assets, as per Note 15 .......................................................................
Total depreciation and amortisation .......................................................................................
Other services ........................................................................................................................
Total fees to auditors ..............................................................................................................
The Company pays contributions to independent defined contribution pension funds due to its employees. The Company has
no responsibility for the funds' obligations. Contributions are expensed in the statement of profit or loss among salaries and
salary-related expenses when incurred.
Other operating expenses
Operating expenses of properties ..........................................................................................
Other salary-related expenses ...............................................................................................
Other personnel expenses .....................................................................................................
Total salaries and other personnel expenses .........................................................................
Average number of employees .............................................................................................
Average full-time equivalent number of employees ...............................................................
Employee gender ratio (males/females) .................................................................................
Salaries ..................................................................................................................................
Contributions to pension funds ...............................................................................................
Notes, contd.:
Information about salaries and benefits of the members of the Board of Directors and management is disclosed in Note 30 on
related parties.
Salaries and other personnel expenses
Total other operating expenses ..............................................................................................
Fees to auditors of the Group and subsidiaries
Fees to auditors are specified as follows:
Audit of annual financial statements .......................................................................................
Maintenance expenses ..........................................................................................................
Sales and marketing expenses ..............................................................................................
Office and administrative expenses, including fees to auditors ..............................................
Communication expenses ......................................................................................................
Other expenses ......................................................................................................................
Insurance and claims expenses .............................................................................................
annual financial statements for the year 2019) ..................................................................
Expenses due to acquisition of Hlekkur ehf. (see Note 4 in the consolidated
Consolidated Annual Financial Statements of Festi hf. 2021
19
Amounts are in thousands of ISK
11.
Finance income is specified as follows:
2021 2020
23.776 38.307
62.146 57.203
3.934 0
0 6.600
89.856 102.110
1.609.516 1.649.809
298.001 281.630
49.183 112.536
1.956.700 2.043.975
12.
Gain on sale of shares in companies .....................................................................................
Interest income on cash and cash equivalents ......................................................................
Finance income and finance costs
Notes, contd.:
Interest expense and CPI-indexation on loans from credit institutions ..................................
Interest expense on lease liabilities ........................................................................................
Other interest expense ..........................................................................................................
Total finance costs ................................................................................................................
Foreign currency differences and assets and liabilities denominated in foreign currencies
Foreign currency differences arise from transactions in foreign currencies, predominantly USD. Transactions in foreign
currencies are recognised at the exchange rate at the dates of the transactions. Monetary assets and liabilities denominated
in foreign currencies are recognised at the exchange rate at year-end. The average ISK/USD exchange rate for the year 2021
was 127.05 (2020: 128.66) and the exchange rate at year-end 2021 was 130.38 (2020: 127.21).
Interest income on receivables ..............................................................................................
Dividend income .....................................................................................................................
Total finance income ..............................................................................................................
Finance costs are specified as follows:
Goodwill
The goodwill recognised in the consolidated annual financial statements resulted from the acquisition by the Company of
Hlekkur and its subsidiaries during the year 2018 and of Íslensk Orkumiðlun and the Krónan store located at Hallveigarstígur
in Reykjavík during the year 2020. For the purpose of impairment testing, goodwill is allocated to the cash-generating units it
relates to. Three cash-generating units were identified in the purchase price allocation and part of the goodwill was allocated
to grocery stores, electronic equipment stores and sale of electricity. The remaining goodwill is due to synergies and
optimisation arising from acquisition of different retail companies has now been changed and is now shown with each cash
generated unit.
Accounting policy
Goodwill is not amortised but tested annually for impairment or more often if there are any impairment indicators. When
testing for impairment goodwill is allocated to the cash-generating units it relates to.
Impairment test at year-end 2021
Goodwill was tested for impairment at year-end 2021. According to the results of the test there was no indication of
impairment. When testing for impairment the recoverable amount is estimated and the estimation was based on the value in
use of cash-generating units. Value in use is calculated by discounting the estimated future cash flows of cash-generating
units.
Consolidated Annual Financial Statements of Festi hf. 2021
20
Amounts are in thousands of ISK
12.
Carrying
Year-end 2021
EBITDA- Terminal- Discount amount
growth growth rate at year-end
9,2% 3,5% 8,7%
11.468.284
6,9% 3,5% 10,9%
2.772.179
3,4% 3,5% 9,9%
427.801
14.668.264
Year-end 2020
6,4% 3,0% 8,3%
11.468.284
5,9% 3,0% 10,3%
2.772.179
5,3% 3,0% 9,2%
427.801
14.668.264
13.
Other intangible assets
Trademarks Software Total
Gross carrying amount
4.142.136 103.893 1.075.889 5.321.918
48.816 164.342 739.766 952.924
389.236)( 74.208)( 68.094)( 531.538)(
3.801.716 194.027 1.747.562 5.743.305
0 0 524.218 524.218
203.969)( 37.049)( 326.298)( 567.316)(
3.597.747 156.978 1.945.482 5.700.207
Amortisation
342.470 41.904 287.694 672.068
226.745 37.304 367.388 631.437
389.236)( 74.208)( 68.094)( 531.538)(
179.979 5.000 586.988 771.967
226.077 42.049 482.947 751.073
203.969)( 37.049)( 326.103)( 567.121)(
202.087 10.000 743.832 955.919
Carrying amount
3.799.666 61.989 788.195 4.649.850
3.621.737 189.027 1.160.575 4.971.338
3.395.660 146.978 1.201.650 4.744.289
5% 14% 20-33%
The following table specifies the key assumptions applied when estimating value in use. Estimated EBITDA-growth is the
average growth for the next five years.
Total goodwill ......................................................................................................................................................
Motor vehicle services and sale of electricity ..................
Accumulated amortisation 31.12.2020 ............................
Amortisation for the year .................................................
Sold and disposed of ......................................................
Gross carrying amount 31.12.2021 .................................
Accumulated amortisation 1.1.2020 ................................
Amortisation for the year .................................................
Sold and disposed of ......................................................
Gross carrying amount 1.1.2020 .....................................
Additions during the year ................................................
Sold and disposed of ......................................................
Gross carrying amount 31.12.2020 .................................
Additions during the year ................................................
Carrying amount 31.12.2021 ..........................................
Amortisation rates ...........................................................
Other intangible assets consist of the trademarks of Krónan and ELKO, trade agreements and software.
Accounting policy
The cost of purchased and acquired trademarks is capitalised and amortised on a straight line basis over 20 years. The
estimated useful life of trade agreements is 7 years. They are amortised on a straight line basis. Capitalised software licenses
are recognised at cost less accumulated amortisation. Software is amortised on a straight line basis over 3-5 years.
Trade agreements
Grocery stores ................................................................
Electronic equipment stores ............................................
Goodwill, contd.:
Electronic equipment stores ............................................
Sale of electricity .............................................................
Notes, contd.:
Grocery stores ................................................................
Total goodwill ......................................................................................................................................................
Sold and disposed of ......................................................
Accumulated amortisation 31.12.2021 ............................
Carrying amount 1.1.2020 ..............................................
Carrying amount 31.12.2020 ..........................................
Other intangible assets are specified as follows:
Consolidated Annual Financial Statements of Festi hf. 2021
21
Amounts are in thousands of ISK
Notes, contd.:
14.
50 years
3 - 20 years
Property and equipment
The Group´s property and equipment consists of properties, vehicles, machinery and equipment, cabinetry, signs and supply
tanks.
The cost of replacing single components of property and equipment is capitalised when it is considered likely that the benefits
associated with the asset will flow to the Company and the costs can be measured reliably. The carrying amount of the
replaced component is expensed. All other costs are expensed in the statement of profit or loss when incurred.
Depreciation
Other property and equipment ...........................................................................................................................
The Group recognises the properties for own use at revalued cost. A revaluation was carried out as at 31 December 2021.
According to the revaluation method an entity shall assess if there are any indicators of there being a significant difference
between fair value and carrying amount.
The Board of Directors of the Company has implemented a policy for the revaluation of property and equipment to ensure that
at any given time the carrying amount of revalued assets does not differ significantly from fair value. According to the policy, a
fair value measurement must be performed if there are indications that the difference between fair value and carrying amount
of revalued assets is in exceeds of the 10% benchmark of the Board of Directors. However, fair value shall be determined at
least every five years.
The gain on sale of property and equipment, which is the difference between their sale proceeds and carrying amount, is
recognised in the statement of profit or loss among other operating income and the loss on sale among other operating
expenses.
Accounting policy
The Group´s properties for own use, i.e. those which are not classified as investment properties, are recognised at revalued
cost amount but other property and equipment at cost less accumulated depreciation and impairment, if any.
When property and equipment consists of parts which have different useful lives, the parts are separated and depreciated
based on the useful life of each part.
Depreciation methods, useful lives and residual values are reviewed at each reporting date and changed if appropriate.
Revaluation of properties
Revalued assets are recognised at the fair value on the date of revaluation. Fair value assessment is carried out on a regular
basis, so as to ensure that their carrying amount does not deviate significantly from fair value. The increase in carrying
amount due to revaluation is recognised in other comprehensive income, net of income tax. The revaluation reserve within
equity is decreased via transfer to retained earnings, the amount each year being equal to the annual depreciation of
revaluation recognised in profit or loss. If revaluation results in a decrease of carrying amount, the decrease is recognised in
profit or loss, except to the extent that the decrease reverses a previous increase due to revaluation, in which case the
downward revaluation is recognised in other comprehensive income.
Revaluation methods for properties
Depreciation is calculated based on the depreciable amount, which is the cost or revalued cost less estimated residual value.
Depreciation is calculated on a straight line basis over the estimated useful life of each component of property and equipment.
Estimated useful lives are specified as follows:
Properties ...........................................................................................................................................................
Consolidated Annual Financial Statements of Festi hf. 2021
22
Amounts are in thousands of ISK
Notes, contd.:
14.
Increase Decrease
1.120.928 1.120.928)(
3.275.671)( 4.698.584
Other
Properties property and
and land equipment Total
Cost or assessed value
30.281.517 11.442.413 41.723.930
838.226 1.992.168 2.830.394
369.663)( 369.663 0
332.824)( 3.493.350)( 3.826.174)(
30.417.256 10.310.894 40.728.150
417.952 1.426.119 1.844.071
2.026.649 0 2.026.649
707.871)( 707.871 0
2.037.041)( 2.097.519)( 4.134.560)(
30.116.945 10.347.365 40.464.310
Depreciation
3.466.114 6.824.056 10.290.170
618.391 1.137.898 1.756.289
26.291)( 26.291 0
183.177)( 3.432.513)( 3.615.690)(
3.875.037 4.555.732 8.430.769
703.145 1.193.310 1.896.455
27.439)( 27.439 0
404.754)( 2.002.254)( 2.407.008)(
4.145.989 3.774.227 7.920.216
Reclassification ........................................................................................
Sold and disposed of during the year ......................................................
Accumulated depreciation 31.12.2020 ....................................................
Sold and disposed of during the year ......................................................
Cost 1.1.2020 ..........................................................................................
Property and equipment are specified as follows:
Property and equipment, contd.:
The main factors that management considers in the assessment of the need for revaluation are:
a. Depreciation of revalued assets since they were last revalued.
b. Sales price of assets similar to those revalued by the Group, if such information is available.
c. Inflation.
d. Changes in official real estate value, if applicable as a benchmark for similar revalued assets of the Group.
e. The assumptions upon which revaluation is based, e.g. growth or decline in sales of goods and changes in discount rates
due to changes in benchmark interest rates and/or risk margin.
Reclassification ........................................................................................
Reclassification ........................................................................................
Revaluation during the year .....................................................................
The Company has revalued the properties at fair value at year-end 2021. Fair value in excess of carrying amount is
recognised in other comprehensive income. The revaluation resulted in an increase of ISK 2,026 million in properties, which is
recognised in other comprehensive income as revaluation to fair value. The Company’s equity increases by ISK 1,621 million
due to the revaluation.
Determination of fair value of properties
The Company´s measurement of the fair value of properties was determined with assistance from independent specialists.
The fair value measurement is based on discounted cash flows of individual assets. The cash flow model applied is based on
free cash flows, discounted by the weighted average cost of capital for individual assets (WACC). The projected cash flows in
the model are up to 50 years. The return on equity is estimated using the CAPM (Capital Asset Pricing Model), which is based
on risk-free inflation-adjusted interest rate with a premium added to reflect the risk of underlying operations. Interest rates on
borrowings are estimated considering the general terms for interest rates which are offered in the market. It is assumed a debt
ratio of 65% for the future and the expected weighted cost of investment (WACC) which is applied is in the range of 5.4% -
6.6% (weighted average 5.5%).
Cost or assessed value 31.12.2021 ........................................................
Accumulated depreciation 1.1.2020 ........................................................
Depreciation for the year .........................................................................
Additions during the year .........................................................................
Sold and disposed of during the year ......................................................
Cost or assessed value 31.12.2020 ........................................................
Additions during the year .........................................................................
Depreciation for the year .........................................................................
Sold and disposed of during the year ......................................................
Accumulated depreciation 31.12.2021 ....................................................
Reclassification ........................................................................................
Sensitivity analysis of fair value measurement at year-end 2021:
Increase / (decrease) of EBITDA from operations of properties by 5% .................................
(Increase) / decrease of return on equity and interest rates by 1.0%-point ............................
Consolidated Annual Financial Statements of Festi hf. 2021
23
Amounts are in thousands of ISK
Notes, contd.:
14.
Property and equipment, contd.:
Properties
and land
Other
property and
equipment
Total
26.815.403
4.618.357
31.433.760
26.542.219
5.755.162
32.297.379
25.970.956
6.573.138
32.544.092
22.785.907
4.618.357
27.404.264
22.645.404
5.755.162
28.400.566
20.119.839
6.573.138
26.692.977
0 - 2%
5 - 33%
2021 2020
20.453.662 21.904.554
27.364.384 29.741.427
6.306.187 6.143.488
15.
A.
The Group as lessee
Accounting policies
Insurance value of real estate ................................................................................................
At the inception date of a lease contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or
contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group uses the
definition of a lease in IFRS 16.
Lease contracts
The Group leases buildings, land, machinery and equipment for its operations and the lease contracts extend up to the year
2068. The contracts are with various parties and are indexed to the consumer price index or not indexed.
At the commencement date of a lease contract, the Group recognises a leased asset and a lease liability in the statement of
financial position. On that date or upon modification of a contract that contains a lease component, the Group allocates the
consideration in the contract to each lease component on the basis of its relative stand-alone prices. However, the Group has
elected not to recognise leased assets and lease liabilities for lease contracts whose lease term, determined in accordance
with IFRS 16 rules, is 12 months or less and for lease contracts for which the underlying asset is of low value. Lease
payments arising from these contracts are expensed in the income statement on a straight-line basis and included in other
operating expenses.
The Group determines the lease term as the non-cancellable period of a lease contract together with periods covered by
options to extend the lease if the Group is reasonably certain to exercise those options. If there are termination options for the
contracts, which the Group is certain to exercise, then they are taken into consideration
Carrying amount 31.12.2020 ...................................................................
Carrying amount 31.12.2021 ...................................................................
Depreciation rates ...................................................................................
Insurance value of machinery and equipment, cabinetry and vehicles ..................................
Carrying amount
Carrying amount 1.1.2020 .......................................................................
Insurance and official property value of property and equipment at year-end:
Official property value .............................................................................................................
