Dividend Policy

Orkuveitan's dividend policy entails that dividends are, on average, paid to owners provided that financial conditions are met, including that the company's financial strength is sufficient and that there is enough liquidity available for the company's operations and investments.

Furthermore, the return on the Group's operations shall be within the minimum return benchmark stipulated in the company's return policy. The aim shall be to provide continuous and stable dividend payments to owners, provided that they do not threaten the Group's future financial position.

The financial conditions, which are determined below, relate, among other things, to the position and outlook of the following factors: capital ratio, liquidity position, leverage, investments and the company's operations. The conditions must be met before and after the dividend payment without jeopardising the financial conditions in the future.

These conditions apply to the year-end position according to the consolidated financial statements and the budget for the coming years, taking into account dividend payments. The conditions are based on a three-year average, specifically the most recent annual financial statement, the forecast for the current year, and the forecast for the following year.

As of 2019 1. Current ratio (adjusted for embedded derivatives) > 1.0 2. Equity ratio > 40% 3. FFO interest coverage > 3.5 4. RCF / net debt > 13%

Definitions:

Current ratio (adjusted for embedded derivatives) = ( Current assets – embedded derivatives among current assets ) / ( Current liabilities – embedded derivatives among current liabilities )

FFO = Funds from operation

Net debt = Interest-bearing debt less cash and other interest-bearing assets

FFO Interest Coverage = measures a company's ability to meet interest payments on its liabilities

RCF = Cash flow from operations less dividend payments

The policy is based on the values and overall strategy of Orkuveitan (Reykjavik Energy) and is presented in accordance with the group's ownership policy.