Consolidated Annual Financial Statements of Festi hf. 2023 2
Contents
Page
Endorsement and Statement by the Board of Directors and the CEO .............................................................. 3
Independent Auditors' Report ............................................................................................................................ 6
Statement of Profit or Loss and Other Comprehensive Income ........................................................................ 10
Statement of Financial Position ......................................................................................................................... 11
Statement of Changes in Equity ........................................................................................................................ 12
Statement of Cash Flows .................................................................................................................................. 13
Notes ................................................................................................................................................................. 14
Appendices - unaudited:
Quarterly Statement .......................................................................................................................................... 44
Statement of Corporate Governance ................................................................................................................ 46
Non-Financial Information ................................................................................................................................. 51
Consolidated Annual Financial Statements of Festi hf. 2023 3 Amounts are in thousands of ISK
Endorsement and Statement by the Board of Directors and the
CEO
Operations of the Group
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 name
Krónan, 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.
Board of Directors and Corporate Governance
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 on 1 July 2021. The guidelines are accessible on the website www.leidbeiningar.is.
The Board of Directors consists of three males and two females. The Company’s Annual General Meeting will be held
next 6 March. Further information about the Board of Directors and Corporate Governance can be found in the appendix
Statement of Corporate Governance, which accompanies these financial statements.
Operations during the year
The Group´s operating revenue for the year 2023 amounted to ISK 138,440 million (2022: ISK 123,785 million) and
increased by 11.8% between years. Operating profit before depreciation, amortisation and changes in value for the year
2023 amounted to ISK 11,015 million (2022: ISK 10,020 million) and increased by 9.9% between years. According to the
Statement of Profit or Loss and Other Comprehensive Income, the profit for the year amounted to ISK 3,438 million (2022:
ISK 4,082 million) and total comprehensive income for the year ISK 3,429 million (2022: ISK 4,044 million). The Group´s
equity at year-end amounted to ISK 35,842 million (2022: ISK 33,460 million), including share capital in the nominal value
of ISK 301 million. Reference is made to the Statement of Changes in Equity regarding changes in equity during the year.
The Group´s equity ratio at year-end was 37.3% (2022: 36.9%).
Operations during the year went well in a challenging operating environment. The impact of high global commodity prices
continued as in the previous year, with a lower margin level, especially in the fuel part of the operations. The effects of
high inflation and the general wage increases negotiated in the labour market had a major impact on all operating costs,
which resulted in higher product prices for stores. We worked with suppliers and collaborators to counteract these effects
as well as find ways to optimise. Prices are expected to remain high in commodity markets amid the war in Ukraine and
at the end of the Mediterranean Sea, but inflation is expected to decrease as the year 2024 progresses.
In connection with the publication of its annual financial statements for the year 2022, the Company released on 8 February
2023 earnings forecast for the year 2023, where projected EBITDA was ISK 9,750 – 10,250 million. The Company
increased its earnings forecast two times during the year, last in connection with the publication of the interim financial
statements for Q3, to ISK 10,400 – 10,800 million. The actual EBITDA for the year amounted to ISK 11,015 million, which
is considerably better than the amount assumed in the first earnings forecast for the year. Increased business in all
subsidiaries explain the better EBITDA, especially in the convenience goods part of the Group, where sales increased
significantly more than assumed in the budgets. There was also a quantity increase in sales and in-stores visits in all
areas of the business. The management continued to place great emphasis on the reduction of all operating expenses
through various measures, which also explains the much better operating result than assumed in the budgets.
On 13 July Festi signed under the purchase of all shares in Lyfja hf., which operates 45 pharmacies and branches around
Iceland, as well as an online store and an app. Lyfja and its subsidiaries employ around 380 employees and the group's
total turnover amounted to ISK 15 billion in 2022 and EBITDA around ISK 1.3 billion. The total purchase price amounts to
ISK 7.8 billion, but the purchase is subject to approval by the Competition Authority, which is assessing the purchase. The
conclusion is expected in the second quarter of 2024.
The full-time equivalent number of employees was 1,352 and increased by 6.5% between years. The average number of
employees was 2,259 and the employee gender ratio (males/females) was 61/39. Management gender ratio
(males/females) was 65/35. Festi has a strong financial position at year-end and the Company is well prepared to address
the challenges ahead.
Consolidated Annual Financial Statements of Festi hf. 2023 4 Amounts are in thousands of ISK
Endorsement and Statement by the Board of Directors and the
CEO, contd.:
The Company's Board of Directors proposes that a dividend of ISK 3 per share of nominal value be paid during the year
2024 or approximately ISK 904 million.
Shareholders
The Company´s shareholders at the end of the year were 1,191, compared to 1,268 at the beginning of the year, and thus
their number decreased by 77 during the year. Following are the Company's 20 largest shareholders at year-end:
Share Capital and Articles of Association
The Company’s listed share capital amounted to ISK 305 million at the end of the year and it was decreased by ISK 8
million during the year by redemption of treasury shares. Outstanding at year-end 2023 were ISK 301 million shares
(2022: ISK 308 million) and the Company owned 3,246 thousand own shares at year-end. All share capital is in one class
and all shareholders enjoy the same rights. At the Company’s Annual General Meeting which was held on 22 March 2023
it was agreed to authorise the Company 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
6,246 thousand shares during the year, about 2.1% of total share capital, as part of the Company’s dividend policy, see
Note 22. The 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 22 March 2022 (as per Note 22). 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 ten-day 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.
Share Change
Share capital capital from
in thousands of ISK in % 2022 in %
Lífeyrissjóður starfsmanna ríkisins, A- og B-deild........................................
40,949
13.6% -0.1%
Lífeyrissjóður verzlunarmanna......................................................................
33,282
11.0% 0.2%
Gildi - lífeyrissjóður........................................................................................
29,499
9.8% 0.2%
Brú Lífeyrissjóður starfsmanna sveitarfélaga................................................
27,224
9.0% 0.3%
Birta lífeyrissjóður..........................................................................................
17,378
5.8% -1.3%
Stefnir............................................................................................................
14,426
4.8% 4.8%
Almenni lífeyrissjóðurinn...............................................................................
14,404
4.8% 0.1%
Stapi lífeyrissjóður.........................................................................................
14,001
4.6% 0.0%
Vanguard.......................................................................................................
10,277
3.4% 1.2%
Frjálsi lífeyrissjóðurinn...................................................................................
10,029
3.3% -0.3%
Söfnunarsjóður lífeyrisréttinda......................................................................
9,263
3.1% 0.1%
Festa - lífeyrissjóður......................................................................................
7,377
2.4% -1.6%
Lífeyrissjóður starfsmanna Reykjavíkurborgar..............................................
7,346
2.4% 0.0%
Stormtré ehf..................................................................................................
7,101
2.4% 0.4%
Brekka Retail ehf...........................................................................................
6,000
2.0% 0.4%
Lífsverk lífeyrissjóður....................................................................................
5,523
1.8% -0.5%
Kjálkanes ehf.................................................................................................
4,674
1.6% -0.4%
Arion banki hf................................................................................................
2,861
0.9% 0.6%
Íslenski lífeyrissjóðurinn - Lífsbraut...............................................................
2,422
0.8% 0.0%
Kvika banki hf................................................................................................
1,981
0.7% 0.4%
266,017
88.3% 4.3%
Other shareholders.......................................................................................
35,237
11.7% -4.3%
301,254
100.0%
Consolidated Annual Financial Statements of Festi hf. 2023 5 Amounts are in thousands of ISK
Endorsement and Statement by the Board of Directors and the
CEO, contd.:
Non-Financial Information
Festi hf. is a public interest entity. According to the Icelandic Act on Annual Accounts, the Company shall provide
information necessary to assess its development, scope, status, 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. For the past few years, the Company has issued a sustainability report in accordance
with Nasdaq’s ESG guidelines. The publication of the report is, among other things, to enable Festi to share its non-
financial parameters for the Group, based on accepted methodology. The policies and results of Festi with respect to
these matters are described in the appendix to these annual financial statements on non-financial information. There is
also the Group’s disclosed information in accordance with the requirements of the EU Taxonomy, which entered into force
on June 1, 2023, valid for the full fiscal year of 2023.
Statement by the Board of Directors and the CEO
The Company's consolidated annual 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 Icelandic 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 2023, its assets, liabilities and financial position as at 31
December 2023, and changes in cash and cash equivalents during the year 2023.
Furthermore, in our opinion the consolidated annual financial statements and the Endorsement and Statement 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 2023 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.
Kópavogur, 7 February 2024.
Board of Directors of Festi hf.