The Company’s properties are pledged for debt which amounted to ISK 27,312 million at year-end 2021. Furthermore, there
is an amount of ISK 2,818 million in VAT encumbrance on the Group's properties. This encumbrance is not recognised as a
liability in the statement of financial position since it will only become payable if the properties would be used in operations
which are exempt of VAT or if they are sold without the buyer taking over the encumbrance.
Leased assets are initially measured at cost, which comprises the initial amount of the lease liability, plus any lease payments
made at or before the commencement date, plus initial direct costs and an estimate of costs of the Group to dismantle and
remove the underlying asset or the restore the underlying asset or the site on which it is located at the end of the lease
contract, less any lease incentives received.
Carrying amount excluding revaluation
Carrying amount 1.1.2020 .......................................................................
Carrying amount 31.12.2020 ...................................................................
Carrying amount 31.12.2021 ...................................................................
Consolidated Annual Financial Statements of Festi hf. 2021
24
Amounts are in thousands of ISK
Notes, contd.:
15.
Leased assets
Buildings
Land
Other
Total
3.374.147 488.035 0 3.862.182
977.249 0 236.405 1.213.654
24.659 799.199 35 823.893
436.277)( 26.888)( 16.998)( 480.163)(
3.939.778 1.260.346 219.442 5.419.566
1.622.220 0 76.143 1.698.363
259.416)( 166.616)( 9.173 416.859)(
477.082)( 19.647)( 49.004)( 545.733)(
4.825.500 1.074.083 255.754 6.155.337
B.
The Group as lessor
Lease contracts, contd.:
Carrying amount 1.1.2020 ..............................................
of lease liabilities ........................................................
of lease liabilities ........................................................
Leased assets are subsequently measured in accordance with the cost model. They are depreciated using the straight-line
method from the commencement date to the end of the lease term, unless the lease transfers ownership to the Group at the
end of the lease term or the cost of the leased assets reflects that the Group will exercise a purchase option of the underlying
assets. In that case the leased assets are depreciated over the useful life of the underlying assets, which is determined on the
same basis as those of property and equipment of the Group. The carrying amount of lease assets is reduced by impairment
losses, when applicable, and adjusted for certain remeasurements of the carrying amount of lease liabilities.
The lease payments included in the measurement of lease liabilities can be both fixed or variable that depend on an indices
or rates.
Subsequent to initial recognition the carrying amount of lease liabilities is increased by interest expense and decreased by
lease payments made. Furthermore, the carrying amount is remeasured when there is a change in future lease payments
arising from changes in indices or rates, in the estimate of the amount expected to be payable by the Group under residual
value guarantees, or as appropriate, changes in the assessment of whether it is reasonably certain that purchase options or
extension options will be exercised or termination options will not be exercised. When the carrying of lease liabilities is
remeasured in this way, the corresponding adjustment is made to the carrying amount of leased assets, or recognised in
income statement if the carrying amount of leased assets has been reduced to zero.
Leased assets are presented separately within non-current assets in the statement of financial position. Lease liabilities are
presented separately in the statement of financial position and split into non-current and current portions. Depreciation of
leased assets is presented in income statement under depreciation, as per Note 10. Interest expense on lease liabilities is
presented in income statement under finance costs, as per Note 11.
The Group leases buildings to many parties. The revenue from the leases is included in other revenue.
New lease contracts ........................................................
Change due to remeasurement
Depreciation for the year .................................................
Carrying amount 31.12.2020 ..........................................
New lease contracts ........................................................
Change due to remeasurement
Variable lease payments that depend on sales or usage of underlying assets are not included in the measurement of lease
liabilities, except to the extent that they are accrued and unpaid at the reporting date. Variable lease payments that depend on
sales or usage of underlying assets are expensed in the income statement as they accrue and included in the line other
operating expenses.
Lease liabilities are initially measured at the present value of the lease payments that are not paid at the commencement date
of the lease contracts, discounted using the interest rate implicit in the lease, if that rate can be readily determined. Otherwise,
the Group uses the incremental borrowing rate. The determination of the incremental borrowing rate is based on various
factors, in particular on the types of assets leased, their location and condition and the lease term.
Depreciation for the year .................................................
Carrying amount 31.12.2021 ..........................................
Leased assets are specified as follows:
Consolidated Annual Financial Statements of Festi hf. 2021
25
Amounts are in thousands of ISK
Notes, contd.:
16.
7.354.468
59.025
186.527)(
240.028
7.466.994
13.027
2.115.736)(
736.006
6.100.291
Increase
Decrease
305.015)( 305.015
877.444)( 1.258.152
373.350 373.350)(
994.263)( 1.384.681
The Company´s measurements of fair value for the years 2021 and 2020 were determined with assistance from independent
specialists. The measurement of investment properties is based on discounted cash flows of individual assets. The cash flow
model applied is based on free cash flows to the Group, discounted by the weighted average cost of capital for individual
assets (WACC). The projected cash flows in the model are up to 50 years. The return on equity is estimated using the CAPM
(Capital Asset Pricing Model), which is based on risk-free inflation-adjusted interest rate with a premium added to reflect the
risk of underlying operations. Interest rates on borrowings are estimated considering the general terms for interest rates which
are offered in the market. It is assumed a debt ratio of 65% (2020:70%) for the future and the expected weighted cost of
investment (WACC) which is applied is in the range of 5.4% - 6.6% (weighted average 5.6%) (2020: 4.9% - 6.1% and
weighted average 5.1%).
Estimated cash flows are based on lease income from existing lease contracts and their expected development. Each lease
contract is assessed and relevant risk factors are taken into account. Utilisation rate is estimated to be 95-96% after a lease
contract expires (2020: 95-96%). Estimated operating expenses are deducted from estimated lease income. In this way each
asset of the Company is assessed as an independent unit. The inputs of the valuation model are based on amounts
experienced in the operations of the Company as well as on a forecast of the development of key factors in the future.
The conclusion of the measurement at year-end 2021 was an increase in the value of investment properties in the amount of
ISK 736 million (2020: ISK 240 million), which is recognised in the statement of profit or loss.
Investment properties are specified as follows:
Carrying amount at 1 January 2020 ...................................................................................................................
Additions during the year ....................................................................................................................................
Sensitivity analysis of fair value measurement at year-end 2021:
Increase / (decrease) of EBITDA from operations of properties by 5% .................................
(Increase) / decrease of return on equity and interest rates by 1.0%-point ............................
Sensitivity analysis of fair value measurement at year-end 2020:
Sale during the year ..........................................................................................................................................
The fair value measurement of investment properties falls under level 3 in the fair value hierarchy of International Financial
Reporting Standards since the valuation is based on significant inputs other than market information. If the key inputs of the
fair value measurement, i.e. the assumptions regarding financing cost and EBITDA, were changed, it would change the
revaluation recognised in the statement of profit or loss as specified in the following table:
Investment properties
Properties intended for rent to third parties and for capital appreciation are classified as investment properties.
Accounting policies
Investment properties are recognised at fair value at the reporting date. Valuation changes of those assets are recognised in
profit or loss in the period in which they occur. Investment properties are not depreciated. Changes in fair value of investment
properties are presented seperately in the statement of profit or loss but lease income is presented as other operating income.
Determination of fair value of investment properties
Fair value change ...............................................................................................................................................
Carrying amount at 31 December 2020 .............................................................................................................
Additions during the year ....................................................................................................................................
Sale during the year ...........................................................................................................................................
Fair value change ...............................................................................................................................................
Carrying amount at 31 December 2021 .............................................................................................................
(Increase) / decrease of return on equity and interest rates by 1.0%-point ............................
Increase / (decrease) of EBITDA from operations of properties by 5% .................................
Consolidated Annual Financial Statements of Festi hf. 2021
26
Amounts are in thousands of ISK
Notes, contd.:
17.
Accounting policies
Ownership 2021 2020
60,0% 1.449.267 1.401.719
24,9% 515.451 511.472
33,3% 109.101 77.330
25,0% 133.921 128.057
116.326 31.104
2.324.066 2.149.682
2.149.682 1.952.349
0 19.007)(
300.702 267.662
214.962)( 134.261)(
118.000 27.911
29.356)( 55.028
2.324.066 2.149.682
Change in the carrying amount of associates during the year:
Carrying amount at the beginning of the year ........................................................................
Share of profit .........................................................................................................................
Dividend .................................................................................................................................
Following is financial information of the associates Olíudreifing ehf. and Malik Supply A/S. The information is based on their
annual financial statements by taking into account the unamortised premium paid upon acquisition of the share in Malik
Supply A/S.
Olíudreifing ehf. .......................................................................................
Malik Supply A/S, Danmörku ..................................................................
EAK ehf. ...................................................................................................
EBK ehf. ...................................................................................................
Shares in associates - 4 companies (2020: 3) .........................................
Total shares in associates at the end of the year ...................................................................
The Company had eight associates at year-end 2021, both domestic and foreign. The Company recognises in the annual
financial statements its share of profit or loss of those associates.
Associates are entities where the Company has significant influence, but not control, over the financial and operating policies.
Significant influence is presumed to exist when the Company holds between 20 and 50 percent of the voting rights.
Associates are accounted for using the equity method and are recognised initially at cost. The Company's investment
includes the goodwill arising from the acquisition, if any, less impairment, if any. The annual financial statements include the
Company’s share of profit and equity movements of associates from the date that significant influence commences until the
date that significant influence ceases. When the Company’s share of losses exceeds its interest in an associate, the carrying
amount of that interest is reduced to nil and the recognition of further losses is discontinued except to the extent that the
Company has provided guarantees in respect of the associate or has financed it. Unrealised profit arising on transactions with
associated companies is recognised as a reduction in their book value. Unrealised loss is recognised in the same way as
unrealised profit, but only to the extent that there is no indication of impairment of these companies.
The share of profit or loss of foreign associates is recognised at the average exchange rate of the year. The share in equity is
recognised at the exchange rate at the reporting date. Exchange differences arising from the translation to Icelandic Krona
are recognised as a separate line item in the statement of comprehensive income. When a foreign associate is sold, partially
or entirely, the related exchange difference is transferred to profit or loss.
Associates
-
Ownership in associates is specified as follows:
Purchase of shares ................................................................................................................
Merger at 1 January 2020 ......................................................................................................
Translation difference .............................................................................................................
Carrying amount at the end of the year ..................................................................................
On 1 February 2021 the Company acquired 45% of the shares in IMF ehf. for ISK 18 million. IMF ehf. specialises in
production of convenience goods sold in Krónan and N1 stores. The Company also participated in the increase in share
capital in Dropp ehf. for ISK 100 million. The Group’s share in profit or loss of associates amounted to ISK 301 million in 2021
(2020: ISK 268 million.)
Ownership in associates and share of profit or loss
Consolidated Annual Financial Statements of Festi hf. 2021
27
Amounts are in thousands of ISK
Notes, contd.:
17.
Olíudreifing ehf.
2021* 2020*
3.799.487 3.866.592
1.255.232 1.196.875
1.834.473)( 2.020.323)(
804.801)( 706.945)(
2.415.445 2.336.199
1.449.267 1.401.719
4.088.140 3.553.993
389.246 390.184
233.548 234.110
Malik Supply A/S
2021* 2020*
1.123.618 1.143.557
6.976.459 5.020.556
516.022)( 545.459)(
5.779.446)( 3.845.424)(
1.804.608 1.773.230
448.529 440.730
66.922 70.742
515.451 511.472
52.537.477 37.403.632
250.643 511.164
62.296 127.048
Profit (100%) ..........................................................................................................................
Share in equity .......................................................................................................................
Carrying amount at year-end 24.9% ......................................................................................
Revenue (100%) ....................................................................................................................
Premium .................................................................................................................................
Current liabilities .....................................................................................................................
Net assets (100%) ..................................................................................................................
Share in total comprehensive income (60%) ..........................................................................
* Draft annual financial statements
The Company owns 60% share in Olíudreifing ehf. The Company has not control over Olíudreifing ehf. which is therefore not
a subsidiary of the Company. This is because the Competition Authority decided that the company should have board
members independent from N1 hf. However the Company´s operations have significant influence on the operations of
Olíudreifing ehf. Accordingly the Company accounts for its ownership interest according to the equity method. The financial
statements of Olíudreifing ehf. are prepared in accordance with the Act on Annual Accounts and the established accounting
rules.
Non-current assets .................................................................................................................
Current assets ........................................................................................................................
Non-current liabilities ..............................................................................................................
Revenue (100%) ....................................................................................................................
Carrying amount at year-end (60%) .......................................................................................
Profit (100%) ..........................................................................................................................
Share in total comprehensive income 24.9% .........................................................................
* Draft annual financial statements
Malik Supply A/S was founded in 1989 to service the international fleet of trawlers on the waters of Greenland and in the
North Atlantic ocean with oil, lubricants and other products. N1 sells Malik fuel oil sold to major fisheries in Greenland. The
financial statements of Malik Supply A/S are prepared in accordance with the Danish Act on Annual Accounts and the
established accounting rules.
Non-current assets .................................................................................................................
Current assets ........................................................................................................................
Non-current liabilities ..............................................................................................................
Current liabilities .....................................................................................................................
Net assets (100%) ..................................................................................................................
Associates, contd.:
Consolidated Annual Financial Statements of Festi hf. 2021
28
Amounts are in thousands of ISK
Notes, contd.:
18.
Interest rates
at year-end 2021 2020
10%/10% 128.412 135.745
4%/4% 21.490 20.980
7% / 7% 120.832 155.333
0%/0% 30.000 50.000
300.734 362.058
72.510)( 90.345)(
228.224 271.713
- 90.345
72.510 143.333
102.500 2.500
125.724 125.880
300.734 362.058
19.
Accounting policy
2021 2020
3.080.438 2.907.083
2.599.583 1.065.752
2.282.174 2.232.116
1.583.146 1.463.311
9.545.341 7.668.262
10.489.709 8.510.122
Inventories at year-end are specified as follows:
The Group’s long-term receivables are denominated both in Icelandic and Danish krona. Receivables from related parties in
the amount of ISK 100 million are convertible into share capital of the corresponding company at a certain conversion ratio at
any time during the loan period. The following is an analysis of the Group´s long-term receivables.
Outstanding at year-end
Receivables from related parties in Danish krona ...................................
Other receivables in Danish krona ...........................................................
Receivables from related parties in Icelandic krona ................................
Other receivables in Icelandic krona ........................................................
Long-term receivables
Current portion .......................................................................................................................
Total long-term receivables ....................................................................................................
Year 2021 ...............................................................................................................................
Year 2022 ...............................................................................................................................
Year 2023 ...............................................................................................................................
Due in 2026 and later ............................................................................................................
Total long-term receivables ....................................................................................................
Insurance value of inventories ...............................................................................................
Electronic equipment ..............................................................................................................
Other goods ...........................................................................................................................
Total inventories .....................................................................................................................
Inventories are pledged as security for liabilities that was fully paid for during the year 2021 (2020: 2,000). The write-down of
inventories at year-end 2021 amounted to ISK 441 million (2020: 535) and decreased by ISK 93 million during the year (2020:
increase 148).
Inventories
The Group’s inventories consist of convenience goods, fuel, electronic equipment and inventory related to the Company’s
lubrication and motor vehicle services.
Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the first-in first-out
rule, and includes expenditure incurred in acquiring the inventories and in bringing them to the location and condition in which
they are at the reporting date. Net realisable value is the estimated selling price in the ordinary course of business less the
estimated costs necessary to make the sale.
Fuel ........................................................................................................................................
Convenience goods ...............................................................................................................
