Elmera Group ASA

2138006BSHJVCD9SR489 2023-01-01 2023-12-31 2138006BSHJVCD9SR489 2022-01-01 2022-12-31 2138006BSHJVCD9SR489 2023-12-31 2138006BSHJVCD9SR489 2022-12-31 2138006BSHJVCD9SR489 2021-12-31 ifrs-full:IssuedCapitalMember 2138006BSHJVCD9SR489 2021-12-31 ifrs-full:TreasurySharesMember 2138006BSHJVCD9SR489 2021-12-31 ifrs-full:SharePremiumMember 2138006BSHJVCD9SR489 2021-12-31 ifrs-full:ReserveOfCashFlowHedgesMember 2138006BSHJVCD9SR489 2021-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 2138006BSHJVCD9SR489 2021-12-31 ifrs-full:RetainedEarningsMember 2138006BSHJVCD9SR489 2021-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 2138006BSHJVCD9SR489 2021-12-31 ifrs-full:NoncontrollingInterestsMember 2138006BSHJVCD9SR489 2021-12-31 2138006BSHJVCD9SR489 2022-01-01 2022-12-31 ifrs-full:IssuedCapitalMember 2138006BSHJVCD9SR489 2022-01-01 2022-12-31 ifrs-full:TreasurySharesMember 2138006BSHJVCD9SR489 2022-01-01 2022-12-31 ifrs-full:SharePremiumMember 2138006BSHJVCD9SR489 2022-01-01 2022-12-31 ifrs-full:ReserveOfCashFlowHedgesMember 2138006BSHJVCD9SR489 2022-01-01 2022-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 2138006BSHJVCD9SR489 2022-01-01 2022-12-31 ifrs-full:RetainedEarningsMember 2138006BSHJVCD9SR489 2022-01-01 2022-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 2138006BSHJVCD9SR489 2022-01-01 2022-12-31 ifrs-full:NoncontrollingInterestsMember 2138006BSHJVCD9SR489 2022-12-31 ifrs-full:IssuedCapitalMember 2138006BSHJVCD9SR489 2022-12-31 ifrs-full:TreasurySharesMember 2138006BSHJVCD9SR489 2022-12-31 ifrs-full:SharePremiumMember 2138006BSHJVCD9SR489 2022-12-31 ifrs-full:ReserveOfCashFlowHedgesMember 2138006BSHJVCD9SR489 2022-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 2138006BSHJVCD9SR489 2022-12-31 ifrs-full:RetainedEarningsMember 2138006BSHJVCD9SR489 2022-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 2138006BSHJVCD9SR489 2022-12-31 ifrs-full:NoncontrollingInterestsMember 2138006BSHJVCD9SR489 2023-01-01 2023-12-31 ifrs-full:IssuedCapitalMember 2138006BSHJVCD9SR489 2023-01-01 2023-12-31 ifrs-full:TreasurySharesMember 2138006BSHJVCD9SR489 2023-01-01 2023-12-31 ifrs-full:SharePremiumMember 2138006BSHJVCD9SR489 2023-01-01 2023-12-31 ifrs-full:ReserveOfCashFlowHedgesMember 2138006BSHJVCD9SR489 2023-01-01 2023-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 2138006BSHJVCD9SR489 2023-01-01 2023-12-31 ifrs-full:RetainedEarningsMember 2138006BSHJVCD9SR489 2023-01-01 2023-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 2138006BSHJVCD9SR489 2023-01-01 2023-12-31 ifrs-full:NoncontrollingInterestsMember 2138006BSHJVCD9SR489 2023-12-31 ifrs-full:IssuedCapitalMember 2138006BSHJVCD9SR489 2023-12-31 ifrs-full:TreasurySharesMember 2138006BSHJVCD9SR489 2023-12-31 ifrs-full:SharePremiumMember 2138006BSHJVCD9SR489 2023-12-31 ifrs-full:ReserveOfCashFlowHedgesMember 2138006BSHJVCD9SR489 2023-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 2138006BSHJVCD9SR489 2023-12-31 ifrs-full:RetainedEarningsMember 2138006BSHJVCD9SR489 2023-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 2138006BSHJVCD9SR489 2023-12-31 ifrs-full:NoncontrollingInterestsMember iso4217:NOK iso4217:NOK xbrli:shares Annual report 2023 1 2023 Annual Report Contents MAIN OFFICE, BERGEN: Elmera Group Folke Bernadottes vei 38 5147 Fyllingsdalen Norway elmeragroup.no Annual Report Elmera Group ASA and the Elmera Group PREFACE 0.1 Key ﬁgures 3 PART 1 1.1 Letter from the CEO 4 PART 2 2.1 Elmera Group at a glance 7 Our business 8 2.2 Management 11 Organisation 12 2.3 ESG-report 18 2.4 Corporate Governance Report 69 2.5 Board of Directors 77 PART 3 3.1 Strategy and strategy planning 82 PART 4 4.1 Board of Directors’ Report 90 4.2 Financial statements Elmera Group 103 4.3 Notes Elmera Group 111 4.4 Financial statements Elmera Group ASA 193 4.5 Notes Elmera Group ASA 199 4.6 Auditor’s report 224 Annual report 2023 2 Annual report 2023 3 Key figures Preface – 0.1 Key ﬁgures NOK in thousands 2023 2022 Revenue 18 920 598 25 521 514 Net revenue 1 728 071 1 697 995 Net revenue adjusted 1 732 998 1 711 002 EBIT reported 359 202 272 781 EBIT adjusted 513 171 460 054 EBITDA 745 721 662 737 EBITDA adjusted 776 610 717 685 Basic earnings per share (NOK) 1,77 0,67 Diluted earnings per share (NOK) 1,74 0,66 EBIT margin 21 % 16 % EBIT margin adjusted 30 % 27 % Net interest bearing debt (cash) 568 729 1 464 739 Capex excl. M&A 52 477 44 328 Volume sold (GWh) 17 873 17 506 # of deliveries ('000) excl. Extended Alliance 920 954 Electricity price (Nord Pool System price) y= NOK/MWh Key ﬁgures 0 500 1000 1500 2000 2500 dec.22 dec.23 1.1 Letter from the CEO Part 1 Part 1 – 1.1 Letter from the CEO Annual report 2023 4 Annual report 2023 5 Part 1 – 1.1 Letter from the CEO Letter from the CEO A few months into 2023, the fundamental conditions in the energy markets improved signiﬁcantly and the price level declined. This was preceded by the extreme conditions in the European energy markets in 2022. These conditions were a consequence of Russia’s invasion and war in Ukraine, together with the phasing-out of fossil fuel and conversion to more renewable energy in the energy mar- kets. Market prices for many energy sources, including electricity, remained high com- pared to the years before 2022, but volatility decreased signiﬁcantly during 2023. Gas stocks in Europe have been re-established at a good level and conditions for the hydro- power reservoirs in Norway and Sweden were also satisfactory. The conclusions from the Norwegian Energy Commission and the Power Price Committee’s reports, prepared in 2023, highlight a need to develop more renewable energy, and that this must take place as soon as possible. The reports also highlight that the electric- ity market is generally well-functioning and gives the necessary price signals when there is a risk of shortages. It should also be noted that as an area for improvement the Power Price Committee’s report highlights the need for private customers to have better access to electricity agreements with price hedging and payment solutions that spread the cost throughout the year. Elmera Group is devel- oping its service oﬀering to its customers accordingly. Enhanced compliance In 2023, we handled signiﬁcant changes in policy and government regulations as a con- sequence of the extreme price conditions and volatility that arose in 2022. These market con- ditions also gave valuable experience that the Group has used in its further eﬀorts to reduce risk and enhance compliance. The downsizing that took place was a new situation for the Group, but was done in a pro- fessional manner and will improve the Group’s competitiveness going forward. Surveys from autumn and winter 2023 show a high level of employee commitment within the Group. The focus on costs will continue, including the conversion of Gudbrandsdal Energi and Nordic Green Energy to the Group’s joint IT platform. The platform is already used by Elmera Group, Fjordkraft and TrøndelagKraft. Increase in consumption Lower electricity prices led to lower supplier switching activity among customers, and customers’ electricity consumption increased Rolf Barmen, CEO at Elmera Group Photo: Frode Fjellstad compared to 2022. This meant our volume sold was higher in 2023 than in the previous year. The business segment also delivered solid results in 2023. Measures have been taken to reduce costs and improve customer care. The reorganisation of customer centre operations in the business market has so far shown very good results. Our customer centres in the consumer mar- ket have the important task of informing cus- tomers about prices and the energy market, and guiding customers on how to use energy more eﬃciently. A more normalised electricity market reduced the number of enquiries to our customer centres, so that we were ready to serve the customers who did contact us. We are pleased that the Group’s companies again came out on top in comparisons with other suppliers’ customer service in 2023. We continuously assess the right cost-eﬃ- cient and market-appropriate payment for our products and services. Our product strategy throughout the year was to strengthen our own value proposition while accepting price- driven churn for customers in the price hunter segment. Strengthened Nordic and NGI After a demanding period, operations in the Swedish/Finnish part of the Group were prof- itable in 2023. There is a general transition process in the Finnish and Swedish energy markets in terms of contract types in the busi- Annual report 2023 6 Part 1 – 1.1 Letter from the CEO Rolf Barmen , CEO ness market. A high proportion of ﬁxed-price agreements without an agreed volume limit has been commonplace. As a result, the price signals did not reach the customer, with a resulting lack of incentive to save energy. In January 2022, we began to restructure our products in the Swedish and Finnish markets to agreements with ﬁnancial price hedging whereby the volume in addition to the con- tractual, pre-hedged volume is based on the spot price. As a consequence, the volatility and risk to the supplier have been reduced signiﬁcantly, with a strong incentive for the customer to use energy as eﬃciently as pos- sible. In Norway, around 70 per cent of our business customers already have agreements that include price hedging whereby the con- sumption volume beyond the agreed volume is pegged to the spot market price. In the spring of 2023, mobile customers were migrated from Telenor to Telia as their network operator. This is the largest migration ever conducted between telecom operators in Norway. The migration-related churn, was as expected, and the portfolio amounted to around 115,000 customers at year-end. The migration is important to enhance our service oﬀering to customers, as well as operational proﬁtability going forward. Popular smartphone app I am particularly pleased to see that the app developed in the Group made incredible pro- gress in 2023. It had 777,000 users in total among Elmera Group’s customers and the 14 companies to which we oﬀer the Elmera App as a white label solution. The app was launched for Finnish custom- ers in March 2023. It has helped to draw a lot of positive attention to Nordic Green Energy and, for private customers, has led to a sig- niﬁcant improvement in the customer experi- ence and customer satisfaction. The app will be launched for Swedish consumers in April 2024. We look forward to the app strength- ening the value proposition and knowledge of Nordic Green Energy among Swedish pri- vate customers. The app provides information that enables customers to take measures to reduce their electricity consumption and keep their costs under control. We expect electric vehicle owners in Sweden and Finland to be particularly keen to become customers and use the app. More solar and decentralised production Elmera Group is in a position to accelerate the green transition for 1 million customers in the Nordic region. This will take place through measures in the various business areas. We will continue to work on increasing the use of our app by new and existing customers. We will also continue to work with our suppliers and customers to cut greenhouse gas emis- sions. We will continue to require our suppliers to be climate committed, and we will oﬀer solar panels and help customers with the pro- duction, storage and sale of solar electricity. Our goal is to work for the Norwegian author- ities to improve the subsidy schemes for pri- vate individuals and businesses who want to produce solar energy from rooftops. Rooftop production does not take up space in nature or create environmental conﬂicts. There is a growing need for products and services that facilitate power balanc- ing, alternative grid capacity solutions and decentralised production. The Group is work- ing continuously on solutions and business models linked to the ﬂexibility market and energy optimisation. It is part of our strategy to develop new revenue streams. Operations and ownership will be assessed from an asset management stance and we will continue our search for attractive acquisition portfolios. The future AI will have a tremendous impact in many areas, including our business. We are already working on several projects involving AI. Artiﬁcial intelligence has been applied within sales follow-up, data collection, power trading and several diﬀerent IT-related areas. In 2023, AI also contributed to an improved customer experience and to streamlining our follow-up on customer enquiries, and this work will continue in 2024. Use of AI is developing extremely rapidly and it will continue to be an exciting topic in our day-to-day operations and also in our strategic work in 2024, and certainly also in the years to come. The Group is well-positioned as a leading player in the Nordic electricity market with multiple revenue streams and a highly skilled organisation. We are frontrunners in accelerat- ing the green transition for over 1 million cus- tomers and our experience and robustness give us courage to continue to develop the Group’s activities across the Nordics. I am proud to state that all of our employees work extremely hard every day, in Norway, Sweden and Finland, to fulﬁl the Group’s mis- sion: To create the most attractive electricity retailers in the Nordics. 2.1 Elmera Group at a glance Part 2 Part 2 – 2.1 Elmera Group at a glance 7 Annual report 2023 Annual report 2021 Part 2 – 2.1 Elmera Group at a glance Fjordkraft AS TrøndelagKraft AS AllRate AS Steddi Payments AS Metzum AS (40%) Elmera Nordic AS Gudbrandsdal Energi AS Elmera Group ASA Metzum AB Switch Nordic Green AB Elmera Industrial Ownership AS Energismart Norge AS Switch Nordic Green Finland branch Fjordkraft AB * Brand Nordic Green Energy Fjordkraft Mobil AS (61%) SunPool AS (50%) Company Structure: Our business Annual report 2023 8 Elmera Group Providing consumers, businesses and the wholesale market with electricity, billing & rating services and electricity related technology solutions. PURPOSE To create the most attractive electricity retailers in the Nordics VISION Supply 3 million people with electricity services at home and at work VALUES Simplify - Be friendly - Create value  Annual report 2023 9 Elmera Group ASA uses the following seg- ments in its ﬁnancial reporting: • Consumer, Norway • Business, Norway • Nordic, electricity sales business in Switch Nordic Green, Sweden and Finland • New Growth Initiatives (NGI) comprise of other business activities (sale of EV charg- ers, PV panels, mobile services, power sale and related services to Alliance partners payment solutions and strategic expendi- tures) which are not considered separate operating segments. Consumer market, Norway The Group has several brands, Fjordkraft, TrøndelagKraft, Gudbrandsdal Energi and in total the Group accounted for a total of 667,000 electricity deliveries at the end of 2023 in the Norwegian consumer segment. Its overall market share in the consumer seg- ment in Norway is approximately 24 per cent. Business market, Norway Elmera Group is a leading supplier to the business market and accounted for a total of 127,000 deliveries in the Norwegian business market. Its overall market share in the busi- ness segment in Norway is approximately 22 % per cent. Products range from straightfor- ward electricity contracts to advanced power portfolio management. Customers range from energy-intensive industrial manufacturers and large corporations with facilities all over the country to small local businesses. Digital energy reporting and analysis tools help businesses achieve eﬃcient energy use. Elmera Group also oﬀers various power purchase agreements and energy and environmental advice. Nordic Elmera Group has a subsidiary called Switch Nordic Green AB. The company sells renewable energy and electricity contracts with guarantees of origin (GoOs) in the cosu- mer and business markets under the brand name Nordic Green Energy. At the end of the year, Switch Nordic Green had a combined total of 125,000 electricity deliveries in Sweden and Finland. NGI – New Growth Initiatives Mobile In April 2017, Fjordkraft became a mobile ser- vice provider. Fjordkraft oﬀers its customers low-cost mobile services via Telenor’s network. The Group had 115,000 mobile subscribers at the end of 2023. Fjordkraft is the largest mobile service provider in Norway without its own telecommunications network. Elmera Group and Telia entered into cooper- ation on mobile customers through Fjordkraft Mobil AS. Fjordkraft AS’ mobile business was demerged to “Fjordkraft Mobil AS”. Fjordkraft AS owns 61 per cent of Fjordkraft Mobil AS, while the remaining shares is owned by Telia Norge AS. Extended Alliance Elmera Group delivers billing and payment services for electricity and broadband compa- nies via AllRate AS and the Moment platform. The platform was developed by Fjordkraft and is operated and upgraded by its jointly owned software. Alliance partners The alliance concept is Elmera’s collaboration model for power producers and electricity retailers in rural areas. Elmera Group provides services related to power trading and market support to electricity companies across Norway. These are electricity retailers, power grid companies and power producers. The alliance concept also provides the company with good insights into the conditions and sit- uations for a wide range of diﬀerent players and allows us to present a comprehensive picture in our communication with industry associations and the government. Acquisitions • On 1 July 2019, Fjordkraft acquired 100 Part 2 – 2.1 Elmera Group at a glance Our business Numbers in thousands Full year 2023 Full year 2022 Electrical deliveries Consumer segment 667 685 Electrical deliveries Business segment 127 120 Electrical deliveries Nordic segment 125 149 Total number of electrical deliveries 920 954 Number of mobile subscriptions 115 144 Deliveries * Number of deliveries excl. Extended Alliance deliveries. Number of deliveries incl. Extended Alliance deliveries: 1 003 thousand in 2023 (2022: 1 033 thousand). Annual report 2023 10 Part 2 – 2.1 Elmera Group at a glance per cent of the shares in the end-user com- pany Vesterålskraft Strøm AS. • In February 2018, an agreement was signed to acquire the shares in TrønderEnergi Marked AS, an electricity retailer in the Trøndelag region. • In August 2018, Fjordkraft completed another transaction with the TrønderEnergi Group, this time acquiring all of the shares in Oppdal Everk Kraftomsetning AS. • In October 2018, the company completed a transaction with BKK AS to take over the customer portfolio of Etne Elektrisitetslag. • In September 2020, Fjordkraft completed the acquisition of Innlandskraft AS. Innlandskraft AS comprised the end-user companies Gudbrandsdal Energi AS and Eidsiva Marked AS. • In November 2020, Fjordkraft acquired 100 per cent of the shares in the Swedish enduser company Switch Nordic Green AB and its branch in Finland, which trade under the brand name Nordic Green Energy. • In October 2021 Fjordkraft acquired the Sky mobile portfolio of approximately 34,000 mobile clients. Subsidiaries • Fjordkraft AS owns 100 per cent of the shares in the electricity retailer TrøndelagKraft AS, which is based in Trondheim. • Elmera Group through Elmera Industrial Ownership AS owns 100 per cent of the shares in the electricity retailer Gudbrandsdal Energi AS, which is based in Vinstra. • AllRate AS was established in January 2020. Elmera Industrial Ownership AS owns 100 per cent of the company’s shares. AllRate AS delivers rating and billing services across the value chain to end-user companies and grid companies in Norway. The company also aims to win customers in Northern Europe. • Steddi Payment AS (former Betalservice AS). Predictable payment plans for house- holds are currently oﬀered in cooperation with electricity retailers in the Elmera Group, oﬀering a diﬀerentiating value proposition. • Telia Norge AS holds 39 per cent of the shares in Fjordkraft Mobil AS and Fjordkraft AS 61 per cent. Joint ventures In November 2019, the group decided to invest in the technology software company Metzum AS through a joint venture with Rieber & Søn AS. The transaction was completed in 2020. Metzum AS has a Swedish branch in Stockholm. Metzum oﬀers billing and rating software systems to electricity retailers and grid companies in the Nordics. Ownership structure Through the acquisition of Innlandskraft in 2020, Gudbrandsdal Energi Holding became a signiﬁcant owner in Elmera Group, holding about 7 per cent of the total shares outstand- ing as per year-end 2023. The Government Pension Fund Norway was the largest share- holder at year-end 2023, holding about 9 per cent of outstanding shares. History Fjordkraft was founded on 1 April 2001 with the ambition of becoming a leading company in the sale of electricity to the end-user market. Since the outset, the company has striven to increase national competition in the end-user market, introduce forward-looking, custom- er-friendly solutions, and ensure a level playing ﬁeld for all the players in the industry. The company was founded as a result of a merger between the power trading operations of BKK Kraftsalg AS and Skagerak Energi AS. The name Fjordkraft was adopted on 1 June 2001. The General Annual Meeting in 2022 approved changing the company’s name from Fjordkraft Holding ASA to Elmera Group ASA. This to avoid confusion with the subsidiary and electricity supplier Fjordkraft AS. Elmera Group is in a position to accelerate the green shift for over 1 million customers in the Nordics by: • Promoting the use of our apps in order to achieve power saving and predictability • Cutting emissions in cooperation with suppliers and customers • Oﬀering solar cell installations and assist our customers with the production, storage and sale of solar energy Our business 2.2 Management Part 2 – 2.2 Management Annual report 2023 11 Annual report 2023 12 Organisation Part 2 – 2.2 Management Executive Vice-President Nordic Per Heiberg-Andersen Nordic Green Energy Chief Strategy Ofﬁcer (CSO) Arnstein Flaskerud Executive Vice-President Service Companies Solfrid Kongshaug Aase Allrate AS, Kraftalliansen, Steddi Payments AS Chief Executive Ofﬁcer (CEO) Rolf Barmen Executive Vice-President Power markets and energy supply Solfrid Fluge Andersen CEO Fjordkraft AS Magnar Øyhovden Chief Financial Ofﬁcer (CFO) Henning Nordgulen Executive Vice President (EVP) and Chief Information Ofﬁcer (CIO) Kari Marvik Executive Vice-President Business Roger Finnanger Executive Vice-President HR&Communications Jeanne Katralen Tjomsland Annual report 2023 13 Part 2 – 2.2 Management Rolf Barmen President and Chief Executive Ofﬁcer (CEO) Background: Rolf Barmen, born in 1964, is the President and Chief Executive Oﬃcer (CEO) of the Group. Mr. Barmen has been the CEO of Fjordkraft since 2013 until June 2022. He has extensive experience as a chief executive oﬃcer within the telecommunication industry including Telering AS from 1999 until 2008, Chess Communication from 2008 until 2011 and NextGenTel from 2011 until 2013. Furthermore, he has experience as regional director at Telenor Telehus and operations manager at IKEA Bergen, as well as the Chairman of Sportsklubben Brann. Education: Mr. Barmen holds a Master of Science in Economics and Business Administration (siviløkonom) from the Norwegian School of Economics (NHH). Arnstein Flaskerud Executive Vice-President (EVP) and Head of Strategy, Sustainability and M&A Background: Arnstein Flaskerud, born in 1963, is the Company’s Executive Vice-President (EVP) and Head of Strategy, Sustainability and M&A. Mr. Flaskerud has more than 30 years’ experience in the electric power industry. He commenced employment with Fjordkraft in 2001 as the Director of Corporate Clients. Mr Flaskerud was a strategic business developer in 2010, Director of the Strategy department in 2013, market manager for BKK Kraftsalg AS from 1997 until 2001 and Market Manager at Bergen Lysverker from 1992 until 1996. Mr. Flaskerud was an engineer at Samkjøring av Kraftverkene in Norway for six years prior to 1992. In 2013, Flaskerud received the industry price for “Inﬂuencer of the Year” for his work with common invoicing and the “Supplier- centric Model”. Education: Mr. Flaskerud is an engineer Electric Power Engineering from Bergen University College (HiB) in addition to an Executive Master of Management degree from the Norwegian Business School (BI). Annual report 2023 14 Part 2 – 2.2 Management Henning Nordgulen Executive Vice-President (EVP) and Chief Financial Ofﬁcer (CFO) Background: Henning Nordgulen, born in 1965, is the Executive Vice-President (EVP) and Chief Financial Oﬃcer (CFO) of the Group. Mr. Nordgulen commenced employ- ment with Elmera Group in 2022. He was previously CFO at Sbanken ASA from 2015 and prior to that CFO at Bergen Group ASA. In addition to that, he has held the position Director of Business at Sparebanken Vest. Education: Mr. Nordgulen holds a Bachelor’s degree from the Norwegian Business School (BI), and has additional education from IMF in Lausanne. Magnar Øyhovden Chief Executive Ofﬁcer, Fjordkraft AS Background: Magnar Øyhovden, born in 1968, is the Chief Executive Oﬃcer (CEO) of Fjordkraft AS. Mr. Øyhovden has been the CEO since august 2022. He has extended experience within the ﬁnance industry as CEO of Sbanken ASA (previously Skandiabanken) from 2000 until 2019. From 2020 until 2022 Mr. Øyhovden was