Guðjón Karl Reynisson, Chairman
Sigurlína Ingvarsdóttir, Vice-Chairman
Hjörleifur Pálsson
Magnús Júlíusson
Margrét Guðmundsdóttir
CEO
Ásta S. Fjeldsted
Consolidated Annual Financial Statements of Festi hf. 2023 6 Amounts are in thousands of ISK
INDEPENDENT AUDITORS’ REPORT
To the Board of Directors and Shareholders of Festi hf.
Opinion
We have audited the Consolidated Financial Statements of Festi hf. for the year ended December 31, 2023 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, 2023, 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.
Basis for Opinion
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.
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.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the Consolidated
Financial Statements of 2023. 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.
Key Audit Matters
How the matter was addressed in our audit
Impairment of goodwill and trademarks
Goodwill amounts to ISK 14.9 billion and the trademarks of
Krónan and Elko amount to ISK 3.1 billion.
The value of goodwill and trademarks 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.
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.
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 13 and 14
in the Consolidated Financial Statement.
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:
• 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.
• Reviewed of assumptions for expected future growth after the
forecast period.
• Reviewed of variances from previous year’s budget.
• Assessed the discount rate for each unit.
• 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.
Consolidated Annual Financial Statements of Festi hf. 2023 7 Amounts are in thousands of ISK
INDEPENDENT AUDITORS’ REPORT, contd.:
Key Audit Matters
How the matter was addressed in our audit
Valuation of properties
Properties of the Group amounts to ISK 33 billion and are
classified on the balance sheet among property & equipment and
investment properties.
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 recognised at fair value through profit
or loss. The Group’s properties, those not classified as
investment properties, are carried at revalued amount.
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.
Revaluation of the Company’s properties 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 properties 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.
Further information regarding real estate, we refer to note 14 and
16 in the Consolidated Financial Statements.
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:
• 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.
• Assessed the assumptions and calculation of the discount rate
(WACC) and compared it to market conditions.
• 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.
Other information
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.
Responsibilities of Management and Those Charged with Governance for 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.
Consolidated Annual Financial Statements of Festi hf. 2023 8 Amounts are in thousands of ISK
INDEPENDENT AUDITORS’ REPORT, contd.:
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements 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.
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.
Consolidated Annual Financial Statements of Festi hf. 2023 9 Amounts are in thousands of ISK
INDEPENDENT AUDITORS’ REPORT, contd.:
Report on other legal and regulatory requirements
Report on European single electronic format (ESEF Regulation)
As part of our audit of the consolidated financial statements of Festi hf. we performed procedures to be able to issue an
opinion on whether the consolidated financial statements of Festi hf. for the year 2023 with the file name
"5493005OLOCYXGTC7E83-2023-12-31-en.zip" is prepared, in all material respects, in compliance with laws no.
20/2021 disclosure obligation of issuers of securities and the obligation to flag relating to requirements regarding European
single electronic format regulation EU 2019/815 which include requirements related to the preparation of the consolidated
financial statements in XHTML format and iXBRL markup.
Management is responsible for preparing the consolidated financial statements in compliance with laws no. 20/2021
disclosure obligation of issuers of securities and the obligation to flag. This responsibility includes preparing the
consolidated financial statements in a XHTML format in accordance with EU regulation 2019/815 on the European single
electronic format (ESEF regulation).
Our responsibility is to obtain reasonable assurance, based on evidence that we have obtained, on whether the
consolidated financial statements is prepared in all material respects, in compliance with the ESEF Regulation, and to
issue a report that includes our opinion. The nature, timing and extent of procedures selected depend on the auditor's
judgement, including the assessment of the risks of material departures from the requirement set out in the ESEF
regulation, whether due to fraud or error.
In our opinion, the consolidated financial statements of Festi hf. for the 2023 with the file name
"5493005OLOCYXGTC7E83-2023-12-31-en.zip" is prepared, in all material respects, in compliance with the ESEF
Regulation.
Deloitte was appointed auditor of Festi hf. by Annual General Meeting of shareholders on 22. March 2023. Deloitte have been elected
since the annual general meeting 2019.
Kópavogur, 7. February 2024
Deloitte ehf.
Þorsteinn Pétur Guðjónsson Pétur Hansson
State Authorized Public Accountant State Authorized Public Accountant
Consolidated Annual Financial Statements of Festi hf. 2023 10 Amounts are in thousands of ISK
Statement of Profit or Loss and Other Comprehensive Income
for the year 2023
The notes on pages 14 to 43 are an integral part of these annual financial statements
Notes 2023 2022
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,
23
Total other comprehensive income ..........................................................................
Total comprehensive income for the year ..............................................................................................
Basic and diluted earnings per share in ISK ........................................
Profit for the year ..........................................................................................................
Other comprehensive income
associate ............................................................................................
Net change in fair value of investments in shares ................................
net of income tax ................................................................................
Translation difference arising from operations of a foreign
Income tax ............................................................................................
Other operating expenses ..................................................................
Operating profit before depreciation, amortisation
and amortisation of intangible assets .............................................
Changes in value of investment property .............................................
Operating profit before finance items (EBIT) ...........................................................................................
Finance income ..................................................................................
Finance costs .....................................................................................
Foreign currency differences ..............................................................
Share of profit of associates ...............................................................
Profit before income tax (EBT) ..........................................................................
and changes in value (EBITDA) ...........................................................................................
Depreciation of property and equipment and leased assets
Salaries and other personnel expenses .............................................
Sale of goods and services .................................................................
Cost of goods sold ..............................................................................
Gross profit from sale of goods and services ................................................................................................................
Other operating income .......................................................................
Consolidated Annual Financial Statements of Festi hf. 2023 11 Amounts are in thousands of ISK
Statement of Financial Position as at 31 December 2023
The notes on pages 14 to 43 are an integral part of these annual financial statements
Notes 2023 2022
Assets
12
13
14
15
16
17
18
Non-current assets 72,404,641 71,450,360
19
28
20
21
Current assets 23,627,473 21,922,563
Total assets 96,032,114 93,372,923
Equity
Equity
22
Liabilities
24
25
26
Non-current liabilities 40,659,254 41,939,825
24
25
27
Current liabilities 19,530,505 16,972,995
Total liabilities 60,189,759 58,912,820
Total equity and liabilities 96,032,114 93,372,923
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 ........................................................................................
Share premium ....................................................................................
Other short-term liabilities ....................................................................
Retained earnings ...............................................................................
Lease liabilities ....................................................................................
Other short-term receivables ...............................................................
Goodwill ...............................................................................................
Leased assets .....................................................................................
Investment properties ..........................................................................
Property and equipment ......................................................................
Consolidated Annual Financial Statements of Festi hf. 2023 12 Amounts are in thousands of ISK
Statement of Changes in Equity for the year 2023
The notes on pages 14 to 43 are an integral part of these annual financial statements
Unrealised
profit of Other
Share Share Statutory Revaluation subsidiaries restricted Retained Total
capital premium reserve reserve and associates accounts earnings equity
Year 2022
Equity 1.1.2022 ................................................................
Profit for the year .............................................................
Total other comprehensive income ..................................
0 96,711 )( 59,436 37,275 )(
Restricted due to subsidiaries and associates ................
Dissolution of revaluation of an associate ......................
Dissolution of revaluation of property and equipment ......
Transactions with shareholders:
Purchased own shares ...................................................
Transferred from statutory reserve .................................
Dividend paid to shareholders (ISK 5 per share) .............
Equity 31.12.2022 ............................................................
Total other restricted equity ............................................
Year 2023
Equity 1.1.2023 ................................................................
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 equipment ......
Transactions with shareholders:
Purchased own shares ...................................................
Transferred from statutory reserve .................................
Dividend paid to shareholders (ISK 3 per share) .............
Equity 31.12.2023 ............................................................
Total other restricted equity ............................................
Other restricted equity
Consolidated Annual Financial Statements of Festi hf. 2023 13 Amounts are in thousands of ISK
Statement of Cash Flows for the year 2023
The notes on pages 14 to 43 are an integral part of these annual financial statements
Notes 2023 2022
Cash flows from operating activities
Operating items not affecting cash flows:
Changes in operating assets and liabilities:
Cash flows from investing activities
13
13
14
14
16
16
Cash flows from financing activities
24
24
25
Foreign currency difference on cash and cash equivalents .................................................................................................................
Investing and financing activities not affecting cash flows
0 40,000)(
0 40,000
15 1,067,666)( 2,483,438)(
25 1,067,666 2,483,438
0 118,000)(
0 0
0 40,500
0 77,500
Interest received .......................................................................................
Income tax paid ........................................................................................
New lease contracts and their remeasurement ...........................................
Net cash from operating activities
Purchased intangible assets ........................................................................