Consolidated Annual Financial Statements of Festi hf. 2021
29
Amounts are in thousands of ISK
Notes, contd.:
20.
2021 2020
82.132 144.517
117.663 327.504
174.000 0
13.410 9.697
152.740 161.475
72.510 90.345
276.456 218.397
888.911 951.935
21.
2021 2020
3.954.802 2.511.210
47.914 51.732
4.002.716 2.562.942
22.
Share capital
Share premium
Statutory reserve
Revaluation reserve
Unrealised profit of subsidiaries and associates
Translation reserve
Retained earnings
Cash and cash equivalents
Other short-term receivables at year-end are specified as follows:
Cash and cash equivalents at year-end are specified as follows:
Receivable due to sale of property and equipment ................................................................
Current portion of long-term receivables ................................................................................
Other short-term receivables ..................................................................................................
Total other short-term receivables .........................................................................................
Bank accounts ........................................................................................................................
Cash .......................................................................................................................................
Total cash and cash equivalents ............................................................................................
Equity and capital management
Share premium consists of the difference between the nominal value of share capital and the amount of paid-in share capital
at any given time, less the premium on acquisition of own shares.
In accordance with the Act on Limited Liability Companies, companies are required to retain a certain percentage of their
profit for the year in a statutory reserve, up to the limit of the reserve being in the amount of 25% of the nominal value of
share capital.
The revaluation of the Group's real estate as well as its share in the revaluation of real estate of an associate is recognised in
the revaluation reserve. The revaluation is dissolved in accordance with annual depreciation of the revaluation in the
statement of profit or loss. Dissolution of the revaluation is recognised in retained earnings.
If the share of profit of subsidiaries and associates which is recognised in the statement of profit or loss is in excess of the
dividends received from them, or the dividends that has been decided to distribute, the difference is to be transferred from
retained earnings to a restricted reserve among equity. If a company’s shareholding in its subsidiary or associate is sold or
written off the reserve is to be dissolved via transfer to retained earnings or accumulated deficit, as applicable.
Profit (loss) for the year is recognised as an increase (decrease) in retained earnings. Dividend payments are recognised as a
decrease in retained earnings. Dissolution of revaluation is recognised as an increase in retained earnings. The amount of
unrealised profit of subsidiaries and associates in excess of dividend payments is recognised in the restricted reserve as a
decrease in retained earnings.
Capital management and dividends
Translation reserve consists of exchange differences arising from the translation into Icelandic krona of the financial
statements of a foreign associate.
The Board of Directors of Festi has established a policy on the capital structure and dividend payments, according to which
dividend payments to shareholders or purchase of own shares should amount to at least 50% of the profit for each year. The
Board has also established a policy that EBITDA should be 35% of gross profit, net interest bearing liabilities should be 3.5 x
EBITDA and equity ratio should be between 30 - 35%. The Company´s loan covenants require a minimum equity ratio of
25%. The equity ratio at year-end 2021 was 39.4% (year-end 2020: 35.7%).
The Company's total share capital according to its Articles of Association amounts to ISK 324 million and it was decreased by
ISK 9 million during the year. One vote is attached to each share of ISK one in the Company. Shareholders in the Company
have the right to receive dividends in proportion to their shareholding upon dividend distribution. Costs directly associated with
issue of share capital are deducted from equity. Purchase price of treasury shares, including direct costs associated, are
deducted from equity. Equity is increased upon the sale of treasury shares. In accordance with the authorisation granted by
the annual general meetings of Festi hf. on 23 March 2020 and 22 March 2021, the Company continued to purchase own
shares during the year 2021. The Company purchased a total of ISK 7 million shares in nominal amount at the average share
price of 209.5 for a total of ISK 1,461 million or 2.2% of the outstanding share capital. The Company owns 7.4 million own
shares or 2.3% at year-end 2021.
Receivables from related parties ............................................................................................
Market value of forward contracts ..........................................................................................
Other short-term receivables
Prepaid expenses ...................................................................................................................
Receivables from the Icelandic State .....................................................................................
Consolidated Annual Financial Statements of Festi hf. 2021
30
Amounts are in thousands of ISK
Notes, contd.:
23.
2021 2020
4.972.114 2.266.303
323.091 328.574
1.798)( 2.641)(
321.293 325.933
15,48 6,95
24.
2021 2020
Long-term loans
29.074.806 29.942.470
11.088.804)( 1.615.525)(
7.000.000 0
141.880 28.609
709.868 757.786
91.771 38.534)(
25.929.521 29.074.806
Short-term loans
1.382.003 1.473.774
0 2.000.000
1.382.003 3.473.774
27.311.524 32.548.580
2021 2020 2021 2022
3,9% 1,9% 23.739.246 8.791.278
2,2% 2,2% 3.572.278 21.757.302
2,4% 0 2.000.000
27.311.524 32.548.580
CPI-indexed loans on floating interest rates ...................
Total loans from credit institutions ..........................................................................................
Profit for the year ....................................................................................................................
Non-indexed loans on floating interest rates ...................
Loans from credit institutions
Earnings per share
Total loans from credit institutions ..........................................................................................
Outstanding at year-end
CPI-indexation ........................................................................................................................
Change in current portion .......................................................................................................
Balance at year-end ...............................................................................................................
Current portion of long-term loans .........................................................................................
Short-term loans from a bank .................................................................................................
Balance at year-end ...............................................................................................................
Interest rates at year-end
Basic and diluted earnings per share for ordinary shares in the Company are presented in the annual financial statements.
Basic earnings per share is based on the weighted average number of effective shares during the year. No share option
contracts have been made with employees nor have financial instruments been issued, such as convertible bonds, which
could lead to dilution of earnings per share. Diluted earnings per share is therefore the same as basic earnings per share.
All loans from credit institutions are denominated in Icelandic krona. The Company converted debt amounting to ISK 15,733
million from CPI-indexed loans to non-indexed loans during the year. The Company paid additional loan payments in the
amount of ISK 2,587 million due to sale of assets during the year. The balance of the loans at year-end is secured by pledge
in the properties of the Company. The loans are specified as follows:
Balance at the beginning of the year ......................................................................................
Repayments ...........................................................................................................................
New loans ...............................................................................................................................
Amortisation of borrowing costs .............................................................................................
Share capital at the beginning of the year ..............................................................................
Effect of changes in share capital ..........................................................................................
Weighted-average of outstanding shares ..............................................................................
Basic and diluted earnings per share in ISK ..........................................................................
Short-term loan on floating interest rates ........................
Consolidated Annual Financial Statements of Festi hf. 2021
31
Amounts are in thousands of ISK
Notes, contd.:
24.
2021 2020
- 3.473.774
1.382.003 1.475.181
1.382.186 1.476.587
1.382.369 1.477.994
7.226.611 7.323.460
1.389.991 1.488.064
14.548.364 15.833.520
27.311.524 32.548.580
25.
5.610.632 3.963.559
1.698.363 1.213.654
416.859)( 823.893
469.573)( 390.474)(
6.422.563 5.610.632
553.819)( 430.085)(
5.868.744 5.180.547
- 430.085
553.819 457.779
557.450 443.346
565.654 458.912
585.575 477.403
561.075 496.220
3.598.990 2.846.887
6.422.563 5.610.632
26.
Accounting policy
Loans from credit institutions, contd.:
The maturities of the loans are specified as follows:
Total loans from credit institutions ..........................................................................................
Lease liabilities
Year 2022 ...............................................................................................................................
Year 2023 ...............................................................................................................................
Year 2024 ...............................................................................................................................
Year 2025 ...............................................................................................................................
Current tax is the income tax estimated to be payable next year in respect of the taxable income for the year, based on the tax
rate at the reporting date, besides adjustments to tax payable in respect of previous years, if any.
Year 2022 ...............................................................................................................................
Year 2023 ...............................................................................................................................
Year 2024 ...............................................................................................................................
Year 2025 ...............................................................................................................................
Due for payment onwards ......................................................................................................
Total .......................................................................................................................................
Year 2026 ...............................................................................................................................
Increase due to indexation of lease payments .......................................................................
Payment of lease liabilities during the year ............................................................................
Total lease liabilities ...............................................................................................................
Current portion .......................................................................................................................
Total non-current portion of lease liabilities ............................................................................
Year 2021 ...............................................................................................................................
Income tax
Income tax comprises current and deferred tax. Income tax is recognised in profit or loss except to the extent that it relates to
items recognised directly in equity or in other comprehensive income, in which case the income tax is recognised together
with those items.
Lease liabilities are specified as follows:
New lease contracts ...............................................................................................................
Carrying amount at the beginning of the year ........................................................................
Deferred tax is recognised using the balance sheet method in respect of temporary differences between, on the one hand, the
carrying amounts of assets and liabilities in the financial statements and, on the other hand, their tax bases. The amount of
deferred tax is based on the estimated realisation or settlement of the carrying amounts of assets and liabilities using the tax
rate in effect at the reporting date.
All lease liabilities are denominated in Icelandic krona.
Year 2026 ...............................................................................................................................
Due for payment onwards ......................................................................................................
Year 2021 ...............................................................................................................................
The maturity analysis of lease liabilities is specified as follows at year-end:
Consolidated Annual Financial Statements of Festi hf. 2021
32
Amounts are in thousands of ISK
26.
Income tax recognised in the statement of profit or loss
The income tax in the statement of profit or loss is specified as follows:
2021 2020
6.161.169 2.777.757
20,0% 1.232.234 20,0% 555.551
0,0% 843 0,1% 1.485
1,0% )( 60.140)( 1,9% )( 53.532)(
0,3% 16.119 0,3% 7.949
19,3%
1.189.055 18,4% 511.454
Deferred tax liability
2021 2020
5.114.858 4.285.417
433.865 336.985
53.445)( 38.213)(
25.288 19.787
14.599 19.729)(
54.856 79.421
5.590.021 4.663.668
27.
1.326.378 1.172.390
2.682.535 1.666.546
680.785 268.524
82.923 55.345
241.059 262.529
701.840 313.710
5.715.520 3.739.044
28.
Risk management
Overview
*
* Liquidity risk
*
* Currency risk
* Operating risk
Inventories ..............................................................................................................................
Other items .............................................................................................................................
Effective income tax rate .................................................
Lease contracts ......................................................................................................................
Deferred tax liability ................................................................................................................
A deferred tax asset is recognised only to the extent that it is probable that it is possible to utilise future profits against the
asset. Deferred tax asset is reviewed at each reporting date and is reduced to the extent that it is considered that it will not be
utilised.
Intangible assets ....................................................................................................................
Deferred tax liability isspecified as follows at year-end:
Unpaid salaries and salary-related expenses ........................................................................
Unpaid accrued interest .........................................................................................................
Deferred income .....................................................................................................................
Other short-term liabilities are specified as follows at year-end:
Notes, contd.:
Income tax, contd.:
Profit before income tax ...........................................................................
Income tax based on current tax rate ..............................
Non-deductible expenses ................................................
Non-taxable income from shares ....................................
Other changes ................................................................
Market risk (price risk and interest rate risk)
Following is information about the Group‘s risks, objectives, policies and processes for measuring and managing the risk as
well as information regarding operating risk. The Company’s risk management objective is to minimise the risk it faces by
analysing the risk, measuring it and controlling it.
The following risks arise from the Group's financial instruments:
Credit risk
Other short-term liabilities ......................................................................................................
Total other short-term liabilities ..............................................................................................
Property and equipment and investment properties ...............................................................
Other short-term liabilities
Unpaid income tax ..................................................................................................................
Other unpaid taxes (VAT, tariffs, oil charge, gasoline charge, carbon charge) .....................
Trade receivables ...................................................................................................................
Consolidated Annual Financial Statements of Festi hf. 2021
33
Amounts are in thousands of ISK
Notes, contd.:
28.
Risk management, contd.:
Credit risk
2021 2020
1.527.147 1.998.564
3.230.139 2.925.145
4.757.286 4.923.709
Nominal
Loss Carrying Allowance
Year 2021
amount
allowance amount ratio
4.530.100 56.490)( 4.473.610 1,2%
191.979 8.537)( 183.442 4,4%
43.958 6.761)( 37.197 15,4%
158.649 95.612)( 63.037 60,3%
4.924.686 167.400)( 4.757.286 3,4%
Year 2020
3.846.589 47.779)( 3.798.810 1,2%
738.971 16.965)( 722.006 2,3%
350.554 26.445)( 324.109 7,5%
197.315 118.531)( 78.784 60,1%
5.133.429 209.720)( 4.923.709 4,1%
Liquidity risk
Total trade receivables ...........................................................................................................
The age of trade receivables at year-end was specified as follows:
Not yet due ......................................................................
Past due by 30 days or less ............................................
Past due by 31 - 120 days ..............................................
Past due by more than 120 days ....................................
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its
contractual obligations. The Company's credit risk arises principally from trade receivables and other receivables.
Credit risk mainly depends on the age of trade receivables, the financial standing and operations of individual customers and
the standing of the industries in which the Company's biggest customers operate, which are transportation, fishing industry
and contractors. Approximately 24% (2020: 16%) of the Company's trade receivables at year-end is attributable to 30 of the
Company's biggest customers. Thereof, receivable from the biggest customer was 3% (2020: 2%).
The Group has established credit rules. All of the Company's customers with charge accounts have credit limits on their
account which they cannot exceed. Legal entities must in general provide a personal guarantee of the owner for an amount
corresponding to supplies for two months. This does however not apply to bigger customers which have good credit rating at
CreditInfo.
The Group establishes an allowance for expected credit losses on trade receivables and other receivables. The estimation of
the allowance is based on historical loss experience, the age of receivables, current economic conditions and future
prospects. During the year a new contract was entered into with a payment processor which delays the payment of credit card
receivables in exchange for lower fees. This explains the increase in credit card receivables between the years.
Credit card receivables ..........................................................................................................
Other trade receivables ..........................................................................................................
Liquidity risk is the risk that the Group will encounter difficulty in meeting financial obligations that are settled by delivering
cash or other financial assets. The Group’s objective is to always have sufficient liquidity to meet its payment obligations as
they become due.
The Group's liquidity position at year-end 2021 was strong. The Group’s management considers that the Group is capable to
meet its financial obligations as they become due. The weighted-average repayment period of the Group’s long-term loans is
about 11 years and all loans are prepayable during the loan term. The Group also has access to lines of credit for up to next 8
months for a maximum amount of ISK 3,000 million. No amount was drawn at year-end 2021.
Further information about the Group's financial liabilities is disclosed in Note 29 about financial instruments.
Not yet due ......................................................................
Past due by 30 days or less ............................................
Past due by 31 - 120 days ..............................................
Past due by more than 120 days ....................................
The Company's trade receivables at year end are specified as follows:
Age analysis of trade receivables and impairment loss
Consolidated Annual Financial Statements of Festi hf. 2021
34
Amounts are in thousands of ISK
Notes, contd.:
28.
Risk management, contd.:
Market risk
Price risk
Interest rate risk
Currency risk
Other
Year 2021
USD EUR currencies Total
0 0 120.724 120.724
326.387 22.115 67.544 416.046
225.894 12.336 220.862 459.092
10.045)( 180.367)( 734.344)( 924.756)(
542.236 145.916)( 325.214)( 71.106
Árið 2020
0 0 125.880 125.880
106.320 20.365 112.581 239.266
146.509 1.368 63.226 211.103
6.291)( 88.937)( 342.101)( 437.329)(
246.538 67.204)( 40.414)( 138.920
Market risk consists of price risk, interest rate risk and currency risk. The Company's objective is to manage and confine
market risk within defined limits.