the Group Director of Media Bergen AS. Education: Mr. Øyhovden is an Economist with a degree from the Norwegian School of Economics (NHH). Annual report 2023 15 Solfrid Kongshaug Aase Executive Vice-President (EVP) and Head of Service Companies Background: Solfrid Kongshaug Aase, born in 1969, is the Company’s Executive Vice-President (EVP) and Head of Service Companies. Ms. Aase has more than 20 years’ experience in the electric power industry. She held several managerial positions in BKK AS and Fjordkraft in the ﬁelds of Business Development, Sales and Portfolio Services. At Fjordkraft, Ms. Aase has, among other posi- tions, worked as Business Manager from 2001 until 2006, as Market Manager for major cus- tomers from 2006 until 2008, was appointed Director of Customer Service in 2015 before she was appointed Head of Company Projects in 2017. Since 2019 until August 2022 Ms. Aase was Head of Alliances. Education: Ms. Aase holds a cand.polit. degree in Economics from the Univeristy of Bergen (UiB). Part 2 – 2.2 Management Solfrid Fluge Andersen Executive Vice-President (EVP) and Head of Power markets and energy supply Background: Solfrid Fluge Andersen, born 1976, was employed at Fjordkraft in 2010 as Chief Accountant Oﬃcer. In 2014, she left the company and joined Falck Nutec as CFO. In 2015 she returned to Fjordkraft in the role of Business Developer. In the period 2015 to 2019, she had several diﬀerent manage- ment positions within the invoicing, operations and in the Power Trading department, before she was appointed Executive Vice President for Operations Division in June 2019. The 1st of December 2023 she was appointed to the Head of Power markets and energy supply. Ms. Andersen also has relevant expe- rience from Bergen Energi (Kinect) as Team Manager for Cost Management before she was employed by Fjordkraft, and later Elmera Group ASA. Education: Ms. Andersen holds a Master of Science in Economics and Business Administration (siviløkonom) from the Norwegian School of Economics (NHH) and a diploma i Hospitality Management from the International College of Tourism & Hotel Management in Sydney, Australia. Annual report 2023 16 Part 2 – 2.2 Management Per Heiberg-Andersen Executive Vice-President (EVP) and Head of Nordic and other end-user companies Background: Per Heiberg-Andersen, born in 1970, is Executive Vice President responsi- ble for Nordic expansion and ﬁghting brands. Prior to this role, Mr. Heiberg-Andersen was CEO at AllRate, a subsidiary of Fjordkraft. Mr. Heiberg-Andersen has had a long career in telecoms and IT, and held positions as Regional Manager Western Norway in Telenor, as well as Vice President of both B2B and Consumer Divisions at NextGenTel (a Telia subsidiary). Mr. Heiberg-Andersen has also been a consultant (Director) at KPMG, with many projects in the electric power industry. Education: Mr. Heiberg-Andersen holds a Master of Science in Economics and Business Administration (siviløkonom) as well as a CEMS Master from the Norwegian School of Economics (NHH) and the University of Cologne. Roger Finnanger Executive Vice-President (EVP) and Head of Business Background: Roger Finnanger, born in 1981, joined Fjordkraft in 2011 as a key account manager. In 2012, Mr. Finnanger became the Sales Manager SME. He has headed the business market venture in the position of Director Business since 2014. In February 2019, Fjordkraft established a separate division for the business market and Mr. Finnanger assumed the position of Executive Vice-President Business. Mr. Finnanger has a background from Coca-Cola Enterprises where he worked for 10 years in a number of positions within sales, management and personnel development. Education: Mr. Roger Finnanger took a basic course in business economics at the Norwegian Business School (BI). Annual report 2023 17 Kari Marvik Executive Vice President (EVP) and Chief Information Ofﬁcer (CIO) Background: Kari Marvik, born 1970, was employed at Fjordkraft in 2021 as Director Cross Border Development. She has also held other management positions in Fjordkraft AS/ Elmera Group ASA as Manager Operational Excellence and Head of IT and projects. Before entering the Elmera Group Ms. Marvik came from a position as Research director at NORCE and Vice president of Science and Technology at Christian Michelsen Research where she was responsible for industrial research projects towards sectors like Energy, Renewables, Marine and Aquaculture. She also has relevant IT experience from the tele- com sector, where she has had diﬀerent man- agement positions in companies like Telenor and Nextgentel. Education: Ms. Marvik holds a cand. scient degree from the University of Bergen. Jeanne K. Tjomsland Executive Vice-President (EVP) and Head of HR&Communications Background: Jeanne Katralen Tjomsland, born in 1965. Ms. Tjomsland has over 25 years’ experience within the ﬁeld of com- munication. She commenced employment with Fjordkraft as Communications manager in 2002, was appointed Director of Human Resources and Security in 2010 (which from 2015 also included a communications role). Jeanne Tjomsland was EVP, CHRO&CCO (Chief communications Oﬃcer) in Fjordkraft Holding ASA until August 2022. She then held the position as CHRO, CCO for the Elmera Group in Fjordkraft AS until December 2023, becoming CHRO&CCO in Elmera Group ASA. Ms. Tjomsland was a senior public relations consultant and Deputy Manager at Consilio Kommunikasjon AS from 1997 until 2001. Education: Ms. Tjomsland holds a Master of Science in Economics and Business Administration (siviløkonom) from Universitetet i Agder (UiA) and an Executive Master of Management degree from the Norwegian Business School (BI). 2.3 ESG-report Environment - Social - Governance Part 2 – 2.3 ESG-report Annual report 2023 18 About the report 19 The right balance 20 About the key topics and reasons for the assessments 23 ENVIRONMENT 27 Elmera Group’s climate pledge 28 UN Sustainable Development Goals 29 Power generation from local solar energy 30 Internal climate and environmental measures 31 Climate Accounts 2023 33 Climate risk 35 Task Force on Climate-Related Financial Disclosure (TCFD) report 38 Useful digital customer solutions 40 Products and services for the low-emission society 42 SOCIAL 45 Our people 46 Business partners and certiﬁcations 53 GOVERNANCE 55 Responsible procurement 56 Attractive to customers 58 GRI - Index 60 Auditor’s report 68 Annual report 2023 19 About the report Elmera Group has reported in accordance with the GRI Standards for the period 1.1.2023 – 31.12.2023. These are internationally recognised stand- ards for reporting on environmental, social and economic responsibilities. We will con- tinue to use the GRI standards as we transi- tion our reporting to be aligned with obligated reporting requirements in EU’s Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS). CSRD builds on estab- lished frameworks such as GRI and TCFD. Elmera Group will be subject to CSRD from the ﬁnancial year 2025, reported in 2026. In accordance with the GRI standards, we conducted a stakeholder analysis and materiality assessment to identify the most signiﬁcant material topics, to us and our stake- holders. We have integrated double materi- ality into the assessment as a step towards being aligned with the CSRD requirements. This is described in the chapter entitled: The right balance. As the highest governance body, the Board of Directors have responsi- bility for managing Elmera Group’s impacts on the environment, people and economy. This responsibility has been delegated to the CEO. The reported information has been reviewed and approved by the Board of Directors. Involving the Board of Directors in the Group’s work with ESG and informing them about developments in requirements is a measure to advance their collective knowl- edge on sustainable development. The GRI index, published at the end of this report, provides a reference to where reported information for every GRI indicator can be found. The report is in accordance with the GRI reporting principles and the Norwegian Accounting Act’s requirement to report on corporate social responsibility. All subsidi- aries where Elmera Group holds a majority interest are included in the report. Information has been gathered from relevant resources in each company and is either consolidated or presented for each company respectively where it is deemed more appropriate. It is clearly stated who the reported information applies to. The report was audited with limited assurance by Deloitte. The auditor’s state- ments can be found at the end of this report. Part 2 – 2.3 ESG-report Annual report 2023 20 The right balance THE DIAMOND MODEL Attractive to owners Attractive to employees Attractive to customers Attractive to society To concentrate our actions and reporting on the most material topics a materiality assess- ment was conducted for the ﬁrst time in 2022. We have now updated our measurement methodology to include double materiality. The double materiality assessment takes into account impact, risk and opportunity of each topic. This is the potential impact by Elmera Group on environmental, social and economic conditions, and the extent to which these may have a ﬁnancial impact on Elmera Group, including both ﬁnancial risks and opportuni- ties. The process of updating our materiality assessment to include double materiality has led to changes in material topics. We have adjusted the wording for one of the topics, from “attractive reputation” to “attractive to customers”. Originally, attractive reputation was chosen because our reputation reﬂects how we are perceived by important stakehold- ers, and thus, is an indication of our attrac- tiveness. Staying attractive in an industry with extreme competitiveness is fundamental to having sustainable operations. Our reputa- tion is, however, not solely inﬂuenced by our actions. External factors like the electricity price and the industry’s overall reputation also aﬀect our reputation. Therefore, we have changed the material topic to attractive to customers as we believe this to be more The Norwegian power market was turned upside down in 2021 and 2022, with record high prices – particularly in southern Norway. 2023 was a more stable year. Fewer custom- ers switched electricity retailer than the year before. As part of a wider corporate govern- ance initiative, we introduced a new sustain- ability policy at the beginning of the year. The policy is vital in ensuring that everyone in the Group works towards the same sustainability targets. The policy helps to strike the right balance in our work. We intend to help our customers transition to a renewable society – a society where more customers will be self-suﬃcient. We can see that electricity customers have become more aware of their electricity consumption. The concept of energy eﬃciency has been ﬁrmly adopted by domestic customers and busi- nesses alike in 2023. As a Group, we need to strike the right bal- ance by being attractive to society, owners, customers and our employees. We must be proactive energy and climate advisors, as demanded by an increasing number of cus- tomers. Part 2 – 2.3 ESG-report accurate in terms of what we are trying to measure. Furthermore, we have included the following material topics; ethics and integrity, services that provide economic predictabil- ity, optimised corporate governance, con- scious community engagement, promoting diversity, equity and inclusion and climate change. Including more material topics is an Annual report 2023 21 acknowledgement of their importance, and a way of widening our reporting scope. CSRD is increasing the report- ing requirements. Thus, including more material topics is part of the preparation to become CSRD-aligned. The process has been structured like the previous year, building on insights acquired through due diligence activ- ities carried out in compliance with Norway’s Transparency Act and stake- holder analysis. Resources from every function with executive responsibilities for ESG have been involved in all steps of the process, including identifying, assessing, and prioritizing Elmera Group’s actual and potential impacts on environment, people and economy. The Executive Management has overseen the process and approved the materi- ality assessment before it was approved by the Board of Directors. Stakeholder views were collected through interviews with employees in the organization who have direct contact with a stakeholder group. For instance, to cover topics signiﬁcant to the inves- tors, the Head of Investor Relations were interviewed. In addition to the investors, we have identiﬁed employees, cus- tomers, suppliers, relevant authorities and the media as our most important stakeholders. The stakeholder groups were identiﬁed based on an assessment involving various departments and the Executive Management Group. Part 2 – 2.3 ESG-report Stakeholder Arenas for engagement Expectations towards Elmera Group Employees • Employee surveys • Appraisal interviews • General meetings • Intranet • Positive reputation • Job security • Diversity, equity and inclusion • Culture • Promote interaction and cooperation across the Group • Strong sustainability profile Consumer customers • Customer surveys • Customer service • Social media • Sales channels • Cost • Consultative communication • Good digital solutions • Positive reputation • Trust and transparency Business customers • Customer surveys • Customer meetings • Customer service • Quarterly and annual reporting • Cost • Trust and transparency • Good digital solutions • Positive reputation • Good invoicing solutions • Good documentation • Power-price hedging knowledge • Sustainable operations Suppliers • Meetings • Conferences • Business networks • Profitability • Positive reputation • Sustainable reputation • Energy optimization Investors • Investor meetings • Quarterly and annual reporting • Conferences • General assembly • Positive reputation • Sustainable business model • Responsible procurement • Good value propositions • Transparency Authorities • Meetings • Consultation responses • Reporting • Industry associations • Take corporate social responsibility, for example by being an advisor that contributes to energy optimization • Provide simple and unambiguous information to customers • Clear and understandable products • Compliance with applicable laws and regulations Media • Phone • Email • Meetings • Quick response • Compliance with consumer authorities' interpretation of the law • A substantial customer base makes negative customer experiences relevant to many • That commercial actors promote products and services in other channels than the editorial channels Annual report 2023 22 Part 2 – 2.3 ESG-report We continuously engage with stakehold- ers through various channels like customer service and employee surveys. Stakeholder engagement is integral to how we run our business, as it enables us to make informed decisions. Based on our organisational con- text, and informed by the stakeholder analysis, we listed actual and potential impacts, both positive and negative, within each dimension of ESG. These were then prioritised based on signiﬁcance. Criteria to judge the signiﬁcance of negative impacts were severity, scale and scope, and likelihood. Similarly, positive impacts were prioritized based on scale and scope and likelihood. Impacts where we can make the most signiﬁcant diﬀerences were weighted. As mentioned, double materiality implies that every material topic has been considered from two perspectives; potential impact by Elmera Group and potential impact on Elmera Group. Every topic has been ranked on a scale from 0-5 in both perspectives. To measure development related to the material topics and the eﬀectiveness of correlating actions we have attached relevant targets to the material topics. These are existing targets embedded in the Group’s strategy, policies or procedures. We are working on setting tar- gets in areas where we don’t have existing targets that are suﬃcient. This is a process that starts with mapping the current situation to gain insights, which in turn will enable us to set appropriate targets, well rooted in the organization. How we perform in relation to the targets is reported to the Board of Directors. Potential impact on Elmera Group Potential impact by Elmera Group Optimized corporate governance Climate change Promote diversity, equity and inclusion Attractive to customers Right competence – attract, retain and develop Useful digital customer solutions Responsible procurement Proactive energy- and climate advisors Conscious community engagement Ethics and integrity Local energy production from solar power DOUBLE MATERIALITY ASSESSMENT Services that provide economic predictability Annual report 2023 23 Attractive to customers: Last year, attractive reputation was a mate- rial topic. The reasoning was that reputation largely reﬂects our actions, and that how we are perceived by customers, investors, employees and authorities aﬀects our ability to deliver on the strategy. Based on the same reasoning, the wording has been changed to ‘attractive to customers’, as we deem this more appropriate. Creating good customer experiences is the most important success factor, with a good reputation as the natural consequence. This material topic is of funda- mental importance, meaning that it is a pre- requisite for achieving lasting positive impacts on other material topics. Rated as the highest impact both by and on Elmera Group. GRI-indicators: 417-2, 417-3, 418-1 Goal: Customer satisfaction above 70 for the brands Fjordkraft, Gudbrandsdal Energi and Nordic Green Energy. Results from the annual EPSI survey for 2023: Consumer segment: Fjordkraft – 65,3 Gudbrandsdal Energi – 69,7 Nordic Green Energy – 74,2 Business segment: Fjordkraft – 60,5 This is a continuous goal. For more informa- tion about how we work to achieve it, see Attractive to customers and Section 3.1 in the annual report – Strategy and strategy planning – Where do we create value. Useful digital customer solutions: The electricity price crisis showed how impor- tant useful digital solutions are to customers. In 2023, the Elmera apps helped more than 777,000 unique users through insights, auto- mation and notiﬁcations. Via the app and Min Bedrift (My Business) we give customers access to services that help them optimise their electricity consumption, both by reduc- ing consumption and by adapting it to the market price and grid tariﬀ model. Digital cus- tomer solutions are our most important tools to help customers and contribute to energy eﬃciency, and thus, have a signiﬁcant impact on the national energy balance and the envi- ronment. Rated as the highest impact both by and on Elmera Group. Goal (measured quarterly): 80 % of customers actively interact with our digital interfaces. Active users are deﬁned as someone who uses the app twice a month. Results Q4 2023: 67 % of Norwegian consumer customers utilised the app. 22 % of Finnish consumer customers utilised the app. As the app was only introduced in Finland this year, we expect the number of users to increase, especially considering the positive feedback we have received this far. The app will be introduced in Sweden during 2024. This is a continuous goal. For more infor- mation of our work to increase customer interaction, see Environment – Useful digital customer solutions. Local energy production from solar power: Sustainable business models are important to the Group. This includes having suﬃcient margins and ensuring that our products help create economic value without compromising society or the environment, but also that we take on a greater role in the transition to a renewable society. The Norwegian authori- ties have set a target to increase solar power production by 8 TWh. Power generation from local solar energy is our opportunity to make a signiﬁcant contribution to more renewable energy. We consider this topic to be greatly inﬂu- enced by Elmera Group. We have the muscle to succeed with our solar initiative and we can make a diﬀerence. We also assess that solar has a relatively low impact on Elmera Group at present. We expect the impact on Elmera Group to increase signiﬁcantly in the coming years. Our ongoing initiatives and investments in solar power are a reﬂection of this. Goal: Number of customers with solar production to be doubled annually. Part 2 – 2.3 ESG-report About the key topics and reasons for the assessments Annual report 2023 24 Result 2023: Solar installations increased by 43 % in 2023 vs. 2022. For more information about how we work towards the goal, see Environment – Power generation from local solar energy and Section 3.1 – Strategy and strategy planning. Ethics and integrity: To continue to succeed in the long term, in an industry that has experienced reputational challenges, we depend on good ethical con- duct by everyone representing the Group. This will safeguard the integrity of both the individual and the company, in meetings with customers, employees, partners, author- ities and other stakeholders. Our Strategic Platform, the Management Philosophy and ethical guidelines set clear guidelines for the conduct of representatives of Elmera Group. This topic is of fundamental importance, as unethical conduct has the potential to nega- tively impact not only the Group, but also cus- tomers, employees and other stakeholders. Rated as high impact both by and on Elmera Group. GRI-indicators: 205-1, 205-2, 205-3, 206-1, 415-1 Goal: 100 % of employees should perform dilemma training annually. 100 % of employees should sign a declara- tion annually, conﬁrming that they have read and act in compliance with the Group’s Code of Conduct. Results 2023: Dilemma training was not performed in 2023. Employees have not signed a declaration in 2023. Dilemma training will be completed by all units in 2024, starting in March. The declara- tion regarding compliance with the Code of Conduct have been sent out in 2024. For more information about our work with eth- ics and integrity, see Governance – Ethics and integrity and the Corporate Governance Report. Services that provide economic predictability: Geopolitical conditions, such as Russia’s invasion of Ukraine and the impact of this on gas supplies in Europe, high CO2 prices, and the transition to renewables that bring more non-regulated power into the system, have led to an extended period of high price volatility. The new normal is expected to be characterised by higher price volatility than before the electricity price crisis. This leads to unpredictability related to electricity costs, perceived as challenging by many in both the private and corporate sectors. Oﬀering good services capable of ensuring economic pre- dictability for customers is therefore important. This could be various hedging products, or through Steddi Payments. In a market char- acterised by equivalent electricity products, hedging instruments are an important diﬀer- entiating factor, which will also apply to the consumer market when the electricity support scheme expires at some point. Rated as high impact both by and on Elmera Group. Goal: 70 % of contracts in the Business segment should include risk management. Customer growth Steddi Payments AS. Numbers in the roadmap for growth are not disclosed due to conﬁdentiality constraints. Results 2023: 78 % of delivered volume included risk man- agement. Optimised corporate governance: Good corporate governance is a prerequisite for qualiﬁed decisions that support our strate- gic goals and ensure sustainable operations. Through the implementation of the corporate governance project, led by Group Finance, 12 policies have been established and reviewed by the Group’s management teams. Other employees have been involved in necessary instruction and training. The work gives us important governance mechanisms that are necessary to create the required results. This is assessed to be greatly inﬂuenced by Elmera Group and that it has a relatively high impact on Elmera Group. GRI-indicators: Indicators in General Disclosures section 3 are related to governance. We have yet to set goals that measure the quality of our corporate governance. For more information about our approach to corporate governance, see the Governance section in the ESG-report and the Corporate Governance report. Proactive energy and climate advisers: Electricity has gone from low interest to high interest as a consequence of higher electricity prices. Our customers need good, proactive advisers in the transition to a renewable soci- ety, in both private and business markets. This is essential to create good customer experiences and to succeed in delivering energy eﬃciency to customers. By serving as competent advisers for our customers we will achieve positive impacts for them, by reduc- ing their electricity cost, and for the society at large, by contributing to energy eﬃciency. Rated at relatively high impact both by and on Elmera Group. Ensuring that we act as good advisors for our customers is a top priority in the organi- sation. We are working towards setting goals that eﬀectively measure our performance Annual report 2023 25 concerning this. For more information about how our subsidiaries strive to be competent advisers to our customers, see Section 3.1 in the annual report – Strategy and strategy planning – Where do we create value. Right competence – attract, retain and develop: The competencies of our employees are the Group’s most important resource. To deliver on our strategic goals, we need to have the best employees. It is therefore important to be an attractive employer that gives employ- ees room to develop, and that we manage to attract bright new talent. Management compe- tencies are regarded as particularly important. Rated as relatively high impact both by and on Elmera Group. GRI indicators: 401-1, 404-1, 404-2, 404-3 Goal: Human Capital Index above 25 Result 2023: Elmera Group ASA - 25,8 Fjordkraft – 25,6 We concluded a pilot project in 2023 named Strategic Competence Development. The initi- ative was a success and will continue in 2024. The insights from this initiative will enable us to set appropriate goals on how to attract and develop the right competencies. For more information, see Social – Right competence. Responsible procurement: As a major player, we can exercise great inﬂuence by setting clear requirements for our regular suppliers. This is how we create domino eﬀects. The Group has an established procurement policy that ensures compliance with general and special requirements asso- ciated with ESG. A climate-committed value chain is required, whereby suppliers accept and recognise the Supplier Code of Conduct. This code concerns general business eth- ics, including sustainability, climate, environ- ment, human rights and anti-corruption. In addition, the Norwegian Transparency Act is observed through the Procurement Policy. The Procurement Policy applies to the entire Group. Rated at a relatively high impact both by and on Elmera Group. GRI indicators: 204-1, 308-1, 308-2, 407-1, 408,1, 409-1, 414- 1, 414-2 Goal: All our regular suppliers must sign the Supplier Code of Conduct. Result 2023: The Supplier Code of Conduct has not been implemented in existing contracts in Gudbrandsdal Energi and Nordic Green Energy. Implementation is expected to be completed in 2024. It is implemented for the Group’s other regular suppliers, and thus, for the majority. Conscious community engagement: We will be a strategic partner that contributes more than just ﬁnancially. When we engage in collaboration, we will be active and contrib- ute with our time, knowledge and networks. Through our strategic partnership with the Church City Mission, we are able to have a positive impact on people who for various rea- sons face challenges in their life, by involving our employees. Rated as relatively high impact by Elmera Group and low impact on Elmera Group. Goals for 2024: We will carry out two beach clean-ups every year. We will assist Skattkammeret “the Treasury” of the Church City Mission with two volunteer employees every week throughout 2024. Promote diversity, equity and inclusion: To achieve the best solutions, we need peo- ple from diﬀerent backgrounds and with diﬀerent experience who can provide new perspectives and ideas. This makes it impor- tant that we succeed in having an equita- ble and diverse workplace where everyone feels included, regardless of background. At Elmera Group, men and women enjoy equal rights, opportunities and pay conditions for the same type of position. The company and the Group work actively to promote the aims of the Act. The activities include recruitment, pay and working conditions, promotion, devel- opment opportunities and protection from discrimination or harassment. Rated at a moderate impact both by and on Elmera Group. GRI indicators: 401-2, 401-3, 405-1, 405-2, 406-1 Goals: The distribution of women and men must be within the range of 40–60 per cent. The distribution of female and male managers should be equivalent to the overall ratio of women and men in the organisation. Results 2023: 45 % women and 55 % men. 36 % of managers with personnel responsi- bility, excluding the Executive Management Group, were women. The Executive Management Group consists of 4 women and 6 men. We will map the Group’s diversity in 2024 and increase the internal competencies con- nected to diversity and inclusion. This is the ﬁrst step towards setting adequate goals for diversity and inclusion. For more information about our work with diversity, equity and inclusion, see the Equal Opportunities Report. Annual report 2023 26 Through our strategic partnership with Kirkens Bymisjon (the Church City Mission) we involve our employees. Svenn Erik Stein- stad (Partner Sales) and Magnar Øyhovden (Chief Executive Oﬃcer at Fjordkraft AS) are volunteering at Skattkammeret in Bergen. At Skattekammeret, people can borrow sports and leisure equipment for free. Climate change: We know that we are heading towards a cli- mate crisis with global warming far above the 1.5°C target in the Paris Agreement, unless immediate action is taken. In its latest report, the UN Intergovernmental Panel on Climate Change describes this as a crucial decade and points out that we have the solutions that are needed. They stress the importance of phasing out fossil fuels quickly. This back- drop aﬀects us in several ways. A higher ratio of renewable energy in the power system increases price volatility, as production will vary according to weather conditions. The price of electricity produced from coal and gas is aﬀected by high CO2 prices. Weather conditions also aﬀect the demand side. Climate change therefore aﬀects key factors such as price and volume. It also drives reg- ulation and increased reporting requirements, as well as the demand for products such as solar panels and guarantees of origin. Rated at a low impact by Elmera Group. Even though we believe we achieve a high eﬀect, in relative terms, by creating domino eﬀects through ‘Klimanjaro’, the impact of Elmera Group on climate change is still low in the big picture. Rated as relatively high impact on Elmera Group. GRI indicators: 201-2, 302-1, 302-3, 302-4, 305-1, 305-2, 305- 3, 305-4, 305-5 Goal: All our regular suppliers must be climate com- mitted. Result 2023: The climate pledge has not been implemented in existing contracts in Gudbrandsdal Energi and Nordic Green Energy. Implementation is expected to be completed in 2024. The Group’s other regular suppliers are deemed climate committed. Photo: Monica Solheim Annual report 2023 27 Environment Part 2 – 2.3 ESG-report Annual report 2023 28 Part 2 – 2.3 ESG-report Elmera Group’s climate pledge is: “ We pledge that our regular suppliers are climate committed. ” The climate pledge obliges our regular suppli- ers, but also us. The requirement is followed up in several ways. Our regular suppliers must prepare green- house gas accounts and a list of measures to cut their emissions. This must be uploaded to the climate portal, Klimahub.no. We also encourage them to oﬀset their emissions by purchasing Scope 1 and 2 allowances and Scope 3 upstream activities. We stand by the principle that the polluter should pay. Suppliers whose Science Based Targets have been approved in accordance with SBTi are also approved as our suppliers. Why do we do this? We want to use our inﬂuence in a positive way. We can see that by setting these require- ments, we can help cut greenhouse gas emis- sions by far more than we would be able to do alone. We have been doing this ever since we introduced climate requirements for our suppliers through ‘Klimanjaro’ in 2017. The requirement has changed since then, but we continue to inﬂuence our suppliers to take greater responsibility. The domino eﬀect con- tinues. Klimahub.no Elmera Group is not the climate police, but based on a desire for greater transparency and the creation of what can become a national register for greenhouse gas accounts, our regular suppliers are required to register greenhouse gas accounts and action lists to reduce emissions on the Klimahub.no climate portal. By the end of 2023, 556 companies had registered their company in Klimahub.no and 408 of them had registered their green- house gas accounts in the portal. Klimahub. no is open for all businesses to use. Here, businesses can create greenhouse gas accounts, free of charge. If they already have greenhouse gas accounts, the business can upload the total ﬁgures from Scope 1, 2 and 3 in order to register. The aim is for Klimahub.no to be the register we can use to monitor Norwegian companies’ climate footprint. On Klimahub.no, it is also possible to compensate for emissions by purchasing allowances. Business partners and suppli- ers can also be invited to post their ﬁgures on Klimahub.no. This helps to increase the transparency of greenhouse gas accounts. Private individuals can use Klimahub.no to exert inﬂuence as consumers by choosing cli- mate-friendly companies for their purchases and as their potential employers. Elmera Group’s climate pledge The goals for ’Klimanjaro’ and Klimahub: 100 per cent of Elmera Group’s regular suppliers must be climate committed 100 per cent of Elmera Group’s regular suppliers must register on Klimahub.no We will have 1,000 registered companies on Klimahub.no by the end of 2023 Part 2 – 2.3 ESG-report We are working to bring more partners on to Klimahub. Cooperation with other players in diﬀerent industries makes us stronger. Gisle Hauge, Head of Legal and Procurement in Elmera Group, talks about our climate pledge to some col- leagues. Photo: Elmera Group Annual report 2023 29 Part 2 – 2.3 ESG-report UN Sustainable Development Goals Part 2 – 2.3 ESG-report This is Elmera Group’s prioritization of our chosen SDGs. We focus particularly on four of the UN Sustainable Development Goals that we will work even harder to achieve. These are the four we believe are closest to our business operations. Number 13: Climate Action This is the most important goal we are working towards achieving. By exerting our inﬂuence and setting requirements for suppliers and sponsorships, we have created a domino eﬀect and reduced greenhouse gas emissions signiﬁcantly. We will be a beacon for others and will continue to lead the way. Number 7: Affordable and Clean Energy Energy is the largest contributor to climate change, through emissions of CO2 and other greenhouse gases. The solution is renewa- ble energy such as hydroelectric power, wind power and solar energy. Renewable energy is sustainable. We are part of the solution. Number 9: Industry, Innovation and Infrastructure Through innovation, we develop new and sus- tainable solutions for private customers and businesses. We ensure value creation. Number 12: Responsible Consumption and Production Today, we consume more than what is envi- ronmentally sustainable. To ensure good living conditions for current and future generations, every consumer has to change their lifestyle. With the help of the app, Puls meter, Målbart (energy metering), Min Bedrift (My Business), customer service, climate footprint etc., we help customers to make their consumption more eﬃcient. Everyone at Elmera Group works to achieve the goals. If any of our business units want to work to achieve additional UN Sustainable Development Goals, they can do so. They just have to give a good reason. Annual report 2023 30 Part 2 – 2.3 ESG-report Power generation from local solar energy The transition to the renewable society requires that more of our customers, both private individuals and businesses, produce more of their own energy. Therefore, in 2022, Elmera Group set a goal for the expansion of local solar energy to our customers. The goal is as follows: Number of customers with solar production to double annually. The number of solar installations in 2023 increased substantially compared to 2022, but we did not manage to double it, and thus, did not reach the target for 2023. Installations increased by 43 % YoY. Sustainable business models are important for the Group. This includes having suﬃcient margins and ensuring that our products help create economic value without compromising society or the environment, but also that we take on a greater role in the transition to a renewable society. Power production from local solar energy is therefore one of our focus areas going forward. It aligns with all four of the UN Sustainable Development Goals that are most closely linked to our business strategy. By capitalising on our large customer base, we have the opportunity to make a signiﬁcant contribution to more renewable energy. The SunPool company was founded in February 2023. The purpose of the company is to carry out activities within operational leasing/PPA of solar cell systems for private households, housing cooperatives and com- mercial buildings. This will continue in 2024. Annual report 2023 31 Part 2 – 2.3 ESG-report Internal climate and environmental measures We require our regular suppliers to be climate committed, but what do we do internally in Elmera Group to reduce our own emissions? For the past two years, we have had an inter- nal sustainability group that looks at various measures we can take within climate and the environment. Working with our greenhouse gas accounts, we create an action list each year that shows where to reduce our own emissions. Our over- all goal is to halve our carbon footprint per employee by 2030, based on the footprint from 2019, the last year before the pandemic. We adhere to our own climate commitment and focus on reducing our own greenhouse gas emissions. We buy electricity with a guar- antee of origin and compensate for resid- ual emissions from Scope 1, Scope 2 and upstream activities in Scope 3 by purchasing European Union Allowances (EUA). We publish our greenhouse gas accounts in Klimapartner Vestland’s annual emission report and on our own web portal, Klimahub. no. On the latter, our greenhouse gas accounts and updated measures for further reductions can be viewed throughout the year. Klimahub.no is a register where people can check the climate footprint of Norwegian companies and use the information to make sustainable choices. In 2019 we could already see that our travel activities account for our greatest emissions. We therefore set a target to cut emissions from air travel by 40 per cent per employee by the end of 2023. We also have a dedicated travel policy with clear guidelines for employees. We managed to reduce emissions from air travel by 41 % per employee, reaching our target. We have worked to become a fossil-free company while waiting for the oil-ﬁred heating of our head oﬃce in Bergen to be replaced by district heating. This ﬁnally happened in the end of 2023. In terms of waste, we set requirements for our property owners and, in 2023, we intro- duced collection of food waste at all our loca- tions. The IT department has worked to ensure that 100 per cent of our used IT equipment is reused or recycled. They managed to achieve this in 2023 through agreements with Atea and their 100 % club, and the company Dustin. The IT department also has strong focus on buying less new equipment than before. Instead, they issue used machinery and equipment to employees. They have achieved this thanks to the dedicated eﬀorts of the IT department’s teams. Elmera Group is expanding both in Norway and in the Nordic region. This will increase Part 2 – 2.3 ESG-report the Group’s total carbon footprint in the years ahead. But the goal of halving emissions per employee is nonetheless maintained. In 2023, we saw a large increase in our total greenhouse gas emissions. This is because, for the ﬁrst time, we include the downstream and the upstream solution ﬁgures in Scope 3, i.e. sale of electricity. Jamal Al-Abdi and his colleagues at our IT department ensure that 100 per cent of our used IT equipment is reused or recycled. Photo: Frode Fjellstad Annual report 2023 32 Part 2 – 2.3 ESG-report Targets for greenhouse gas reductions: 100 per cent of Elmera Group’s regular suppliers must be climate committed 100 per cent of Elmera Group’s suppliers must register with Klimahub.no We must have 1,000 companies registered with Klimahub by the end of 2023 ENERGY 100 per cent of the electricity we consume must be purchased with a guarantee of origin. TRANSPORT We have a dedicated travel policy stating that employees must always consider whether a journey is necessary, from a climate and cost perspective. Our vehicle ﬂeet must be fossil-free We will cut emissions from air travel by 40 per cent per employee by the end of 2023 (zero point in 2019) – Emissions from air travel per employee has been reduced by 41 % WASTE 100 per cent of our used IT equipment must be reused or recycled. We require landlords to sort waste at source We will have sorting of food waste in place at all locations OTHER Our locations in Bergen, Trondheim and Sandefjord are Eco-Lighthouse-certiﬁed. We want the oﬃce at Vinstra to be certiﬁed by the end of 2025. At the Oslo and Sortland oﬃces, there are so few employees that we will not carry out certiﬁcation. Our oﬃces at Hamar, Stockholm and Wasa do not have the same certiﬁca- tions. We use technology to streamline communication between our locations. Reuse must always be considered when purchasing products. Employees who walk, cycle or travel by public transport to work receive ﬁnancial compensation of NOK 500. The internal sustainability group has created a recycling group on Workplace (intranet) called Give Away – Exchange – Buy – Sell. Here, employees can give away, exchange, buy or sell things they no longer need. We have an internal sustainability academy for employees. Part 2 – 2.3 ESG-report Two employees in Bergen; Ingvild Dimmen and Alice Lavik Lammetun, with the new recyclebin for foodwaste. Photo: Frode Fjellstad Elmera Group 2023 Fjordkraft 2019 Number of employees 457 Number of employees 293 Emissions from air travel per employee 0,46 tCO2e Emissions from air travel per employee 0,79 tCO2e Total emissions per employee 0,6 tCO2e Total emissions per employee 1 tCO2e Annual report 2023 33 Climate Accounts Input to the climate accounts has been gathered from all our locations in Norway, Sweden and Finland, covering all companies and employees in the Group. The majority of input has been converted to CO2 equivalents through Klimahub, our soft- ware solution developed in compliance with the Greenhouse Gas Protocol. Conversion factors used in Klimahub can be down- loaded here: klimahub.no/about. Klimahub’ s main source for conversion factors is the Department for Environment, Food & Rural Aﬀairs (DEFRA – a UK ministerial department) set of conversion factors for 2023. The cal- culation of CO2 equivalents includes green- house gases CO2, CH4, N2O, as stated in DEFRA’s conversion factor set. The conver- sion factor for electricity comes from DNV and is speciﬁc to Norway. Therefore, emissions from consumed and sold electricity in Sweden and Finland have been calculated based on conversion factors from AIB for product mix and residual mix in both countries. Downstream emissions from sold electric- ity have been calculated for the ﬁrst time for 2023. To be able to compare the climate accounts for 2023 and 2022 total emissions with and without downstream emissions are included in the table. Emissions from sold electricity are not compensated by emission allowances. Scope 3 emissions have been categorised according to the GHG protocol. Previously, emissions from “Flights”, Mileage allowance” and “Other business travel” have been reported separately. These are now reported under Category 6: Business travel. In the previous report, we calculated emis- sions from air travel for 2022 to 232 tCO2e. Since we have discovered that some of the air travels were double-counted. When adjusting for this mistake, emissions from air travel in 2022 amount to 145,7 tCO2e. Part 2 – 2.3 ESG-report GRI DISCLOSURE 302-1 Energy consumption from renewable sources MWh Electricity from hydropower 829 Energy consumption from non-renewable source MWh District heating 109 Gas 30 Annual report 2023 34 Part 2 – 2.3 ESG-report Elmera Group ASA Elmera Group ASA Difference CLIMATE ACCOUNTS (TONNES CO2E.) 2023 2022 2022-2023 Scope 1 Fuel (vehicles and other consumption) 5,4 1,9 184 % Paraﬃn, propane and gas 5,2 8,8 -41 % Total direct emissions (Scope 1) 10,6 10,7 -1 % Scope 2 District heating/cooling 19,1 Electricity location based 16 Electricity market-based 0 0 0 % Total indirect emissions from purchased energy - location based (Scope 2) 35,1 Total indirect emissions from purchased energy - market based (Scope 2) 19,1 0 0 % Scope 3 Category 1: Purchased goods and services 20,6 3,6 472 % Category 3: Fuel and energy related activities 8 999 140 Category 5: Waste generated in operations 0,2 0,2 0 % Category 6: Business travel 222,4 161,7 38 % Category 7: Employee commuting 19,9 11,6 72 % Total other indirect emissions excl. category 3 (Scope 3) 263,1 177,2 48 % Total other indirect emissions (Scope 3) 8 999 666 Total emissions - market-based, excl. downstream eissions 292,8 187,9 56 % Total Emissions - market-based 8 999 696 Total offsetting 293 274 7 % KEY FIGURES Number of employees 459 440 4 % Total energy consumption - MWh (fossil fuel + purchased energy) 968,7 946,6 2 % Heated area (m2) 9074 9074 CLIMATE AND ENERGY DISCLOSURES Total emissions per employee excl. process emissions (tCO2e/employee) 0,6 0,4 50 % Energy consumption for heating premises (kWh/m2) 106,8 93,9 14 % Part 2 – 2.3 ESG-report Included for the ﬁrst time. Read more at page 33. Annual report 2023 35 Part 2 – 2.3 ESG-report Assessment of climate risk is part of Elmera Group’s overall risk management and reporting. This takes place on an annual basis. Many diﬀerent factors have contributed to high price volatility for a sustained period. These include geopolitical conditions, such as Russia’s invasion of Ukraine and the con- sequences of this for gas supplies in Europe, high CO2 prices, and the transition to renewa- bles that bring more non-regulated power into the system. Going forward, the new normal is expected to be characterised by higher price volatility than before the electricity price crisis. This leads to unpredictability related to electricity costs, perceived as challenging by many in both the private and corporate sectors. This in turn has put the spotlight on our industry in recent years, from the media, politicians and our customers. Many have become more aware of prices, consumption and opportunities for energy eﬃciency. As a consequence, more customers than before want to monitor electricity prices more closely, preferably in real time. Customers have become more aware of their own electricity consumption, which is very positive in terms of fulﬁlling SDG 12, Climate risk which states that we will have responsible consumption and production. In turn, as a Group we have been challenged to put in place even better technical solutions, for example in the various apps that our subsid- iaries oﬀer to customers. A lot of work was done on this in 2023. In the future, we will make it easier for more of our customers to become more self-suﬃ- cient in local electricity We therefore began a new initiative towards the end of 2022 for more Part 2 – 2.3 ESG-report power generation from local solar energy. If more customers become self-suﬃcient in electricity in the years to come, this will have consequences for us. There are opportunities for us as advisers to customers, but also as an innovative company that can oﬀer services to help our customers transition to a renewable society. Changes in customers’ consumption pat- terns as a consequence of high prices, the changing international energy markets, and the composition of energy carriers have a direct impact on us and our customers. This is also true of EU climate goals, the phasing-out of fossil energy production, a high CO2 price, and investment in renewable energy. Investments in wind and solar power have made the European power market increas- ingly weather-dependent. Consumers have a low tolerance for high power prices, which entails risks for Elmera Group. Photo: Shutterstock Annual report 2023 36 Part 2 – 2.3 ESG-report Climate risk Risk categorisation Risk assessment Conclusion Physical risk Physical risk involves costs associated with physical damage due to climate change. Elmera Group has very few assets that could be physically damaged as a consequence of climate change. The increased frequency of extreme weather conditions could result in signiﬁcant damage to grid owners’ infrastructure, which could aﬀect Elmera Group’s reputation in the event of prolonged power outages. Society has a low tolerance for disrupted power supplies. Low risk Transition risk Transitional risk involves economic uncertainty related to the transition to a low-emission society, and is divided into four categories: • Technology • Market • Policy • Reputation Power prices are aﬀected by many diﬀerent elements. The EU climate goals and the phasing-out of fossil energy production, as well as investment in renewable energy, with a signiﬁcant wind power element, mean that the European power market is becoming increasingly weather-dependent. High CO2 prices also inﬂuence power prices. The war in Ukraine has less impact on prices now than at the start of the war, but it is causing greater ﬂuctuations than normal. Challenges After several years of unstable prices, consumers have a low tolerance for high power prices. High prices draw more negative attention and increase the industry’s reputational challenges. Wider ﬂuctuations in electricity prices make power purchases/hedging more demanding. There is a higher risk related to agreements that are based on price hedging. As a consequence of intermittent high power prices, there is also a risk of political intervention in the market. Opportunities The transition to a renewable society creates business opportunities for Elmera Group. Greater electriﬁcation leads to increased demand for products closely linked to Elmera Group’s core business. Variations in electricity prices favourably aﬀect the demand for hedging products. Elmera Group has strong power trading expertise, which enables us to oﬀer hedging products that provide customers with more predictable prices. The transition to a low-emission society also gives us good opportunities to invest more in local electricity production, such as solar energy. Medium risk Part 2 – 2.3 ESG-report Annual report 2023 37 Part 2 – 2.3 ESG-report Risk categorisation Risk assessment Conclusion Transition risk Involves economic uncertainty related to the transition to a low-emission society, and is divided into four categories: ’ • Technology • Market • Policy • Reputation Elmera Group is a major, reliable player that can oﬀer customers deferred payment and repayment plans when electricity prices are high. We use our market-leading position in a positive way and hope this can help create trust over time. In the long term, far greater expansion of renewable energy is expected in Europe, with more stable energy production, leading to lower power prices. Challenges: Customers that are more self-suﬃcient in electricity can be a threat to the company in the long term. This relates to increased investment in solar energy, development of batteries and new storage technology. Opportunities: We see great opportunities in solar energy. When electricity prices are high, this is a more attractive solution for households and businesses. If more people become self-suﬃcient in energy, this can also reduce pressure on the market and be beneﬁcial to the green transition. We broker solar energy sales and joined forces with Solcellespesialisten to start SunPool. This is and will remain a major focus area for us in the years to come. Energy management tools oﬀer opportunities in the short term, although increased energy eﬃciency represents volume risk in the long term. Taxonomy, the EU classiﬁcation requirement, will come into force for us as from 2025, when the new EU sustainability directive, CSRD, also comes into force for our Group. Medium risk Third party risk Claims for damages related to decisions or a failure to make decisions that can somehow be linked to climate policy or climate change. Through our work with ‘Klimanjaro’, where we started setting climate requirements for our suppliers in 2017, we initiated a positive domino eﬀect. The climate requirement has been upgraded in a new climate pledge, but the domino eﬀect continues. We set requirements for our suppliers, and several of them pass on these requirements to their suppliers. We also use the Klimahub.no climate portal to focus on how companies should maintain an overview of their own greenhouse gas emissions and opportunities to cut emissions. Klimahub can be used to cut emissions both within and outside the company’s value chain. Low risk Part 2 – 2.3 ESG-report Climate risk Annual report 2023 38 Part 2 – 2.3 ESG-report Part 2 – 2.3 ESG-report # Governance 1 Describe the board’s oversight of climate-related risks and opportunities. The Board is informed of the Group’s most signiﬁcant risks, including climate risk, through risk reporting, as described in the risk management section. The Board is informed of the results of the group executive management’s annual climate risk assessment. 