Purchased property and equipment .............................................................
New loans from credit institutions .................................................................
Net cash used in financing activities
Dividend paid ................................................................................................
Dividend received ........................................................................................
Net cash from (used in) investing activities
Sold property and equipment .......................................................................
Acquisition of subsidiary, net of cash acquired ............................................
Changes in operating assets and liabilities
Profit before depreciation, amortisation and changes in value (EBITDA) .....
Trade and other short-term receivables, decrease (increase) .................
Inventories, (increase) decrease ...............................................................
Trade and other short-term liabilities, increase .........................................
Gain on sale of shares in companies ........................................................
Gain on sale of property and equipment ...................................................
Sale of investment properties ......................................................................
Repayment of lease liabilities .......................................................................
Change in shares in companies ...................................................................
Interest paid .............................................................................................
Long-term receivables, change ...................................................................
Purchase of investment properties ..............................................................
Purchase of shares in companies .................................................................
Sold intangilble assets ..................................................................................
Sold investment properties ...........................................................................
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 .............................................................................
Sold property and equipment .......................................................................
Trade and other short-term receivables ........................................................
Consolidated Annual Financial Statements of Festi hf. 2023 14 Amounts are in thousands of ISK
Notes
at Dalvegur 10-14, Kópavogur, Iceland . The main operations of the Group consist of sale of fuel, goods and service to
annual financial statements consist 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.
Information about accounting policies is presented in the same notes as the applicable items. Management believes that
Consolidated Annual Financial Statements of Festi hf. 2023 15 Amounts are in thousands of ISK
Notes, contd.:
Consolidated Annual Financial Statements of Festi hf. 2023 16 Amounts are in thousands of ISK
Notes, contd.:
Consolidated Annual Financial Statements of Festi hf. 2023 17 Amounts are in thousands of ISK
Notes, contd.:
Consolidated Annual Financial Statements of Festi hf. 2023 18 Amounts are in thousands of ISK
Notes, contd.:
Consolidated Annual Financial Statements of Festi hf. 2023 19 Amounts are in thousands of ISK
Notes, contd.:
Consolidated Annual Financial Statements of Festi hf. 2023 20 Amounts are in thousands of ISK
Notes, contd.:
Consolidated Annual Financial Statements of Festi hf. 2023 21 Amounts are in thousands of ISK
Notes, contd.:
Consolidated Annual Financial Statements of Festi hf. 2023 22 Amounts are in thousands of ISK
Notes, contd.:
Consolidated Annual Financial Statements of Festi hf. 2023 23 Amounts are in thousands of ISK
Notes, contd.:
Consolidated Annual Financial Statements of Festi hf. 2023 24 Amounts are in thousands of ISK
Notes, contd.:
Consolidated Annual Financial Statements of Festi hf. 2023 25 Amounts are in thousands of ISK
Notes, contd.:
Consolidated Annual Financial Statements of Festi hf. 2023 26 Amounts are in thousands of ISK
Notes, contd.:
A. The Group as lessee
Consolidated Annual Financial Statements of Festi hf. 2023 27 Amounts are in thousands of ISK
Notes, contd.:
Consolidated Annual Financial Statements of Festi hf. 2023 28 Amounts are in thousands of ISK
Notes, contd.:
B. The Group as lessor
Consolidated Annual Financial Statements of Festi hf. 2023 29 Amounts are in thousands of ISK
Notes, contd.:
Consolidated Annual Financial Statements of Festi hf. 2023 30 Amounts are in thousands of ISK
Notes, contd.:
It was announced on 1 December 2023 that Festi hf. and Olís ehf. have jointly initiated an assessment of the strategy and
future possibilities with respect to their ownership in Olíudreifing ehf., EAK ehf. and EBK ehf. This entails the evaluation
of the possibility of a changed ownership, as applicable in cooperation with other shareholders of the companies, with the
aim to maximise shareholder value, simplify ownership and at the same time ensure a favourable future development of
their infrastructure. It is expected that the conclusions of the initial assessment will be available by mid-year 2024.
Consolidated Annual Financial Statements of Festi hf. 2023 31 Amounts are in thousands of ISK
Notes, contd.:
Consolidated Annual Financial Statements of Festi hf. 2023 32 Amounts are in thousands of ISK
Notes, contd.:
Consolidated Annual Financial Statements of Festi hf. 2023 33 Amounts are in thousands of ISK
Notes, contd.:
Consolidated Annual Financial Statements of Festi hf. 2023 34 Amounts are in thousands of ISK
Notes, contd.:
Consolidated Annual Financial Statements of Festi hf. 2023 35 Amounts are in thousands of ISK
Notes, contd.:
Consolidated Annual Financial Statements of Festi hf. 2023 36 Amounts are in thousands of ISK
Notes, contd.:
Consolidated Annual Financial Statements of Festi hf. 2023 37 Amounts are in thousands of ISK
Notes, contd.:
• Credit risk
Consolidated Annual Financial Statements of Festi hf. 2023 38 Amounts are in thousands of ISK
Notes, contd.:
Consolidated Annual Financial Statements of Festi hf. 2023 39 Amounts are in thousands of ISK
Notes, contd.:
Consolidated Annual Financial Statements of Festi hf. 2023 40 Amounts are in thousands of ISK
Notes, contd.:
Consolidated Annual Financial Statements of Festi hf. 2023 41 Amounts are in thousands of ISK
Notes, contd.:
Consolidated Annual Financial Statements of Festi hf. 2023 42 Amounts are in thousands of ISK
Notes, contd.:
Consolidated Annual Financial Statements of Festi hf. 2023 43 Amounts are in thousands of ISK
Notes, contd.:
Operations
2023 2022
7,6 7,6
13,3 15,9
35,9% 37,1%
50,3% 49,8%
20,9% 21,9%
Financial position
1,21 1,29
0,52 0,52
2,28 2,78
37,3% 36,9%
10,0% 11,9%
Current ratio: current assets / current liabilities ...........................................................
Liquidity ratio: (current assets - inventories) / current liabilities ...................................
Leverage: net interest bearing liabilities excluding leaese liabilities / EBITDA ............
Equity ratio: equity / total capital ..................................................................................
Return on equity: profit for the year / average balance of equity .................................
Other operating expenses / gross profit ......................................................................
Turnover rate of inventories
Average balance of trade receivables during the year / goods and
Utilisation of goods / average balance of inventories during the year ....................
Sales days in trade receivables:
services sold ......................................................................................................
Profit before depreciation, amortisation and finance items / gross profit .....................
Salaries and salary related expenses / gross profit .....................................................
Consolidated Annual Financial Statements of Festi hf. 2023 44 Amounts are in thousands of ISK
Quarterly Statement – unaudited
The Group´s operations for the year 2023 is specified by quarters as follows:
2023
Q1 Q2 Q3 Q4 Total
29,483,531 34,199,250 37,333,780 35,234,640 136,251,201
23,256,243)( 26,442,925)( 28,759,114)( 27,125,954)( 105,584,236)(
6,227,288 7,756,325 8,574,666 8,108,686 30,666,965
496,934 517,711 534,774 639,420 2,188,839
3,672,552)( 4,137,590)( 3,676,304)( 3,953,846)( 15,440,292)(
1,650,753)( 1,574,932)( 1,528,514)( 1,645,829)( 6,400,028)(
4,826,371)( 5,194,811)( 4,670,044)( 4,960,255)( 19,651,481)(
Operating profit before depreciation, amortisation
1,400,917 2,561,514 3,904,622 3,148,431 11,015,484
943,764)( 945,090)( 990,573)( 1,222,264)( 4,101,691)(
15,546 86,131 89,030)( 126,246 138,893
472,699 1,702,555 2,825,019 2,052,413 7,052,686
27,255 42,053 86,251 88,458
244,017
817,897)( 893,273)( 901,923)( 931,398)(
3,544,491)(
23,989 4,288 52,680)( 9,893)(
34,296)(
122,064 49,771 258,568 12,278)(
418,125
644,589)( 797,161)( 609,784)( 865,111)( 2,916,645)(
171,890)( 905,394 2,215,235 1,187,302 4,136,041
80,825 167,351)( 399,140)( 212,181)( 697,847)(
91,065)( 738,043 1,816,095 975,121 3,438,194
subsequently to profit or loss:
17,887)( 1,769 63,406)( 73,060 6,464)(
30 2,903)( 20,797)( 20,593 3,077)(
17,857)( 1,134)( 84,203)( 93,653 9,541)(
108,922)( 736,909 1,731,892 1,068,774 3,428,653
0.30)( 2.43 5.96 3.22 11.31
(Loss) profit before income tax (EBT) .....................................................................
