Investors

Eimskip is a limited liability company governed by the Public Limited Companies Act, No. 2/1995, its Articles of Association and the Board of Directors’ Rules of Procedure. Under its Articles of Association, the Company is governed by shareholders’ meetings, the Board of Directors and the Chief Executive Officer.

Corporate Governance practices are designed to ensure open and transparent relationship between the Company's management, its Board of Directors, its shareholders, and other stakeholders. The Corporate Governance in Eimskip is also designed to ensure sound and effective control of the Company’s affairs and a high level of business ethics.

The Board of Directors approved an update of the Corporate Governance Statement for the Company on the 17th of February 2022. The statement declares that Eimskip complies with the accepted practices as stated in the 6th edition of the Corporate Governance Guidelines, issued by the Iceland Chamber of Commerce, SA – Business Iceland and Nasdaq Iceland. Eimskip’s Corporate Governance Statement is accessible on the Company’s website.

The Corporate Governance Guidelines, along with the Company’s Articles of Association and rules for issuers of securities listed at Nasdaq Iceland, make up the framework for the Corporate Governance practices of Eimskip.

BOARD OF DIRECTORS
The Board consists of five Directors and two alternate Directors and they are all elected annually at the Annual General Meeting.
The Board of Directors holds supreme authority between shareholders’ meetings. It shall ensure that the Company’s organization and operations are in good order. It shall promote the development and long-term performance of the Company and supervise its operations. The Board of Directors has statutory role which it is responsible for, unless the Board grants permission by law to transfer authority by delegation.

Rules of Procedure for the Board of Directors were adopted in accordance with the fifth paragraph of Article 70 of the Public Limited Companies Act, No. 2/1995, and are supplementary to the Articles of Association. Under the Rules of Procedure, the Board of Directors selects subcommittees that operate on its behalf. The Rules of Procedure are accessible on the Company’s website.

The Board of Directors has three subcommittees: Audit Committee, Remuneration Committee and Nomination Committee.

The principal duties of the Audit Committee are to review all financial information and procedures regarding information disclosure from day-to-day management and the Company’s independent auditors and to ensure the independence of the Company’s independent auditors. The role and main responsibilities of the Audit Committee are set out in its rules of procedure. Members of the Audit Committee are Lárus L. Blöndal, Chairman, Ólöf Pálsdóttir and Alexander G. Edvardsson.

The role of the Remuneration Committee includes preparing the Company’s Remuneration Policy, ensuring its enforcement, and negotiating with the CEO on wages and other employment terms. Eimskip’s Remuneration Policy is accessible on the Company’s website. The role and main responsibilities of the Remuneration Committee are set out in its rules of procedure Members of the Remuneration Committee are, Baldvin Thorsteinsson, Chairman, Gudrún Blöndal and Margrét Guðmundsdóttir.

The role of the Nomination Committee is to assist the Board with the process and oversight of Board succession planning and identification and nomination of Board candidates as well as member of the Board’s committees. The Board is responsible for the appointment and activities of the Nomination Committee and it operates under the Board’s authority. The role and main responsibilities of the Nomination Committee are set out in its rules of procedure. Members of the Nomination Committee are Óskar Magnússon, Chairman, Guðrún Blöndal and Margrét Guðmundsdóttir.

CHIEF EXECUTIVE OFFICER
The Company’s CEO is responsible for the day-to-day operations, in accordance with law, regulations and the Company’s Articles of Association and follows the policies and instructions laid down by the Board. The CEO must at all times conduct his work with integrity and take account of the Company’s interests. Day-to-day operations do not include matters which are unusual or of great significance. The CEO shall make sure that the Company’s accounts are kept in accordance with law and practice and that the Company’s assets are kept in a secure manner. The CEO is obligated to abide by all instructions of the Board of Directors and shall give the auditor any information requested. The CEO does not have the authority to make decisions concerning any matters that are assigned to others by law or are reserved to the Board under its Rules of Procedure. The CEO shall ensure that Directors of the Board are regularly provided with accurate information on the Company’s finances, development and operations to enable them to perform their duties and the information shall be in the form and of the quality determined by the Board. The information shall be available when needed and as up-to-date and accurate as possible. The CEO is to acquaint the Board with all major issues involving the operations of the Company or its subsidiaries and is to attend the Board meetings. He participates in the Boards of the subsidiaries within the group.