2 Describe management’s role in assessing and managing climate-related risks and opportunities. The responsibility for incorporating climate risk lies with the Group Risk Manager and Head of Sustainability. Climate risk is speciﬁcally included on the group executive management’s agenda on an annual basis. Every year, the Group Risk Manager and Head of Sustainability arrange a climate risk workshop with the group executive management where it is discussed how climate-related threats and opportunities aﬀect the Group’s businesses, strategy and ﬁnancial planning. This forms the basis for the Group’s climate risk assessment. The management is informed of the Group’s most signiﬁcant risks, including climate risk, through quarterly risk reporting, as described in the risk management section. Strategy 3 Describe the climate-related risks and opportunities the organisation has identiﬁed over the short, medium and long term. See the table “climate risk” above for assessment of climate-related threats and opportunities. 4 Describe the impact of climate-related risks and opportunities on the organisation’s businesses, strategy and ﬁnancial planning. Climate-related risks and opportunities are deﬁned as part of the Group’s overall and annual strategy process. The group executive management and line management identify threats and opportunities and assess the impact these can have on Elmera Group’s businesses, strategy and ﬁnancial planning. See the table “climate risk” above for assessment of climate-related risks and opportunities. 5 Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios, including a 2 o C or lower scenario. Elmera Group’s strategy has not been stress-tested against the diﬀerent climate-related scenarios, but it is considered and assessed as a part of our scenario planning document. Task Force on Climate-Related Financial Disclosure (TCFD) report Annual report 2023 39 Part 2 – 2.3 ESG-report Part 2 – 2.3 ESG-report # Risk Management 6 Describe the organisation’s processes for identifying and assessing climate-related risk. Climate risk is part of Elmera Group’s framework for enterprise risk management. The Group has a structured process for identifying and assessing risk on a quarterly basis. All risk categories, including climate risk, are part of the overall risk management process. Risks that are considered to have a material impact on the Group’s objectives and strategy are reported quarterly to the group executive management and semi-annually the Board. If climate risk is considered to have a material impact on the Group’s overall objectives and strategy, it will be included in the reporting to the group executive management and the Board. Climate risk is assessed at least annually, as described in the section on governance. 7 Describe the organisation’s processes for managing climate-related risk. Risks that are considered to have a material impact on the Group’s objectives and strategy are reported quarterly to the group executive management. The management prioritises risks based on the severity in relation to the Group’s risk appetite, and the prioritisation forms the basis for the management’s risk management. This is reported to the Board. 8 Describe how processes for identifying, assessing and managing climate-related risks are integrated into the company’s overall risk management. Climate risk is an integral part of the Elmera Group’s overall risk management framework, as described above. Metrics and Targets 9 Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk management process For Elmera Group, climate-related risks and opportunities are closely linked to the spot price of electricity, as described above. It is therefore natural to monitor developments in spot prices, but also other factors that inﬂuence price determination in the market. The most important factors now are hydrological balance, production of wind power on the continent, gas prices and how much is exported via export cables to the UK and Germany. Elmera Group’s Power Trading Department closely monitors the development of these factors and assesses risk on an ongoing basis. 10 Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas emissions, and the related risks. The Elmera Group reports climate accounts that include Scope 1, Scope 2 and Scope 3 upstreams activity. Historical ﬁgures are published together with the year’s results in order to measure developments. 11 Describe the impact of climate-related risks and opportunities on the organisation’s businesses, strategy and ﬁnancial planning. Elmera Group aims to reduce emissions from air travel by 40 per cent by 2023, where 2019 is the zero point. The reason is that air travels stands for a majority of our internal emissions. Annual report 2023 40 Useful digital customer solutions App in the consumer market In 2023, more than 777,000 unique users started using an app provided by Elmera Group. We launched ﬁve new apps in 2023 and now have 18 apps in our portfolio. In March 2023, we launched an app for Nordic Green Energy (NGE) in Finland. This is the ﬁrst time we have launched an app out- side Norway and in a diﬀerent language. In November, NGE climbed to third place in the Finnish EPSI ranking. They scored high on value for money. The apps give customers access to insights that help them optimise their own consump- tion. They gain a full overview of how much electricity they have used so far in the current month, and an estimate for the full month, as well as their live electricity consumption, if they have the real-time Puls meter. They get an overview of the month’s total costs so far, including grid tariﬀ and electricity subsidy. They can also see their capacity level in the grid tariﬀ model, how close they are to moving to the next level, and the costs associated with the various capacity levels. They can also see today’s and tomorrow’s electricity price, as well as a spot price forecast for the next ﬁve days. Based on this insight, consumption can be adjusted according to prices. Customers can do this themselves, but we also have ser - vices to help them by managing their electric- ity consumption automatically. By connecting a compatible electric car or electric car charger to one of our apps, you can charge smartly via the app. Then you can put the car on charge, decide when the car should be fully charged, and we will cal- culate during which hours it will be cheapest to charge within this time frame. In 2024, we will launch a new and smarter version of smart charging that also takes the capacity level into account, if you have a Puls meter, thereby ensuring the lowest possible total cost. We will also launch smart heating management and Smart VVB. Smart heating management is a service whereby customers can connect compatible panel heaters, underﬂoor heating thermostats and heat pumps in the app and automatically reduce the temperature during the three hours with the highest electricity price. The customer chooses how much the temperature should be lowered. Smart VVB is a component that is connected to an existing water heater and the app. The service will then be able to adapt the water heating to consumption patterns and electricity prices. Both services can exercise control according to the capacity level, provided that you have a Puls meter. In 2023, we launched a new alert service for those with Puls meters, called Live Spending Limit. By activating the service in the app, the customer will receive notiﬁcations if their con- sumption means that they are about to exceed the capacity level in the grid tariﬀ. For most customers, the capacity level is calculated on the basis of the average of the three hours with the highest consumption. By getting live notiﬁcations before they have exceeded the limit for the next level, the customer can adjust their consumption and avoid higher costs. It is interesting to note how in 2023, custom- ers used the apps more actively than before. Part 2 – 2.3 ESG-report App for Fjordkraft, TrøndelagKraft, Gudbrandsdal Energi and Nordic Green Energy. The NGE app was launched in Finland in Q1 2023. An EPSI rating spotlights which areas create customer satisfaction and loyalty in many diﬀerent sectors. Annual report 2023 41 With higher grid tariﬀs and intermittently high electricity prices, more people focus on not using too much electricity – or using too much electricity at the same time. We can see that app users have become better at shifting their electricity consumption to the hours when electricity is cheaper. Customers are also satisﬁed with the services we provide in the app, which is clearly apparent from how the Fjordkraft app went from scores of 2.0 and 2.1 to 4.3 and 4.4, respectively, in App Store and Google Play during 2023. The apps have made it possible for more car brands to convert charged volumes into monetary amounts. At Gudbrandsdal Energi alone, customers saved NOK 420,000 (including VAT) on smart charging throughout 2023. The same customers also moved 4.7 GWh from expensive to cheaper hours. This shows that active use is made of the app. Part 2 – 2.3 ESG-report Min Bedrift (My Business) All business customers have access to ‘Min Bedrift’ (My Business) at Fjordkraft.no. This was relaunched in 2023. Here, the business customer can get a full overview of costs related to electricity consumption and grid tariﬀs, consumption together with associated reports, and important information about their customer relationship. Active use of ‘Min Bedrift’ is an important tool to reduce a com- pany’s electricity consumption. By using the reports to adjust electricity consumption and avoid price spikes, a company can achieve signiﬁcant savings in terms of both electricity prices and grid tariﬀs, for example by analys- ing consumption against a temperature and power analysis of the hourly output at each individual plant. Two subscriptions are oﬀered: Min Bedrift Basic and Min Bedrift Plus. Photo: Elmera Group Annual report 2023 42 Part 2 – 2.3 ESG-report Products and services for the low-emission society Part 2 – 2.3 ESG-report Marketplace Marketplace linked more closely to the app, with focus on the sale of physical prod- ucts that reduce electricity consumption. Marketplace is a digital shopping centre where one of the most important products is the real-time Puls meter. The Puls meter is connected to the power meter via the HAN port and transmits power consumption data in real time. The Puls meter is compatible with the apps of Fjordkraft, TrøndelagKraft and Gudbrandsdal Energi. Marketplace includes several other products, such as recondi- tioned mobile phones and charging cables for mobile devices. Fjordkraft sells Apia’s charging cable, which has plant-based plastic insulation and 100 per cent recycled packaging. In 2023, we explored more opportunities to increase recycling. Energy footprint Fjordkraft’s app includes a function that dis- plays the energy footprint of customers’ elec- tricity use. This was developed in collaboration with Ducky AS in 2021. The energy footprint is the sum of all greenhouse gas emissions from the customer’s energy consumption. We measure this in CO2 equivalents (kgCO2e). Both CO2 and other greenhouse gases are included. To discover the size of the individual customer’s footprint, we multiply the energy consumption in kilowatt hours by a factor that describes how much CO2 the energy emits. Together with their energy footprint, cus- tomers get good tips on how to reduce it. For example, did you know that using a tumble dryer three times less per week over a full year will reduce your annual CO2 consumption by 300–500 kWh? This enables annual savings of 500 kWh, or 198 kgCO2e per customer. Solar cells for private customers In collaboration with Solcellespesialisten (spe- cialising in solar panels), Fjordkraft designs solar panel systems in dialogue with custom- ers in order to make the best possible use of the system for private households. An online solution includes a solar map that displays which of the home’s roof surfaces are suitable for solar panels. It can also esti- mate what proportion of the home’s energy consumption could be replaced with self-pro- duced solar energy. Customers choose between panel types with varying power out- put, appearance and price levels, and can see the size of the Enova subsidy they are entitled to. ‘Plus Customers’ (i.e. customers who in some periods produce more electricity than they use) can sell their surplus production to Fjordkraft. Plus Customers can choose between selling their surplus production immediately at the market price, or using Solkonto (a Sun Account). Solkonto functions like a virtual battery whereby customers can save kWh for use at a later date. Since they are saving kWh, cus- tomers can achieve a proﬁt by storing surplus production from the summer months for use when their production drops and electricity prices rise in the winter months. Customers thereby avoid having to invest in physical bat- teries. Subject to certain conditions, the cus- tomer can manage savings and withdrawals via the Fjordkraft app. Photo: Dronetec/Fjordkraft Annual report 2023 43 Part 2 – 2.3 ESG-report Part 2 – 2.3 ESG-report Climate-smart solutions for the business market The companies in Elmera Group want to be an energy partner to the business commu- nity. Under the Klimasmart umbrella, we oﬀer innovative products and services that help companies achieve more energy-eﬃcient day-to-day activities. Common to the solutions is that they are local and sustainable, so they make a diﬀerence for the environment and for the company’s energy costs. Solar energy is an important energy source to meet future energy needs. We oﬀer solar panels to companies as an ‘Energy-as-a- Service’ solution and as purchased systems. The Energy-as-a-Service solution involves the building owner making their roof availa- ble, combined with establishing a long-term agreement to purchase electricity from the system. By handling project design, ﬁnancing, installation and operation, we eliminate the entry barriers for companies. The customer beneﬁts from green electricity and predict- able electricity prices, without making any investment themselves. Solar panel systems can also have a positive eﬀect on a building’s energy classiﬁcation. Other concepts under Klimasmart include charging solutions for electric cars (Ladesmart), energy metering systems (Målbart) and local energy plants with inno- vative heat pump technology (Energismart). We have also run an ongoing pilot project together with ECO STOR, where we oﬀer envi- ronmentally friendly battery storage systems for industry and commercial buildings. With the aim of being at the forefront of the energy ecosystem of the future, this project will show how industrial and commercial buildings can reduce power peaks and relieve pressure on the power grid, and increase the use of renewable power from solar panels while reducing the energy costs for the end cus- tomer. The Klimasmart concept is oﬀered across our Norwegian companies: Fjordkraft, Gudbrandsdal Energi and TrøndelagKraft. In Ladbart (Chargeable), we reuse bat- teries from electric cars as stationary energy storage devices in buildings. This is a very exciting initiative whereby the customer can, among other things, use the battery to cut power peaks in electricity consumption and locally store their own surplus energy produc- tion. Since the batteries are in their second life cycle, Ladbart is also virtually emission-free. Business customers are also oﬀered guar- antees of origin, advisory services, energy labelling and energy surveys. All buildings over 1,000 m² must undergo energy label- ling every ten years and hold a valid energy performance certiﬁcate. This is mandatory for anyone selling or renting commercial buildings. Energy surveys involve more com- prehensive surveying of a building’s energy consumption and how to reduce it. We oﬀer all our customers the opportu- nity to create greenhouse gas accounts in the Klimahub.no climate portal. This can be accessed directly or via ‘Min Bedrift’. Home chargers for electric cars Home chargers for electric cars We oﬀer home chargers for electric cars and plugin hybrids to private customers. The Norwegian Directorate for Civil Protection and Emergency Preparedness (DSB) recom- mends that electric car owners acquire an approved wall charger for home charging. Using a normal wall socket for regular charg- ing is not permitted due to earthing faults and the fact that they are prone to overload. Nevertheless, regular charging via normal wall sockets is extremely widespread. In addition to facilitating the use of chargeable vehicles, we want to make it easier for customers to charge their cars safely. Home chargers for electric cars are oﬀered via Marketplace. Fjordkraft also oﬀers smart EV charging using the Fjordkraft app. Activating smart EV charg- ing enables you to choose the exact time you want your car to be fully charged. The app will identify the cheapest hours within the set time- We oﬀer home chargers for electric cars via our Marketplace. Photo: Kristian Pletten/Partnerstudio Annual report 2023 44 Part 2 – 2.3 ESG-report Part 2 – 2.3 ESG-report span and charge your car accordingly. You can monitor the process in the app and also get an overview of your savings. Charging your car when prices are at their lowest helps save both money and the environment. Ladestasjoner.no Fjordkraft provides the ladestasjoner.no ser- vice, which is available online and as a sep- arate app. Using our charging map, which retrieves data from Nobil, users can easily ﬁnd charging points nearby and get an over- view of which charging points are suitable for the diﬀerent types of cars. The charging map provides a list of more than 10,000 charging points in Norway and the Nordic countries. At ladestasjoner.no, users can also ﬁnd tips and advice on rapid charging and everything else they need to know about charging their electric car. In 2023, Ladestasjoner had a total of 268,000 users, of whom 97,000 were users via apps and 171,000 were users via ladestas- joner.no. Thermal camera rental In October, Gudbrandsdal Energi started rent- ing out thermal cameras. In the last months of the year alone, 378 customers rented this equipment. In winter-cold Norway, heat loss from our homes is the biggest power thief we have. GE is the ﬁrst electricity company in Norway to rent out thermal cameras to cus- tomers, to identify where they are losing heat from their homes. The charging station app had 97 000 users in 2023. Guarantees of origin from Norwegian Hydropower Guarantees of origin are an electricity label- ling scheme designed to show the elec- tricity customer that a quantity of power is generated from a speciﬁed energy source. The scheme was introduced with the ﬁrst EU renewables directive in 2001, to give con- sumers a choice between renewable and non-renewable power. Power producers that sell guarantees of origin receive at the same time an extra income from their renewable power generation. While purchasing electricity with guaran- tees of origin is widespread in the business market, there has been limited demand in the private market. Elmera Group has oﬀered guarantees of origin under the collective designation of renewable energy sources included in selected power agreements. In 2020, Fjordkraft launched a new solution for the purchase of guarantees of origin in the private market, called Norsk Vannkraft. This is an optional service that can be combined with all power agreements. The price was NOK 0.119/kWh at the end of 2023. Electricity customers can view pictures and information about their local hydroelectric power station in the app or on ‘Min side’ (My page). GE and NGE have equivalent oﬀers under their agreements. Annual report 2023 45 Social Part 2 – 2.3 ESG-report Annual report 2023 46 Part 2 – 2.3 ESG-report Our people At Elmera Group, we are committed to building a healthy corporate culture. We are also committed to having good ethical guidelines and to setting requirements for our suppliers. How we work with each other and the requirements we set internally and exter- nally are becoming more and more important, not least after the Norwegian Transparency Act came into force on 1 July 2022. The Groups Leadership Philosophy On the initative from then CEO the Groups ﬁrst leadership philosophy booklet was produced in 2013 and revised in 2018 and 2023. The booklet is based on basic principles of what often is referred to as “the Nordic leadership model” and expresses the expectations for leaders in the Group. The leadership philosophy is closely linked to the Groups strategy model. Many of our employees are involved in our strategy pro- cesses. We develop the companies’ collective business acumen via these processes. Our leaders are important role models and thereby creators of our corporate culture. When you, as a leader, put the leadership philosophy into practice and are familiar with the Groups strategic platform, and teach this to others, you are making a vital contribution to creating the culture we want in the Group. Our leadership philosophy, and our values and other strategic guidelines provided via the strategic platform and sub-strategies, policies and other guidelines, together con- stitute a safety net that helps our leaders make good choices and protects us from “getting it wrong”. It is also the basis for the culture we want everyone in the Group to represent – and which should be evident to all. The Leadership Philosophy consists of four core areas: HUMAN RESOURCES LEADERSHIP To unlock the organisation’s potential, every- one who is a leader is expected to know and understand the basic principles necessary for people to perform and develop, and to ensure their mental well-being. The Self-Determination Theory (Deci & Ryan) is a recognised research theory