Income tax .......................................................
Effective portion of changes in fair value of
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
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 .........................
(Loss) profit for the period ..........................................................................................................
cash flow hedges, net of income tax ............
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 ..................................................
Share of profit of associates ............................
Sale of goods and services ............................
Consolidated Annual Financial Statements of Festi hf. 2023 45 Amounts are in thousands of ISK
Quarterly Statement – unaudited, contd.:
The Group´s operations for the year 2022 is specified by quarters as follows:
2022
Q1 Q2 Q3 Q4 Total
24,571,564 29,936,064 35,146,484 31,744,288 121,398,400
18,837,445)( 22,610,643)( 28,083,005)( 24,873,386)( 94,404,479)(
5,734,119 7,325,421 7,063,479 6,870,902 26,993,921
430,759 481,679 801,265 672,591 2,386,294
3,006,224)( 3,407,827)( 3,306,926)( 3,735,105)( 13,456,082)(
1,409,284)( 1,488,724)( 1,491,306)( 1,515,319)( 5,904,633)(
3,984,749)( 4,414,872)( 3,996,967)( 4,577,833)( 16,974,421)(
Operating profit before depreciation, amortisation
1,749,370 2,910,549 3,066,512 2,293,069 10,019,500
807,881)( 868,619)( 913,390)( 938,383)( 3,528,273)(
9,746 32,856)( 65,241 173,911 216,042
951,235 2,009,074 2,218,363 1,528,597 6,707,269
28,988 34,256 86,905 27,649 177,798
442,817)( 572,441)( 714,671)( 677,604)( 2,407,533)(
28,037)( 59,021 85,861 112,231)( 4,614
62,998 105,939 215,629 68,922 453,488
378,868)( 373,225)( 326,276)( 693,264)( 1,771,633)(
572,367 1,635,849 1,892,087 835,333 4,935,636
96,569)( 300,654)( 329,651)( 126,992)( 853,866)(
475,798 1,335,195 1,562,436 708,341 4,081,770
subsequently to profit or loss:
19,268)( 11,968)( 7,932 49,027 25,723
0 0 0 59,436 59,436
89,498)( 23,474)( 1,191 10,653)( 122,434)(
108,766)( 35,442)( 9,123 97,810 37,275)(
367,032 1,299,753 1,571,559 806,151 4,044,495
1.35 4.45 5.10 2.29 13.19
Basic and diluted earnings per share in ISK ....
Foreign currency differences ...........................
Share of profit of associates ............................
Items that are or may be reclassified
Total other comprehensive income .............
for the period ..............................................................................................
Profit for the period ..........................................................................................................
operations of a foreign associate .................
cash flow hedges, net of income tax ............
Total comprehensive income
Effective portion of changes in fair value of
Change in fair value of investments in shares .
Other operating expenses .............................
Depreciation and amortisation .........................
Translation difference arising from the
Profit before income tax (EBT) .....................................................................
Income tax .......................................................
Other comprehensive income
and changes in value (EBITDA) ...........................................................................................
Operating profit (EBIT) ...........................................................................................
Finance costs ..................................................
Finance income ...............................................
Changes in value of investment properties .....
Salaries and other personnel expenses .........
Other operating income ...................................
Gross profit from sale of goods and serv. ...........................................................................................
Sale of goods and services ............................
Cost of goods sold ..........................................
Consolidated Annual Financial Statements of Festi hf. 2023 46 Amounts are in thousands of ISK
Statement of Corporate Governance
Board of Directors and Corporate Governance
Festi (“Festi” or “the Company”) complies with the Guidelines on Corporate Governance, revised 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 rules of procedure of the Board of Directors
were most recently reviewed at a Board meeting on 24 January 2024. The rules are based on provisions in Article 70,
paragraph 5 in the Act on Public Limited Companies No. 2/1995 and Article 18, paragraph 4 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 2023. 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/cc/stjornarhættir. The Company’s highest
authority is with its shareholders. The Annual General Meeting of shareholders shall be held no later than 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 ultimately 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 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 Board members
appointed annually at the Annual General Meeting. According to the conclusion of the Annual General Meeting from 22
March 2023, the Board of Directors consists of: Guðjón Reynisson, Hjörleifur Pálsson, Magnús Júlíusson, Margrét
Guðmundsdóttir and Sigurlína V Ingvarsdóttir. The Board of Directors now consists of three men and two women.
Therefore, the Company complies 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 business
experience.
The Annual General Meeting will be held on 6 March 2024. 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 10 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. 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.
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. Four Board
members are independent of both the Company and the large shareholders but, according to The Guidelines of Corporate
Governance issued 1 July 2021, one Board member is dependent.
Consolidated Annual Financial Statements of Festi hf. 2023 47 Amounts are in thousands of ISK
Statement of Corporate Governance, contd.:
Remuneration committee
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 to the Remuneration
Committee and they shall all be independent from the Company. Neither the CEO nor other employees may be a member
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 Hjörleifur Pálsson - Chairman of the
Committee, Guðjón Karl Reynisson and Margrét Guðmundsdóttir.
Audit committee
The Board of Directors of Festi hf. has appointed an Audit Committee in accordance with provisions of the Icelandic
Financial Statements Act. The Committee must consist of at least three members and the majority of the members shall
be independent from Festi and its day-to-day managers. The Committee shall be appointed for a one-year term at the first
Board meeting following the Annual General Meeting. 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. The Chairman of the Committee calls for meetings at
his own initiative or upon request from other members of the Committee but no less than four times a year. The Committee
consists of Magnús Júlíusson, member of Board, Sigurlína Ingvarsdóttir, member of the Board, and Björgólfur
Jóhannsson, Chairman of the Committee.
The Audit Committee´s tasks are as follows:
• To monitor the financial reporting process.
• To monitor the structure 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.
Nomination committee
The Nomination committee bases its work on the Company’s Articles of Association and rules of procedure in accordance
with resolution of the Annual General Meeting. The committee consists of three members appointed for one year at a
time. Two members are elected at the Company´s Annual General Meeting but the third one is appointed by the Board of
Directors and is one of the Board members, directly after the Annual General Meeting. The principle shall be that a
committee member appointed by the Board shall not be a Board member of the Company. 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 Association
regarding the appointment of the Board of Directors.
Consolidated Annual Financial Statements of Festi hf. 2023 48 Amounts are in thousands of ISK
Statement of Corporate Governance, contd.:
The Nomination Committee's recommendations shall be aimed at the 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 Sigrún Ragna Ólafsdóttir, Chairman of the Committee, Ólafur Arinbjörn Sigurðsson
and Tryggvi Pálsson. Any queries are received through email, tilnefningarnefnd@festi.is.
Investment Committee
The Board of Directors appointed an Investment Committee, which operated until the Company’s Annual General Meeting
which was held on 22 March 2023. The Committee consisted of Guðjón Reynisson, Chairman of the Board of Directors,
Ásta S. Fjeldsted, the CEO and Magnús Kr. Ingason the CFO.
During the year 2023, the Board of Directors held 19 meetings, the Audit Committee 6 meetings and the Remuneration
Committee 6 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.
The Board of Directors of Festi
Guðjón Reynisson, Chairman of the Board of Directors
Guðjón Reynisson holds an MBA from the University of Iceland from 2002 and completed Operational- and Business
Studies from Endurmenntunarstofnun 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. 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, and the Board’s Chairman since 2022; board member
of Kvika banki since 2018, and of Securitas since 2018. Guðjón is independent of the Company, its day-to-day managers,
and major shareholders.
Sigurlína Invarsdóttir, Vice-Chairman of the Board of Directors
Sigurlína Invarsdóttir, holds a B.Sc degree in Industrial Engineering from the University of Iceland. Currently she works
as an independent advisor in her own company, Ingvarsdottir ehf. and a member of its board. Additionally, she is an
investor in Behold VC, where she is one of the owners. The fund invests in Nordic Countries in computer games
companies in the early stages of their development. Between 2006 and 2020 Sigurlína worked as a manager in computer
game manufacturing in Iceland, Sweden, Canada and the USA. Earlier she worked as a pharmaceutical development
project manager in Actavis and in business development, and also implementing new technical solutions at Hagar.
Sigurlína is the Chairman of the Boards of Directors of Carbon Recycling International and Solid Clouds and in addition
she is also a board member of Eyrir Vöxtur, along with other Icelandic and foreign computer games companies. Sigurlína
became a Board member of Festi in July 2022. She is independent of the Company, its day-to-day managers, and major
shareholders.
Hjörleifur Pálsson, member of the Board of Directors
Hjörleifur graduated from the University of Iceland in 1988 and holds a Cand. Oecon. degree. He became a certified public
accountant in 1989 and worked as an accountant until 2001. He held the CFO position in Össur hf. from 2001 to 2013.
