#117 August 2023 Investor Presentation H1 2023 Ásgeir Helgi Reykfjörð Gylfason, CEO SKEL FJÁRFESTINGAFÉLAG Kalkofnsvegur 2 101 Reykjavík [email protected] www.skel.is#2Our objective is to develop opportunities targeting long-term value creation SKEL#3We are active investors with the clear objective of supporting strong management teams and entrepreneurs in enhancing and developing enterprises and business ideas SKEL#4H1 2023 FROM INVESTOR PRESENTATIONS 2022: ,, Development of ,, Restructuring of Orkan's retail section under review" ,, Emphasis on transformation and increased profitability in listed investments" leading service enterprise" Klettur Purchase of Klettur finalised Lyfjaval Orkan buys all shares in Lyfjaval Heimkaup Gréta María appointed CEO of Heimkaup. The purchase of Orkan's retail section and all shares in Lyfjaval announced Vís The merger of Fossar og VÍS announced and later approved by shareholders and by the competition authorities Kaldalón When publishing their interim financial statements on August 31st 2023 the company will have achieved two of the four goals for listing on the main market Styrkás Holding company of Skeljungur and Klettur. The goal is to develop a leading service enterprise Horn IV strong co-investor Horn IV signed a subscription agreement for new equity in Styrkás for a value of ISK 3,500 million and thereby becomes the owner of 29.54% of the company's total share capital SKEL ,, Reduced weight of fossil fuel in the investment portfolio 96% " 47% ,, Active participant in the energy transition" Orkufelagið Settlement for the sale of shares in SP/F Orkufelag completed on 3. August 2023 Orkan The first fast-charging station opened in Birkimelur in July, planned to open 16 stations in the next 12 months Vetnisfélagið The share capital increase in Íslenska Vetnisfélagið has been completed and preparations for the construction of 4 hydrogen stations have begun.#5Portfolio SKEL#628% 20% CONSUMER MARKET ORKAN (100%) Löður Íslenska vetnisfélagið Straumlind CORPORATE MARKET STYRKÁS (70%) Skeljungur Klettur 17% REAL ESTATE KALDALÓN (15.37%) REIR ÞRÓUN (50%) Other real estate and land 12% CASH AND TREASURY BONDS 8% FINANCIAL MARKET Heimkaup (88%) Lyfjaval 10-11 Other convenience stores Restaurants Vís (9.25%) OTHER LISTED ASSETS SKEL 7% INFRA- STRUCTURE GALLON (100%) 7% ASSETS IN DIVESTMENT PROCESS SP/F ORKUFELAGIÐ (48.3%)* *SP/F ORKUFELAGIÐ uppgjör viðskipta fór fram 3. ágúst 2023#7" Styrkás Creation of a company servicing corporations across all industries GG ENERGY AND CHEMICAL PRODUCTS Styrkás DEVICES AND EQUIPMENT ENVIRONMENT INDUSTRY ASSET MANAGEMENT KLETTUR दे HORN IV INVESTS FOR ISK 3.5 BILLION AND WILL RECEIVE 29.5% OF ISSUED SHARES GROUP 2023 E | SKEL Profit margin 6,632 m.kr. EBITDA 1,981 m.kr. VALUATION IS BASED ON PURCHASE PRICE The purchase price is based on the enterprice value of the group being ISK 11,200 million and the value of assets ISK 8,350 million Horn IV slhf., private equity fund managed by Landsbréfa hf. signed a subscription agreement for new equity in Styrkás worth ISK 3,500 million (29.54%) Book value is based on the purchase price. The equity value after the share capital increase is ISK 11,850 million and SKEL will own 69.8% in Styrkás after the equity increase THE PHILOSOPHY New leading service enterprise Strong growth in key industries such as; energy production, tourism, aquaculture and heavy industry Increased demand for specialized services and equipment as a service An opportunity to combine many smaller service providers into one strong entity THE VISION Build on strong foundations and expand operations with increased product offerings and customer focused services Emphasis on internal growth and targeted acquisitions and partnerships Get partners invested in the journey i.e. Horn IV