The Group is exposed to cash flow interest rate risk due to changes in interest rates of floating rate financial liabilities. In order
to diversify the risk, the Company’s financing is a mix of non-indexed and CPI-indexed loans.
An increase in interest rates at the reporting date by one percentage point (100 basis points) would decrease profit or loss
before income tax by ISK 273 million (2020: ISK 325 million) due to effects on the borrowings of the Company at floating
interest rates. The calculation is based on operating effect on an annual basis. A decrease by one percentage point would
have the same effect but in the opposite direction.
All of the Company's transactions denominated in foreign currencies give rise to currency risk. In evaluating currency risk both
payment risk and settlement risk is taken into account. The objective is to manage currency risk in order to best insure the
Company's benefits. The major part of imports is purchase of goods for resale from foreign suppliers denominated in USD
and EUR, but the sale is for the most part in ISK. Sales in ISK constitute 97% (2020: 96%), USD 2% (2020: 3%) and other
currencies 1% (2020: 1%).
Risk in the statement of financial position .......................
Risk in the statement of financial position .......................
Long-term receivables ....................................................
Trade receivables ...........................................................
Cash and cash equivalents .............................................
Trade liabilities ................................................................
Assets and liabilities denominated in foreign currencies at year-end are specified as follows:
Long-term receivables ....................................................
Trade receivables ...........................................................
Cash and cash equivalents .............................................
Trade liabilities ................................................................
An important market risk of the Company is price risk due to changes in the oil price in the world market, which has been very
volatile in the past years. The price risk is reduced by means of specific agreements with the largest customers of the
Company but also by the Parent Company entering into derivative contracts to hedge part of the price risk arising from the
purchase of oil. The contracts have maturities of up to several months, whereas the oil price is fixed in foreign currency and
they cover the part of the Group’s oil purchases which is not hedged with specific agreements. The contracts are settled in
cash and are presented in the statement of profit or loss as part of the cost of oil to which they relate. The gain from oil
hedges amounted to ISK 532 million during the year (2020: loss of ISK 11 million). The fair value of derivatives recognised in
restricted reserves in equity amounted to ISK 122 million at year-end 2021 (2020: ISK 129 million).
Consolidated Annual Financial Statements of Festi hf. 2021
35
Amounts are in thousands of ISK
Notes, contd.:
28.
Risk management, contd.:
Sensitivity analysis
2021 2020
54.224 24.654
14.592)( 6.720)(
32.521)( 4.041)(
7.111 13.892
Operating risk
29.
Assets at fair value
Loans from credit institutions and other financial liabilities
In order to reduce operating risk, among other things, there has been established an appropriate segregation of duties and
transactions on charge accounts and compliance with laws are monitored. Furthermore, effective training activities are
performed with the objective of giving the necessary training to all employees relating to their work for the Company. Effective
work procedures and rules on back-up of IT systems have been implemented. Furthermore, effective operating budgets and
monthly statements are prepared for individual divisions and deviations from approved operating budgets are analysed.
Financial instruments and fair value
Securities are recognised at fair value. The fair value estimate is categorised in level 3 of the fair value hierarchy, since the
information about their fair value is based on the Company's own assumptions. Securities are an immaterial part of the
Group’s assets. The properties are recognised at revalued cost. This entails that their fair value is determined regularly to
ensure that book value does not differ significantly from fair value at any given time. Further information about the fair value
measurement of properties is disclosed in Note 14. Investment properties are recognised at fair value. Further information
about their fair value is disclosed in Note 16.
A 10% strengthening of the ISK against the following currencies at year-end would have increased (decreased) the
Company's profit before income tax by the following amounts.
USD ........................................................................................................................................
EUR ........................................................................................................................................
Other currencies .....................................................................................................................
Financial assets and liabilities are classified into certain categories. The classification of financial assets and financial
liabilities affects how the respective financial instruments are measured after initial recognition. The classification of financial
assets and financial liabilities of the Group and their measurement basis are specified in the following table.
Total .......................................................................................................................................
A 10% weakening of the ISK against these currencies would have the same effect but in the opposite direction.
Operating risk is the risk of direct or indirect loss due to various factors in the Group's operations. Among the risk factors are
employees’ work, technology and methods applied.
The Group's financial assets and liabilities include cash and cash equivalents, shares in other companies and long-term
receivables, trade and other receivables, derivative contracts, borrowings, trade payables and certain other current liabilities.
Financial instruments are initially recognised at fair value. They are recognised at the transaction date, which is the date the
Group becomes a party to the contractual provisions of the instrument. For financial instruments not recognised at fair value
through profit and loss all direct transaction costs are taken into account upon initial recognition.
The fair value of loans from credit institutions is the estimated future cash flows discounted at the market interest rate at the
reporting date. The loans from credit institutions are on market interest rates and therefore the difference between their
carrying amount and fair value is insignificant at any given time. Short-term liabilities are not discounted as the difference
between their fair value and their carrying amount is insignificant.
Consolidated Annual Financial Statements of Festi hf. 2021
36
Amounts are in thousands of ISK
Notes, contd.:
29.
Financial instrument
Cash and cash equivalents
4.002.716 2.562.942
5.564.065 5.731.127
Long-term receivables
228.224 271.713
Loans from credit institutions
27.311.524 32.548.580
12.496.195 10.495.510
Financial conditions
Maturity analysis
After more
Year-end 2021
Within a year After 1 - 3 years After 3 - 5 years then 5 years
2.566.909 4.586.253 9.980.124 16.694.480
900.780 1.696.166 1.589.874 5.537.354
7.021.734
2.682.535
680.785
2.111.141
15.963.884 6.282.419 11.569.998 22.231.834
Year-end 2020
4.102.427 4.113.067 9.805.639 18.862.451
722.094 1.402.116 1.336.716 5.347.133
7.018.995
1.666.546
268.524
1.541.445
15.320.031 5.515.183 11.142.355 24.209.584
Trade and other short-term
liabilities classified as financial
instruments
Financial liabilities at amortised cost
In the loan agreements there is the condition that the Group’s equity ratio must always be higher than 25% at the end of each
operating year. The equity ratio was 39.4% at year-end 2021 (year-end 2020: 35.7%) and the condition was fulfilled.
Financial instruments and fair value, contd.:
Carrying
amount at
year-end 2020
Loans from credit institutions ..........................................
Current tax liability ...........................................................
Payable to the Icelandic State .........................................
Trade payables ...............................................................
Other short-term liabilities ...............................................
Lease liabilities ................................................................
Current tax liability ...........................................................
Payable to the Icelandic State .........................................
Trade payables ...............................................................
Other short-term liabilities ...............................................
Lease liabilities ................................................................
The following table shows when the future payments of the Group's liabilities and income tax become due. The cash flow
includes estimated future interest payments where appropriate.
Loans from credit institutions ..........................................
Financial assets at amortised cost
Trade and other receivables
classified as financial
instruments, including
receivables from related parties
Financial assets at amortised cost
Financial assets at amortised cost
Financial liabilities at amortised cost
Classification of financial instruments and their measurement basis
The following table shows the classification of the Group's financial instruments, their measurement basis and where gains
and losses arising from them are recognised in the statement of profit or loss.
Carrying
amount at
year-end 2021
Classification
Consolidated Annual Financial Statements of Festi hf. 2021
37
Amounts are in thousands of ISK
Notes, contd.:
30.
Definition of related parties
Transactions with related companies
2021 2020
2.215.364 2.087.152
297.210 169.747
15.212 14.813
249.245 291.078
13.410 9.697
232.609 5.488
Board of Directors and key management personnel
Number
Performance-
of shares
2021
Salary
Benefits based salary
at year-end
Board of Directors
7.685 609.391
5.787 83.014
5.772 6.028
5.502
13.323 5.000.000
Key management personnel
50.548 4.116 4.200 600.000
173.926 16.682 8.529 384.902
262.543 20.798 12.729 6.683.335
2020
Board of Directors
11.635 4.345.463
6.905 349.391
5.577 6.028
8.068 22.014
3.411
Key management personnel
50.400 4.573 12.745 90.000
163.562 13.392 25.925 34.902
249.558 17.965 38.670 4.847.798
2021 2020
83/17 83/17
Key management personnel gender ratio (males/females) ....................................................
Total ................................................................................
The numbers above include shares owned by their spouses and companies controlled by the members of the Board of
Directors and key management personnel.
Þórey G. Guðmundsdóttir ...............................................
Eggert Þór Kristófersson, CEO .......................................
Five managing directors ..................................................
Long-term receivables at year-end ........................................................................................
Short-term receivables at year-end ........................................................................................
Trade receivables at year-end ...............................................................................................
Þórður Már Jóhannesson, Chairman
Guðjón Karl Reynisson, Vice-Chairman ..........................
Five managing directors...................................................
Total.................................................................................
The salaries and benefits of the members of the Board of Directors and key management personnel for their work for the
Group and the nominal amount of their shareholding at year-end is specified as follows:
Margrét Guðmundsdóttir, Vice-Chairman .......................
Þórður Már Jóhannesson, former Chairman ...................
Þórey G. Guðmundsdóttir ...............................................
Guðjón Karl Reynisson, Chairman
Related parties
The Company's related parties are large shareholders in the Company, associates, members of the Board of Directors and
management, their close family members and companies owned by them.
Purchased goods and services ..............................................................................................
Kristín Guðmundsdóttir ...................................................
Eggert Þór Kristófersson, CEO........................................
Sold goods and services ........................................................................................................
Interest revenue from receivables ..........................................................................................
of the Board of Directors ............................................
of the Board of Directors ............................................
Transactions with related companies are specified as follows:
Kristín Guðmundsdóttir ...................................................
Margrét Guðmundsdóttir .................................................
Consolidated Annual Financial Statements of Festi hf. 2021
38
Amounts are in thousands of ISK
Notes, contd.:
30.
Transactions with other related parties
Transactions with employees
31.
32.
In 2020, ELKO initiated at the District Court a litigation against the inspection fees levied by the Icelandic State for the import
of electronic equipment during the years 2016 – 2020. The District Court ruled the case in ELKO’s favor in November 2020.
The State appealed the case to the Court of Appeal and its ruling is expected in the first half of the year 2022. If the Court of
Appeal agrees with the District Court, ELKO will be repaid between ISK 30 – 40 million including penalty interests. No amount
is recognised in the annual financial statements with respect to this litigation.
In December 2020 the Competition Authority announced it would initiate an investigation on potential violations of the
settlement by Festi and requested information and further explanations from the Company regarding several aspects,
including the sale of the convenience store in Hella, which was subsequently answered. It the Company's view, all conditions
of the settlement have been fulfilled.
Related parties, contd:
There are no shareholders with significant influence at year-end 2021. Companies controlled by members of the Board of
Directors and key management personnel are five at year-end 2021 and they were defined as related parties. Transactions
with them during both years 2021 and 2020 were very insignificant and they consist of normal sales and purchases and the
pricing in such transactions is comparable to other transactions of Group companies.
The Group has granted loans to its employees due to general purchase of goods in the amount of ISK 8 million at year-end
2021 (2020: ISK 9 million). Other liabilities of employees amounted to ISK 1 million at year-end (2020: ISK 1 million).
Litigation and other claims
Festi hf. made a settlement with the Competition Authority on 30 July 2018 as a consequence of the acquisition by the
Company of Hlekkur hf. According to the settlement, Festi committed, amont other things, to selling five self-service stations
within the Capital Region and the convenient store Kjarval located in Hella. On 14 February 2019, Festi reached an
agreement for the sale of the self-service stations which was approved by the Competition Authority. The delivery of self-
service stations occurred on 28 February 2019. Festi completed the sale of the convenience store in the first half of the year
2021 as the sale was delayed because the store’s lessor did not accept the previous buyers.
Other matters
At year-end 2018 the Internal Revenue Board ruled that Festi had incorrectly classified certain fuel deliveries for custom
purposes during the years 2013 – 2018. Subsequently, the Revenue and Customs authority re-determined in December 2019
import duties for the years 2013-2014 and in March 2020 for the years 2015 – 2018. Consequently, the Company paid in total
ISK 110 million including charges and penalty interests. The Company appealed the case to the Internal Revenue Board,
which ruled in favor of the Company in December 2020. The Revenue and Customs authority accepted the ruling partially and
paid partial compensation of ISK 15 million in 2021 but it withheld the remaining ISK 95 million based on a re-determination.
The Company does not agree and has appealed again to the Internal Revenue Board, which is expected to rule in the second
half of 2022. The receivable is capitalised among other short-term receivables in the statement of financial position at year-
end 2021.
Consolidated Annual Financial Statements of Festi hf. 2021
39
Amounts are in thousands of ISK
Notes, contd.:
33.
Financial ratios
Operations
2021 2020
8,2 8,6
18,9 13,8
41,1% 34,1%
47,3% 50,9%
21,0% 23,0%
Financial position
1,31 1,10
0,66 0,58
2,30 4,25
39,4% 35,7%
15,6% 7,8%
Equity ratio: equity / total capital .............................................................................................
Return on equity: profit for the year / average balance of equity ............................................
Sales days in trade receivables:
Average balance of trade receivables during the year / goods and
Profit before depreciation, amortisation and finance items / gross profit ................................
Salaries and salary related expenses / gross profit ................................................................
Other operating expenses / gross profit .................................................................................
Current ratio: current assets / current liabilities ......................................................................
The Group's key financial ratios
Turnover rate of inventories
Utilisation of goods / average balance of inventories during the year ...............................
Liquidity ratio: (current assets - inventories) / current liabilities ..............................................
Leverage: net interest bearing liabilities / EBITDA .................................................................
services sold ................................................................................................................
Consolidated Annual Financial Statements of Festi hf. 2021
40
Amounts are in thousands of ISK
2021
Q1 Q2 Q3 Q4 Total
20.917.226 24.326.416 27.063.982 26.428.388 98.736.012
15.773.505)(
18.220.853)(
20.189.203)( 19.906.821)( 74.090.382)(
5.143.721 6.105.563 6.874.779 6.521.567 24.645.630
455.018 603.412 534.144 723.797 2.316.371
2.817.658)( 3.016.679)( 2.752.260)( 3.072.282)( 11.658.879)(
1.276.106)( 1.233.879)( 1.311.155)( 1.364.368)( 5.185.508)(
3.638.746)( 3.647.146)( 3.529.271)( 3.712.853)( 14.528.016)(
Operating profit before depreciation, amortisation
1.504.975 2.458.417 3.345.508 2.808.714 10.117.614
728.794)( 714.239)( 754.370)( 995.858)( 3.193.261)(
64.123)(
22.695
434.678 342.756
736.006
712.058 1.766.873 3.025.816 2.155.612 7.660.359
17.941
21.691
22.328 27.896
89.856
440.128)(
612.266)(
385.076)( 519.230)(
1.956.700)(
17.229
8.416)(
18.004 40.135
66.952
45.221 80.787 166.978 7.716
300.702
359.737)( 518.204)( 177.766)( 443.483)( 1.499.190)(
352.321 1.248.669 2.848.050 1.712.129 6.161.169
62.993)( 206.147)( 562.071)( 357.844)( 1.189.055)(
289.328 1.042.522 2.285.979 1.354.285 4.972.114
subsequently to profit or loss:
27.140)( 5.021)( 14.164 11.359)( 29.356)(
150.934 43.118 68.418)( 132.622)( 6.988)(
subsequently to profit or loss:
0 0 0 1.621.320 1.621.320
123.794 38.097 54.254)( 1.477.339 1.584.976
413.122 1.080.619 2.231.725 2.831.624 6.557.090
0,91 3,21 7,10 4,26 15,48
Profit before income tax (EBT) .....................................................................