based on the idea that everyone needs to achieve Part 2 – 2.3 ESG-report recognition and experience mastery, have a sense of aﬃliation, and exert an inﬂuence. By stimulating these drivers, we can promote the individual’s commitment and job satisfaction. PERSONAL LEADERSHIP Our leaders are important role models and thereby creators of our corporate culture. The phrase “It’s always showtime” reminds us that in each and every situation, we are seen and send out signals that are observed, inter- preted – and taught to others. This requires an awareness of one’s own role, clear, shared values, and personal integrity. DECISION LEADERSHIP Before making a decision, leaders must con- sider how and according to which criteria a decision should be made. Afterwards,we must evaluate the decision-making process and our own role. There are several ways and decision making styles. As a leader, you are expected to be familiar with the company’s overall strategy and key activities, so that you can use this to assess whether activities and partners ﬁt the company’s business model. The market and its surrounding environment are constantly changing and evolving. This means that collecting and evaluating infor - mation is important. All business activities are associated with risk-taking. Without taking risks, we cannot create value. But the risks we take must be calculated and assessed, and we must choose good advisers in our decision-making process. PERFORMANCE LEADERSHIP In addition to being able to meet goals, lead- ers must set goals, follow up and back up. A leader is expected to take action if the results are not delivered as expected and to decide which action to take. A leader’s performance-based leadership determines whether they can drive development forward. As leaders, we must stimulate our employ- ees to be concerned with results and to take calculated risks. The results we achieve and the way they are achieved must always be in line with the company’s purpose, values and ethical guidelines. Our leaders are expected to be familiar with the principles that underlie promise-based leadership and to take account of our experi- ence with the application of this methodology over the years. Annual report 2023 47 Working environment, absence due to illness, and well-being After several years of the pandemic and remote working, most of the Group’s employ- ees were back in the oﬃce in 2023. For some, returning fully to the oﬃce was a big transition, while for others it was keenly anticipated. To strengthen the corporate culture after sev- eral years of remote working, in 2023 there was extra focus on culture building, besides a focus on close relations. This work will con- tinue into 2024. In 2023, Elmera Group ASA and Fjordkraft AS conducted two employee surveys, in Q1 and Q3, respectively. The target is a Human Capital Index (HCI) score of 25 or better. In 2023, we scored 25.6 for both surveys. Gudbrandsdal Energi uses a qualitative study. The Group’s Nordic company, Nordic Green Energy, uses an employee survey with a scale of 1 to 5. The results for 2023 were 4.46 for NGE Sweden and 4.11 for NGE Finland, and 4.16 for the company overall. In 2023, the Group had a total rate of absence due to illness of 7.6 per cent. For 2023, the target for absence due to illness in Elmera Group was set at below 4.9 per cent. In 2023, absence due to illness was the follow- ing in the various companies: Elmera Group ASA: 5.1 per cent (company), Fjordkraft AS: 10.0 per cent, Gudbrandsdal Energi: 1.9 per In November, 16 cheerful employees took part in the Americano padel tournament in Bergen. Part 2 – 2.3 ESG-report cent, Fjordkraft Mobil AS: 2.8 per cent and NGE: 4.3 per cent. Elmera Group has an active corporate sports team that works to promote everyday activity and reduce absence due to illness through support for exercise activities and organisation of keep-ﬁt sessions. Annual report 2023 48 Part 2 – 2.3 ESG-report Part 2 – 2.3 ESG-report Equal opportunities Elmera Group has the following gender equal- ity goals: • The proportions of women/men in Elmera Group must be within the range of 40-60 per cent. • The proportion of women/men in executive positions should match the proportion of female/male employees. At the end of 2023, women accounted for 42.6 per cent of employees in the Norwegian part of the Group. In NGE, women accounted for 58.1 per cent at year-end. In Elmera Group ASA (company), the pro- portion of women with personnel responsibility as of 31 December 2023 was 18.2 per cent (women in the Group Management are not included in this ﬁgure). As of 31 December 2023, there were 18 women with personnel responsibility in Fjordkraft AS, accounting for 43.9 per cent. Gudbrandsdal Energi had four managers with personnel responsibility, all of whom were men. In Nordic Green Energy, female managers accounted for 37.5 per cent at the end of 2023. The Group management team consists of ten people; four women and six men. The Board of Directors of Elmera Group consists of eight people; four women and four men. Link to the gender equality report. Right competence – attract, retain and develop Our skilled employees are the Group’s most important resource. It is crucial for our com- petitiveness that we are able to further develop this expertise, while also attracting the exper- tise we need both now and in the future. We are dedicated to this mission, as reﬂected in, among other things, the Group’s strategic key activities and each unit’s sub-strategy. Elmera Group encourages competence development and wants to facilitate this. Through our student support scheme, per - manent employees can apply for scholarships for continuing education. They can apply for support for individual subjects or a full degree at Master’s or Bachelor’s level. Support is granted for one semester at a time, but Elmera Group helps to facilitate completion of the programme. In the grant allocation process, there is emphasis on whether the educa- tion programme is relevant for the Group. In this way, the scheme will contribute to the required competence development. In 2023, there was a welcome increase in the number of employees applying for student support at Group level. There were 13 applicants for the spring semester, of which ten applica- tions were granted, and 12 applicants for the autumn semester, of which seven applications were granted. The Strategic Competence Development Pilot was launched in the Commercial Business unit in February 2023 and ran throughout the year. The aim of the pilot was to ensure a course for both individual compe- tence development and development across departments, based on common strategic focus areas. For the company, the work will, among other things, ensure the greater accuracy of com- petence measures, a good structure in com- petence-building work, and proud employees with high employee engagement and positive personal development. At the end of the year, all employees in the Commercial unit had an individual develop- ment plan that had been followed up over six months, and had participated in several competence-developing activities based on their development plan. For example, the unit conducted Soldagen, with a focus on climate-smart services, to increase com- petence in the unit and for the individual. It was particularly gratifying that the initiative spread further throughout the organisation, and resulted in the participation of the Sales, Private and Customer Service units. The head of the commercial unit reports that he feels that the beneﬁt of the work is increased expertise across departments of Fjordkraft Bedrift, and that a systematic approach has been established to maintain this development over time. The Strategic Competence Development pilot was suc- cessful and will be conducted in additional units in 2024. Focus on competence enhancement is important for Elmera Group with its subsidiar- ies, to ensure the right competence in the right place, both today and in the years to come. Link to Equality & Deversity Report 2023 Annual report 2023 49 Part 2 – 2.3 ESG-report Part 2 – 2.3 ESG-report Through the right focus and priorities, we will ensure motivated employees in successful professional development. As an employer, we are positive about employees developing their knowledge, and the company has spent considerable funds on this over the years. Competence develop- ment concerns everything from courses and studies to learning through everyday assign- ments and challenges. The employee’s line manager ensures continuity and the individ- ual’s development. As of today, Elmera Group with subsidiaries does not have systems that provide an overview of the number of hours of competence building per year, broken down by gender and job category. Reporting on this issue therefore presents a challenge. In this section and in 404-2 a), we will therefore mention the key measures we implemented in 2023. • Competence sharing takes place within and between teams continuously through the way we are organised. This applies to the entire Group. • Student support: Through our student support scheme, permanent employees can apply for scholarships for continuing education. All permanent employees are eligible to apply for support for individ- ual subjects, or a full degree at Master’s or Bachelor level. Support is granted for one semester at a time, but Elmera Group seeks to facilitate that programmes are completed. In the support allocation process, there is emphasis on whether the education programme is relevant for the Group. In this way, the scheme will contribute to the required competence development. • Elmera Group and Fjordkraft: In 2023, there were 13 applicants for the spring semester and 12 applicants for the autumn semes- ter. Overall student support in Fjordkraft for 2023 amounted to NOK 400,000, is an increase from the previous year. • Gudbrandsdal Energi: In 2023, one employee was in the final stages of completing a Master’s thesis with partial support from the company. This will be completed in 2024. • In NGE and Finland, applications are sub- mitted to the authorities for student sup- port, which includes all study expenses and salary during the study period. NGE decides on the granting of the actual study leave, which is very widely granted. There are restrictions on what can be applied for. If someone has been employed for three months or more, they can apply for ﬁve days’ study leave. For seniority of more than 12 months, up to two years of study leave spread over ﬁve years can be granted. The company thereby has no direct costs associated with the employ- ees’ studies, but must cover indirect costs with a replacement employee during the period in question. • Attendance of courses, webinars, sem- inars and various certiﬁcations etc. is ongoing throughout the year. Funds for this are granted to the individual manager and the individual team, and the funds are used for the measures most relevant for the department’s needs today and in the future, as well as what is right for the indi- vidual’s development. This applies to the entire Group. • Team development is oﬀered to all teams in the Group. HR facilitates workshops mainly based on Big5 via the provider Assessio, but also based on the DISC model when this is the right tool. In some parts of the Group, the occupational health service is also used for this. The intention is for each employee to get to know themselves and those with whom they work closely on a daily basis even better. The output is measures for a smoother and more eﬀec- tive working life, in interaction with the rest of the team, by getting to know each other better and ﬁnding even better ways to col- laborate and develop. • Measures such as secondment are also used in parts of the Group. Speciﬁcally, in Gudbrandsdal Energi there are, for exam- ple, customer service employees who participate in the everyday work of other departments, as well as in interdisciplinary gatherings where appropriate. • The management team in Elmera Group regularly share information and expertise at meetings where all managers in the company are gathered. This is shared across units and organisations. Any manager with personnel responsibility must undertake regular follow-up of their employees, to ensure employee commitment and professional development. Each unit is responsible for ensuring this for its employees. This means that we do not have records of everything that has been completed at unit level. Since May 2023, Elmera Group have con- ducted monthly Lunch & Learn across the Group. This has resulted in nine diﬀerent topics with contributions from employees of the Group and external partners. Participants have represented all of the company’s loca- tions and units. A total of 468 seats have been occupied for competence development and learning. Lunch & Learn has become estab- lished as a forum for sharing expertise across the company. The aim of Lunch & Learn is not for everyone to participate in everything, but for all employees to ﬁnd something relevant for them in their particular role. As examples of further competence-en- hancing measures that have been imple- mented, we can mention activities such as the Fjordkraft Way of Sales for all salespeople in the Private area, and the Business Academy for all employees in Fjordkraft’s Business area. Customer service staﬀ at Fjordkraft had 125 hours of training time and professional updat- ing per employee in 2023. Gudbrandsdal Energi holds monthly professional evenings for all Customer Service employees, where relevant topics and issues are shared and discussed. In NGE, the focus has been on the electricity crisis aﬀecting Norway. Competence development and transfer have taken place from partners and hired consultants. Annual report 2023 50 Part 2 – 2.3 ESG-report Part 2 – 2.3 ESG-report In 2023, managers with personnel respon- sibility attended our semiannual leadership development seminars. In spring 2023, the core competences of personnel management and performance leadership were on the agenda, with topics related to performance management, culture and the organisation’s values, among others. In autumn 2023, the core competences of performance man- agement and personal leadership were the main focus, with topics related to the revised version of our management philosophy and OKR (objectives and key results) as a meth- odology. The seminars were held with per- sonal attendance at each location, to ensure even greater professional beneﬁt, sharing of experience, networking and strengthening of existing relationships. At NGE, leadership development is linked to the employee sat- isfaction survey, including leadership days where, among other things, managers work with Fjordkraft’s leadership philosophy to strengthen the managers in their roles. At company level, all employees and teams are followed up on this via our employee sat- isfaction survey, HKI. Examples of questions include ‘I have the necessary resources to do the job in a good way’, and ‘I have the opportunity to do what I am best at every day at work’. Employees also have the opportunity to share their thoughts and opinions in an open comment ﬁeld. These are anonymised and cannot be traced back to the respondent, but can still provide useful learning for the team. At Gudbrandsdal Energi, similar questions are used, both in the employee satisfaction sur- vey and in performance appraisal interviews. The safety representative also has an impor- tant role here, related to the working envi- ronment and the employee’s well-being. In NGE, Humbol was launched in 2023, whereby employees are followed up monthly in relation to central, relevant topics. There are monthly team discussions with the manager to map workload, well-being, facilitation and similar issues. Quarterly meetings are intended to highlight measures and goals, and ensure the right direction for the work, going forward. Every November, a seminar is held with focus on individual development. Here, the wishes and needs of the various employees for the coming year are clariﬁed. Expertise is shared across the Group’s com- panies, for example on data protection and team development. Elmera Group has a strong focus on employees’ life phases, as well as support in demanding phases of their working lives. Employees approaching retirement age: • All employees of Elmera Group and Fjordkraft are oﬀered the opportunity to attend a pension preparation course. This takes place every other year, to ensure that everyone who wants to participate has this opportunity. The most recent course was held in Q1 2022. The course includes infor- mation about our pension schemes and tips on retirement life. This is a popular course with relatively high attendance. • Gudbrandsdal Energi: As retirement age approaches, employees are oﬀered fol- low-up and individual consultations by the pension provider. • NGE: Pensions are also in focus, but to date no employees have taken retirement. No employees were approaching retire- ment age in 2023. Termination of employment: • Elmera Group assists employees in pro- cesses where an employment relationship is to end. This involves support from either the line manager, HR, or another relevant resource, or several of these in combina- tion. Career guidance tips are given by NAV (the Norwegian Labour and Welfare Administration) in relevant cases. We also oﬀer career guidance via a provider cho- sen by the employee in cases where the employment relationship is terminated on the basis of the employer’s circumstances. This applies to the entire Group. Fjordkraft has used pledge-based manage- ment since 2004. This means that all employ- ees make pledges to support the company’s overall goals. In this way, everyone in the company can progress in the same direc- tion, by working on a targeted basis. We use performance and follow-up interviews (abbre- viated to ROS) between the manager and the employee to follow up the performance of the individual and to clarify the needs and expectations of the individual employee. These are carried out once every quarter and together with pledge-based management are an important instrument for maintaining the required competence level and achieving good results. All managers in the Group and the com- panies have a special responsibility for and must regularly follow up on their employees, where the focus also includes follow-up on deliveries and career development. Elmera Group, Fjordkraft and Gudbrandsdal Energi facilitate this follow-up through processes in Simployer. Throughout the year, the following interviews must be conducted as a minimum: • Q1: ROS – interview (Result and follow-up interview) and Pledge follow-up • Q2: Performance appraisal interviews and updating pledges • Q4: ROS – interview and Pledge follow-up In NGE, follow-up is carried out via Humbol, with monthly and quarterly conversations. This has changed from annual to monthly con- versations for both individual follow-up and follow-up in the team. Each response given in the survey contributes to the summary of discussion points. The surveys are not anony- mous, which leads to good, open and honest discussions that lead to concrete and useful measures. This has yielded good results for both employees and the company. The com- pany’s overall results are summarised monthly at management meetings and general meet- ings, and trends are followed up. The target for the green light is 75, the average result for the year was 78. Annual report 2023 51 In addition, managers conduct shorter or longer appraisal interviews with their employ- ees to ensure that adopted plans are imple- mented and adjusted for any necessary changes. This is also followed up at team level in e.g. departmental meetings. Performance appraisal interviews: All managers are assigned a process in Simployer, with deadlines for conducting performance appraisal interviews with all their employees. The status is continuously updated in the system by the manager. These processes are monitored by HR, to ensure that all managers and units are covered. Gudbrandsdal Energi conducts four perfor- mance appraisal interviews during the year, where the ﬁrst interview has particular focus on competence development and a personal development plan. In NGE, conversations as described above are conducted using Humbol. When hiring, the manager is responsible for ensuring that the new employee receives a thorough introduction to work tasks and procedures, as well as relevant training. Employees are followed up extra closely during the ﬁrst six months. Via ROS and the ongoing dialogue, the manager must identify the need for competence-enhancing meas- ures for all employees and allocate resources where deemed necessary. The Group pos- sesses diverse and good expertise. Internal competence sharing is therefore important. Managers can also bring in external expertise in the form of courses and advisory services. Managers must not only facilitate the skills 27 January February March May April June July August September October November December Personnel management • Deadline for applications for continuing education Annual Cycle Management tasks • On 1 July, ﬂexihours above the limit are deleted • Writing section-strategy • Preparing promises for goal-setting (Målting) • Follow-up from employee surveys • Check your hourly balance and remaining holiday • Budget process • Målting • Q4 ROS interview and promise follow-up • Add new promises • On 1 January, ﬂexihours above the limit are deleted • Q1 ROS interview and promise follow-up • Q1: Update job description • Q2 Appraisal interview before the deadline • Pay settlement submissions • Deadline for applications for continuing education • Ordinary meeting with status of promises Succession planning • Ordinary meeting with status of promises • Ordinary meeting with status of promises ROS: Performance and follow-up interviews and performance appraisals • An appraisal interview is a more comprehensive meeting that takes place in Q2, and has its own form. • A performance and follow-up interview is a shorter meeting for status and feedback on promises and tasks – and any other follow-up. - Takes place as a minimum in Q1 and Q4. We also recommend conducting this in Q3, to plan the autumn goals and tasks. Other activities: - Business Review - Department meetings - Department and unit meetings - Safety inspections - Health and Safety inspections • Follow-up from employee surveys • Planning summer holidays • Check your teams hourly balance and remaining holiday Part 2 – 2.3 ESG-report Annual report 2023 52 development of others. As good role models, they must also ensure that they safeguard their own development. The company’s managers participate in a leadership devel- opment programme that spans several meet- ings. Here, managers have the opportunity to share experience and are challenged through discussion and case solving, in addition to presenting professionally relevant content. This applies to the entire Group. Below is the circular calendar used for man- agement tasks throughout the year. This is periodically adjusted to match the company’s management philosophy. Internal culture building One of the Group’s strategic focus areas for 2023 was to ‘Live the values, proud employ- ees and high employee engagement’. Culture building was therefore a natural focus area for the Group once again this year. There has been a weekly ‘Say It Forward Talk’, a relay where a colleague has been praised and gets to say it forward by prais- ing a colleague. This has taken place on our Workplace intranet. The person who is praised receives a video greeting from a colleague. Then the person who has been praised picks another colleague they feel should be praised for their work eﬀort and conduct. It all started when the HR depart- ment challenged an employee to pass the ‘praise baton’ for the ﬁrst time. The column has been viewed by nearly 300 employees every week. Together with Kahoot, this takes place every other Friday, and has received a lot of positive feedback internally. It has had a unifying eﬀect on the Group, and we have got to know each other better. An autumn party was also held across loca- tions, as well as Måltinget. The former was conducted as a hybrid event, where all loca- tions were connected via Teams during parts of the party. Måltinget, which is our annual strategy meeting and Christmas party, was an in-person event attended by a large majority of the Group’s employees, including execu- tives from GE and NGE. Smaller activities include Valentine’s Day, Mingling & Food, Easter, Halloween and Christmas. Our SoMe team, established in early 2023, has taken responsibility for this together with HR. The SoMe team is a group focusing on social media and employer branding. Attractive for young people In 2023, the IT department brought in ﬁve newly qualified developers via Experis Academy. They attend an intensive course lasting around three months at Experis Academy, then go out to businesses for a trial year, with the possibility of permanent employ- ment after completing the contract. We have made use of this in recent years. It provides a great opportunity for graduates to gain work experience, and an excellent opportunity for us to recruit young talent. All ﬁve developers gained permanent employment in 2023, after completing Experis Academy. The Group is also an attractive workplace for young people who want to combine their studies with a part-time job. At the end of 2023, we had ﬁve employees who were tem- porarily employed alongside their studies (in the Norwegian part of the Group), of whom one was in a 100 per cent position and the others in 10 per cent positions. Of the 122 new employees in 2023, 75 tem- porary staﬀ were hired for permanent posi- tions. This is partly related to new Norwegian rules for hiring from employment agencies with eﬀect from 1 April 2023. Part 2 – 2.3 ESG-report Monica Solberg at our HR-department is one of the persons that was praised by a colleague. Photo: Frode Fjellstad Annual report 2023 53 Part 2 – 2.3 ESG-report Business partners and certifications Eco-Lighthouse Elmera Group’s oﬃces in Bergen, Trondheim, Sandefjord and on Hamar are certiﬁed under the Eco-Lighthouse certiﬁcation scheme Being an Eco-Lighthouse involves having to work systematically on measures aimed at ensuring more eco-friendly operations and a good working environment. Each year, the various business units must prepare a cli- mate and environmental report in which the eﬀect of the initiatives is measured and new goals are set. Eco-Lighthouse is recognised by the EU. Klimapartnere Vestland Elmera Group is a member of the regional network project Klimapartnere Vestland, which works to reduce greenhouse gas emissions and stimulate green social and business development in the county of Vestland. The network consists of more than 80 public and private enterprises. Klimapartnere Vestland publishes an annual report on its members’ overall emissions. Kirkens Bymisjon - The Church City Mission We have been a strategic partner of Kirkens Bymisjon - the Church City Mission since 2019, and it has always been a goal that we should contribute more than ﬁnancial support. We started cautiously with knitting eﬀorts, but as from autumn 2023 we have also contributed volunteers in the Treasury (Skattkammeret). This is the Church City Mission in Bergen’s shop where anyone can come and borrow free leisure equip- ment. Since October, two employees have been volunteering in the Treasury one afternoon a week. This will be continued throughout 2024. ‘Our eﬀorts in the Treasury have con- tributed to increased employee engage- ment, brought us closer to the Church City Mission and given us more to talk about. We look forward to the continuation and will also consider whether employees can become involved in more ways in 2024,’ says communications manager Jon Eikeland of Fjordkraft. We also contributed knowledge lectures for employees of the Church City Mission, and collected festive clothes for those in need, before Christmas. We hope to do more in the way of sharing knowledge and warm encounters with people in 2024. Part 2 – 2.3 ESG-report Before christmas we collected festive clothes from our em- ployees for those in need. We also had a knowledge lecture about Kirkens Bymisjon for our employees. Photo: Elmera Group Annual report 2023 54 FUTURE-PROOF In 2022, Group CEO Rolf Barmen signed the FUTURE-PROOF poster on behalf of the entire Elmera Group ASA. The poster was prepared by the Rafto Foundation for Human Rights and Bergen Chamber of Commerce and Industry. It shows that we stand together for human rights. Our commitment to FUTURE-PROOF demonstrates the following: 1) By sharing our own knowledge and expe- rience, we will contribute to the FUTURE- PROOF initiative, where challenges are raised, discussed and resolved together. 