From 2013 Hjörleifur has been a board member of various companies and today he is a board member, Chairman of the
Audit Committee, and a board member of Remuneration Committee in Lotus Pharmaceutical Co. Ltd., which is listed on
the share exchange in Taiwan. He is also a board member of Ankra ehf., a board member of Brunnur vaxtarsjóður slhf.
and a board member of Brandr Global ehf. Hjörleifur is the Chairman of Remuneration Committee of Icelandair Group hf.,
the Chairman of the Audit Committee of Harpa ráðstefnu og tónlistarhúss ohf. and a member of the Audit Committee of
Landsbankinn hf. Hjörleifur was for many years the Chairman of the Board of Directors and University Council of Reykjavík
University and, among other things, he is a former chairman of the Board of Directors of Sýn hf. Hjörleifur became a Board
member of Festi in July 2022. Hjörleifur is independent of the Company, its day-to-day managers, and major shareholders.
Consolidated Annual Financial Statements of Festi hf. 2023 49 Amounts are in thousands of ISK
Statement of Corporate Governance, contd.:
Magnús Júlíusson, member of the Board of Directors
Magnús holds an M.Sc. degree in Sustainable Energy Engineering from KTH Royal Institute of Technology in Stockholm
and a B.Sc degree in High Tech Engineering from Reykjavík University. Magnús held the position of CEO and was co-
founder of Stika umhverfislausnir ehf., a software company in the field of environmental solutions. Earlier Magnús was
assistant to the Higher Education, Science and Innovation Minister. In 2017 he established Íslenska Orkumiðlun ehf.,
specialising in electricity sales for the public electricity market, which Festi purchased in March 2020. Then Magnús
became responsible for the Energy division of N1 until the end of 2021. From 2014 to 2015 he worked as a specialist in
electricity supervision with Orkustofnun and from 2015 to 2016 he worked as an energy broker with Orka náttúra. From
2013 Magnús has also been a part time lecturer in Business Administration at Reykjavík University. Magnús is a board
member at Rio Tinto in Iceland. Magnús was a member of a committee responsible for shaping long term energy strategy
for Iceland, including vision and guidelines for Iceland in energy affairs until 2050. Magnús became a Board member of
Festi in July 2022. Magnús is dependent of the Company, day-to-day managers, and major shareholders.
Margrét Guðmundsdóttir, member of the Board of Directors
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 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, between 1982 and 1986. She was the deputy CEO of AIESEC International Brussel from 1978 to
1979. Margrét is a board member of Eignarhaldsfélagið Lyng ehf., Eimskip hf., Hekla hf., Hekla Fasteignir ehf. and Paradís
ehf. Margrét 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 between 2009 and 2013,
a board member of Reiknistofa bankanna from 2010 to 2011 and from 2016 to 2018, a board member of ISAVIA from
2017 to 2018 and a board member of SPRON from 2008 to 2009. Additionally, Margrét has been a board member of
Skýrr hf., Frigg hf., Q8 A/S in Denmark and Dansk Institut for Personaleradgivning. Margrét started as member of the
Board of Directors of N1 in 2011, the Chairman of the Board of Directors from 2012, which later became Festi, until March
2020. She is independent of the Company, day-to-day managers, and major shareholders.
Executive Board of Festi
The Executive Board is composed of the CEO and five managing directors of the Company, whereby each managing
director is responsible for a certain division under the CEO. The Company’s CEO, Ásta S. Fjeldsted, was on maternity
leave from the beginning of November 2022, but returned to work on 17 March 2023. Magnús Kr. Ingason, CFO, served
as CEO during the specified period.
Ásta Sigríður Fjeldsted, CEO
Ásta Sigríður is a Mechanical Engineer with an M.Sc. degree from DTU, Technical University of Denmark. Between the
years 2007 to 2012 she worked for IBM in Denmark and Össur hf. the orthopaedic manufacturer, both in France and
Iceland. From 2012 to 2017 she worked for the consulting firm McKinsey & Company, at both its offices in Tokyo and
Copenhagen. From 2017 she worked as the Secretary-General of Iceland Chamber of Commerce. Ásta Sigríður held the
position of CEO of Krónan from 2020 and became CEO of Festi in September 2022. Ásta Fjeldsted is a member of the
Corporate Advisory Council of the Icelandic National Committee for UNICEF and is a board member at Transition Labs.
Other members of the Executive Board
Magnús Kristinn Ingason, CFO and COO
Guðrún Aðalsteinsdóttir, CEO of Krónan
Óðinn Árnason, CEO of Festi fasteignir
Óttar Örn Sigurbergsson, CEO of ELKO
Ýmir Örn Finnbogason, CEO of N1
Consolidated Annual Financial Statements of Festi hf. 2023 50 Amounts are in thousands of ISK
Statement of Corporate Governance, contd.:
According to the Company’s Articles of Association, it is the role of the Board of Directors 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.
Main components of internal control and the Company´s risk management
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. Risk management is integrated in the day-to-day operation
of the Company.
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 a 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.
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 external auditors carry out limited reviews of its
processes.
Company's Shareholders
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. 2023 51 Amounts are in thousands of ISK
Non-Financial Information
Non-Financial Information – ESG
Festi’s Business Model
Festi is a holding company that owns and operates companies which are leading in the food market, fuel and service
station market, and electronic equipment and smart device market. Operation of properties, purchase and sale of
securities are also part of the Group’s operations. The Parent Company, Festi, owns the subsidiaries Krónan, which
operates grocery stores under the name Krónan, N1, which operates service stations for fuel and charging of electric
vehicles as well as 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 in warehouse services and distribution. Festi's Executive Board is made up of the Group's CEO and
managing directors, and Festi's representatives also make up the subsidiary companies' boards.
Festi has defined its mission, values and future vision, which are used as guiding lights in everyday work and decision-
making.
Mission: Manage investments, support value creation and create new opportunities.
Values: Value – Cooperation – Trust
Vision: We are leading, reliable and sustainable. We add value, satisfaction and increase quality of life.
Festi services all companies of the Group in various ways and thus achieves optimisation due to size and increased quality
through standardisation of work procedures and coordination of processes. In addition, the Company provides its
operating companies with the necessary support to be able to consistently be at the forefront of service and product
offerings, all over the country. The services are in the field of finance, information technology, human resources, quality,
safety and sustainability, as well as operation and maintenance of the Group's properties.
Summary of the Group's non-financial policies
Board of Directors’ Code of Conduct
Board of Directors’ Working Procedures
Code of Conduct
Code of Conduct for Suppliers and Service providers
Equal Pay Policy
Equality Policy
Human Resource Policy
Information Security Policy (In-house policy)
Investor Relations Policy
Privacy Policy (In-house policy)
Policy and response plan against bullying, harassment and violence
Remuneration Policy
Sustainability Policy
The Group's policies, other than in-house policies, can be accessed on the Company's website. In addition to the above-
mentioned policies, Festi's operating companies have independent policies that can be found in their sustainability reports.
Consolidated Annual Financial Statements of Festi hf. 2023 52 Amounts are in thousands of ISK
Non-Financial Information, contd.:
Sustainability policy of Festi and its operating companies
The policy‘s purpose is to serve as a guide to more sustainable operations for the Group. The policy lays the foundation
for the Group’s vision and strategic priority of having sustainability as a guiding principle in all decision making regarding
its future growth. Additionally, the policy supports the UN Sustainable Development Goals the Company the company
puts emphasis on, specifically the goals on gender equality (5), decent work and economic growth (8), reduced inequalities
(10), responsible consumption and production (12) and climate action (13).
Nasdaq’s internationally recognised guidelines for environmental, social and corporate governance (ESG) factors lay the
foundations of the policy, but the policy and its objectives are reviewed annually, published on Festi’s website and
presented to management and employees.
Environmental factors
Festi and its operating companies are aware of the impact of their operations on the environment and strive to minimise
their negative impact as much as possible. Festi and its operating companies are all members of Festa, the Centre for
Corporate Social Responsibility and Sustainability, and have all signed Festa’s and the City of Reykjavík’s Climate
Declaration on reducing greenhouse gas emissions and minimising negative environmental impacts through targeted
actions.
Amongst other things, the Group emphasizes responsible use of resources, reducing waste, increasing the availability of
environmentally friendly products and services, managing indirect emissions of greenhouse gases from operations (in
addition to direct emissions) as well as reducing them, mapping and responding to sustainability risks, improving employee
education and having a positive impact on the supply chain.