Income tax ....................................................
Revaluation of properties, net of tax .............
Items that are or may be reclassified
for the period ..............................................................................................
Basic and diluted earnings per share in ISK .
operations of a foreign associate ...............
Total comprehensive income
Items that will not be reclassified
Share of profit of associates .........................
Sale of goods and services ..........................
Cost of goods sold .......................................
Gross profit from sale of goods and serv. ...........................................................................................
Other operating income ................................
Salaries and other personnel expenses .......
Foreign currency differences ........................
Other operating expenses ...........................
and changes in value (EBITDA) ...........................................................................................
Depreciation and amortisation ......................
The Group´s operations for the year 2021 is specified by quarters as follows:
Quarterly Statement - unaudited
Profit for the period ..........................................................................................................
Changes in fair value of cash flow hedges ....
Other comprehensive income
Total other comprehensive income ...........
Changes in value of investment properties ...
Operating profit (EBIT) ...........................................................................................
Translation difference arising from the
Finance income ............................................
Finance costs ...............................................
Consolidated Annual Financial Statements of Festi hf. 2021
41
Amounts are in thousands of ISK
The Group´s operations for the year 2020 is specified by quarters as follows:
2020
Q1 Q2 Q3 Q4 Total
18.955.760 20.764.238 23.602.332 22.937.368 86.259.698
14.651.994)( 15.540.552)(
17.817.262)( 17.565.780)( 65.575.588)(
4.303.766 5.223.686 5.785.070 5.371.588 20.684.110
374.148 378.973 432.038 473.138 1.658.297
2.404.714)( 2.708.235)( 2.475.192)( 2.932.789)( 10.520.930)(
1.252.568)( 1.191.239)( 1.155.503)( 1.165.625)( 4.764.935)(
3.283.134)( 3.520.501)( 3.198.657)( 3.625.276)( 13.627.568)(
Operating profit before depreciation, amortisation
1.020.632 1.703.185 2.586.413 1.746.312 7.056.542
622.277)( 654.356)( 799.335)( 791.921)( 2.867.889)(
0 59.907 875)( 180.996 240.028
398.355 1.108.736 1.786.203 1.135.387 4.428.681
48.422 28.264 957
24.467 102.110
453.010)( 602.496)( 520.289)(
468.180)( 2.043.975)(
64.291 39.268 692)(
79.588)( 23.279
7.579 61.736 168.528 29.819 267.662
332.718)( 473.228)( 351.496)( 493.482)( 1.650.924)(
65.637 635.508 1.434.707 641.905 2.777.757
12.979)( 110.095)( 272.318)( 116.062)( 511.454)(
52.658 525.413 1.162.389 525.843 2.266.303
subsequently to profit or loss:
46.937 2.667 25.179 19.755)( 55.028
0 30.000 0 0 30.000
49.416 15.925 131.856)( 195.695 129.180
96.353 48.592 106.677)( 175.940 214.208
149.011 574.005 1.055.712 701.783 2.480.511
0,16 1,60 3,55 1,64 6,95
for the period ..............................................................................................
Other comprehensive income
Total other comprehensive income ...........
Total comprehensive income
in shares ....................................................
Changes in fair value of cash flow hedges ....
Change in fair value of investments
Basic and diluted earnings per share in ISK .
Finance costs ...............................................
Other operating expenses ...........................
Changes in value of investment properties ...
Operating profit (EBIT) ...........................................................................................
operations of a foreign associate ...............
Translation difference arising from the
Profit before income tax ..........................................................................
Income tax ....................................................
Profit for the period ..........................................................................................................
Items that are or may be reclassified
Depreciation and amortisation ......................
and changes in value (EBITDA) ...........................................................................................
Finance income ............................................
Share of profit of associates .........................
Foreign currency differences ........................
Salaries and other personnel expenses .......
Other operating income ................................
* The classification of revenue and expenses for the year 2020 has been changed in accordance with the presentation for the year
2021, see further information in Note 2.3.
Quarterly Statement - unaudited
Sale of goods and services ..........................
Cost of goods sold .......................................
Gross profit from sale of goods and serv. ...........................................................................................
Consolidated Annual Financial Statements of Festi hf. 2021
42
Amounts are in thousands of ISK
Board of Directors and Corporate Governance
Statement of Corporate Governance
Festi complies with the Guidelines on Corporate Governance, audited edition from 1 July 2021, issued by the
Icelandic Chamber of Commerce, Nasdaq Iceland and the Confederation of Icelandic Employers. The Guidelines
are available on www.leidbeiningar.is
The corporate governance of Festi is laid down in the rules of procedure of the Board of Directors, the
Company‘s Articles of Association and the Act on Public Limited Companies No. 2/1995. The current rules of
procedure of the Board of Directors were approved at a Board meeting on 28 April 2021. The rules are based on
provisions in Article 70, paragraph 4 in the Act on Public Limited Companies No. 2/1995 and Article 17,
paragraph 2 of the Company‘s Articles of Association. The Company‘s Articles of Association describe the
Company’s objective, its share capital, shareholders meetings, Board of Directors, CEO, accounting and audit.
The current remuneration policy for Festi was approved by the Annual General Meeting on 22 March 2021. The
policy applies to the terms of employment for the members of the Board of Directors, the CEO and the senior
management of the Company.
The Company’s rules of procedure for the Board of Directors, Articles of Association and information regarding
the remuneration policy are accessible on the Company’s website, www.festi.is/fjarfestatengsl. The Company’s
highest authority is with its shareholders. The Annual General Meeting of shareholders shall be held by the end
of August each year. The Board of Directors has the highest authority in the Company’s affairs between
shareholders meetings and is responsible for its operations. The Board of Directors executes an appraisal of its
performance annually. Communication between the Board and shareholders takes place at shareholders
meetings. Members of the Board are independent in their work and do not accept direct instructions from
shareholders in the Company or other stakeholders. Members of the Board must also observe confidentiality in
performing their duties and are not allowed to provide information to shareholders concerning the Company’s
finances or operations unless it is presented by the Board of Directors.
According to the Articles of Association of Festi, the Board of Directors of the Company shall consist of five
directors appointed annually at the Annual General Meeting. The Board of Directors now consists of three women
and one man whereas Þróður Már Jóhannesson, the former Chairman of the Board of Directors resigned on the
6 January 2022. The Board of Directors subsequently divided tasks between its remaining members and Guðjón
Reynisson took over as Chairman of the Board. The Annual General Meeting will be held in March 2022 and until
then four members will comprise the Board of Directors. Therefore, the Company does not, until then, comply
with the provisions of the Act on Public Limited Companies on gender ratios which entered into effect on 1
September 2013. Members of the Board have diverse education and extensive professional experience.
Those who intend to candidate at the election of the Board of Directors of the Company must notify so in writing
to the Board of Directors with at least five days notice before the beginning of the Annual General Meeting. The
Company's Articles of Association can only be amended with the approval of 2/3 of votes cast in a lawfully called
shareholders' meeting, provided that the intended amendment is thoroughly mentioned in the agenda to the
meeting as well as what it consists of.
The Board of Directors has laid down rules of procedure for the Board which are reviewed on an annual basis. In
the rules of procedure the competences of the Board and its purview with respect to the CEO are defined. The
rules contain, among other things, provisions on the appointment of Board members, communication with
shareholders, calling of meetings and quorum, minutes of meetings and their content, rules on Board members'
obligation of confidentiality and secrecy and rules on eligibility of Board members to participate in decision
making. The Board elects a Chairman and a Vice-Chairman for the Board in addition to appointing members of
sub-committees. Board meetings shall be called as often as necessary but in general no less than eight times per
year. Board meetings are held at the headquarters of Festi hf. at Dalvegur 10-14, 201 Kópavogur, and the
Chairman of the Board directs the meetings. The CEO attends Board meetings and may at the meetings discuss
matters and present motions, unless otherwise decided by the Board in specific matters. The Company's Board
of Directors determines among other things the CEO's terms of employment and meets regularly with the
Company's auditors. The Board of Directors has appointed an Audit Committee and a Remuneration Committee.
The Nomination Committee of the Company operates according to a mandate granted by the Annual General
Meeting.
Consolidated Annual Financial Statements of Festi hf. 2021
43
Board of Directors and Corporate Governance, contd.
Remuneration committee
Audit committee
The Board of Directors of Festi hf. has appointed an Audit Committee in accordance with provisions of the
Financial Statements Act. The Committee must consist of at least three members and the majority of the
members shall be independent from Festi. The Committee shall be appointed for a one year term at the first
Board meeting following the Annual General Meeting. The majority of Committee members shall be members of
the Board of Directors of Festi and the chairman of the Committee shall be appointed by the Company's Board of
Directors. Committee members must have qualifications and experience in accordance with the activities of the
Committee, and at least one member must have sufficient expertise in the field of accounting or auditing.
Employment terms of committee members shall be decided at the Annual General Meeting. The Committee shall
monitor the audit of the Company’s financial statements and evaluate the performance of the auditor to ensure
further safety and quality of work methods during the audit. According to the Committee's rules of procedure two
Board members shall be appointed to the Committee in addition to an external expert. The Committee shall meet
at least four times a year and additional meetings shall be called when deemed necessary by the Chairman. The
Committee consists of Þórey Guðmundsdóttir, member of Board of Directors, Kristín Guðmundsdóttir, member of
the Board of Directors, and Björgólfur Jóhannsson, Chairman of the Committee.
Statement of Corporate Governance, contd.
To ensure that the Company's financial statements are in accordance with International Financial Reporting
Standards the Company places emphasis on carefully defined responsibilities, appropriate segregation of duties
and regular reporting and transparency in its operations. The process of monthly reporting and review for
individual divisions is an important factor in the controls for earnings and other key aspects of the operation.
Monthly statements are prepared and presented to the Company's Board of Directors. The Company has
established work procedures to ensure controls for income recognition, operating expenses and other items
affecting the Company's operation. Risk management is reviewed on regular basis in order to reflect changes in
market conditions and the Company's operation. Through personnel training and work procedures the Company
aims at maintaining disciplined controls where all employees are aware of their roles and responsibilities.
Operating risk is addressed by monitoring transactions and compliance with law. The Board of Directors has
established an equity management policy to ensure a strong equity position and to support stability in the future
development of the company´s operations.
All members of the Board of Directors have provided personal information in order to enable an evaluation of
their qualification for membership on the Board. The information includes board membership in other companies,
shareholding in the Company, whether directly or indirectly through related parties, and possible conflict of
interest. All Board members are independent of both the Company and the large shareholders.
The Board of Directors has appointed a Remuneration Committee. The role of the Remuneration Committee is to
provide guidance to the Board of Directors regarding employment terms for Board members and Company's
management and advise on the Company's remuneration policy, which shall be reviewed every year and
presented to the Company's Annual General Meeting. Furthermore, the Committee shall monitor that employment
terms of senior management is within the framework of the Company's remuneration policy and report thereon to
the Board of Directors on an annual basis in relation to the Annual General Meeting. The Board of Directors shall
appoint three members tp the Remuneration Committee. Two of three members shall be independent from the
Company and its day-to-day managers. Neither the CEO nor other employees may be a member of the
Remuneration Committee. Independent Board members may be members of the Remuneration Committee.
Committee members should preferably have experience and knowledge of the criteria and customs that relate to
the determination of the employment terms of managers. The employment terms of the members of the
Committee shall be decided at the Annual General Meeting. The rules of procedure of the Board of Directors
shall stipulate the tasks of the Committee. The Committee consists of Margrét Guðmundsdóttir, Chairman of the
Committee, and Guðjón Karl Reynisson and Þórður Már Jóhannesson up until 6 January 2022.
The Audit Committee´s tasks are as follows:
• To monitor the financial reporting process.
• To monitor the organisation and effectiveness of Festi´s internal control, risk management and other control
procedures.
• To monitor the external audit of Festi´s financial statements.
• To make recommendation to the Board of Directors regarding the selection of auditors or audit firm.
• To evaluate the independence of external auditors or the audit firm and monitor other tasks performed by them.
Consolidated Annual Financial Statements of Festi hf. 2021
44
Nomination committee
Investment committee
The Board of Directors of Festi
Guðjón Reynisson, Chairman of the Board of Directors
Margrét Guðmundsdóttir, member of the Board of Directors
Statement of Corporate Governance, contd.
Festi has appointed a Nomination Committee, elected at the Annual General Meeting. The Nomination
Committee has an advisory role regarding the election of Board members and presents its recommendations to
the shareholder meeting where Board members are scheduled to be appointed. The Nomination Committee
presents a reasoned proposal for the election of Board members, taking into account their competency,
experience and knowledge with regards to the Guidelines on Corporate Governance and the results of the
Board's performance appraisal. The committee´s proposal shall be in accordance with provisions of the Act on
Limited Liability Companies and the company's Articles of Assocation regarding the appointment of the Board of
Directors.The Nomination Committee's recommendations shall be aimed at a Board composition of diverse
knowledge and experience that will serve well for setting the Company´s policies and for monitoring the business
environment of the Company at any given time. The Nomination Committee shall conduct its work with the overall
interests of all the shareholders of the Company in mind.
The Nomination Committee consists of three members that are appointed for a one-year term; two who are
elected at the Annual General Meeting and one member of the Board of Directors. The majority of Committee
members are independent from the Company and its day-to-day managers. The same guidelines are applied in
assessing the independence of Committee members as for assessing the independence of Board members, i.e.
the Guidelines on Corporate Governance issued by the Icelandic Chamber of Commerce, Nasdaq Iceland and
the Confederation of Icelandic Employers. At least one Committee member shall be independent from the
Company’s large shareholders.
The Nomination Committee consists of Sigrún Ragna Ólafsdóttir, Chairman of the Committee, Tryggvi Pálsson
and Margrét Guðmundsdóttir, Vice-Chairman of the Board of Directors. Any queries are received through e-mail,
tilnefningarnefnd@festi.is.
The Board of Directors has appointed an Investment Committee. Its purpose is to provide the Board with analysis
and recommendations regarding investments. The Committee consists of Guðjón Reynisson, Chairman of the
Board of Directors, and Eggert Kristófersson, CEO.
During the year 2021, the Board of Directors held 18 meetings, the Audit Committee 9 meetings, the
Remuneration Committee 3 meetings. The majority of members of the Board of Directors, the Audit Committee,
the Remuneration Committee attended all meetings. The Audit Committee calls meetings with the Company's
auditors on a regular basis and auditors attend Board meetings when reviewed or audited financial statements
are discussed.
Guðjón Reynisson holds an MBA from the University of Iceland from 2002 and completed Operating- and
business studies from Endurmenntunarstofnuna Háskóla Íslands in 1999. Guðjón graduated with an athletic
education degree from Íþróttakennaraskóli Íslands in 1986. Currently, Guðjón is an independent investor and a
member of the Board of Directors. Between 2008 and 2017 he was the CEO of Hamleys of London. As CEO,
Guðjón was responsible to develop and implement the company's strategy which aimed at the business's
expansion from one store to becoming an international chain. He lead the sales process of the company in 2011
to 2012 and again in 2015 to 2016. Between 2003 and 2007 Guðjón was the executive director of 10-11
convenience stores. Prior to that, from 1998 to 2003, he was the executive director of sales at Tal. Guðjón has
been a member of the Board of Directors of Festi since 2014, of Kvika banki since 2018, of Securitas since 2018
and as chairman of Dropp since 2021.
