Festi hf.: 2024 Annual report

The operations both for the quarter and the full year performed well and exceeded expectations.

Highlights of Q4 2024

• Sales of goods and services amounted to ISK 41,946 million, an increase of 19.0% between years but 6.1% excluding the impact of Lyfja, which joined the group from July 2024.
• Gross profit from sales of goods and services amounted to ISK 10,267 million, an increase of 26.6% from the previous year but 8.5% excluding the effect of Lyfja.
• Gross profit was 24.5%, up by 1.5 p.p. from Q4 2023 but remains unchanged from the previous quarter.
• Salaries and personnel costs amounted to ISK 5,202 million, an increase of 31.6% between years but 7.6% excluding the effect of Lyfja.
• One-off costs, due to an administrative fine of ISK 750 million, increase operating expenses and decrease EBITDA in the quarter. See note 32 in the Company's financial statements.
• EBITDA amounted to ISK 2,957 million, decreasing by 6.1% between years but increasing by 17.8% without the effect of the administrative fine.
• Profit for the quarter amounted to ISK 632 million, decreasing by 35.2% between years but increasing by 41.7% without the effect of the administrative fine on the quarter's results.
• Profit for the year 2024 amounted to ISK 4,018 million and the total result was ISK 6,422 million, while a revaluation of the company's real estate at year-end 2024, which was entered directly into equity, amounted to ISK 2,437 million.
• Equity amounted to ISK 43,493 million, and the equity ratio was 37.9% at year-end 2024, compared to 37.3% the previous year.
• EBITDA for the year 2024 amounted to ISK 12,511 million but would have been ISK 13,940 million with Lyfja's operations included for the full year and without the effect of an administrative fine.
• The company's EBITDA forecast for the year 2025 amounts to ISK 14,400 - 14,800 million.

Ásta S. Fjeldsted, CEO:

• The company's operations performed well in the fourth quarter and the result exceeded expectations. It is positive to note that the number of visits and volume sold increased in most stores between years, along with strong growth in fuel litres sold.
• Profit margins strengthened for all product and service categories of the group, except electronics sales, and increased by 1.5 p.p. between years. Gross profit from sales of goods and services amounted to ISK 10,267 million, an increase of 26.6% between years.

• The operating expenses for the quarter were impacted by a one-off cost of ISK 750 million due to an administrative fine, as outlined in Note 32 in the 2024 Annual report. The year-on-year increase in operating expenses amounts to 20.3% excluding this effect, demonstrating that the cost-saving measures implemented are showing results.
• EBITDA for the year 2024 amounted to ISK 12,511 million, representing a 13.6% increase from the previous year. Had Lyfja's operations been included for the full year and without the one-off costs, EBITDA for the year 2024 would have amounted to ISK 13,940 million.

• Profit for the year 2024 amounted to ISK 4,018 million, representing an increase of 16.9% from the previous year. Increased activity across all group companies explains the strong performance, particularly in the grocery and fuel segments.
• The outlook for 2025 is good.All operating segments are expected to improve year-on-year, particularly in the first half of the year. The integration of Lyfja within the group will continue, with a focus on maximising synergies with other business areas wherever possible. Emphasis will remain on enhancing efficiency and optimising operations across the group's entire value chain. Festi expects to deliver improved financial results in 2025 compared to 2024, in EBITDA results, post-tax profit and return on equity.

The highlights of last year and outlook for the year ahead:

• The Festi group grew when Lyfja joined in July, when the Icelandic Competition Authority approved the merger with a settlement. Karen Ósk Gylfadóttir was appointed Lyfja's Managing Director, supported by a strong management team. Towards the end of the year, Lyfja's office moved to Festi's headquarters on Dalvegur in Kópavogur, and Festi took over provision of support services to Lyfja, in line with those provided to other companies in the group.
• Yrkir eignir assumed responsibility for the group's real estate operations as of early 2024. The company leases commercial property to companies in retail operations, operates a security department and a construction department, as well as developing the group's property portfolio with a strong emphasis on profitability. This has led to several exciting property development projects over the year, such as in Stóragerði, Skógarsel and Ægisíða, as well as developments in Akranes and Vík. Further details on these projects will be presented at the scheduled investor presentation on 6 February.
• Festi began a formal sales process of the shares in Olíudreifing last September, but Festi owns a 60% stake in the company alongside Olís. In early December, three shortlisted bidders were invited to proceed in the sales process, which is currently ongoing.
• Magnús Hafliðason has been appointed Managing Director of N1 and will officially take over at the end of the month. N1 has re-entered the car-wash market by taking over six car wash stations that had been leased out to third parties for several years. Additionally, N1 opened a new service station, the largest on the Suðurnes peninsula, at Flugvellir, Reykjanes and took over new premises for the country's largest tyre hotel at Borgarhella.
• ELKO's stylish and improved flagship store in Lindir, Kópavogur, reopened at the end of October. The company continues to strengthen its market position with a targeted product range and robust services for both individual and corporate customers.
• Krónan has maintained strong growth, with a significant increase in both the number of customers and sales volume year-on-year. Recent refurbishments to Krónan's stores in Grafarholt and Bíldshöfði have been well received by customers, reflected in increased sales at these locations.
• All group e-commerce platforms have seen substantial growth, underscoring the importance of continued focus on digital expansion and growth. ELKO's online store is becoming one of its largest business units. Krónan added a considerable amount of delivery points; Húsavík, Vestmannaeyjar, Neskaupsstaður, Eskifjörður, Reyðarfjörður, Fáskrúðsfjörður, Laugarás, Flúðir and Reykholt. Lyfja has also achieved notable success in online sales and home deliveries through its recent app, which enables the purchase of prescription drugs, over-the-counter medicines, cosmetics and various healthcare products throughout the country. N1 is continuously enhancing its digital services, expanding the functionality of the N1 card in the app and introducing self-service kiosks at its largest service stations.
• Valuable lessons were learned from the settlement reached with the Icelandic Competition Authority (ICA) in late November regarding Festi's breach of the 2018 settlement related to N1's acquisition of Festi. The administrative fine amounted to ISK 750 million, representing a significant financial impact. However, the matter is now considered fully resolved and no further investigations or legal proceedings will be pursued by the ICA against the company, its employees, or other individuals.

Looking ahead, our company continues to grow and strengthen. The focus remains on driving revenue growth, maintaining cost control and enhancing efficiency to improve margins and reduce unit costs. The integration of Lyfja into the group presents numerous opportunities, which will be developed throughout the year alongside many other exciting projects that we look forward to sharing as the year progresses. We are proud of the results achieved in the past year and above all, we owe this success to our loyal customers and exceptional employees across the country," says Ásta S. Fjeldsted, CEO of Festi.

Investor meeting on 6 February at 8:30 GMT.

An investor meeting will be held on Thursday 6 February 2025, at 8:30 am GMT, at the Company's headquarters at Dalvegur 10 - 14, Kópavogur. Ásta S. Fjeldsted, CEO of Festi, and Magnús Kr. Ingason, CFO of Festi, will present the results and answer questions.

The meeting will be streamed live on the Company's website where registration for the webcast will also take place: https://www.festi.is/en/tenglar/results-Q4-2024. Participants attending virtually will be able to ask questions during the meeting via the email [e-mail]. Answers will be provided at the end of the presentation.

The presentation will be held in Icelandic though all material will be available in English as well.

The presentation material will be available online after the meeting on the Company's website: https://www.festi.is/en/fjarhagsupplysingar.