2) We take our shared responsibility to respect human rights seriously. We do this by com- plying with the UN Guiding Principles on Business and Human Rights. Skift – the greenwashing poster The greenwashing poster consists of ten prin- ciples designed to prevent companies from greenwashing their activities. The poster was produced by Skift, Zero, WWF and Fremtiden i våre hender (Future in our hands). Elmera Group has thereby announced that we must do our utmost to abide by the poster’s prin- ciples in all of our marketing and communi- cation. Ten principles for green purchasing practices In 2021, we signed the Skift initiative “Ten prin- ciples for green purchasing practices”. The principles are intended as a simple guide that all enterprises can aim to follow. For us, this will be a supplement to our climate neutrality requirement for all our regular suppliers. Young Entrepreneurship Vestland Elmera Group participated as judges and pre- sented the award for the best youth enterprise in the sustainability category at the County Championship for Ungt Entreprenørskap (Youth Enterprises) in Bergen in March. This is held by Young Entrepreneurship Vestland and gathered 670 students and 110 experts from the labour market and business commu- nity in Western Norway at the Amalie Skram upper secondary school. Gudbrandsdal Energi has an agreement with Ungt Entreprenørskap Innlandet. They provide jury members for the presentations under the EnergiSmart programme for grades 4-6 in elementary schools. The partnership started in 2022 and runs through 2024. For Innlandet, we also present awards during the County Championship and participate in jury work. Part 2 – 2.3 ESG-report Per Heiberg-Andersen, Mette Nygård Havre and Henrik Eliassen from Elmera Group, participated as judges and presentet the award for the best youth enterprise in the sustainability category at the Country Championship for Ungt Entreprenørskap (Youth Enterprises) in Bergen. Photo: Ungt Entreprenørskap Iver Nyhus Solli og Marie Brumil- lom Leirdalen from Gudbrandsdal Energi were jury members for Ungt Entreprenørskap Innlandet at the EnergiSmart programme for grades 4-6 in elementary schools. Annual report 2023 55 Governance Part 2 – 2.3 ESG-report Corporate governance is about establishing sensible guidelines to help owners, the board and management to manage and develop the company’s resources in the best possible way. In Elmera Group, corporate governance is the foundation for sustainable operations aimed at creating long-term value for our investors and other stakeholders. The Executive Management Group has deﬁned areas that are critical in securing a holistic and sustainable approach to operating the Group. For each area, it is deﬁned clear governance principles, along with roles and delegation of responsibility. This is operationalised through training programs. Our corporate governance is aligned with NUES, The Norwegian Code of Practice for Corporate Governance. For additional information about corporate governance in Elmera Group, read the Corporate Governance Report. Annual report 2023 56 Part 2 – 2.3 ESG-report Responsible procurement Through its subsidiaries, Elmera Group holds the position as Norway’s leading electricity retailer. Through its subsidiaries, Elmera Group holds the position as Norway’s leading electricity retailer. With that position comes substantial purchasing power, which we strive to manage in a way that beneﬁts society at large. This includes setting strict requirements for social and environmental conditions in our supplier contracts. Some services are not covered by supplier contracts, and subsequently, are not subject to our climate pledge or social requirements. This typically applies to soft- ware licenses from global companies and other one-time purchases limited to 100.000 NOK. In spend, these instances make for less than one per cent of the total. The suppliers in question are still considered in our due dil- igence processes. In addition to the requirements set through the “Klimanjaro”-initiative, Elmera Groups climate pledge, suppliers are required to comply with the Groups Supplier Code of Conduct, hereunder operate in compliance with the ILO conventions and speciﬁc policies for pay and working conditions. Additionally, the Group have a strict anti-corruption pol- icy. All new suppliers are screened using the mentioned social and environmental criteria. Non-compliance with these contractual terms may be subject to sanctions. The strongest form of sanctions is immediate termination of the contract. This means that if Elmera Group uncover breaches of environmental or social requirements, the supplier agreement may be terminated. In cases where human rights are at stake, the termination clause will only be used as a last resort if repeated attempts to remedy the negative impacts have proved unsuccessful. No contracts have been termi- nated due to non-compliance with environ- mental or social criteria during 2023. The Group’s Supplier Code of Conduct is yet to be implemented in all existing contracts in Nordic Green Energy and Gudbrandsdal Energi. We have communicated the require- ments and expect them to be implemented by the end of 2024. Respect for human rights The Group has a responsibility to ensure that the human rights of our employees and oth- ers aﬀected by our activities are protected and respected. Elmera Group aspire to be an inclusive workplace where everybody is welcomed regardless of race, gender, age, religion or sexual orientation. We focus on facilitating a good, safe, and secure work- ing environment. We support and respect all internationally recognised human rights and work to comply with the UN Guiding Principles on Business and Human Rights (UNGP), the OECD Guidelines and the ILO’s Core Conventions. This means that we strive to not commit or contribute to human rights violations through our activities, and that we will act immediately if we detect violations of the guidelines. We work to avoid, and mitigate, negative impacts on human rights in activities directly linked to our operations through our suppliers and partners. All sup- pliers are obliged to respect the eight core ILO Conventions: • Freedom of association and protection of the right to organise (No. 87) • Right to organise and collective bargaining (No. 98) • Prohibition of forced labour (No. 29 and no. 105) • Prohibition of discrimination relating to the workplace and pay (No. 100 and no. 111) • Minimum age for starting employment (No. 138) • Prohibition of the worst forms of child labour (No. 182) Our suppliers must also ensure that any sub-contractors that contribute to fulﬁl the contract with Elmera Group also comply with these conventions. Reporting on the Transparency Act The Group’s commitment to respecting human rights is adopted by the board through a state- ment where the company commits to pro- mote and respect human rights and decent working conditions. The declaration obliges Elmera to work actively and continuously with human rights and decent working conditions in its operations and the company’s supply chains. The statement brieﬂy sets out Elmeras approach to the challenge and describes Elmeras continuous work in the area. In general, Elmera is conscious of its respon- sibility to stop actual negative consequences and to limit signiﬁcant risks of negative con- sequences in our supply chain. Risk for adverse impact on fundamental human rights and decent working conditions is integrated into the procurement policy. All new suppli- ers must document their supply chain and signiﬁcant risks of negative consequences before contract implementation, and guide- lines, expectations and commitments are set out in the Supplier Code of Conduct. This is part of the guidelines and procedures that are followed in the procurement processes. Part 2 – 2.3 ESG-report Annual report 2023 57 Part 2 – 2.3 ESG-report Part 2 – 2.3 ESG-report Link to The Group’s Code of Conduct. A thorough human rights due diligence was conducted in 2022, in compliance with the Norwegian Transparency Act. Read more about the process in our due diligence report (in Norwegian). Human rights due diligence is an ongoing process that requires continu- ous assessment of human rights impacts. We consider it to be no signiﬁcant changes in our value chain since 2022, and thus, have not produced a new due diligence report. When mapping our entire value chain, service pro- viders and suppliers to Fjordkraft Marketplace were identiﬁed as two segments associated with the most signiﬁcant risks of adverse impact. The two segments were divided into supplier categories and scored based on probability and severity of potential human rights breaches. The assessment concluded that production of solar panels and IT equip- ment, including mobile phones, are associ- ated with signiﬁcant risks of severe human rights violations. The risks are mainly linked to the extraction of polysilicon, a critical com- ponent of solar panels, and cobalt, a critical component in batteries used in computers and mobile phones. Around 40 per cent of the world’s total supply of polysilicon comes from Xinjiang Uyghur Autonomous Region. More than half of the world’s total supply of cobalt comes from the Democratic Republic of the Congo. Both operations are linked to extensive human rights violations, including child labour and forced labour. Consequently, Elmera Group made immediate inquiries and engaged in dialogue with two relevant sup- pliers to make sure that components were sourced responsibly. The Group’s main supplier of solar panels has addressed the issue with stakeholders in the supply chain. They have conducted on-site inspections in China during 2023 and have pledged to keep monitoring their sup- pliers’ ESG performance closely. Risk associated with the extraction of cobalt that is used in batteries is a global issue that requires joint forces to solve. However, we are pleased with how thoroughly our main supplier of IT equipment has addressed this issue. There is still a way to go to eliminate all potential breaches, but the work has gained focus and will commence. Elmera will con- tinue to monitor and assess these risks together with our suppliers. Notiﬁcation routines are available on the webside: www.fjordkraft.no/apenhetsloven. Ethics and integrity Elmera Group has a clear attitude towards anti-corruption. Corruption undermines integ- rity and ethical business activities and poses a threat to our operations, reputation, indi- viduals, and society at large. We have zero tolerance for corruption and strongly oppose conduct that violates anti-corruption legisla- tion. Through the Group’s Code of Conduct, employees, and everyone else representing Elmera Group receive guidance in ethical business activities and anti-corruption. The guidelines are based on national and inter- national standards. They are approved by the Board of Directors annually. All employees must sign a declaration each year conﬁrming that they have read and act in compliance with the guidelines. As part of the anti-cor- ruption work, each department is meant to perform dilemma training annually. This was not the case in 2023. Training will commence in March 2024. By simulating situations where internal guidelines are violated, employees can discuss and practise how to resolve them. Through good preparation, employees will be better equipped to act in line with the desired behaviour, thereby maintaining the integrity of the company. The Group’s Code of Conduct can be found here: Elmera Group sets strict requirements for ethical business activities within the organ- isation and expects the Group’s partners to live up to these high standards. The Group wishes to send a clear signal that corruption is unacceptable in all parts of its operations. This is communicated to all business part- ners, including the Group’s suppliers through a mandatory Supplier Code of Conduct. The requirements for zero tolerance of corruption are extended to the supplier’s employees and subcontractors to ensure maximum impact. Prior to establishing new partnerships, the employee responsible for the agreement must evaluate the potential for conﬂict of interest and risks of corruption. The Group is in its rights to terminate an agreement if suppli- ers are convicted or ﬁned for violation of this requirement. No violations of the Code of Conduct have been discovered internally or externally during the reporting year. Good whistleblowing procedures and risk management are essential to uncover foul behaviour out of line with expected ethical conduct. The company have guidelines that deﬁne how employees can report situations that violates the Code of Conduct, legislation or generally accepted ethical norms. Risk related to corruption is deﬁned as operational risk and is part of the Group’s extensive risk management and internal control. Risk is con- tinuously monitored and reported to the group executive management. To reduce risk asso- ciated with corruption in the supplier sector, Elmera Group avoids suppliers from coun- tries with high corruption risk. Today, a large majority of regular suppliers are located in the same areas as our Norwegian operations. Thus, we strongly contribute to local value cre- ation. Along with the other Scandinavian coun- tries, Norway is among the highest ranked on Transparency International’s Corruption Perception Index. Choosing well-established players from countries that are considered to have low corruption risk is a risk-reducing strategy to compensate for the fact that Elmera Group cannot constantly monitor compliance because of capacity constraints. Annual report 2023 58 Part 2 – 2.3 ESG-report Part 2 – 2.3 ESG-report Attractive to customers We operate in an industry characterized by strong competition and low margins. Thus, economy of scale is a premise for sustained success. That means that our ability to stay attractive to customers, making sure they choose us amid strong competition, is fundamental to having sustainable operations, hence the classiﬁca- tion as the most material topic. A prolonged period with high electric- ity prices compared to historical data has increased public awareness of energy consumption and the associated costs. Consequently, customer needs have changed towards products and services that help opti- mise consumption and reduce the overall cost. Additionally, there is a need for eco- nomic predictability, as varying electricity bills can be diﬃcult to cope with. Delivering on these needs is key to staying attractive to customers. Our in-house digital ecosystem, in collaboration with our electricity retailers, works constantly to improve existing products and services, and to develop new ones that deliver customer value. Moreover, we have taken several measures in the last two years to improve the customer experience and to accommodate regulations. We wish to be perceived as trustworthy and transparent. These measures are all part of a holistic and continuous approach to provid- ing the best customer journey, which serves towards our greater goal of having the most attractive electricity retailers in the Nordics. The measures include: • Simplifying our product portfolio by dras- tically reducing the number of electricity contracts available. • Discontinued the sale of variable contracts in the Consumer segment. Price volatil- ity combined with the introduction of the electricity support scheme and increased regulations have increased risk associated with the product substantially, and thus, harmed the value proposition. Existing cus- tomers have been advised to re-evaluate their choice of contract and have been recommended a spot contract. • Stopped door-to-door sales. We want to meet the customers in their pre- ferred sales channels. Renewables Norway, the industry organization for production, distribution and trading of electricity, have since made it a require- ment in the certiﬁcation scheme Trygg Strømhandel to have no door-to-door sales. • An overview of all active and inactive con- tracts along with information about them are available on our Norwegian compa- nies’ website. • Invoicing fee reduced to cost price in Norway. Privacy protection and information security As a leading player in the Norwegian electric- ity market, in addition to having substantial customer portfolios in Sweden and Finland, Elmera Group processes large amounts of personal data. We therefore have a great responsibility to manage the personal data of our employees, customers, and other part- ners safely and securely. We are committed to safeguarding the individual’s rights and maintaining integrity and conﬁdentiality asso- ciated with private information, in line with the Personal Data Act and the General Data Protection Regulation (GDPR). Elmera Group have established procedures and processes to ensure that personal data is used solely in accordance with the legislation. In 2023 it is registered 9 security cases concerning data privacy. We reported two of the cases to the authorities – one to the Norwegian Data Protection Authority and one to the Finnish Data Protection Authority. Both cases involved wrongful sharing of information and were reported by Elmera Group. Both cases are closed without any sanctions. The remaining cases concerned very few custom- ers and had little to no consequences for the parties involved. Thus, they were not reported to the relevant national government bodies. Incidents of potential non- compliance The Group Companies have not been subject to any non-compliance with regulations result- ing in payment of ﬁne or penalty. However, there have been some issues relating to the Norwegian part of the consumer elec- tricity market addressed by the Norwegian Annual report 2023 59 Part 2 – 2.3 ESG-report Part 2 – 2.3 ESG-report Consumer Authorities. These cases are in par- ticular related to the Marketing Control Act, the Cancellation Act and product reporting to the authorities. In 2023 the Consumer Authorities carried out inspections of the majority of the electricity suppliers resulting in reactions from the Consumer Authorities to 19 electricity sup- pliers in Norway, including some of the Group companies. The matters related to speciﬁcs in some of the group companies’ price lists and presentation of information about elec- tricity agreements and cancellation by the customers available on the companies’ web- site and online ordering system. The Group Companies adhered to the decisions and rectiﬁed the situation without challenging the legal perception of the Norwegian Consumer Authorities. In addition, Consumer Authorities addressed their concern regarding Fjordkraft’s implemen- tation of payment for a postponement service made available to the consumer customers (Fast Utsatt Forfall). Fjordkraft decided to cease payment of such service. In 2023 The Norwegian Regulatory Authorities (RME) required that Trøndelagkraft made changes to the invoice layout, stating that the “contract period is ongoing”, in cases where the contractual duration is unregulated. The error arose due to Fjordkraft/Trøndelagkraft believing that information of the duration of a contract only was required for agree- ments with duration limitations. Fjordkraft/ Trøndelagkraft rectiﬁed the situation imme- diately upon RMEs request. In addition, RME regularly monitors the power supply compa- nies reporting of the product portfolio (power supply agreements) to Strømpris.no and the companies implement measures in order to comply with RMEs practice and requirements. In Norway, there is an independent tribunal (Elklagenemnda “EKN”) handling consumer complaints related to electricity supply. In 2023, Fjordkraft/TrøndelagKraft were ﬁled in 98 cases. Being the largest electricity retailer in Norway, it is natural that Fjordkraft receives more complaints than smaller companies and in percentage, the number of complaints is very low. In 2023 the customer was suc- cessful or partially successful in 4 cases, 1 case was rejected by EKN and 41 cases were solved directly with the customer without EKN decisions. In 2023 the Consumer Authority notiﬁed some business segments in Norway within telecom, of their understanding of the new requirements in the Financial Agreements Act from 1.1.2023 regarding invoicing fees. The Group companies reduced the invoice fees in 2023 and will take further steps if required in 2024 to comply with any new requirements when clariﬁed by the Consumer Authority. Nordic Green Energy Sweden had 17 cases reported to the Swedish Consumer Agency and 9 cases reported to the National Board for Consumer Disputes (ARN). The Swedish Consumer Agency only registers complaints without further action. Of the cases reported to ARN, 7 were rejected and a settlement solved the other two. Nordic Green Energy Finland had two cases reported to the Finnish Consumer Disputes Board. The company believe they have acted in compliance with applicable policies. Certiﬁed through Trygg Strømhandel Fjordkraft, TrøndelagKraft and Gudbrandsdal Energi are certiﬁed members of the certiﬁca- tion scheme Trygg Strømhandel. The scheme was initiated by the industry organisations Renewables Norway and DistriktsEnergi and is a voluntary certiﬁcation scheme for elec- tricity retailers. Certiﬁed companies have to adhere to several requirements involving personnel training, marketing, products, sales, billing and customer service. The cer- tiﬁcation body is DNV, an international quality assurance and risk management company headquartered in Norway. In 2023 Fjordkraft, TrøndelagKraft and Gudbransdalen Energi were re-certiﬁed by DNV. Annual report 2023 60 Part 2 – 2.3 ESG-report GRI - reporting 2023 - Elmera Group ASA GRI reference Description of the GRI standards Comments Reference Omission GRI 2 : GENERAL DISCLOSURES 2021 - THE ORGANIZATION AND ITS REPORTING PRACTICES 2-1 Organizational details Legal name: Elmera Group ASA. Headquarter: Folke Bernadottes vei 38, 5147 Fyllingsdalen. Operations in Norway, Sweden and