In addition to minimising the impact on the environment from direct operations, the Company is working on a project in
certified afforestation on the land of Fjarðarhorn in Hrútafjörður, which is carried out according to the requirements of
Skógarkolefni's quality system. It is estimated that in the next 50 years, the carbon sequestration of Festi associated with
this project will amount to about 70,000 tons of CO2. In this regard, it is also relevant to mention that in recent years the
Company has offset measured emissions from its activities with purchased carbon units.
Social factors
It is important for Festi and its operating companies to be desirable workplaces that attract and retain qualified and
dependable staff. Emphasis is placed on equality in the workplace as well as objective and fair communication but the
Group does not tolerate any form of bullying, violence or harassment and has put in place a response plan related to
those matters. Every effort is made to ensure the satisfaction, safety and well-being of employees with good workplace
conditions as well as regular training and career development. Workplace analyses are regularly carried out to measure
well-being at the workplace, and the development of customer satisfaction is also monitored in various ways. Festi
operates a zero-accident policy, which means that no accidents are acceptable. Safety and occupational safety courses
are held annually to promote safety and health awareness among employees, together with lectures related to health,
communication and well-being in the workplace. Festi cooperates with Siðferðisgáttin (the Ethics Gateway), which gives
the Group's employees the possibility to report, in a safe way to a third party, if they are subjected to unwanted behaviour
or experience discomfort in the workplace.
All companies in the Group are equal pay certified according to the ÍST 85:2012 standard and the requirements of the
Directorate of Equality. It confirms that at the Company’s employees who do the same or equally valuable work are not
discriminated against in pay. Festi and its operating companies have implemented Velferðarpakki (the Welfare Package),
which attempts a holistic approach to the well-being of employees. The objective is to increase the quality of life, promote
improved mental and physical health, and reduce the likelihood of illness and absenteeism due to illness among the
Group's employees.
Festi and its operating companies support and respect the protection of international human rights in accordance with
Icelandic laws as well as the United Nations Declaration of Human Rights in all of their activities. The Group respects the
United Nations Convention on the Rights of the Child and rejects all human rights violations such as forced and slave
labour, including child slavery.
Consolidated Annual Financial Statements of Festi hf. 2023 53 Amounts are in thousands of ISK
Non-Financial Information, contd.:
Corporate Governance
Festi and its operating companies are aware of the impact they have on society through their activities and place great
emphasis on practicing healthy business practices in every respect. With the new Code of Conduct for Suppliers and
Service Providers, the Company will also try to have a positive influence on the supply chain to conduct more responsible
and sustainable production and business, practice healthy business practices and fight against any form of corruption.
Festi is a limited liability company registered on the Iceland Stock Exchange and follows the approved guidelines for
corporate governance, issued by the Icelandic Chamber of Commerce, Nasdaq OMX Iceland hf. and the Confederation
of Icelandic Employers. In addition, the Group prepares its financial statements according to International Financial
Reporting Standards (IFRS). Festi hf.'s Code of Conduct applies to all activities of Festi and its operating companies, all
employees as well as contractors who carry out tasks for the Group. In addition, both the Board of Director’s Code of
Conduct and the Board of Directors’ Working Procedures apply, which also include procedures for assessing reputational
risk and conflicts of interest. More information about the Company's governance can be found in the Statement of
Corporate Governance within these financial statements.
Objectives and progress
The Group has set forth defined objectives related to environmental factors, social factors and corporate governance,
which are reviewed annually. A more detailed coverage of the objectives may be found in the Company's annual and
sustainability report. There you can also find the Group's Sustainability Statement, which is prepared in collaboration with
Klappir grænar lausnir hf. Festi's sustainability and annual report for the year 2023 will be published in connection with
the Company's Annual General Meeting on March 6.
During the second half of the year, Reitun carried out an ESG sustainability assessment of Festi where Festi received a
grade of B2 or 76 points out of a possible 100, improving by 1 point year-on-year. The assessment gives an account of
how companies stand in environmental and social factors and corporate governance. Festi is above average in all
categories and moved up a category in social factors. Examples of success achieved in the field of sustainability in 2023
are for instance, that a multidisciplinary sustainability committee was established, which meets regularly and works toward
e.g. increased in-house sustainability knowledge and awareness. There was also an increased focus on sustainability
risks within the Group, the Code of Conduct for Suppliers and Service Providers was implemented, the involvement of the
Board of Directors and Executive Committee on the topic of sustainability increased and gender ratios in the Executive
Committee were equalised.
Sustainability risks
At least twice a year, an assessment of the main risk factors in the Group's operations is updated. The assessment is
carried out for each operating unit and by relevant members of management at each company. In 2023, the focus on
sustainability risk was increased by deliberating it as an independent risk category. The main results and changes in the
Group's risk assessment are presented to Festi's audit committee twice a year.
Sustainability risks vary greatly depending on the operations of the operating companies, but the greatest risk is related
to the sale of fossil fuels at N1. The Company also evaluates this risk as an opportunity and intends to be a leading player
in Iceland’s energy exchange by helping companies and individuals switch from fossil fuels to green energy sources.
Examples of supporting projects that are well underway include the installation of fast charging stations all over the country
and various innovative and collaborative projects, e.g. in improving the electric charging infrastructure of Iceland and
increasing access to green energy sources in the country.
Consolidated Annual Financial Statements of Festi hf. 2023 54 Amounts are in thousands of ISK
Non-Financial Information, contd.:
Due diligence process
The Group relies on sustainability software from the company Klappir Grænar Lausnir for sustainability accounting and
monitoring of all the necessary data, but most data is collected automatically. The Group emphasises increasing
transparency and systematically improving sustainability information. A step in that journey is that Festi's Sustainability
Report for 2023 will be assured with limited assurance by Deloitte ehf., for the second year in a row. This is not a legal
requirement, but with this, Festi receives an assessment and confirmation of the reliability of data and information related
to the Group's sustainability performance. In addition, it is relevant to mention that the Company's financial statements
are audited by an external auditor, presented to Festi's Audit Committee and approved by the Company's Board of
Directors and shareholders at the Company’s Annual General Meeting.
More information related to the Company's sustainability journey can be found in the Annual and Sustainability Report for
2023, which will be published in the beginning of March 2024 and will then be available on Festi's website, www.festi.is.
Festi's subsidiaries will also publish more detailed information on their sustainability performance, goals and emphasis for
the year in reports on their websites.
EU Taxonomy reporting
EU Taxonomy regulation entered into force in Iceland on 1 June 2023 with Act. no. 25/2023 on Sustainable Finance
Disclosure Regulation (SFDR) and taxonomy for sustainable investments. The Act applies from 1 January 2023 for the
entire fiscal year 2023.
The aim of the regulation is to define which business activities are considered environmentally sustainable based on the
technical assessment criteria set out in the delegated regulation 2021/2139 as well as to promote transparency in
sustainability information. For companies to be considered environmentally sustainable within the meaning of the
regulation, they must meet the criteria for environmentally sustainable economic activity according to Article 3 of the
regulation. First, the economic activity must make a substantial contribution to one or more environmental objectives,
while at the same time it may do no significant harm to other goals. It must be carried out in accordance with minimum
safeguards and finally comply with technical screening criteria.
The environmental objectives are six: climate change mitigation, climate change adaptation, sustainable use and
protection of water and marine resources, transition to a circular economy, pollution prevention and control, and protection
and restoration of biodiversity and ecosystems. Assessment criteria for climate change mitigation and adaptation have
been implemented by delegated regulation 2021/2139. Business activities carried out there are subject to information
disclosure requirements in Iceland, but the delegated regulation 2023/2486 on other environmental objectives entered
into force within the EU in 2023 and is awaiting implementation in Iceland.
Companies are required to disclose the percentage of turnover, capital expenditure and operating expenses for the most
recent operating period on eligible activities, that is, activities covered by the EU Taxonomy regulation. Similarly, the same
key performance indicators must be disclosed for activities that meet all the criteria of the regulation and are considered
to be aligned activities or environmentally sustainable. In Iceland, the regulation applies to companies subject to non-
financial information disclosure requirements according to article 66d in the Icelandic Annual Accounts Act no. 3/2006 and
Festi is among them.
Festi’s eligible activities covered by EU Taxonomy
Festi began its review by comparing the Company's activities to the technical assessment criteria already disclosed based
on the environmental objective of climate change mitigation and adaptation to climate change. Festi's core business is
retail, which currently does not fall under the technical assessment criteria. During the assessment of the activities, it was
found that categories 1.1. Afforestation, 4.9. Transmission and distribution of electricity, 6.4. Operation of personal mobility
devices, cycle logistics, 6.6. Freight transport services by road, 7.1. Construction of new buildings, 7.2. Renovation of
existing buildings, 7.3. Installation, maintenance and repair of energy efficient equipment and 7.7. Acquisition and
ownership of buildings fall under the environmental objective of climate change mitigation and are related to the activities
of Festi or its subsidiaries.
