Festi hf. – Valuation as of 1 Jan 2025

Key assumptions

• Sale of goods and services is projected to grow at an average of 6.1% per year throughout the forecast period.
• Gross margin is expected to average 23.5% annually.
• Other operating expenses relative to sale are projected at 16.5% per year.
• Depreciation of operating assets, right-of-use assets, and intangible assets (excluding goodwill) averages 9.8% per year.
• Investment properties are revalued in line with the annual increase in the CPI, 4% in 2025 and 3% per year from 2026 onwards.
• The weighted average cost of debt is 9% in 2025, decreasing to 7% per year from 2026 onwards, corresponding to 4% real interest rates; financing is primarily in ISK.
• Return on equity of accounted stakes in associated companies is projected at 17% per year.
• Corporate income tax is 20% per year and is calculated on profit net of earnings from associated companies.
• The ratio of sales to book value of operating assets, right-of-use assets, and intangible assets (excluding goodwill) increases from 2.6 to 3.2 over the forecast period. Investment as a percentage of sales declines from 5.1% to 4.2% annually.
• Dividend payout is assumed to be 34.9% of prior year total comprehensive income in 2025 and 70% thereafter, with an equity ratio of approximately 40%.
• The terminal growth rate at the end of the forecast period is 4.5%, equivalent to 1.5% in real terms.
• See other general assumptions under “Valuation.”
• A nominal required return on equity of 10% is assumed when discounting the forecasted results for 2025–2034.

Results

• Based on the above assumptions, the estimated share value is ISK 243.4 as of 1 January 2025.