private equity fund A strong shareholder agreement, where the aim is to be listed on the Icelandic Stock Exchange in 2027 Equity value (69,8%) 8,266 m.kr Assets 100% Skeljungur 100% Klettur - S&Þ#8" Heimkaup Creation of a challenger in the retail market GG PHARMACY Lyfjaval heimkaup CONVENIENCE STORES EXTRA 1011 m heimkaup RESTAURANTS glo SBARRO BRAUÐ GRÉTA MARÍA APPOINTED CEO 1. JUNE 2023 ESTIMATED SALES 2023 3.5 B.ISK. 6.5 B.ISK. 1 B.ISK. K SKEL h Estimated sales 2023 11 B.ISK. Stores 19 PURCHASE OF LYFJAVAL AND ORKAN'S RETAIL SECTION Book value is ISK 4,099 million (of which the value of Lyfjaval was ISK 2.5 billion at the end of last year) The purchase price is paid with new shares in Heimkaup Norvik og HIBB holding invest ISK 500 million in cash Plan to raise up to ISK 1.5 billion of equity to finance external growth THE GROUP AFTER THE PURCHASE 7 Lyfjaval pharmacies Brand, online store and goodwill of Heimkaup, incl. information about 100k+ users 9 convenience stores under the brand of 10- 11, EXTRA and Orkan 8 Brauð og co. ehf. bakeries, 38% share, 2 Gló restaurants and 23% share in Sbarro The future plan is for retail stores and restaurants to be in 100% ownership of Heimkaup THE VISION The goal of the shareholders is to create a strong company in the retail market with a large revenue base Achieve simplification, better procurement, optimization and lower unit costs Both internal and external growth is planned Restructuring is being completed and the aim set for listing on the Icelandic Stock Exchange in 5 years We expect to promote the company better in the fall and bring in new partners Customers 100+ thousand on mailing list Employees 156#9" Orkan Servicing vehicles in a simple way FUEL ELECTRICITY HYDROGEN CAR WASH OTHER SERVICES ORKAN STRAUMLIND íslenska-H₂ vetnisfélagið SIMPLE BUSINESS MODEL WITH MINIMAL OVERHEAD AFTER THE RETAIL SECTION WAS SOLD Loður DI O SKEL GROUP 2023 E Profit margin 4,109 milli million ISK EBITDA 1,897 milli million ISK PURPOSE OF THE COMPANY SMART SERVICES A company that services vehicles; In a simple way • With good locations (network effect) With smart automated services It must be doable; . At scale With technology Smart payment solutions, Orkan recently introduced the Orkan Card to Apple/Google Wallet Gas cylinder vending machines • Screen wash on pump Faster charging- 16 fast charging stations in the next 12 months Cheaper electricity at night with Straumlind THE VISION Active participant in the energy transition Whether the vehicle needs energy, cleaning or other common services, Orkan will offer a service that takes care of its needs Investments in fast charging, hydrogen and better washing stations throughout the country over the next 3 years The share capital increase in Íslenska Vetnisfélagið has been completed and preparations for the construction of 4 hydrogen stations have begun Total value of equity 7,462 million ISK 72 energy stations 15 car washing stations 18 real estates 38 employees#10Listed companies KALDALÓN (15.37%) 2,464 m. ISK Vís (9.25%) 2,747 m. ISK vis SKEL SKEL has played a strategic role in the developement of Kaldalón as the fourth Icelandic real estate company on the market. We believe that company's focus on simple operation, simple portfolio and minimal infrastructure will be successful in the long term. Kaldalón recently completed the phase of issuing a bond framework for debt instruments. This is a big milestone for the company so it can later aquire market financing. Kaldalón's CEO announced recently that the management's plan and goals to list the company on the main market will be ready this quarter and preperation will begin as soon as goals are met. SKEL's position in Kaldalón has increased since the beginning of the year by ISK 300 m. in nominal value and has decreased in