Consolidated Annual Financial Statements of Festi hf. 2023 55 Amounts are in thousands of ISK
Non-Financial Information, contd.:
Environmentally sustainable activities according to the regulation
A substantial contribution
For an activity to be considered aligned and thereby meet the requirements of the EU Taxonomy regulation to be
environmentally sustainable, it must make a substantial contribution and do no significant harm, in addition to meeting
minimum safeguards. The requirements are detailed and it is clear that if companies want to disclose in good conscience
that the objectives are met and pass inspection, a considerable amount of preparation has to have taken place.
Aligned activities that Festi considers to meet the criteria for being environmentally sustainable are as follows:
1.1. Afforestation
Festi has an afforestation project in Fjarðarhorn in Hrútafjörður. The project follows the methodology and standards of
Skógarkolefni, which was compared with the requirements of the EU Taxonomy regulation and confirmed that the
methodology meets the requirements of the technical assessment criteria when it comes to a substantial contribution.
4.9. Transmission and distribution of electricity
Construction and operation of N1 charging stations for electric vehicles, but N1 operates both home charging stations and
fast charging stations all over the country.
6.4. Operation of personal mobility devices, cycle logistics
ELKO sales of electric scooters, where the driving force comes from a combination of a zero-emission engine and users
physical movement.
7.3. Installation, maintenance and repair of energy efficient equipment
LED bulbs in Krónan, ELKO and N1 stores are classified as installation and replacement of energy-efficient light sources.
As a class A energy efficiency certificate is required according to EU directive 2010/31 to determine a significant
contribution for the categories: construction of new buildings, renovation of existing buildings, and acquisition and
ownership of buildings, it was not possible to go further with those elements. This is due to the fact that Iceland has a total
exemption from the implementation of the directive and it has not been implemented into Icelandic law. As a result, no
energy efficiency certificates are issued for buildings in Iceland, making it impossible to determine primary energy needs
based on the directive. Since requirements related to energy efficiency are the only requirements set forth for the
environmental sustainability of these categories, it is impossible for Icelandic companies to demonstrate environmentally
sustainable activities in these categories.
It was not possible to meet the requirements of the regulation in the category of freight transport services by road, even
though the Company operates zero-emission cars. The requirements of the regulation regarding tires are such that it is
very difficult to meet the safety requirements in Icelandic conditions.
Do no significant harm
Climate change adaptation and mitigation
Changes in climatic conditions because of climate change will affect all infrastructure. Festi conducted a climate risk and
vulnerability assessment on the activities that are defined as aligned and has evaluated the main climate risks related to
the activities. Similarly, the Company has identified which adaptation solutions are in place and where improvements are
needed. Furthermore, a risk assessment has been conducted by Skógarkolefni on Festi’s afforestation project that is
considered to meet the requirements of the EU Taxonomy regulation.
Sustainable use and protection of water and marine resources
The criteria for sustainable use and protection of water and marine resources is related to the EU Water Framework
directive where strain on water resources shall be defined. The body of water on Stórisandur is the body of water that is
closest to Fjarðarhorn and is related to activity 1.1. Afforestation. The body of water is groundwater and is considered to
have an adequate quantitative status of water, however the chemical status of the body of water has not been analysed.
Other business activities of Festi that are classified as environmentally sustainable are not required to fulfil the
requirements of sustainable use and protection of water and marine resources.
Consolidated Annual Financial Statements of Festi hf. 2023 56 Amounts are in thousands of ISK
Non-Financial Information, contd.:
Transition to a circular economy
The transition to a circular economy applies to the transmission and distribution of electricity and the operation of personal
mobility devices. A waste management plan that ensures reuse is in place for both categories.
Pollution prevention and control
No significant harm is permitted in pollution prevention and pollution prevention control in relation to afforestation and the
transmission and distribution of electricity. Pesticides are not used in Icelandic forestry and the use of fertiliser is in
accordance with Icelandic law. Requirements related to the transmission and distribution of electricity are not applicable
since those requirements are not related to charging stations for electric vehicles.
Protection and restoration of biodiversity and ecosystems
This requirement also applies to afforestation and the transmission and distribution of electricity. The cultivation plan of
the forestry project in Fjarðarhorn fulfils and explains the requirements that apply to afforestation. Before charging stations
are installed it is examined whether permits from public authorities are required and ensured that the instalment fulfils all
applicable law and regulations, such as civil engineering structure law, law on environmental impact assessment etc.
Minimum safeguards
Article 18 of the taxonomy regulation prescribes the minimum safeguards where the OECD guidelines for Multinational
Enterprises, the UN Guiding Principles on Business and Human Rights, including the principles set out in the eight
fundamental conventions identified in the Declaration of the International Labour Organisation on Fundamental Principles
and Rights at Work are considered. The Sustainable Finance Forum has identified core subjects in accordance with these
requirements: human rights, corruption and bribery, taxation and fair competition.
The Sustainability Policy, the Codes of Conduct for the Board of Directors and employees as well as the Human Resource
Policy lay the foundation to ensure Festi follows the minimum safeguards in accordance with the EU Taxonomy regulation.
In addition, Festi operates in accordance with Icelandic tax law and labour law which takes into account the UN’s
Convention on the Rights of the Child and the Act of the Child no. 73/2003. Further information on the Company’s policies
on the core subjects can be found as a part of the Group’s non-financial information in these financial statements.
Festi is aware that further work is needed when it comes to ensuring the minimum safeguards, such as due diligence on
human rights in accordance with OECD’s definition, in addition to further requirements of EU legislation that relates to
disclosures on human rights. The Group will continue to put emphasis on those factors in the near future.
Key performance indicators
The following methodology is used for the calculation of the key performance indicators of turnover, capital expenditure
and operating expenditure for eligible activities. The European Union has published guidelines for the calculation of key
performance indicators in delegated regulation 2021/2178. It is possible that requirements or methodology will change as
the regulation is updated and that can affect the future calculations for Festi, also if it turns out that the Company’s activities
fit better with other environmental objectives than those that have already been published.
The Group’s financial statements are prepared in accordance with IFRS as is disclosed in Note 2 in the annual financial
statements. The calculation of key performance indicators is disclosed on a consolidated basis where internal transactions
have been eliminated to avoid double counting. The following methodology was used in the calculation of key performance
indicators, turnover, capital expenditure and operating expenditure, that are disclosed hereafter in tables on p. 59, 60 and
61.
As previously mentioned, the core operation of Festi is retail, but that sector has not yet been included in the technical
screening criteria of the EU Taxonomy regulation. For that reason, only a small part of the Group’s turnover, capital
expenditure and operating expenditure is eligible in accordance with the taxonomy regulation.
Consolidated Annual Financial Statements of Festi hf. 2023 57 Amounts are in thousands of ISK
Non-Financial Information, contd.:
Turnover
The proportion of turnover in accordance with the definition of the taxonomy regulation includes income that is entered in
accordance with paragraph 82A of IAS 1. Total turnover in accordance with the definition is in accordance with the Group’s
total turnover for the year 2023 as it is presented in note 5 in the consolidated financial statements, in total 138,440 m.
ISK. There of 2.8% is from activities that are taxonomy eligible, and the proportion of sustainable activities is the same,
or 2.8% in categories 4.9. Transmission and distribution of electricity and 6.4. Operation of personal mobility devices,
cycle logistics. Proportions are presented in table for turnover on p. 59.
Capital expenditure
Capital expenditure has been allocated to eligible activities in accordance with the EU Taxonomy regulation. According to
article 8 of the taxonomy regulation capital expenditure entails additions to tangible and intangible assets during the
financial year considered before depreciation, amortisation, and any re-measurements, including those resulting from
revaluations and impairments, for the relevant financial year and excluding fair value changes. Investments including new
leases amounted to a total of 4,489 m. ISK in 2023 in accordance with additions during the year in note 13, 14 and 15 in
the consolidated financial statements. There of 26.1% is from aligned activities and 5.5% from sustainable activities in
activities 1.1. Afforestation, 4.9. Transmission and distribution of electricity and 7.3. Installation, maintenance, and repair
of energy efficient equipment. The main reason for the difference between the proportion of activities that are aligned with
the taxonomy regulation and sustainable activities is the impossibility for Icelandic companies to present sustainable
operations for the activities construction of new buildings, renovation of existing buildings and the acquisition and
ownership of buildings as mentioned before. Proportions of capital expenditures are presented in a table for capital
expenditures on p. 60.