Finland. Our Business 2-2 Entities included in the organization's sustainability reporting Entities consolidated in the ﬁnancial statements are included in the sustainability reporting Note 25 2-3 Reporting period, frequency and contact point Reporting period: 1.1.2023-31.12.2023. Reporting cycle: Annually, in addition to ﬁnancial quarterly reports. Publication date: 22.03.2024. Contact point 2-4 Restatements of information Emissions from business air travel were double counted in the 2022 climate accounts. This has been rectiﬁed. There is no more restatements. ESG report - Environment - Climate accounts 2-5 External assurance Assurance report from Deloitte AS Auditor's report, Corporate Governance Report - 15. Auditor GRI 2 : GENERAL DISCLOSURES 2021 - ACTIVITIES AND WORKERS 2-6 Activities, value chain and other business relationships Our Business, Strategy and strategy planning, Board of Director’s report, Due diligence report on human rights 2-6-d: N/A 2-7 Employees Equal opportunities report 2-8 Workers who are not employees Equal opportunities report - Section 1.4 - Temporary employment, employees in part-time positions and average number of weeks of leave of absence and Part 3 GRI 2 : GENERAL DISCLOSURES 2021 - GOVERNANCE 2-9 Governance structure and composition Corporate Governance Report - 8. Corporate assembly and board of directors: composition and independence and 9. The work of the board of directors, Board of Directors 2-9 -c-vi N/A 2-10 Nomination and selection of the highest governance body Corporate Governance Report - 7. Nomination committee and 8. Corporate assembly and board of directors: composition and independence 2-11 Chair of the highest governance body The chair of the highest governance body, Steinar Sønsteby, is not a senior executive in the organisation 2-11-b N/A 2-12 Role of the highest governance body in overseeing the management of impacts ESG report - The right balance, Corporate Governance Report - 2. Business and 9. The work of the board of directors 2-13 Delegation of responsibility for managing impacts ESG report - About the report, The Board of Directors' Report, Board of Directors' Report - Ownership and legal form 2-13-a-ii N/A 2-14 Role of the highest governance body in sustainability reporting ESG report - About the report 2-14-b N/A 2-15 Conﬂicts of interest Corporate Governance Report - 9. The work of the board of direc- tors, 2.5 Board of Directors, Note 17 Share capital Part 2 – 2.3 ESG-report Annual report 2023 61 Part 2 – 2.3 ESG-report Part 2 – 2.3 ESG-report GRI reference Description of the GRI standards Comments Reference Omission GRI 2 : GENERAL DISCLOSURES 2021 - GOVERNANCE Continue 2-16 Communication of critical concerns Corporate Governance Report - 10. Risk management and internal control 2-17 Collective knowledge of the highest governance body ESG report - About the report and TCFD report 2-18 Evaluation of the performance of the highest governance body 2.18-c: No actions taken Corporate Governance Report - 9. The work of the board of directors 2-19 Remuneration policies The Executive Management Group does not have remuneration poli- cies that relate to their objectives and performance in relation to the management of the Group's impacts on the economy, environment and people. Corporate Governance Report - 11. Remuneration of the Board of Directors and 12. Remuneration of executive personnel, Guidelines for remuneration 2-20 Process to determine remuneration 2-20-b: The Board of Directors’ guidelines for remuneration to directors were presented and approved at the General Meeting 21st of April 2021. A summary stipulated that 59,946,972 shares (with a corresponding number of votes) were represented at the meeting, which represents 52,46 % of all issued shares in the company. This was not up for vote in 2023. Guidelines for remuneration 2-21 Annual total compensation ratio 2-21-a: Ratio of annual total compensation of the CEO to the average annual total compensation for Employees in Fjordkraft (1), Elmera Group ASA (2), Gudbransdal Energi AS (3) and Nordic Green Energy: 5,82 (1), 4,04 (2), 5,03 (3) and 5,76 (4). Currency rates used: SEK to NOK - 1.01 EUR to NOK - 11.43 Report on salaries and other remuneration to executive personnel for 2023 will be published here Information unavail- able/incomplete: average annual ﬁxed compensation used instead of median. NGE not included in 2-21-b. GRI 2 : GENERAL DISCLOSURES 2021 - STRATEGY, POLICIES AND PRACTICES 2-22 Statement on sustainable development strategy investor.elmeragroup.no/corporate-social-responsibility/ ethics-at-elmera-group/ Board of Directors report - ESG 2-23 Policy commitments ESG report - Governance - Responsible procurement 2-24 Embedding policy commitments ESG report - Governance - Responsible procurement, Due dili- gence report on human rights 2-25 Processes to remediate negative impacts ESG report - Governance - Responsible procurement, Privacy pro- tection and information security, Attractive to customers - Incidents of potential non-compliance, Due diligence report on human rights 2-26 Mechanisms for seeking advice and raising concerns ESG report - Governance - Responsible procurement - Ethics and integrity Part 2 – 2.3 ESG-report Annual report 2023 62 Part 2 – 2.3 ESG-report GRI reference Description of the GRI standards Comments Reference Omission GRI 2 : GENERAL DISCLOSURES 2021 - STRATEGY, POLICIES AND PRACTICES Continue 2-27 Compliance with laws and regulations ESG report - Governance - Attractive to customers - Incidents of potential non-compliance 2-28 Membership associations ESG report - Social - Business partners and certiﬁcations GRI 2 : GENERAL DISCLOSURES 2021 - STAKEHOLDER ENGAGEMENT 2-29 Approach to stakeholder engagement ESG report - The right balance 2-30 Collective bargaining agreements All employees in Norway and Finland are covered by collective bargaining agreements. In Sweden, working conditions and terms of employment are not determined based on collective bargaining agreements. GRI 3 : MATERIAL TOPICS 2021 3-1 Process to determine material topics ESG report - The right balance 3-2 List of material topics ESG report - The right balance MATERIAL TOPIC: ATTRACTIVE TO CUSTOMER 3-3 Management of material topics ESG report - The right balance, Governance - Attractive to cus- tomers TOPIC STANDARD: GRI 417 - MARKETING AND LABELING 417-2 Incidents of non-compliance concerning product and service information and labeling ESG-report - Governance 417-3 Incidents of non-compliance concerning marketing communications ESG-report - Governance TOPIC STANDARD: GRI 418 - CUSTOMER PRIVACY 418-1 Substantiated complaints concerning breaches of customer privacy and losses of customer data ESG report - Governance - Attractive to customers - Privacy protection and information security 418-1-c: N/A ELMERA DISCLOSURE Elmera 1 Customer satisfaction above 70 for all brands ESG-report - The right balance MATERIAL TOPIC : USEFUL DIGITAL CUSTOMER SOLUTIONS 3-3 Management of material topics ESG report - The right balance, Governance - Attractive to cus- tomers ELMERA DISCLOSURE Elmera 2 80 % of customers actively interact with our digital interfaces Interacting with our digital interfaces means using our app services. ESG-report - The right balance - Useful digital customer solutions Part 2 – 2.3 ESG-report Annual report 2023 63 Part 2 – 2.3 ESG-report GRI reference Description of the GRI standards Comments Reference Omission MATERIAL TOPIC : LOCAL ENERGY PRODUCTION FROM SOLAR POWER 3-3 Management of material topics ESG report - The right balance, Environment - Local energy pro- duction from solar power ELMERA DISCLOSURE Elmera 3 Number of customers with solar produc- tion to be doubled annually ESG report - The right balance, Environment - Local energy pro- duction from solar power MATERIAL TOPIC : ETHICS AND INTEGRITY 3-3 Management of material topics ESG report - The right balance, Governance - Responsible pro- curement TOPIC STANDARD: GRI 205 - ANTI-CORRUPTION 205-2 Communication and training about anti-corruption policies and procedures ESG report - Governance - Ethics and integrity 205-3 Conﬁrmed incidents of corruption and actions taken No conﬁrmed incidents 205-3-a-d: N/A TOPIC STANDARD: GRI 206 - ANTI-COMPETITIVE BEHAVIOUR 206-1 Legal actions for anti-competitive behavior, anti-trust, and monopoly ractices No cases 206-1-b: N/A TOPIC STANDARD: GRI 415 - PUBLIC POLICY 415-1 Political contributions No contributions 415-1-b: N/A ELMERA DISCLOSURE Elmera 4 100 % of employees should perform dilemma training annually ESG report - The right balance Elmera 5 100 % of employees should sign a decla- ration conﬁrming that they have read and act in compliance with the Group’s Code of Conduct. ESG report - The right balance MATERIAL TOPIC : SERVICES THAT PROVIDE ECONOMIC PREDICTABILITY 3-3 Management of material topics ESG report - The right balance ELMERA DISCLOSURE Elmera 6 70 % of customers in the Business segment should have an agreement that includes risk management ESG report - The right balance Elmera 7 Customer growth Steddi Payments AS ESG report - The right balance Conﬁdentiality con- straint: Numbers in roadmap for growth not disclosed Part 2 – 2.3 ESG-report Annual report 2023 64 Part 2 – 2.3 ESG-report GRI reference Description of the GRI standards Comments Reference Omission MATERIAL TOPIC : OPTIMIZED CORPORATE GOVERNANCE 3-3 Management of material topics ESG report - The right balance, Governance, Corporate Governance Report MATERIAL TOPIC : PROACTIVE ENERGY AND CLIMATE ADVISORS 3-3 Management of material topics ESG report - The right balance, Environment - Products and services for the low-emission society, Governance - Attractive to customers ELMERA DISCLOSURE Elmera 1 Customer satisfaction above 70 for all brands ESG-report - The right balance MATERIAL TOPIC : RIGHT COMPETENCE - ATTRACT, RETAIN AND DEVELOP 401-1 New employee hires and employee turnover Equal Opportunities report - Section 1.2 and Part 3 TOPIC STANDARD: GRI 404 - TRAINING AND EDUCATION 404-1 Average hours of training per year per employee ESG report - Social - Right competence Information incomplete: We are unable to provide informa- tion on hours of training per employee. 404-2 Programs for upgrading employee skills and transition assistance programs ESG report - Social - Right competence 404-3 Percentage of employees receiving regular per- formance and career development reviews ESG report - Social - Right competence ELMERA DISCLOSURE Elmera 8 Human Capital Index above 25 NGE and GE uses a diﬀerent survey. This target is therefore not directly applicable for them. However, performance is tracked and reviewed in the same manner. ESG-report - The right balance Information incomplete: NGE and GE uses a diﬀerent sur- vey and reports on a diﬀerent scale. MATERIAL TOPIC : RESPONSIBLE PROCUREMENT 3-3 Management of material topics ESG report - The right balance, Governance - Responsible procurement TOPIC STANDARD: GRI 204 - PROCUREMENT PRACTICES 204-1 Proportion of spending on local suppliers Local deﬁned as suppliers located in the same city as our locations ESG report - Governance - Ethics and integrity TOPIC STANDARD: GRI 308 - SUPPLIER ENVIRONMENTAL ASSESSMENT 308-1 New suppliers that were screened using environ- mental criteria ESG report - Governance - Responsible procurement 308-2 Negative environmental impacts in the supply chain and actions taken ESG report - Governance - Responsible procurement Part 2 – 2.3 ESG-report Annual report 2023 65 Part 2 – 2.3 ESG-report GRI reference Description of the GRI standards Comments Reference Omission TOPIC STANDARD: GRI 407 - FREEDOM OF ASSOCIATION AND COLLECTIVE BARGAINING 407-1 Operations and suppliers in which the right to freedom of association and collective bargaining may be at risk ESG report - Governance - Responsible procurement - Reporting on the Transparency Act TOPIC STANDARD: GRI 408 - CHILD LABOR 408-1 Operations and suppliers at signiﬁcant risk for incidents of child labor ESG report - Governance - Responsible procurement - Reporting on the Transparency Act TOPIC STANDARD: GRI 409 - FORCED OR COMPULSORY LABOR 409-1 Operations and suppliers at signiﬁcant risk for incidents of forced or compulsory labor ESG report - Governance - Responsible procurement - Reporting on the Transparency Act TOPIC STANDARD: GRI 414 - SUPPLIER SOCIAL ASSESSMENT 414-1 New suppliers that were screened using social criteria ESG report - Governance - Responsible procurement 414-2 Negative social impacts in the supply chain and actions taken ESG report - Governance - Responsible procurement - Reporting on the Transparency Act ELMERA DISCLOSURE Elmera 9 All our regular suppliers must sign the Supplier Code of Conduct ESG report - The right balance MATERIAL TOPIC : CONSCIOUS COMMUNITY ENGAGEMENT 3-3 Management of material topics ESG report - The right balance MATERIAL TOPIC : PROMOTE DIVERSITY, EQUITY AND INCLUSION 3-3 Management of material topics ESG report - The right balance and Social TOPIC STANDARD: GRI 401 - EMPLOYMENT 401-2 Beneﬁts provided to full-time employees that are not provided to temporary or parttime employees Equal Opportunities report - Section 1.4 - Temporary employ- ees and Part 3 401-3 Parental leave Equal Opportunities report - section 1.4 - Parental leave and Part 3 - Parental leave 401-3-d Information not available: We do not have sta- tistics for employment status 12 months after parental leave ended as we do not se the relevance in the connection. Part 2 – 2.3 ESG-report Annual report 2023 66 Part 2 – 2.3 ESG-report GRI reference Description of the GRI standards Comments Reference Omission TOPIC STANDARD: GRI 405 - DIVERSITY AND EQUAL OPPORTUNITY 405-1 Diversity of governance bodies and employees Board of Directors, Equal Opportunities report - Section 1.2 and Part 3 405-2 Ratio of basic salary and remuneration of women to men Equal Opportunities report - Section 1.3 and Part 3 TOPIC STANDARD: GRI 406 - NON-DISCRIMINATION 406-1 Incidents of discrimination and corrective actions taken No reported incidents ELMERA DISCLOSURE Elmera 8 Human Capital Index above 25 NGE and GE uses a diﬀerent survey. This target is there- fore not directly applicable for them. However, perfor- mance is tracked and reviewed in the same manner. ESG-report - The right balance, Social - Working environment, absence due to illness and welfare Information incomplete: NGE and GE uses a diﬀerent sur- vey and reports on a diﬀerent scale. MATERIAL TOPIC : CLIMATE CHANGE 3-3 Management of material topics ESG report - The right balance TOPIC STANDARD: 201 ECONOMIC PERFORMANCE 201-2 Financial implications and other risks and opportunities due to climate change ESG report - Environment - Climate risk, Part 3 - Strategy and strategy planning at Elmera Group - Strategic focus areas - New Business TOPIC STANDARD: GRI 302 - ENERGY 302-1 Energy consumption within the organization ESG report - Environment - Climate accounts, Key ﬁgures 302-3 Energy intensity The intensity ratio uses energy consumption within the organisation and includes electricity, district heating and heating from gas. ESG report - Environment - Climate accounts 302-4 Reduction of energy consumption ESG report - Environment - Climate accounts TOPIC STANDARD: GRI 305 - EMISSIONS 305-1 Direct (Scope 1) GHG emissions ESG report - Environment - Climate accounts 305-2 Energy indirect (Scope 2) GHG emissions ESG report - Environment - Climate accounts Part 2 – 2.3 ESG-report Annual report 2023 67 Part 2 – 2.3 ESG-report GRI reference Description of the GRI standards Comments Reference Omission TOPIC STANDARD: GRI 305 - EMISSIONS 305-3 Other indirect (Scope 3) GHG emissions ESG report - Environment - Climate accounts 305-4 GHG emissions intensity ESG report - Environment - Climate accounts 305-5 Reduction of GHG emissions ESG report - Environment - Climate accounts ELMERA DISCLOSURE Elmera 10 All our regular suppliers must be climate committed. ESG report - The right balance ADDITIONAL REPORTED TOPIC STANDARDS ECONOMIC TOPICS TOPIC STANDARD: GRI 201 - ECONOMIC PERFORMANCE 201-1 Direct economic value generated and distributed Financial statement Elmera Group 201-3 Deﬁned beneﬁt plan obligations and other retire- ment plans Notes Elmera Group - Note 17 201-4 Financial assistance received from government Notes Elmera Group - Note 15 Annual report 2023 68 Part 2 – 2.3 ESG-report 2.4 Corporate Governance Report Part 2 – 2.4 Corperate Governance Report Annual report 2023 69 Annual report 2023 70 Corporate governance report 1. Implementation and reporting on corporate governance This corporate governance report is pre- pared by the Board of Directors of Elmera Group ASA (“Elmera” or the “Company” or the “Group”). The report is designed to cover all sections of the Norwegian Code of Practice for Corporate Governance (the “Code of Practice”). The Code of Practice is available from the Norwegian Corporate Governance Board’s website nues.no. The Code of Practice is not revised in 2023. The corporate governance report follows the Code of Practice. The Group’s business is described in chapter two. Chapter three contains descriptions of equity and dividends. Chapter four contains descriptions of the equal treatment of shareholders and transactions with close associates. Furthermore shares and negotiability (chapter ﬁve), General Meetings (chapter six), the nomination com- mittee (chapter seven), the composition and independence of the corporate assembly and Board of Directors (chapter eight) and the work of the Board of Directors (chapter nine) are also described. Risk management and internal controls are described in chapter ten, company organised under Norwegian law and subject to the provisions of the Norwegian Public Limited Liability Companies Act. Our purpose is to create the most attractive electricity retailers in the Nordics. Based on our core values “simplify”, “be friendly”, and “create value”, our goal is for Elmera Group to deliver electricity services to 3 million people, both at home and at work. Elmera Group aims to create long-term value for its shareholders through revenue from the sale of electricity and other services to both consumers and businesses. We make sure that social and environmental aspects are taken into account for all our products and services, and we aim to conduct our business in the most sustainable way possible. In order to achieve this goal, we have based our strategy on the following: • Revenue growth • Cost eﬃciency • New business The Board of Elmera Group ASA conducts an annual evaluation of the Group’s current strategy and goals and adopts a strategy plan for the coming period. Risk is an integral part of the strategy process, and attitudes and limits are deﬁned for each individual category of risk factor. Half-yearly risk reports are pro- duced for the Audit Committee. Elmera Group has a clear code of conduct that deﬁnes what we consider acceptable and unacceptable behaviour, both internally and externally, for all our employees, board members, contracted personnel, consultants, agents and others who act on behalf of the Group. The code of conduct is updated reg- ularly and approved by the Board of Elmera Group ASA on an annual basis. The group also has guidelines for whistle-blowing that deﬁne how our employees should report sit- uations that breach our code of conduct, the law, or generally accepted ethical norms. The Group have for many years set climate neutrality as a condition in all supplier agree- ments, in line with the EU initiative Climate Neutral Now. However, Climate Neutral Now have changed. Climate neutrality is no longer in the initiative’s scope. We have changed our climate pledge accordingly. Our revised climate pledge states that all regular suppli- ers must be climate committed. This implies followed by a description of the remuneration of the Board of Directors (chapter eleven) and executive personnel (chapter twelve). Finally there are descriptions of information and communication (chapter thirteen), take-overs (chapter fourteen) and the auditor (chapter ﬁfteen). The report reﬂects the revised Code of Practice from October 2021. Except for a minor deviation in chapter six, there are no deviations from the Code of Practice. The Board is aware of its responsibility to ensure that the Company conducts its busi- ness in accordance with the applicable princi- ples for good corporate governance. It is also responsible for the implementation of internal procedures and regulations aimed at ensuring that the Company and its subsidiaries comply with the Code of Practice. 2. Business The Company’s business, as deﬁned in its articles of association, is the sale of electricity and other forms of energy in the retail market, in addition to other related business, including participation in other companies. The articles are available on investor.elmeragroup.no. Elmera Group ASA is a public limited liability Part 2 – 2.4 Corporate Governance Report Annual report 2023 71 that suppliers are required to deliver climate accounts, make a list of measures to reduce their emissions, and compensate their emis- sions with carbon oﬀsets. Additionally, com- panies with approved science-based targets in line with the Science Based Targets ini- tiative are also considered climate commit- ted and accepted as a supplier. All of the Company’s contractual partners have to sign a letter of intent regarding climate commit- ment. If they fail to do so, Elmera Group will seek alternative partners. Deviations from the Code of Practice: None 3. Equity and dividends Shareholders’ equity At the General Meeting in 2023, the Board was granted the following authorities: • The authority to increase the Company’s share capital by up to NOK 3,430,554 through issuance of a maximum of 11,435,180 new shares each per nomi- nal value of NOK 0.30. The authority can be used to issue shares in connection with potential mergers and acquisitions. The authority covers capital increases in other assets than cash. The authority also covers the right to incur special obliga- tions for the Company, ref. § 10-2 of the Public Limited Companies Act. Subject to the aggregated amount limitation the authority may be used in more than one occasion. The pre-emptive rights of the sitions, mergers, de-mergers or other transfers of business, or for the purpose of subsequent deletion of shares by reduc- tion of the registered share capital with the General Meetings resolution. The lowest and the highest price that can be paid for the shares according to authorisation are respectively NOK 0.3 and NOK 300 per share. The Board will decide at their own discretion how the shares are acquired or disposed of. The authorisation shall be valid until the Company’s ordinary General Meeting in 2024, though no longer than until 30 June 2024. As per 31 December 2023 the Group holds a total of 5,680,189 treasury shares. At the General Meeting in 2022, the Board was granted the following authorities: • The authority to increase the Company’s share capital by up to NOK 3,430,554 through issuance of a maximum of 11,435,180 new shares each per nomi- nal value of NOK 0.30. The authority can be used to issue shares in connection with potential mergers and acquisitions. The authority covers capital increases in other assets than cash. The authority also covers the right to incur special obliga- tions for the Company, ref. § 10-2 of the Public Limited Companies Act. Subject to the aggregated amount limitation the authority may be used in more than one occasion. The pre-emptive rights of the shareholders under § 10-4 of the Public Limited Companies Act may be set aside. The authority also comprises changes in the articles of association as the share increase will require. The authority will remain valid until the General Meeting in 2023, however it will expire no later than 30 June 2023. As per 31 December 2022 there has not been an issuance of new shares. • The authority to increase the Company’s share capital by a maximum of NOK 343,055.40 through issuance of a maxi- mum of 1,143,518 new shares each per nominal value of NOK 0.30. The authority can only be used related to the Company’s share option programme. Subject to the aggregated amount limitation the author- ity may be used more than one occasion. The pre-emptive rights of the sharehold- ers under § 10-4 of the Public Limited Companies Act may be set aside. The authority also comprises changes in the articles of association as the share increase will require. The authority will remain valid until the General Meeting in 2023, however it will expire no later than 30 June 2023. As per 31 December 2022 there has not been issued new shares related to the authority. • The authority to acquire shares in the Company, on one or several occasions, up to a total nominal share value of NOK 1,715,227. The authority may only be used in connection with the Company’s bonus programme, in connection with acquisitions, mergers, de-mergers or shareholders under § 10-4 of the Public Limited Companies Act may be set aside. The authority also comprises changes in the articles of association as the share increase will require. The authority will remain valid until the General Meeting in 2024, however it will expire no later than 30 June 2024. As per 31 December 2023 there has not been an issuance of new shares. • The authority to increase the Company’s share capital by a maximum of NOK 378,000 through issuance of