EXECUTIVE MANAGEMENT TEAM
The following roles form the Executive Management Team; CEO, CFO, COO, CIO, General Counsel and the Executive Vice Presidents of Sales and Business Management, International Operations, Iceland Domestic Operations and Human Resources and Communication.

Further information on the Executive Management team is on the Company’s website.

DIVERSITY
The Company issued a policy on diversity in connection with the Board of Directors, Executive Management and Senior Management on 27 January 2022.

INTERNAL CONTROL AND ACTIVE RISK MANAGEMENT
Internal control and active risk management play an important role at Eimskip and aim to ensure stable operations and earnings. The internal control and risk management procedures regarding financial processes are designed to minimize the risk of material misstatements. The Audit Committee monitors the Company’s internal control systems. The Risk Management Program is aimed at minimizing potential negative effects on operations and earnings from marketing, operational and financial activities, and to keep risks at acceptable levels. Risk management within the Company is governed by the Board of Directors, while the Audit Committee is responsible for its review on a regular basis. The Executive Management is responsible for identifying material risks and developing the Company’s risk management strategy. Further information on risk management and risk factors can be found under Risk Management and Risk Factors.

SUSTAINABILITY AT EIMSKIP
Eimskip is a registered participant of the UN Global Compact, the United Nation’s initiative for social responsibility with respect to human rights, labor, environment and anti-corruption. With its participation, the Company has committed to managing its business operations so that the UN Global Compact and its Ten Principles become a part of the Company’s strategy, culture, and day-to-day operations.

Eimskip’s Sustainability Policy is based on the Nasdaq ESG Reporting Guide, published in March 2017. The Nasdaq reporting guide focuses on 30 environmental, social and governance (ESG) performance indicators.

Further information on Eimskip’s commitment to sustainability is on the Company’s website.

CODE OF CONDUCT
The Board of Directors approved a revision of the Company’s Code of Conduct in February 2021. The Code of Conduct is closely linked to the Company’s values: Achievement, Cooperation and Trust. The Code is also based on Eimskip’s aims to secure a good return for shareholders with profitable growth, to create value for customers with outstanding solutions and services, to be an outstanding workplace for employees with great team spirit and ambition, and to show concern for society through social responsibility and a reduced ecological footprint.

The purpose of this Code of Conduct is to support Eimskip’s mission and vision. It applies to the Board of Directors and all employees of Eimskip and its subsidiaries. It guides them in conducting the Company’s daily activities in an honest, responsible, and ethical way, based on its values and generally accepted professional standards of conduct. The Code of Conduct is accessible on the Company’s website.

Share Capital
Eimskip’s shares started trading on Nasdaq Iceland on November 16, 2012 with the ISIN number IS0000019800 and under the ticker symbol EIM.

The total number of shares is 175,200,000. Each share has a nominal value of ISK 1.00 and entitles its holder to one vote. The Company holds 31,710 shares in treasury, corresponding to 0.02% of the total issued share capital of the Company. Outstanding shares are 175.168.290. There were 850 shareholders at the end of 2021.

Largest shareholders
At the end of 2021, three of Eimskip’s shareholders each owned over 10% in the Company: Samherji Holding ehf. owned 32.8% of issued share capital, Lífeyrissjódur verzlunarmanna owned 12.32%, and Gildi – lífeyrissjódur was the third largest with 11.14%. The 12 largest shareholders held 85% of the total outstanding shares at year-end 2021.

Risk management is the process of analyzing and assessing risk factors that could prevent the Company from achieving its set goals. It also includes that remedial action is taken to minimize the anticipated effects of such risk factors.