Margrét holds a Cand. oecon. degree in Business Administration from the University of Iceland, Cand. merc.
degree from Copenhagen Business School and an Executive education from CEDEP Insead in France. Margrét
held the position of CEO of Austurbakki, later Icepharma hf., during the period from 2005 to 2016. Before that
she was an executive director at Skeljungur from 1995 to 2005, executive director at Kuwait Petroleum
(Danmark) A/S from 1986 to 1995 and the office director at Dansk ESSO, later Statoil, from 1982 to 1986. She
was the deputy CEO of AIESEC International Brussel from 1978 to 1979. Margrét is a member of the Board of
Directors of Eignarhaldsfélagið Lyng ehf., Hekla hf., Hekla Fasteignir ehf. and Paradís ehf. She was the chairman
of European Surgical Trade Association from 2011 to 2013 and sat on the Association’s Board of Directors from
2009 to 2015. She was the chairman of the Icelandic Federation of Trade. Margrét was also a member of the
Board of Directors at Reiknistofa bankanna from 2010 to 2011 and from 2016 to 2018, and a member of the
Board of Directors at ISAVIA from 2017 to 2018 and at SPRON 2008 to 2009. Margrét has also been a member
of the Board of the following companies: Skýrr hf., Frigg hf. and Q8 A/S in Denmark and Dansk Institut for
Personalerådgivning. Margrét has been a member of the Board of Directors of N1 from 2011. Margrét was the
Chairman of the Board of Directors of Festi until March 2020.
Consolidated Annual Financial Statements of Festi hf. 2021
45
The Board of Directors of Festi, contd.
Kristín Guðmundsdóttir, member of the Board of Directors
Þórey G. Guðmundsdóttir, member of the Board of Directors
Executive Board of Festi
Eggert Þór Kristófersson, CEO
Festi´s values, code of conduct and policy on social responsibility
Þórey holds a Cand.oecon. degree in Business Administartion from the University of Iceland. Þórey was the CFO
of Bláa Lónið hf. from 2013 to 2021. Þórey was the Head of the Economics Department of Samskip from 2012 to
2013 and the CFO of Straumur Fjárfestingabanki, which operated in four countries for a period, from 2004 to
2011. She was the assistant and substitute for the Manager of Operations and Finance of Alþingi from 1999 to
2000 and worked for KPMG Endurskoðun hf. from 1995 to 1999. Þórey is a member of the Board of Directors of
DecideAct A/S which is listed on Nasdaq First North Danmark and sells software that supports corporations to
implement and follow their strategy. Þórey was elected to the Board of Directors of Festi in March 2020.
Statement of Corporate Governance, contd.
Kristín holds a Cand. oecon. degree in business administration from the University of Iceland and she is the CEO
of KG slf. In 2011 she was the CEO of Skipti hf. Prior she was the CFO of Síminn hf. and Skipti hf. from 2003 to
2010. Kristín was the CFO of Grandi hf. from 1994 to 2002. Kristín was also for many years an executive at
Íslandsbanki and Iðnaðarbanki Íslands. Kristín has been a member of many Boards of Directors. She was the
Chairman of the Board of Directors of Sparisjóður Vestmannaeyja from 2011 to 2013, a member of the Board of
Directors of Síminn hf. and Míla ehf. from 2007 to 2011, a member of the Board of Directors of Straumur
investment bank from 2013 to 2015 and of Kvika bank from 2015 to 2016 and again in 2018 and on the board of
the Golf Association of Iceland 2013 - 2021. She has also been a member of the Board of Directors of the
following companies: Skjá miðlar, Fasteignafélagið Jörfi, Sjóminjasafnið, Farsímagreiðslur, Straumur,
Verslunarráð Íslands, Verðbréfaskráning Íslands and Lífeyrissjóður verkstjóra. She is a member of the Board of
Directors of Farice since 2013, Rvk Studios since 2015, Eyrir Venture Management since 2020 and Eyrir
Ventures since 2019. She has been a member of the Board of Directors of Eyrir Sprotar since 2020 and a
member of the investment committee of Eyrir Sprotar since 2015. Krístín was the president of Rótarý Reykjavík
Miðborg from 2013 to 2014. Kristín has been a member of the Board of Directors of N1 since 2011 and became a
member of the Board of Directors of Festi in 2018.
The Executive Board is comprised of the CEO and five managing directors of the Company, whereby each
managing director is responsible for a certain division towards the CEO.
Eggert was employed as a consultant in personal service at VÍB hf. from 1995 to 1997. He acted as the executive
director for sales and service at Lánasýsla ríkisins from 1997 to 1999 and Íslandsbanki hf. from 2000 to 2007,
first being responsible for bond positions and later he was the managing director of Islandsbanki's investment
funds. During the year 2008 Eggert acted as director of asset management at Glitnir bank in Iceland and in
Finland but a year later he joined the investment company Sjávarsýn ehf., where he acted as the CEO. Eggert
was the acting CFO of N1 from June 2011 and took over as CEO of N1 in February 2015. Eggert is the Chairman
of the Board of Directors at Malik Supply A/S and Nordic Marine Oil where Festi holds a 24% share and he is the
Chairman of the Board of Directors in Festi‘s subsidiaries. Eggerts holds a Cand. oecon. degree from the
accounting department at the University of Iceland and is also a certified securities trader.
Magnús Kristinn Ingason, CFO
Kolbeinn Finnsson, managing director of Operations
Ásta Sigríður Fjeldsted, CEO of Krónan
Hinrik Bjarnason, CEO of N1
Óttar Örn Sigurbergsson, CEO of ELKO
According to the Companie's Articles of Association, it is the role of the Board of Directors is to hire the CEO and
decide the terms on the employment contract. The Board of Directors and CEO are responsible for the
governance of the Company.
It should be noted that members of the Executive Board of Festi do not have share option agreements with the
Company. There are no conflicts of interest between members of the Executive Board and the Company’s main
customers, competitors or large shareholders.
Festi's values are:
Value
Cooperation
Trust
Consolidated Annual Financial Statements of Festi hf. 2021
46
Festi´s values, code of conduct and policy on social responsibility, contd.
Main components of internal control and the Company´s risk management
Company's Shareholders
The Company’s policy is to be a leader for the future, which includes being socially responsible. Concurrently to
the issue of the financial statements, a social report will be issued in accordance with the ESG Reporting Guide
2.0 from February 2022. Festi endeavours to minimise the environmental impact of its operations by relentlessly
applying disciplined and accepted measures. On 19 June 2015 Festi was granted VR´s certificate of equal salary
which all subsidiaries of Festi have been granted in accordance with the ÍST 85:2012 standard. The certificate
confirms that the Company´s employees working comparable jobs are not being discriminated against in
determination of their salaries. Every year a number of non-profit organisations and individuals ask the Company
for financial support for their good causes. Festi puts emphasis on preventative measures and sport activities.
Statement of Corporate Governance, contd.
Festi´s code of conduct was approved on 27 February 2020. The code of conduct is accessible on the
Company´s website.
Monitoring the main risks faced by the Company is an integral and ongoing part of the Company´s day-to-day
operations intended to secure its operational continuity and minimise risk.
The main components of internal control and risk management are reviewed by the Board of Directors annually.
The Company does not have an internal auditor. However, the Company´s auditors carry out limited reviews of its
processes.
The Company is a limited liability company. Information regarding its largest shareholders is disclosed on its
homepage, www.festi.is.
Consolidated Annual Financial Statements of Festi hf. 2021
47
_______________________________________________________________________________________________
Values of Festi:
Festi's policy includes:
Festi owns and operates companies that are leaders in the market for food products, sale of fuel and related services, electricity and electronic
equipment. The Company's operations regard investments in and provision of core services to its subsidiaries, the operation of real estate and
the purchasing and selling of shares. The subsidiaries are Bakkinn vöruhótel, ELKO, Festi fasteignir, Krónan and N1.
Festi is listed on the main market of the stock exchange of NASDAQ OMX Iceland and has approximately one thousand shareholders and
diverse ownership.
ESG Risk Assessment
A summary of Reitun's report can be found on Festi's website.
Festi's operations
Non-Financial Information
Non-Financial Information ESG
These annual accounts contain an excerpt from the Sustainability Report of Festi and its operating subsidiaries which will be published in detail
in a separate document. The sustainability performance of Bakkinn, ELKO, Krónan, and N1 will also be published.
The information in the Sustainability Report is produced by employees and experts in applicable divisions of Festi. The report is not audited or
reviewed by a third party. The report covers the entire operations of Festi and its operating subsidiaries based on the operating year 2021.
Since the merger of the companies, Festi hf. (Festi) has been publishing alongside the annual consolidated financial statements a
comprehensive sustainability report, based on the Nasdaq ESG Reporting guide for Iceland and the Nordic countries introduced in February
2020. These guidelines reflect the existing recommendations issued in 2015 by the United Nations (UN) and its Sustainable Stock Exchanges
(SSE) initiative, the World Federation of Exchanges’ Sustainability Working Group.
Greenhouse gas emissions and other environmental metrics are provided by Klappir’s online solution. The metrics include the following
information: number of flights provided by each relevant airline company, fuel litres from N1 customers accounting systems, data on waste
disposal from the waste management companies, and data on energy and water usage from applicable utilities. Metrics for the years 2018 to
2020 are provided for comparison. However, the data provided for comparison may change between years if updated information has been
streamed through the database of Klappir.
Reitun prepared and issued a report on the ESG risk assessment for Festi in 2020 and 2021. The Group had a positive outcome from the risk
assessment with an improvement from grade B3 in 2020 to grade B2 in 2021 (i.e. from 68 to 72 points out of 100 possible).
The purpose of the assessment is to analyze and evaluate Festi's performance in selected main ESG aspects (environmental, social and
governance). In Icelandic, the term is UFS (umhverfismál, félagslegir þættir and stjórnarhættir). The risk of each factor, which are given different
weights, is assessed from the perspective of management and performance results. Festi's overall score is 72 points, category B2. At the time of
publication, this score was above the average of the 34 Icelandic companies which had been assessed by Reitun through similar ESG analysis.
Employees: We want to be an outstanding and sought after workplace by supporting career development and a healthy work culture.
Subsidiaries: We support our companies under management to grow and constantly seek new opportunities in efficient infrastructure services
for operations, financing, human resources, digital solutions and sustainability.
Partners: We build long-term business relationships with our customers, suppliers and other partners.
Shareholders: We create value for our shareholders with sustainable long-term investments.
The company’s policy is to manage investments, support value creation and develop new opportunities. Doing so will provide Festi's subsidiaries
with the necessary surpport so that they will stay at the forefront of services and product offerings in the whole of Iceland.
Value - Cooperation - Trust
Community: We have a positive impact on our community and local environment by being guided by sustainability in all of our decision-making.
Consolidated Annual Financial Statements of Festi hf. 2021
48
_______________________________________________________________________________________________
Vision of Festi:
Sustainable
Development
Goals
Reference
8 Policy Indicator 2019 2020 2021 ESG
Create value
for shareholder
Total segment
revenue ma. ISK
87 87 101 NA
Publish a
sustainability report
Krónan, Festi and
N1
Festi, Bakkinn, ELKO, Krónan and N1
Festi, Bakkinn,
ELKO, Krónan
and N1
G8
Grade A from Reitun B3 B2 G8
Festi’s daily operations are divided into operating of infrastructure services for the Group’s operating entities and investment operations. The
tasks associated with Festi’s operations include the Group’s IT, finance, including daily treasury and financing, human resources, the operations
of real estate, as well as quality management and security operations. The Executive Committee of Festi is an integrated part of the
management team of the Group’s operating entities. As such the Executive Committee of Festi participates in monthly management meetings of
its subsidiaries and the Boards of the operating entities consist of representatives of Festi.
We are trustworthy and sustainable leaders
We increase value, happiness and the quality of life
Non-Financial Information, continued:
Festi's operating subsidiaries
The Group operates more than 200 operating units around Iceland. Furthermore, it leases out real estate assets which are not used for own
operation. Most of the Group's companies are subject to operating permits, in addition to having have to comply to several laws and regulations
which are monitored. Operations subject to permits are annually reviewed by relevant supervisory bodies in relevant municipalities. Feedback
and comments by such supervisory bodies are addressed in cooperation with them.
Bakkinn vöruhús are two warehouses specialised in storage and distribution of products for customers who either partly or fully outsource their
warehousing operations, both within and outside of the conglomerate. Bakkinn's operations are an important link in the Group's supply chain
through the distribution and delivery of products for Festi's operating subsidiaries. Bakkinn emphasizes quality, safety and efficiency in both
services and processes. Bakkinn will publish its second sustainability report in accordance with the Nasdaq ESG Reporting guide in March 2022.
It will further describe operations, environmental goals, greenhouse gas emissions and goals related to the 17 UN Sustainable Development
Goals.
Festi's, and its subsidiaries', risk assessment is updated twice a year. The assessment covers all material risk issues in which both likelihood
and financial impact is assessed. Issues which have developed and progressed from last assessment are especially analyzed to further
decrease impacts of those risk issues. An action list is then updated which lists out actions until the next assessment. Festi's CFO is responsible
for the risk assessment.
Festi Target
Decent work
and Economic
growth
Promote good
business
practices
Festi Real Estate owns and operates the Group's real estate with the objective of return on investment and/or to support its core operation.
Elko is the largest electronics retail chain in the country and operates seven stores, including an online store. Elko's objectives are to offer
quality brand names in electronics at competitive prices, as well as to offer customers excellent services. Its supply agreement with Elkjöp helps
to provide the lowest prices for electronics in Iceland. Elko promotes environmental practices in multiple ways such as tacking back used
products, such as laptops and mobiles, for refurbishment and reselling in return for a voucher. Elko has received thousands of used electric
products from Icelandic consumers which have been resold or refurbished abroad. Other environmental practices include electronic invoicing,
waste management, and energy efficiency through investments in environmentally friendly tools and equipment.
Next March, ELKO will publish its second sustainability report prepared in accordance with the Nasdaq ESG Reporting guide in March 2022. It
further described its activities, environmental goals, CO2 emissions and its goals related to the UN Sustainable Development Goals.
Consolidated Annual Financial Statements of Festi hf. 2021
49
_______________________________________________________________________________________________
Sustainable
Development
Goals
Reference
12 Policy Indicator 2019 2020 2021 ESG
Positive impact
on the
community
90% of all waste
sorted by 2030
Percentage of
sorted waste
70,4%
Percentage of sorted waste 72,8%
Percentage of
sorted waste
75,8%
E1, E7
Positive impact
on the
community
Certifications,
internal reviews of
licensed operations
with the objective to
Swan Ecolabel at
2 Krónan stores,
18 N1 service
stations certified
Swan Ecolabel at all Krónan stores, 18 N1 service
stations certified ISO 14001, all tire service
stations certified by Michelin, Bakkinn Klettagarðar
certified by ExxonMobil, sales of Swan Eco Label
Swan Ecolabel at
all Krónan stores,
18 N1 service
stations certified
G5
Non-Financial Information, continued:
N1 is energy supplier for the Group and provides people, households and companies with fuel, electricity, supplies, tires and lubrification
services, catering and leisure services at the service stations accross the country. The N1's objective is to enhance the mobility of society with a
customized service and a targeted product range that meets the requirements of customers in all circumstances. N1’s policy is to be a leader in
Icelandic transportation and to serve all types of clients regardless of whether they use petrol, diesel, eletricity or methane driven vehicles. N1
Rafmagn distributes eletricity to residential homes, corporations and common property. The electricity originates from renewable ernergy
sources. N1 operates 86 fuel service stations, 13 electricity service stations in its brand name N1 Rafmagn (12) or in collaboration with Telsa
(2), and one methane service station for vehicles. Out of these, 29 offer refreshments and healthy snacks under the brand names Nesti og Ísey
Bar, including offering pick-up for online purchases through the delivery service Dropp. 18 of N1’s stations are certified in line with the ISO
14001 standard on environmental management. N1 also runs 11 lubrication and tire service stations. All of the tire service stations have quality
assurances by Michelin. In addition, N1 operates 3 corporate stores, 6 corporate stores through agents, 5 tire service stations and 41 maritime
fuel pumps around the country.