Operational expenditure
The taxonomy regulation’s definition of operational expenditure is narrower than the general accounting definition.
Operational expenditure are direct non-capitalised costs that relate to research and development, building renovation
measures, short-term leasing, maintenance and repair and any other direct expenditures relating to the day-to-day
servicing of assets of property, plant, and equipment by the undertaking or third party to whom activities are outsourced,
that are necessary to ensure the continued and effective functioning of such an asset. Operation expenditure according
to this definition amounted to ISK 1,043 million during the year 2023 and was due to maintenance and repairs. There of
7.4% is from aligned activities and 2.6% from sustainable activity in 1.1. Afforestation, 4.9. Transmission and distribution
of electricity and 7.3. Installation, maintenance, and repair of energy efficiency equipment. Proportions are presented in a
table for operational expenditures on p. 61.
Consolidated Annual Financial Statements of Festi hf. 2023 58 Amounts are in thousands of ISK
Turnover
Economic Activities (1)
Code (2)
Absolute turnover (3)
Proportion of Turnover (4)
Climate Change Mitigation (5)*
Climate Change Adaptation (6)
Water (7)
Pollution (8)
Circular Economy (9)
Biodiversity and ecosystems (10)
Climate Change Mitigation (11)
Climate Change Adaptation (12)
Water (13)
Pollution (14)
Circular Economy (15)
Biodiversity (16)
Minimum Safeguards (17)
Taxo-
nomy
aligned
pro-
portion
of total
turn-
over,
year N
(18)**
Taxo-
nomy
aligned
pro-
portion
of turn-
over,
year N-
1 (19)
Category
(enabling
activity)
(20)
Cate-
gory
(trans-
itional
act-
ivity)
(21)
Text #
ISK,
thousands
% % % % % % %
Y/N Y/N Y/N Y/N Y/N Y/N Y/N % % E T
2.8%
Afforestation 1.1 0 0.0% 100% 0% 0% 0% 0% 0% Já Já Já Já Já Já Já 0.0% NA
Transmission and distribution of electricity 4.9 3,711,448 2.7% 100% 0% 0% 0% 0% 0% Já Já Já Já Já Já Já 2.7% NA E
Operation of personal mobility devices, cycle logistics 6.4 103,855 0.1% 100% 0% 0% 0% 0% 0% Já Já Já Já Já Já Já 0.1% NA
Installation, maintenance and repair of energy efficient equipment 7.3 0 0.0% 100% 0% 0% 0% 0% 0% Já Já Já Já Já Já Já 0.0% NA E
3,815,303 2.8% 2.8% 0% 0% 0% 0% 0% Já Já Já Já Já Já Já 2.8% NA 0.0% 0%
Freight transport services by road 6.6 902 0.0%
Construction of new buildings 7.1 0 0.0%
Renovation of existing buildings 7.2 0 0.0%
Acquisition and ownership of buildings 7.7 0 0.0%
902 0.0%
3,816,205 2.8%
134,623,835 97.2%
138,440,040 100%
A.2 Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)
Turnover of Taxonomy-eligible but not environmentally sustainable activities
(not Taxonomy-aligned activities) (A.2)
Total (A.1+A.2)
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Turnover of Taxonomy-non-eligible activities
Total (A+B)
Turnover of environmentally sustainable activities (Taxonomy-aligned) (A.1)
Substantial Contribution Criteria
DNSH criteria ('Does Not Significantly
Harm')
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities (Taxonomy-aligned)
Consolidated Annual Financial Statements of Festi hf. 2023 59 Amounts are in thousands of ISK
CapEx
Economic Activities (1)
Code (2)
Absolute CapEx (3)
Proportion of CapEx (4)
Climate Change Mitigation (5)*
Climate Change Adaptation (6)
Water (7)
Pollution (8)
Circular Economy (9)
Biodiversity and ecosystems (10)
Climate Change Mitigation (11)
Climate Change Adaptation (12)
Water (13)
Pollution (14)
Circular Economy (15)
Biodiversity (16)
Minimum Safeguards (17)
Taxo-
nomy
aligned
pro-
portion
of total
CapEx,
year N
(18)**
Taxo-
nomy
aligned
pro-
portion
of turn-
over,
year N-
1 (19)
Category
(enabling
activity)
(20)
Cate-
gory
(trans-
itional
act-
ivity)
(21)
Text #
ISK,
thousands
% % % % % % %
Y/N Y/N Y/N Y/N Y/N Y/N Y/N % % E T
26.1%
Afforestation 1.1 35,382 0.8% 100% 0% 0% 0% 0% 0% Já Já Já Já Já Já Já 0.8% NA
Transmission and distribution of electricity 4.9 166,735 3.7% 100% 0% 0% 0% 0% 0% Já Já Já Já Já Já Já 3.7% NA E
Operation of personal mobility devices, cycle logistics 6.4 0 0.0% 100% 0% 0% 0% 0% 0% Já Já Já Já Já Já Já 0.0% NA
Installation, maintenance and repair of energy efficient equipment 7.3 43,468 1.0% 100% 0% 0% 0% 0% 0% Já Já Já Já Já Já Já 1.0% NA E
245,585 5.5% 5.5% 0% 0% 0% 0% 0% Já Já Já Já Já Já Já 5.5% NA 4.7% 0%
Freight transport services by road 6.6 64,810 1.4%
Construction of new buildings 7.1 592,724 13.2%
Renovation of existing buildings 7.2 99,427 2.2%
Acquisition and ownership of buildings 7.7 170,123 3.8%
927,084 20.7%
1,172,669 26.1%
3,316,296 73.9%
4,488,965 100%
A.2 Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned)
CapEx of Taxonomy-eligible but not environmentally sustainable activities (not
Taxonomy-aligned activities) (A.2)
Total (A.1+A.2)
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Capex of Taxonomy-non-eligible activities
Total (A+B)
CapEx of environmentally sustainable activities (Taxonomy-aligned) (A.1)
Substantial Contribution Criteria
DNSH criteria ('Does Not Significantly
Harm')
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. CapEx of environmentally sustainable activities (Taxonomy-aligned)
Consolidated Annual Financial Statements of Festi hf. 2023 60 Amounts are in thousands of ISK
OpEx
Economic Activities (1)
Code (2)
Absolute OpEx (3)
Proportion of OpEx (4)
Climate Change Mitigation (5)*
Climate Change Adaptation (6)
Water (7)
Pollution (8)
Circular Economy (9)
Biodiversity and ecosystems (10)
Climate Change Mitigation (11)
Climate Change Adaptation (12)
Water (13)
Pollution (14)
Circular Economy (15)
Biodiversity (16)
Minimum Safeguards (17)
Taxon-
omy
aligned
pro-
portion
of total
OpEx,
year N
(18)**
Taxo-
nomy
aligned
pro-
portion
of turn-
over,
year N-
1 (19)
Category
(enabling
activity)
(20)
Cate-
gory
(trans-
itional
act-
ivity)
(21)
Text #
ISK,
thousands
% % % % % % %
Y/N Y/N Y/N Y/N Y/N Y/N Y/N % % E T
7.4%
Afforestation 1.1 102 0.0% 100% 0% 0% 0% 0% 0% Já Já Já Já Já Já Já 0.0% NA
Transmission and distribution of electricity 4.9 20,445 2.0% 100% 0% 0% 0% 0% 0% Já Já Já Já Já Já Já 2.0% NA E
Operation of personal mobility devices, cycle logistics 6.4 0 0.0% 100% 0% 0% 0% 0% 0% Já Já Já Já Já Já Já 0.0% NA
Installation, maintenance and repair of energy efficient equipment 7.3 6,397 0.6% 100% 0% 0% 0% 0% 0% Já Já Já Já Já Já Já 0.6% NA E
26,944 2.6% 2.6% 0% 0% 0% 0% 0% Já Já Já Já Já Já Já 2.6% NA 2.6% 0%
Freight transport services by road 6.6 21,857 2.1%
Construction of new buildings 7.1 0 0%
Renovation of existing buildings 7.2 26,755 3%
Acquisition and ownership of buildings 7.7 1,531 0%
50,143 4.8%
77,087 7.4%
965,969 92.6%
1,043,056 100%
A.2 Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)
OpEx of Taxonomy-eligible but not environmentally sustainable activities (not
Taxonomy-aligned activities) (A.2)
Total (A.1+A.2)
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
OpEx of Taxonomy-non-eligible activities
Total (A+B)
OpEx of environmentally sustainable activities (Taxonomy-aligned) (A.1)
Substantial Contribution Criteria
DNSH criteria ('Does Not Significantly
Harm')
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities (Taxonomy-aligned)