Eimskip’s internal control and risk management procedures regarding financial processes are designed to minimize the risk of material misstatements in financial reporting. The Company does not have an internal audit function but uses internal control systems that are monitored by management and the Audit Committee.

An independent auditing firm is elected at the Annual General Meeting each year. The auditors are tasked with reviewing Eimskip’s accounting records and material related to the Company’s operations and financial position. As such, they have access to the Company’s books and documents at all times. They must examine the Company’s Consolidated Financial Statements in accordance with International Standards on Auditing (ISAs). Significant findings regarding accounting and internal control deficiencies are reported to the Board of Directors through the Audit Committee. Independent auditors are not allowed to own shares in the Company.

RISK FACTORS

The risk factors and uncertainties described in the following text are not the only risks that the Company as a whole faces, nor are they listed in order of priority or with regard to significance or likelihood of occurrence.

MARKET RISK
Demand for transportation services has historically been highly cyclical and closely correlates with global economic activity. Eimskip is thus exposed to a possible economic downturn or recession, either globally or in one or more of the Company’s main markets. The Company is also sensitive to foreign exchange fluctuations and changes in its competitive position.

OPERATIONAL RISK
Eimskip’s operations are dependent upon many factors e.g., access to terminals, IT systems, operation and ownership of vessels, supply of and demand for fuel, international and EU regulations on lower sulphur emissions, inflation, the reputation of the Company, and its ability to retain key personnel and customer contracts. Furthermore, refugees and stowaways, and incidents involving significant damage, loss or environmental pollution are risk factors for the Company. Changes in the legislative, political, governmental and economic framework may have a material impact on the Company’s business. The Company is dependent on various licenses relating to its operations and is subject to contractual risk in relation to its obligations to fulfil various provisions of its contracts.

FINANCIAL RISK
Eimskip is exposed to financial risk factors, including currency risk, risk related to availability of funding, interest rate risk, liquidity risk, credit risk, tax risk, fuel price risk, and risk in relation to potential amendments to International Financial Reporting Standards (IFRS).

Some of the financial risk factors are addressed as follows:

CURRENCY RISK
Eimskip is exposed to currency risk on sales, expenses and borrowings that are denominated in currencies other than the functional currencies of the Company and its entities. The majority of the Company’s revenue and assets, obligations and interest-bearing debt are denominated in currencies other than the Icelandic Krona. Subsidiaries use the local currency as their functional reporting currency where they are based, with the exception of Eimskip Ísland ehf. and the parent company Eimskipafélag Íslands hf., where the functional currency is the EUR.

As can be seen from the graphs below, the revenue and expenses of Eimskip provide, to a certain degree, a natural currency hedge. The Company believes that the natural currency balance of its operations provides hedging and is investing in some external hedging instruments, such as derivatives. When planning for large investments in a non-EUR currency, due consideration is given to whether hedging is prudent. Decisions on this are made on a case-by-case basis.

Assets and liabilities in the balance sheet are mostly denominated in EUR or the relevant operating currency of the entities. The mismatch of other non-operating currencies on the balance sheet is mainly related to the US Dollar, as is shown in a table under note 21 in the Consolidated Financial Statements 2021.

ACCESS TO CREDIT RISK
Eimskip is exposed to risks related to the availability of funding. The Company is, to some extent, dependent on access to sufficient funding at acceptable terms and may not be able to secure new sources of liquidity or funding, should projected or actual liquidity fall below the levels it requires. These factors could also impact the ability of Eimskip’s shareholders to provide it with liquidity and there can be no assurance that the Company could obtain additional shareholder funding. To manage this risk factor, the Company seeks long-term borrowings where applicable, maintains a healthy and stable current ratio, and produces internal short-term cash flow reports on a regular basis. In 2019, the Company introduced a target capital structure with the aim of keeping an equity ratio around 40% and leverage ratio in the range of two to three times net interest-bearing debt to EBITDA.