N1 will publish its sustainability report prepared in accordance with the Nasdaq ESG Reporting guide in March 2022 for the third consecutive
year. It further describe its activities, environmental goals, grenhouse gas emissions and its goals related to the UN Sustainable Development
Goals. Since 2014, N1 has been publishing a corporate social responsibility report.
Society and Environment
Krónan is a discount super market which emphasizes fresh produce. Krónan runs 25 convenience stores under the brand names Krónan, Kr and
Krónan online store. Their objective is to provide a wide variety of products at low prices to its customers. All the stores have been the first in
Iceland to be awarded the Swan Ecolabel environmental certificate. The Swan Ecolabel for convenience stores covers all environmental aspects
of the stores' operations such as food waste, waste sorting, energy consumption and offer of organic and environmentally certified products.
Krónan supports the national campaign Þjóðþrif by collecting the recyclable plastic generated by its operations and sending it to Pure North
Recycling. The project promotes sustainability, aligns with the circular economy and ensures, through a certified process, that plastics are duly
recycled and not landfilled, incinerated or sent unprocessed to foreign countries.
Krónan will publish its third sustainability report, prepared in accordance with the Nasdaq ESG Reporting guide in March 2022, the first of which
was awarded CSR Report of the Year by Festa Center for Corporate Social Responsibility, Stjórnvisi and the Iceland Chamber of Commerce. It
further described its activities, environmental goals, CO2 emissions and its goals related to the UN Sustainable Development Goals.
It is Festi's policy to have positive impacts on society and the local environment by focusing on sustainability in all decison-making. Social
responsibility plays an important part in that journey. The company’s policy is to treat the environment with respect, minimize negative
externalities and seek to provide environmentally friendly products and services. Festi and its subsidiaries are all members to Festa , the center
for social responsibility in Iceland.
Festi's operating subsidiaries, continued:
Festi and its operating subsidiaries strive to operate in accordance with issued operating licenses, internationally certified standards and
approved methods. All of Krónan's convenient stores are certified by Swan Eco Label, 18 of N1 fuel service stations are certified pursuant to the
ISO 14001 standard on environmental management by Vottun hf. All nine N1 tire workshops are certified Michelin Quality Dealers by SCA in
Denmark. Bakkinn and lubrication oil service stations operate in accordance with the requirements of Exxon Mobil certified by Exxon Mobil.
Festi and its operating subsidiaries have in various ways reduced their environmental footprint, among other things through targets on waste
sorting, responsible procurement, product selection, innovation, services and training, and other measures. These activities are outlined in more
detail in the sustainability report of Festi and its subsidiaries with the annual report during the first quarter of the year.
Festi Target
Ensure
sustainable
consumption
and production
patterns
Festi and its operating subsidiaires work constantly to increase social responsibility accross the core activities of the companies. Social
responsibility is an increasingly important factor in the operations and covers all aspects of the Group. Various fields fall under the term, such as
environmental issues, codes of conduct, fair practices, communal activity, and development and relations with the society. Festi and its
subsidiaries are developing a Community and climate policy which supports and strengthens the existing policies of Festi. It is estimated that the
policy will be presented during the first quarter of 2022.
Consolidated Annual Financial Statements of Festi hf. 2021
50
_______________________________________________________________________________________________
Sustainable
Development
Goals
Reference
13 Policy Indicator 2019 2020 2021 ESG
Energy insenty
kWh/FTE
44,3 43,1 42,0 E4
Energy intensity
kWh/m2
505,0 459,4 474,6 E4
Emissions
kgCO2/million ISK
19,1 19,6 15,7 E2
Emissions
tCOs/FTE
1,43 1,49 1,34 E2
Carbon offsetts
through reforestation
Signature of
contract with the
E1
Carbon neutrality by
2035
Offset Scope 1
emissions
tCO2e 441,8
Offset Scope 1 emissions tCO2e 470,5
Carbon offsets for
Scope 1, 2 og 3
tCO2e .583,0
E1
Procurement policy
Preparing for
presentation in
2022
S9, S10
Supplier
assessment on the
largest suppliers of
Festi and its
subsidiaries
Not yet started Preparing S9, S10
Eletricity provider
Purchase of
share of Íslensk
Orkumiðlun
Purchase of all remaining shares of Íslensk
Orkumiðlun
N1 Rafmagn E10
Non-Financial Information, continued:
This year, all of Festi's subsidiaries will publish their second sustainability report including non-financial information, environmental and waste
management , as well as their goals in connection with the 17 United Nations Sustainable Development Goals. Those reports are part of the
commitments of Festi, Krónan, Bakkinn and ELKO under their signature for the Climate Declaration of Festa (Loftlagsyfirlýsing Festa) and the
city of Reykjavík this year. N1 signed the declaration in 2015.
Since the merger, Festi has offset the direct emissions of the day-to-day operations of the conglomerate (Scope 1 emissions). For the year
2021, Festi hf. has also offset indirect emissions, including from energy use, flights and waste (Scope 2 and 3). Information on the source of the
data from suppliers is traceable through Klappir's software.
The report is not audited by a third party in accordance with paragraph 66.d. of act 3/2006 on annual accounts but there are plans to do so in
2022.
During the year of 2021, Festi hf was the first of all companies in Iceland to register its carbon sequestration in the Icelandic Climate Register in
accordance with the requirements of the Skógarkolefni quality system by signing a contract with the Icelandic Climate Register and Skógrækt.
The project is transparent, measurable and will be confirmed and certified by an independent party. Responsible carbon offsetting is an
important part of Festi's and its operating companies' policy and part of the journey towards the Group's carbon neutrality in 2035.
Society and Environment, continued:
The project starts in 2022 with the certified planting of about half a million trees over the next three to four years at Fjarðarhorn in Hrútafjörður.
With this first project, it is estimated that over the next 50 years Festi's carbon sequestration will amount to 70,000 tonnes of Co2, which
comprises ca. 85% of expected emissions due to the operations of Festi and its subsidiaries during the same period. Festi's investment related
to this one project is around 100 million ISK, but the aim is to invest in further projects related to forestry in each part of the country. In this way,
Festi hf not only aims to develop new forests, but also to strengthen the level of employment in the areas where the new forests will rise. The
forests are also designed to promote exercise and outdoor life with benches, tables and outdoor recreation facilities for people all around the
country.
Festi Target
Take urgent
action to
combat climate
change and its
impacts
We have a
positive impact
on our
community and
local
environment by
being guided by
sustainability in
all decision-
making.
Consolidated Annual Financial Statements of Festi hf. 2021
51
_______________________________________________________________________________________________
Unit 2019 2020 2021
X:1 - -
Outcome of pay analysis - Festi % - 0,79% 0,35%
Outcome of equal pay certification - Bakkinn % 4,3% 0,11% 1,31%
Outcome of equal pay certification - ELKO % 2,51% 0,67% 0,64%
Outcome of equal pay certification - Krónan % 3,59% 0,71% 0,2%
Outcome of equal pay certification - N1 % 1,1% 0,33% 0,95%
Non-Financial Information, continued:
Numerous non-profits, humanitarian organizations and individuals contact the Group annually with enquiries for all sorts of support to its causes
and projects. Festi emphasizes support to preventional activities and sports. Further details on these activities will be detailed in the Group's
individual subsidiaries' sustainability reports.
Cleaning measures on behalf of N1 ehf. and Festi hf. due to a leak from a fuel tank at the N1 self-service station at Suðurbraut 9 in Hofsós have
been going on since 2020 and are still in progress. The precautionary measures and proposals were preceded by extensive research into soil,
soil air, indoor air as well as regular monitoring of organic compounds in defined areas in accordance with the instructions of the Environment
and Food Agency. N1 nor Festi are not authorized to undertake any actions in the area except on the basis of instructions from the Environment
Agency and with the consent of the municipality and the relevant site owner. Work is now underway to comply with instructions for improvements
issued by the Environment Agency on 22 November 2021. To prevent a similar incidence like the one in Hofsós, N1 has implemented a special
tank measurement and monitoring system at 85 service points that measures and reports the smallest deviations in the fuel tank contents to
prevent any accidents like this in the future.
Human resources
Festi's policy is to attract and retain qualified and trustworthy employees. This strategy involves creating a positive and motivating work
environment for employees as well as empowering and supporting them through purposeful training and career development. Emphasis is put
on the awareness and knowledge of employees on the respective company's role and responsibility, policy and values in order to achieve
greater success.
The procurement policy of Festi and its subsidiaries is being formulated. It is estimated that it will be published and implemented in 2022.
Krónan requires its suppliers to certify that their products are manufactured in accordance with laws and regulations, to respect the protection of
international human rights and to assure no human rights violations have been taken place. This provision is further described in Krónan's
procurement rules in its sustainability report. Suppliers who service ISO 14001 certified N1 establishments have undergone supplier assessment
in accordance with the requirements of N1 and the standard. Some N1 suppliers make reciprocal requirements for N1 to meet certain conditions
in order to obtain a license to sell their products, such as the training of N1 staff in accordance with their standards but also the fulfillment of their
requirements for environmental, safety and security, personnel and health issues. These processes are reviewed annually.
This year, Festi and its subsidiaries harmonized their equal pay system in accordance with IST 85: 2012 and the criteria of the Ministry of
Welfare for equal salary. The equal pay certification was reviewed by Icert in January 2021. No deviations were identified.
Results of salary gap at Festi and its subsidiaries:
Gender Pay Ratio
Human resources, non-discrimination, and equal pay policies that apply to Festi and its subsidiaries are available on the relevant websites.
Festi places great emphasis on ensuring that employees performing the same or equivalent jobs are not discriminated against in terms of pay or
pay by gender or other factors, thus supporting UN SDG 5 on Gender Equality and UN SDG 10 on Inequality.
In January 2021, the equal pay system of Festi and its subsidiaries, based on the IST 85:2012 standard and the requirements of the Ministry of
Welfare on equal pay certifications, was evaluated by Icert in January of 2021. No issues were identified during the assessment.
The results of the pay analysis for Festi and its subsidiaries;
Median total compensation for men (X) to median total
compensation for women
S2
In 2019 Festi and its subsidiaries were the first companies to enter into contract with the ethics platform of Hagvangur (Hagvangur's
Siðferðisgátt). The objective is to provide employees of companies and institution a platform to report to an independent party any misconduct
or harassment at the workplace. Promotion of this co-operation is available on the companies internal workpage, and promotional cards are
available at all establishments where there is no easy access to Relysis' internal or educational website. One notification was received through
the portal in the year 2020. In 2021 they were 8 notifications for the entire Group. Not all of them were related to misconduct, bullying or
harassment but all received notifications were resolved.
Consolidated Annual Financial Statements of Festi hf. 2021
52
_______________________________________________________________________________________________
Sustainable
Development
Goals
Reference
5 and 10 Policy Indicator 2019 2020 2021 ESG
Equal pay for similar
and equally valuable
jobs
Gender Pay Gap 0,73%
Gender Pay Gap
0,35%
S2
Equal pay
certification for Festi
and its subsidiaires
Launch of the
project
Project completed
No deviation
found in the
review of the
equal pay
certification
S2
Equal gender ratio
at board level
50% women 66% women 60% women G1
Increase the
proportion of women
in senior
management
Senior
management
Festi 17%
Women (1 of 6)
Senior management Festi 17% Women (1 of 6)
Senior
management
Festi 17%
Women (1 of 6)
S4
Increase the
proportion of women
in senior
management
Head of divisions
Festi 80% women
(4 of 5)
Head of divisions Festi 80% women (4 of 5)
Head of divisions
Festi 83% women
(5 of 6)
S4
Anti-harassment
Agreement with
Siðferðisgáttin
One notification received through the system
Eight notifications
received through
the system
S6 S7 S10
2021
Svar-
hlutfall
2020
Svar- hlutfall
Total 4,07 73,7% 4,21 67%
Festi 4,27 94,1% 4,34 91%
Bakkinn 3,87 85,7% 4,03 69%
ELKO 4,17 77,1% 4,17 90%
Krónan 4,04 69,9% 4,15 58%
N1 4,08 74,1% 4,33 72%
Non-Financial Information, continued:
Festi has a zero-accident policy. Safety and occupational safety courses are held annually as it is important to strengthen the safety and health
awareness of employees. Emphasis is placed on safety in the work environment and attention is drawn to health and exercise. Courses and
educational lectures are e.g. related to first aid, fire protection, chemicals and chemical products, quality, environment and security issues,
responses to robbery and theft, threatening behavior and degradation as well as lectures on health, discrimination, bullying and harassment.
The goal of the human resource department is to increase the e-learning in order to provide better access to all of the Group’s employees
throughout the country and as a key element in the on-boarding process of new employees. Through these measures, Festi believes that the
Group’s employees become more powerful and employee turnover ratio will decrease. A new Relysis electronic training and communication
system is currently being implemented with good promise. Educational material is tailored to operations and can be used by all of the Group's
companies.
Festi Target
Achieve gender
equality and
empower all
women and girls
We want to be
an outstanding
and sought
after workplace
by supporting
career
development
and a healthy
work culture.
Reduce
inequality within
and among
countries
A big step was taken towards a holistic approach regarding the wellbeing of employees this year through the implementation of Festi's and its
subsidiaries' wellbeing package (Velferðarpakki). The package offers all full time employees a range of different services. The services include
therapy sessions, sport grants, the ethics platform (siðferðisgátt), retirement courses, trauma care, counseling of various professionals such as
with a nutritionist or social worker. An agreement between the Group and the Health Protection Agency on the registration of illness and health-
related counseling is also in force.
Human resources, continued:
Satisfied employees are the foundation for outstanding services. In co-operation with Gallup, Festi, and its subsidiaries perform an annual
workplace analysis. The purpose is to measure the well-being and employee satisfaction. Gallup´s Q12 questionaire is used in addition selected
question from Festi. Ratings range from 1 to 5 (5 being the highest). Once available, the results are analysed, compared to previous years, to
peers or to the other companies of the Group. Then, the results are reviewed by the management and presented to the employees. Potential
actions are taken if appropriate.
The employee satisfaction assessment was conducted in October 2021.