market value by ISK 302 m. since 31.12.2022. SKEL is interested in participating in the journey that the board of directors have started to change a well-established insurance company to a growing company in the financial market. Although larger havoc and rising interest rates affect the company's performance, we are pleased that in a short time asset management and fund operations have been set up at SIV, a merger with Fossa investment bank hf. was approved with the decisive support of shareholders and the company has announced that there has been a turnaround in sales after 6 years of continuous decline. We believe that the original reasons for the investment are still there. The company is in an ideal position to grow beyond the market as the brand is strong, the number of customers is significant, the company's finances are strong and there has been significant investment in the company's infrastructure in recent years. The company's managers have also managed to attract powerful managers to the company in recent months. SKEL's position in VÍS is unchanged from the beginning of the year, ISK 157 m. in nominal value and has increased in market value by ISK 111 m. since 31.12.2022.#11Financials SKEL#12Income Statement H1 2023 INCOME STATEMENT 1.1.-30.6.23 ISK million H1 2023 H1 2022 Fair value change of financial assets 2,065 496 Financial income (-expenses) 287 302 Other income 73 6,051 Investment income 2,424 6,849 Salaries and related expenses Other operating expenses Operating expenses (266) (406) (141) (230) (407) (636) Profit before tax 2,017 6,213 Income tax 43 (1,274) Net profit for the period 2,060 4,939 Profit after tax 2,060m.IS SKEL OPERATING EXPENSES ANNUALISED, ADJUSTED FOR STOCK OPTIONS FAIR VALUE CHANGES OF OTHER INVESTMENT ASSETS FAIR VALUE CHANGES OF LISTED SHARES 2% of equity 2,189 m.ISK (124) m.ISK#13Changes in fair value BREAKDOWN OF FAIR VALUE CHANGES RATIONALE FOR FAIR VALUE CHANGES Orkan 2,601 Löður (74) Lyfjaval 331 Styrkás - Skeljungur - Klettur (724) Kaldalón (302) Gallon (47) Vís 111 Other inv.assets 102 Loður Other listed inv.assets 67 2,065 m.kr. ORKAN CHANGES Orkan - Löður - Lyfjaval 31.12.22 8,671 Fair value change Lyfjaval 331 Lyfjaval og retail section sold (4,067) Fair value change Orkan Fair value change Löður 2,601 (74) Fair value of Orkan - Löður 30.6.2023 7,462 m.kr. Orkan is valued without the retail operations that were sold to Heimkaup during the period Orkan's emphasis on lower operating costs, a simpler operating model and low prices have resulted in EBITDA being higher than budgeted. The budget was therefore updated for the valuation and the estimated EBITDA for 2023 will be ISK 1,648 million Löður was slightly below budget, that can mainly be explained by constructions on new and larger washing facilities that have been delayed, but it is expected that they will now open in the second half of the year ☆ Lyfjavalo 42% share in Lyfjaval was purchased last March, but there were purchase and sale option agreements on shares that affected the value. The purchase price was ISK 331 million lower than the book value of the company at the end of last year Styrkás: the purchase price is based on the enterprise value of the group being ISK 11,200 million and the value of assets ISK 8,350 million Horn IV slhf., private equity fund managed by Landsbréfa hf. signed a subscription agreement for new equity in Styrkás worth ISK 3,500 million (29.54%) Book value is based on the purchase price. The equity value after the share capital increase is ISK 11,850 million and SKEL will own 69.8% in Styrkás after the equity increase Gallon was on budget in the first half of the year. The updated valuation is ISK 47 million. lower than the previous valuation. In the first half of the year, Gallon paid ISK 80 m. in dividends to SKEL SKEL#14Balance Sheet 30.6.2023 BALANCE SHEET 30.6.2023 ASSETS IN MILLION ISK M.kr. 30.6.2023 31.12.2022 Cash and cash equivalents Treasury bonds Listed shares 3,904 4,731 1,008 2,116 5,876 4,921 Sold inv.assets at fair value 2,917 0 Other inv. assets at fair value 24,627 23,137 Investment properties at fair value 1,140 690 Other assets 2,603 2,910 Total assets 42,074 38,505 Styrkás 8,266 4,911 Cash and cash equivalents and treasury bonds Equity 34,946 33,430 Debts to credit institutions 2,806 2,515 Deferred income tax liability 2,014 2,014 Other liabilities 2,308 547 Total liabilities 7,127 5,075 7,462 Total equity and liabilities 42,074 38,505 Orkan, Löður SKEL Return on equity for the period 12.5% 2,917 Orkufelagið 2,873 Gallon 2,747 Vís 2,464 Kaldalón 4,099 Heimkaup, Lyfjaval 2,623 Real estate and land 1,753 Reir þróun 1,294 Loans, receivables and other assagnir Other listed assets 665#15Overview of assets 26% Cash and listed assets 56% ASSETS BOOKED AT LISTED PRICE OR BASED ON TRANSACTIONS BETWEEN UNRELATED PARTIES 30% Recent transactions with unrelated parties 44% Investment assets at fair value CASH AND LISTED ASSETS Cash and cash equivalents and treasury bonds Vís 4,911 2,746 Kaldalón Other listed assets 2,463 709 10,830 m.kr. RECENT TRANSACTIONS WITH UNRELATED PARTIES Styrkás (Skeljungur og Klettur) 8,266 Sp/f Orkufelagið 2,917 Klettagarðar 1,023 Real estate - Barónsstígur 2-4 450 12,656 m.kr. INVESTMENT ASSETS AT FAIR VALUE Orkan, Löður 7,461 Heimkaup, Lyfjaval, 10-11 and more 4,099 Gallon 2,873 Reir þróun 1,753 Loans, receivables and other assets 1,250 Real estate and land 1,317 18,587 m.kr. SKEL#16Summarized SUMMARY The operating companies that previously formed Skeljungur are performing well The majority of the company's assets are now valued based on known market value or on the basis of transactions between unrelated parties The sale of S/pf Orkufelagið has been completed However, the right to sell still exists and a loan in the initial amount of ISK 460m AHEAD The development of Styrkás is off to a good start with cooperation with Horn and is fully funded for the medium term The company looks, among other things, to increase investments in registered bonds, to northern Europe and to the real estate market in the coming seasons Liquidity is strong and the share of listed assets, which by their nature can be sold at short notice, will increase SKEL#17Questions? Nánari upplýsingar veitir: [email protected] SKEL#18Additional material SKEL#19Methodology of valuation The companies that have not been part of recent transactions were valued, they are Orkan, Löður, which is part of Orkan, and Gallon. Kvika Bank's consulting department was hired for the project, and the bank's valuation experts reviewed the companies' performance in the first half of the year. When deviations were significant, the companies' future budget were adjusted. Methodology Estimates of the fair value of companies owned by SKEL were based on Discounted Cash Flow (DCF), using both Free Cash Flow to Firm (FCFF) and Dividend Discount Model (DDM). The valuation is to a large extent based on management's operating budgets and discussions between the appraisers and management. Many of the estimates are based on actual changes in underlying figures and subsequently the inherent inflation premium of risk free interest is used for the estimate of future inflation of cash flow. All operating figures exclude the impact of IFRS 16 in this presentation The effect of that is that leases are charged among operating costs in the income statement and reduce EBITDA instead of the right of use being charged with depreciation and interest charged among capital items as required by the IFRS16 standard. SKEL#20Orkan - valuation EXCLUDES LÖÐUR, LYFJAVAL AND RETAIL OPERATION RESULT OF VALUATION