The workplace analysis was last conducted in October 2021;
Results of the work satisfaction survey
Overall satisfaction
Consolidated Annual Financial Statements of Festi hf. 2021
53
_______________________________________________________________________________________________
Operational parameters
Unit 2018 2019 2020 2021
Total Revenue ISK thousands 59.700.000 86.700.000 87.392.899 101.052.383
Total Equity ISK thousands 26.000.000 28.700.000 29.783.625 33.910.395
Number of full time equivalent employee FTEs 764 1.158 1.145 1.176
Total space for own operation m² 112.000 101.644 107.423 104.144
Unit 2018 2019 2020 2021
kgCO₂e/MWh 40,1 32,3 34,7 32
kgCO₂e/FTEs
2.438,23 1.430,8 1.495,99 1.346,08
GhG emissions per unit of revenue
kgCO₂e/ISK
thousands
0,03 0,02 0,02 0,02
GhG emissions per unit of equity
kgCO₂e/ISK
thousands
0,07 0,06 0,06 0,05
GhG emissions per unit of space (m²) kgCO₂e/m² 16,63 16,3 15,95 15,2
Nasdaq: E2
Unit 2018 2019 2020 2021
kWh/FTEs 60.795,8 44.327,7 43.101,7 42.026,7
Energy per unit of revenue
kWh/ISK thousands
0,8 0,6 0,6 0,5
Energy per square meter kWh/m² 414,7 505 459,4 474,6
Unit 2018 2019 2020 2021
kg/FTEs 5.632 3.594,2 3.728 3.423,6
Total waste per unit of revenue
kg/ISK thousands
0,1 0 0 0
Accounting of emissions
Unit 2018 2019 2020 2021
Total emissions offset tCO₂e 509 441,8 470,8 1.583
Emissions offset by forestry tCO₂e 509 441,8 470,8 1.583
tCO₂e 0 0 0 0
Other emissions offset tCO₂e 0 0 0 0
Unit 2018 2019 2020 2021
Scope 1 tCO₂e 535,1 441,8 470,5 474,8
Scope 2 (location-based) tCO₂e 401,1 462,6 459,8 456,8
Scope 1 and 2 tCO₂e 936,2 904,5 930,3 931,6
Scope 3 tCO₂e 926,6 752,4 782,6 651,4
tCO₂e 1.862,8 1.656,9 1.712,9 1.583
FESTI HF. - ESG Statement 2021
Operational Parameters
Non-Financial Information, continued:
Anti-corruption and bribery policy
In accordance with Act no. 40/2020 on the Protection of Whistleblowers the e-mail addresses uppljostrun@festi.is, uppljostrun@bakkinn.is,
uppljostrun@elko.is, uppljostrun@kronan.is, uppljostrun@n1.is are active and the Company's privacy representative receives the notifications.
Everyone can proposed suggestions to the company through Festi's website, www.festi.is. External suggestions are recorded, managed and
resolved by the responsible party.
Festi and its subsidiaries are aware of their impact on the society. Festi acknowledges that the reputation of Festi and its subsidiaries is one of
the most valuable asset of the Company. The Code of Conduct of Festi, approved on 27 February 2020, applies to all activities of the Group, all
employees, its board of directors as well as contractors which perform tasks for the Companies. The Code of Conduct is available on the
Company's website, www.festi.is.
Energy per full-time equivalent (FTEe)
employee
Nasdaq: E4
Waste Intensity
Total waste per full-time equivalent (FTEe)
employee
GHG emissions
GhG emissions per megawatt-hour consumed
GhG emissions per full-time equivalent (FTEe)
employee
Energy Intensity
Emissions neutralized by carbon offset projects
Mitigation efforts through wetland restoration
Greenhouse Gases
Greenhouse Gas Emissions
Nasdaq: E1
Consolidated Annual Financial Statements of Festi hf. 2021
54
_______________________________________________________________________________________________
Unit 2018 2019 2020 2021
Total emissions tCO₂e 535,1 441,8 470,5 474,8
Fuel consumption of vehicles
tCO₂e 525,2 422,2 412 439,1
Unit 2018 2019 2020 2021
Total emissions tCO₂e 401,1 462,6 459,8 456,8
Electricity tCO₂e 225,8 244,5 253,8 231,2
Heating tCO₂e 175,3 218,1 206,1 225,6
Unit 2018 2019 2020 2021
Total emissions tCO₂e 879,1 727,5 766,5 634
tCO₂e 879,1 727,5 766,5 634
Total emissions tCO₂e 47,5 24,9 16,1 17,4
Flights tCO₂e 47,5 24,9 16,1 17,4
Environmental parameters
Unit 2018 2019 2020 2021
Total energy consumption kWh 46.447.974 51.331.534 49.351.456 49.423.451
Of which energy from fossil fuel kWh 2.099.645 1.734.360 1.898.995 1.909.942
Of which energy from bio fuel kWh 497 2.921 3.759 2.992
Of which energy from electricity kWh 24.541.146 24.952.973 24.168.116 22.021.289
Of which energy from hot water kWh 19.806.686 24.641.280 23.280.586 25.489.228
Direct Energy Consumption kWh 2.100.142 1.737.281 1.902.754 1.912.934
Indirect Energy Consumption kWh 44.347.832 49.594.253 47.448.702 47.510.517
Unit 2018 2019 2020 2021
Total energy consumption kWh 46.447.974 51.331.534 49.351.456 49.423.451
Fossil Fuel % 4,5% 3,4% 3,8% 3,9%
Renewable Energy % 95,5% 96,6% 96,2% 96,1%
Nuclear % 0% 0% 0% 0%
Unit 2018 2019 2020 2021
Total fuel consumption liters 214.180,6 177.258,2 193.964,5 194.123,6
Petroleum liters 62.859 53.021 59.279 50.171
Diesel oil liters 150.968,8 123.709,6 134.342,4 143.679,2
Methane liters 48 266 343 273
Unit 2018 2019 2020 2021
Total water consumption m³ 571.255,9 693.312,1 633.565,4 672.492,3
Cold water m³ 229.761,3 268.462,5 232.175,9 233.022,8
Hot water m³ 341.494,6 424.849,7 401.389,4 439.469,5
Unit 2018 2019 2020 2021
Total electricity use kWh 24.541.145,8 24.952.972,5 24.168.115,8 22.021.288,9
Fossil fuels % 0% 0% 0% 0%
Renewable energy % 100% 100% 100% 100%
Nuclear % 0% 0% 0% 0%
Unit 2018 2019 2020 2021
Total waste generated kg 4.302.852 4.162.058 4.268.519 4.026.164
Of which sorted waste kg 2.699.675 2.923.957 3.107.779 3.051.870
Of which unsorted waste kg 1.507.642 1.238.101 1.160.740 971.748
Recycled/recovery kg 2.668.603 2.806.409 2.944.355 2.248.371
Landfill/disposal kg 1.623.906 1.355.649 1.324.164 1.775.247
Percentage of sorted waste % 62,7% 70,3% 72,8% 75,8%
Percentage of recycled waste % 62% 67,4% 69% 55,8%
Non-Financial Information, continued:
Scope 1 - Composition of emissions
Scope 2 - Composition of emissions
Scope 3 - Composition of emissions
Category 5: Waste generated in operations
Energy Mix
Nasdaq: E5
Fuel consumption
Water Usage
Nasdaq: E6
Transport, disposal and treatment
Category 6: Business travel
Energy Usage
Nasdaq: E3
Electricity Mix
Waste Management
Consolidated Annual Financial Statements of Festi hf. 2021
55
_______________________________________________________________________________________________
Unit 2018 2019 2020 2021
Total distance km 489.624 281.715 154.034 197.113
Flights km 489.624 281.715 154.034 197.113
Unit 2018 2019 2020 2021
yes/no yes yes yes -
yes/no - - - -
yes/no no no no no
Environmental Management
Unit 2018 2019 2020 2021
yes/no - no no no
yes/no - no no no
Unit 2018 2019 2020 2021
ISK thousands - - - 230.670,3
Social parameters
Unit 2018 2019 2020 2021
X:1 - - - -
yes/no - no no no
Unit 2018 2019 2020 2021
X:1 - - - -
Outcome of pay analysis - Festi % - - 0,79% 0,35%
Outcome of equal pay certification - Bakkinn % - 4,3% 0,11% 1,31%
Outcome of equal pay certification - ELKO % - 2,51% 0,67% 0,64%
Outcome of equal pay certification - Krónan % - 3,59% 0,71% 0,2%
Outcome of equal pay certification - N1 % - 1,1% 0,33% 0,95%
Unit 2018 2019 2020 2021
% - - 4,5% 5,6%
Employee turnover women % - - - 2,8%
Employee turnover men % - - - 2,8%
% - - 29,1% 27,1%
Employee turnover women % - - - 1,1%
Employee turnover men % - - - 26%
% - - 21,5% 23,5%
Employee turnover women % - - - 7,9%
Employee turnover men % - - - 15,6%
Non-Financial Information, continued:
Environmental Operations
Does your company follow a formal
Environmental Policy?
Does your company follow specific waste,
water, energy, and/or recycling policies?
Does your company use a recognized energy
management system?
Nasdaq: E7
Business travel
Total annual investment in climate-related
infrastructure, resilience, and product
development
Nasdaq: E10
CEO Pay Ratio
CEO Salary & Bonus (X) to median FTE Salary
Does your company report this metric in
regulatory filings?
Nasdaq: S1
Climate Oversight / Board
Does your Executive Management oversee
and/or manage climate-related risk?
Does your Board of Directors oversee and/or
manage climate-related risk?
Nasdaq: E8, E9
Climate Risk Mitigation
Nasdaq: S2
Year-over-year change for full-time
employees- Festi
Year-over-year change for full-time
employees- Bakkinn
Year-over-year change for full-time
employees- ELKO
Gender Pay Ratio
Median total compensation for men (X) to
median total compensation for women
Nasdaq: S2
Employee Turnover
Full-time Employees
Consolidated Annual Financial Statements of Festi hf. 2021
56
_______________________________________________________________________________________________
Unit 2018 2019 2020 2021
% - - 87,6% 58,4%
Employee turnover women % - - - 22,7%
Employee turnover men % - - - 35,6%
% - - 26,2% 38,2%
Employee turnover women % - - - 22,6%
Employee turnover men % - - - 15,6%
Unit 2018 2019 2020 2021
Percentage of women in enterprise % - 34% 36% 39%
Festi % - - - 53%
Bakkinn % - - - 10%
ELKO % - - - 29%
Krónan % - - - 41%
N1 % - - - 43%
Percentage of women on executive board % - - - 17%
Festi % - - - 0%
Bakkinn % - - - 0%
ELKO % - - - 0%
Krónan % - - - 100%
N1 % - - - 0%
% - - - 42%
Festi % - - - 83%
Bakkinn % - - - 0%
ELKO % - - - 17%
Krónan % - - - 67%
N1 % - - - 38%
% - - - 28%
Bakkinn % - - - 0%
ELKO % - - - 20%
Krónan % - - - 33%
N1 % - - - 30%
Units 2018 2019 2020 2021
% - - - 0%
% - - - 0,4%
Unit 2018 2019 2020 2021
yes/no - yes yes yes
Non-Financial Information, continued:
Employee Turnover, cont.
Full-time Employees
Year-over-year change for full-time
employees- Krónan
Management team
Percentage of women in senior- and executive-
level positions
Other management positions
Percentage of women with other
management positions
Nasdaq: S4
Year-over-year change for full-time
employees- N1
Nasdaq: S3
Gender Diversity
Enterprise Headcount
Executive Board
Nasdaq: S6
Temporary Worker Ratio
Total enterprise headcount held by part-time
employees
Total enterprise headcount held by
contractors and/or consultants
Nasdaq: S5
Non-Discrimination
Does your company follow a sexual
harrassment and/or non-discriminatory policy?
Consolidated Annual Financial Statements of Festi hf. 2021
57
_______________________________________________________________________________________________
Unit 2018 2019 2020 2021
% - - 0% 0%
% - - 0,09% 0%
% - - 0,06% 0%
% - - 0,03% 0,2%
% - - 0,09% 0,28%
Unit 2018 2019 2020 2021
yes/no yes yes yes yes
X:1 - - - 0,015
X:1 - - - 0,029
X:1 - - - 0,03
X:1 - - - 0,028
X:1 - - - 0,035
Units 2018 2019 2020 2021
yes/no - yes yes yes
yes/no - yes yes yes
yes/no - no no no
Units 2018 2019 2020 2021
yes/no yes yes yes yes
yes/no - - no no
Governance parameters
Units 2018 2019 2020 2021
% - 50% 66% 60%
% - 75% 100% 33%
Units 2018 2019 2020 2021
yes/no - yes yes yes
% - 100% 100% 100%
Injury Rate
Total number of injuries and fatalities, relative
to the total workforce - Festi
Total number of injuries and fatalities, relative
to the total workforce - Bakkinn
Total number of injuries and fatalities, relative
to the total workforce - ELKO
Total number of injuries and fatalities, relative
to the total workforce - Krónan
Non-Financial Information, continued:
Absence from work due to illness (X) as a
percentage of all employees' working hours -
ELKO
Absence from work due to illness (X) as a
percentage of all employees' working hours -
Krónan
Absence from work due to illness (X) as a
percentage of all employees' working hours -
Nasdaq: S8
Child & Forced Labor
Does your company follow a child labor policy?
Total number of injuries and fatalities, relative
to the total workforce - N1
Nasdaq: S7
Global Health & Safety
Does your Company publish and follow an
occupational health and/or global health &
safety policy
Absence from work due to illness (X) as a
percentage of all employees' working hours -
Festi
Absence from work due to illness (X) as a
percentage of all employees' working hours -
Bakkinn
If yes, does your human rights policy cover
suppliers and vendors?
Nasdaq: S10
Board Diversity
Total board seats occupied by women (as
compared to men)
Committee chairs occupied by women (as
compared to men)
Does your company follow a forced labor
policy?
If yes, do your child and/or forced labor policy
cover suppliers and vendors?
Nasdaq: S9
Human Rights
Does your company publish and follow a
human rights policy?
Nasdaq: G1
Board Independence
Does the company prohibit CEO from serving
as board chair?
Total board seats occupied by independents
Nasdaq: G2
Consolidated Annual Financial Statements of Festi hf. 2021
58
_______________________________________________________________________________________________
Units 2018 2019 2020 2021
yes/no yes no no no
Units 2018 2019 2020 2021
% - 86 99 100
Units 2018 2019 2020 2021
yes/no - no no no
% - - - -
Units 2018 2019 2020 2021
yes/no -
% - - - -
Units 2018 2019 2020 2021
Does your company follow a Data Privacy policy?
yes/no - yes yes yes
yes/no - yes yes yes
Units 2018 2019 2020 2021
yes/no yes yes yes yes
yes/no - - yes yes
Units 2018 2019 2020 2021
yes/no - no no no
yes/no - yes yes yes
yes/no - yes yes yes
External Assurance Units 2018 2019 2020 2021
yes/no - no no no
Are executives formally incentivized to
perform on sustainability
Nasdaq: G3
Collective Bargaining
Total enterprise headcount covered by
collective bargaining agreements (X) to the
total employee population
Nasdaq: G4
Supplier Code of Conduct
Incentivized Pay
Non-Financial Information, continued:
Nasdaq: G6
Data Privacy
Has your company taken steps to comply with
Nasdaq: G7
ESG Reporting
Are your vendors or suppliers required to
follow a Code of Conduct
If yes, what percentage of your suppliers have
formally certified their compliance with the
code?
Nasdaq: G5
Ethics & Anti-Corruption
Does your company follow an Ethics and/or
Anti-Corruption policy?
If yes, what percentage of your workforce has
formally certified its compliance with the
Does your company set targets and report
progress on the UN SDGs?
Nasdaq: G9
Are your sustainability disclosures assured or
validated by a third party?
Nasdaq: G10
Does your company publish a sustainability
report?
Is sustainability data included in your
regulatory filings?
Nasdaq: G8
Disclosure Practices
Does your company provide sustainability
Does your company focus on specific UN
Sustainable Development Goals (SDGs)?
Consolidated Annual Financial Statements of Festi hf. 2021
59