VALUE OF EQUITY 5.7 BILLION ISK 1,791 852 984 8,231 5,456 PERFORMANCE AND FORECAST 2023E 2024E Gross profit 3,633 3,450 EBITDA 1,648 1,461 EBIT 1,217 816 Depreciation 431 645 Investments 601 999 5,714 -3,370 Change to NWC (62) (56) EBITDA / margin 45.4% 42.3% Inv./margin 16.5% 29.0% ROIC 21.3% 13.3% YIELDS NOMINAL VALUE WACC Target leverage FCFF 2023-21 FCFF 2028–47 TV 2047 EV Non-operating assets IBD Value of equity IMPACT ON VALUE Better results in operation Simple model Increased market share Investments relating to energy transition Real margin growth projected at 0% 12.2% 40.0% COMPARABLES 2023E 8,5x 5,0x 4,7x 2,3x 0,3x 0,3x EV/Revenue EV/EBITDA Orkan ■Sunoco LP ■Delek US Holdings, Inc. SKEL#21Löður - valuation RESULT OF VALUATION VALUE OF EQUITY 1.75 BILLION ISK (144) 1,587 408 1,851 92 22 Loður SKEL PERFORMANCE AND FORECAST 2023E 2024E Gross profit 840 1,088 EBITDA 249 411 1,748 EBIT 149 307 (195) Depreciation 100 85 Investments 1,030 460 Change to NWC (84) (210) EBITDA / margin 29.6% 37.8% Inv./margin 122.6% 42.3% ROIC 18.8% 20.6% FCFF 2023-27 FCFF 2028–47 TV 2047 EV Non-operating assets IBD Value of equity IMPACT ON VALUE Growth opportunities Leading brand Increased environmental awareness Investments Competition with car wash at home YIELDS NOMINAL VALUE WACC Target leverage 13.6% 30.0% COMPARABLES 2023E 4.9x 4.5x 1.7x 16,0x EV/Revenue EV/EBITDA ■Löður Mister Car Wash#22Gallon - valuation RESULT OF VALUATION VALUE OF EQUITY 2.9 BILLION ISK 751 353 2,873 341 2,520 1,427 [0] SKEL GALLON PERFORMANCE AND FORECAST 2023E 2024E Revenue 580 682 EBITDA 275 353 EBIT 161 234 Depreciation 114 119 Investments 80 86 Change to NWC (56) (3) EBITDA / Revenue 47.4% 51.8% Inv./Revenue 13.8% 12.6% ROIC 10.4% 15.0% YIELDS NOMINAL VALUE WACC Target leverage ECFF 2023-27 FCFF 2028–47 TV 2047 EV Non-operating assets IBD Value of equity IMPACT ON VALUE Improved utilisation Emergency supplies Energy transition Underutilised investment 11.2% 50.0% COMPARABLES 2023E 5.3x 4.4x 1.2x EV/Revenue 11.9x 9.2x 7.7x EV/EBITDA ■Gallon Magellan Midstream Partners, LP. ■Energy transfer LP#23Disclaimer SKEL fjárfestingafélag notes that the presentation is intended solely for information purposes and its receipt should not be construed as investment advice. Under no circumstances shall the presentation be perceived or construed as a promise of success in the operation of the company or returns on assets. Information contained in this presentation is based on sources that the company considers to be reliable at each time and statements contained in the presentation may be based on the assessments and estimates of the company's management and not on facts that can be verified in the presentation. Statements made in this presentation are valid only that the point in time that this presentation is made public and their validity is limited by the substance of this disclaimer. Investors should note that a number of factors can have the effect that the company's business operations and performance deviating from the assumptions made in the presentation. The presentation will not be revised in this regard following its publication. Any statement in this presentation that refers to the company's estimated or anticipated future results represents only a forecast of the company's future prospects based on current trends, available information and estimates. The company's future prospects are subject to a number of risks and uncertainties that could cause actual results to differ from the prospects forecast in this presentation. These include factors such as changes in the economic environment, financial risk, oil price risk and increased competition. By the receipt of this presentation the recipient acknowledges his/her acceptance of being bound by the above reservations and restrictions. SKEL