a maximum of 1,260,000 new shares each per nomi- nal value of NOK 0.30. The authority can only be used related to the Company’s share option programme. Subject to the aggregated amount limitation the author- ity may be used more than one occasion. The pre-emptive rights of the sharehold- ers under § 10-4 of the Public Limited Companies Act may be set aside. The authority also comprises changes in the articles of association as the share increase will require. The authority will remain valid until the General Meeting in 2024, however it will expire no later than 30 June 2024. As per 31 December 2023 there has not been issued new shares related to the authority. • The authority to acquire shares in the Company, on one or several occasions, up to a total nominal share value of NOK 1,715,227. The authority may only be used in connection with the Company’s bonus programme, in connection with acqui- Part 2 – 2.4 Corporate Governance Report Part 2 – 2.4 Corporate Governance Report Annual report 2023 72 other transfers of business, or for the pur- pose of subsequent deletion of shares by reduction of the registered share capital with the General Meetings resolution. The lowest and the highest price that can be paid for the shares according to authori- sation are respectively NOK 0.3 and NOK 300 per share. The Board will decide at their own discretion how the shares are acquired or disposed of. The authorisation shall be valid until the Company’s ordinary General Meeting in 2023, though no longer than until 30 June 2023. This authority was fully utilised in the share buyback program which was completed in June 2022. Capital structure As at 31 December 2023, the Group’s total non-current assets amounted to NOK 3,323 million and total current assets to NOK 8,362 million. The Group’s total non-current liabil- ities amounted to NOK 1,799 million, total current liabilities to NOK 5,044 million and shareholders’ equity to NOK 1,519 million. The management and the Board regularly evalu- ate whether the Group’s capital structure is appropriate for its objectives, strategy and risk proﬁle. The Board considers this to be satisfactory in relation to its expressed goals, strategy and risk proﬁle. Dividend policy Elmera Group’s initial target ambition is to distribute minimum 80% of its net income, adjusted for certain cash and non-cash items. form part of the ordinary course of business, the Board will arrange for a third party valua- tion of the transaction. Deviations from the Code of Practice: None 5. Shares and negotiability The Company’s shares are listed on the Oslo Stock Exchange. All shares in the Company have equal rights and may be traded freely. Elmera Group’s articles of association do not contain any restrictions on the negotiability of its shares. Deviations from the Code of Practice: None 6. General meetings Elmera Group ASA was listed on the stock exchange on 21 March 2018. In 2022 the Board has held twelve meetings and in addi- tion two meetings by e-mail circulation of documents. The Company’s annual General Meeting took place on 26 April 2023. In addi- tion the Board has held a seminar devoted to strategy. The General Meeting serves as a demo- cratic and eﬀective body for the views of the shareholders and the Board. Elmera Group encourages all its shareholders to attend General Meetings. The Board has taken the following steps to facilitate this: • A notice calling the Meeting with compre- hensive supplementary information on the resolutions to be considered at the General Meeting, including the recommendations of the Nomination Committee, was made available on Elmera Group’s website at least 21 days prior to the date of the General Meeting. • All shareholders who are registered in the Norwegian Central Securities Depository (VPS) will receive notiﬁcation of the General Meeting. This includes information on how to vote by proxy and the deadline for regis- tering their intention to attend the General Meeting. • The registration deadline for attendance by a shareholder has been set as close to the date of the General Meeting as possible. • Shareholders who are unable to attend the General Meeting in person may vote by proxy. The annual General Meeting approves the annual ﬁnancial statements and annual report, the Board of Director’s report and any div- idend proposed by the Board. The annual General Meeting also approves the remu- neration of members of the Board and the Nomination Committee, as well as the exter- nal auditor. The meeting agenda may also include authorisation to purchase own shares, increase the share capital, elect members of the Board, the Nomination Committee or the external auditor, and any other matters listed in the notice of the General Meeting. Minutes from annual General Meetings will be made available on Elmera Group’s website immediately after the General Meeting. In determining the annual dividend level, the Board of Directors will take into consideration, among other things, the expected cash ﬂow, capital expenditure plans, covenant restric- tions in its ﬁnancial loan agreements, ﬁnanc- ing requirements (including for any mergers and acquisitions activity) and appropriate ﬁnancial ﬂexibility. There can be no assurance that a dividend will be proposed or declared in any given year. If a dividend is proposed or declared, there can be no assurance that the dividend amount will be as contemplated above. Deviations from the Code of Practice: None 4. Equal treatment of shareholders and transactions with close associates Elmera Group ASA has only one class of shares, and each share represents one vote at the General Meeting. Existing shareholders have priority rights to subscribe to shares in the event of a share capital increase. Any purchase or sale by the Company of its own shares is carried out through the Oslo Stock Exchange or at prices quoted on the Oslo Stock Exchange. Any transaction between the Company and a close associate will be at arm’s length. In the event of a material transaction between the Company and a shareholder, parent company of a shareholder, board member, executive management personnel or any close associ- ates of the aforementioned, which does not Part 2 – 2.4 Corporate Governance Report Annual report 2023 73 All shares have equal voting rights at General Meetings. Resolutions at General Meetings are normally passed by simple majority (more than 50 per cent). However, Norwegian law requires a qualiﬁed majority for certain resolutions, including resolutions to waive preferential rights in connection with any share issue, approvals of mergers or demergers, amendments to the articles of association, or authorities to increase or reduce the share capital. Such matters require the approval of at least two-thirds of the share capital represented at the General Meeting. Link to the articles of association: investor.elmeragroup.no/board-of-direc- tors-and-coporate-governance/articles-of-as- sociations/ Deviations from the Code of Practice: The Code of Practice recommends that the Board and chairman of the Nomination Committee be present at General Meetings. Elmera Group has not deemed it necessary to require all board members to be present at General Meetings. The Chairman of the Board, the Company’s external auditor, the chairman of the Nomination Committee, the CEO and other members of management are always present at General Meetings. 7. Nomination committee Pursuant to the articles of association, the Company shall have a Nomination Committee that shall consist of one to three members. All current members are independent of the Composition of the Board The Board consists of eight members, of whom ﬁve are elected by the General Meeting and three are representatives of the employ- ees. More than the minimum required two board members elected by the shareholders are independent of the Company’s largest shareholders. Board members can be elected for a period of two years. The Board must at all times represent suﬃcient diversity in terms of background, competence and expertise to ensure that it can satisfactorily perform its duties. Elmera Group’s Board will always consist of at least 40 per cent women. Value creation for the shareholders of the Company will always be the Board’s highest priority, both ﬁnancially and reputationally speaking. Independence of the Board Operating as a collegiate body to promote value creation in the interests of the various stakeholders is key. The Board shall repre- sent all stakeholders and not promote indi- vidual interests at the cost of the Company or any of its aﬃliates. Hence, the majority of the members elected to the Board are inde- pendent of the Company’s executive man- agement and its main business connections. Four of the members elected to the Board by the General Meeting are independent of the Company’s major shareholders. None of the Group’s executive management are members of the Board. This is intended to ensure that the interests of the shareholders are always properly represented. Once a board mem- ber has been in oﬃce for a certain period, an assessment will be made of whether the person can still be regarded as independent of the executive management or not. The General Meeting elects the Chairman of the Board. Elmera Group encourages board members to hold shares in the Company to create a commonality of ﬁnancial interest between themselves and the shareholders. The shares held by board members in 2022-2023 are listed in the notes to the ﬁnancial statements in the Annual Report 2023. Board members, including their CVs, are presented in this Annual Report and on the website: investor.elmeragroup.no. The Board is of the opinion that it has suﬃcient expertise and capacity to perform its duties in a satis- factory manner. Deviations from the Code of Practice: None 9. The work of the board of directors The Board is responsible of determining the instructions for their work and instructions for the executive management. The internal division of responsibilities and duties must always be clear. Instructions have been drawn up for the Board’s work and these have been approved by the Board. The Board is respon- sible for supervising the day-to-day manage- ment and activities in general. They must also delegate authority and nominate board committees when this is seen as expedient and more eﬃcient. The Board is responsible Board of Directors and the Group’s executive management. The current members of the Nomination Committee are Ms. Lisbet Nærø (Chair), Ms. Ragnhild Stolt-Nielsen and Mr. Brede Selseng. The annual General Meeting elects the members of the Nomination Committee. The members of the Nomination Committee are normally elected for a term of two years. The Nomination Committee submits its rec- ommendations to the annual General Meeting for the election of board members and the Board’s remuneration. The General Meeting has stipulated guidelines for the duties of the Nomination Committee, which are available from Elmera Group’s website. All shareholders are entitled to propose candidates for the Board and the Nomination Committee through the Company’s website. Deviations from the Code of Practice: None 8. Corporate assembly and board of directors: composition and independence Corporate assembly As of today Elmera Group has no corporate assembly. An agreement has been reached between the Company and a majority of the employees that the Company will not have a corporate assembly in accordance with the Section 6-35(2) of the Public Limited Liability Companies. Part 2 – 2.4 Corporate Governance Report Annual report 2023 74 for ensuring that the Group’s activities are soundly organised and for approving all plans and budgets for the activities of the Group. Attendance from Board members elected by the General Meeting: Three representa- tives gave notice of absence at one meeting in 2023. Elmera Group has prepared guidelines ensuring that board members and executive management personnel notify the Board in the event that they, directly or indirectly, have a signiﬁcant interest in any agreement entered into by the Group. In the event of a matter that is material in nature and in which the Chairman of the Board is, or has been, personally involved, the con- sideration of this matter is chaired by another board member to ensure impartiality in the decision-making process. In accordance with the Norwegian Public Companies Act the Board has appointed an Audit Committee. More information about this can be found in Section 15 - Auditor. The majority of the members of this committee shall be independent. The Board has established a Remuneration Committee. The committee prepare items for consideration by the Board and its authority is limited to making such recommendations. The Board evaluates its own performance on annual basis and assures itself that its mix of board members possesses the com- petence and expertise necessary to govern the Company in a professional and appropri- ate matter. Details of any board committees appointed and/or newly appointed board members is presented in the annual report. No board committees were appointed during sist of several expert functions (second line roles) within risk management which provide assistance with managing risk, including risk oversight. The unit is the key facilitator of the risk management system and assists the Board with implementing and maintaining the Group’s risk management framework to support managing and reporting all types of risk. The centralized risk management unit fur- ther coordinates the Group’s risk management activities and consolidates the risk reporting. The third line roles consist of the internal audit which provides independent and objec- tive assurance and advice on the adequacy and eﬀectiveness of governance, risk man- agement and internal controls. The internal Audit reports directly to the Audit Committee. Guidelines for risk management and internal control Elmera Group’s governing principles and policies deﬁne the main principles as well as clarify roles and responsibilities within gov- ernance, risk management and internal con- trol. The Group focuses on building a strong risk and internal control culture where every employee is aware of their responsibility to ensure good risk management and internal control. ISO31000 provides the basis for Elmera Group’s risk management framework. This means that risk is to be understood as “the impact of uncertainty related to goals”. Generally, this means that risk is to be under- stood as the eﬀect of uncertainty related to Elmera Group’s strategy plan as approved by the Board, while risk at business unit and staﬀ level is to be understood as uncertainty related to the achievement of goals deﬁned in sub-strategies. Elmera Group practises a general princi- ple that risk is not to be avoided but taken consciously and controlled while optimising it in relation to earnings. Elmera Group takes a systematically approach towards risk and risk management is an integrated part of the Group’s operational and strategic manage- ment. Risk management is an integral part of the Group’s strategy process and the perfor- mance review process. Internal control in Elmera Group shall be established at a reasonable and appropriate level, in line with Elmera Group’s values and risk appetite. Risk appetite Risk appetite describes how much risk Elmera Group is willing to assume to achieve its stra- tegic goals. The Board sets the Group’s risk appetite with speciﬁc exposure limits and prin- ciples within key risk dimensions and carries out annual reviews. The CEO and the busi- ness managers in ﬁrst line are accountable to ensure that risk exposure is in line with the limits and principles provided. Violations of frameworks and principles shall be reported to the Audit Committee. Risk-based internal control Elmera Group shall take a risk-based approach towards internal control work to ensure appropriateness and eﬃciency. This means that the internal control work shall, as far as possible, correspond to the risks identiﬁed in connection with the Group’s risk management process. the year to consider particular matters other than the Audit Committee and Remuneration Committee. Deviations from the Code of Practice: None 10. Risk management and internal control It is the Board’s responsibility to ensure that the Group practises proper internal control and has systems for risk management that are appropriate in relation to Elmera Group’s activ- ities. The Board carries out annually reviews and approval of the Group’s governing prin- ciples, including governing principles for risk management and internal control. The Board has delegated responsibility for monitoring and following up current risk exposure to the executive management. The CEO is responsible for ensuring compliance with the governing principles. The CEO is also responsible for carrying out risk assessments from a Group perspective. The Group’s CFO bears executive responsi- bility for the management and follow-up of the Group’s risk management and internal control. Risk management and internal control are centrally governed processes, but the respon- sibility for day-to-day risk-management and control activities is placed with the business- and staﬀ units. Elmera Group uses the prin- ciples of the “three-lines model” to organize the Group’s governance and help the Board carrying out its governance responsibility. This means responsibility for managing risk is placed in the ﬁrst line with the business managers as risk owners. The centralized risk management unit con- Part 2 – 2.4 Corporate Governance Report Annual report 2023 75 Risk and internal control reporting Risks that are considered to have a material impact on the Group’s strategic goals and strategy are reported at least quarterly to the group executive management and semi-an- nually the Audit Committee. For those risk cat- egories where speciﬁc exposure limits have been set, the report includes how these limits has been utilised. Each year, the centralized risk management function compiles a report to the executive management and the Audit Committee on the internal control work performed the past year, and a plan for internal control activities to be performed the coming year. The Group has implemented a contingency plan for handling critical concerns. There has been no such critical concerns in 2023. Financial reporting The Board and the executive management are responsible for establishing and maintaining adequate internal control for ﬁnancial report- ing. The internal control of ﬁnancial reporting is supervised by the CFO. The process is intended to provide reasonable assurance regarding the reliability of ﬁnancial reporting and the preparation of the Group’s ﬁnancial statements. The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS ® ) as adopted by the European Union (EU) and interpretations issued by the IFRS Interpretations Committee (IFRS IC) appli- cable to companies reporting under IFRS. The ﬁnancial statements comply with IFRS as issued by the International Accounting Standards Board (IASB). The Audit Committee monitors ﬁnancial reporting and its related internal controls, including the application of accounting poli- cies, estimates and judgements. The Group has a monthly reporting process where the ﬁnancial results are presented and reviewed in a management report. Extended controls are carried out as part of the quarterly and year-end reporting processes. The Board is of the opinion that the Group has suﬃcient expertise to perform proper and eﬃcient ﬁnancial reporting in accordance with IFRS and the Norwegian Accounting Act. Deviations from the Code of Practice: None 11. Remuneration of the board of directors The remuneration paid to Board members is decided annually at the General Meeting, based on a proposal from the Nomination Committee. The remuneration shall reﬂect the Board’s responsibilities, expertise, time com- mitment and the complexity of the Company’s activities. The fee paid to Board members are ﬁxed for the year and dependent on the role the member has on the Board, and is not linked to the Company’s performance. The remuneration paid to each Board member is disclosed in the notes to the ﬁnancial state- ments in the annual report. The increase in fees from 2022 to 2023 was compensated to Board members entirely with shares in Elmera Group ASA. Stock options in the Company are not held or issued to the Board of Directors. Board members and/or companies they Part 2 – 2.4 Corporate Governance Report are associated with shall ordinarily not take on speciﬁc assignments for Elmera Group in addition to fulﬁlling their responsibilities as a Board member. Any such situations must be disclosed to the full Board, and any remuner- ation for such additional assignments must be approved by the Board. Deviations from the Code of Practice: None 12. Remuneration of executive personnel The Board has established guidelines for the remuneration of the members of the executive management. It is a policy of the Group to oﬀer the executive management competitive remuneration based on current market stand- ards, and group and individual performance. The remuneration consists of a basic salary element combined with a performance-based bonus programme. The performance-based compensation is limited up to a certain per- centage of basic salary. The management is covered by the Group’s insurance policies and each member is entitled to certain addi- tional beneﬁts, such as a set car allowance. A special statement on the remuneration of executive personnel is prepared for the General Meeting. The CEO and the other members of the executive management may terminate their employment with the Group with 6 months’ written notice. The CEO is entitled to sever- ance payment for a period of 12 months fol- lowing termination of employment. In accordance with the Public Limited Liability Companies Act, the Accounting Act and the NCGB Code of Practice, the details of the remuneration is disclosed in the notes to the ﬁnancial statements. The remuneration to be paid shall be understandable and receive the general acceptance of relevant stakeholders. Deviations from the Code of Practice: None 13. Information and communications All reporting of ﬁnancial and other informa- tion is based on transparency and takes into account the requirement for the equal treat- ment of all participants in the securities mar- ket. The Board establishes guidelines for the presentation of this information. A ﬁnancial calendar and shareholder information is pub- lished on Elmera Group’s web page: inves- tor.elmeragroup.no. All communication with regards to investor relations is published on the company’s website, including quarterly reports, public presentations and the payment date for any dividends. Information shared with the company’s shareholders is published on Elmera Group’s website at the same time as it is sent to the shareholders. Deviations from the Code of Practice: None 14. Take-overs Elmera Group’s articles of association do not contain any restrictions on the negotiability of its shares, nor will the Board seek to hinder or obstruct any public bid for the Company’s business or shares unless there are particular reasons for doing so. In the event of a take-over bid, the Board will issue a statement to the shareholders in Annual report 2023 76 which they will make a recommendation as to whether shareholders should or should not accept the bid. This statement will include a valuation from an independent expert, includ- ing detailed explanations. Deviations from the Code of Practice: None 15. Auditor In accordance with Norwegian law, the Board delegates authority to an Audit Committee that pre-approves the external auditor’s audit plan. The auditor presents the main features of the audit plan to the Audit Committee each year. A review of the Group’s internal control pro- cedures is presented to the Audit Committee at least once a year and the auditor reports any identiﬁed weaknesses and other areas for improvement. The auditor is invited to participate in meet- ings held by the Board when annual accounts are being discussed, and attends every meet- ing held by the Audit Committee. At these meetings the auditor will report on any material changes to the Group’s accounting policies and material accounting estimates. The audi- tor will also report on any material matters in which there has been disagreement between Elmera Group’s executive management and the auditor. The auditor must be present and present the auditor’s report when the annual report is approved by the General meeting. The Board must, at least once a year, hold a meeting with the auditor at which neither the CEO nor any other member of the executive management is present. Guidelines have been established by the Board regarding the use by the Group of the auditor for non-auditing services. These are intended to make the Group’s executive man- agement more aware of the auditor’s inde- pendence. The remuneration paid to the auditor is reported by the Board at the annual General Meeting. This includes details of the fees paid for the audit itself, as well as any fees paid for other speciﬁc assignments. The remunera- tion paid is also disclosed in the notes to the Group’s ﬁnancial statements. Deviations from the Code of Practice: None Part 2 – 2.4 Corporate Governance Report 2.5 Board of Directors Part 2 – 2.5 Board of Directors Annual report 2023 77 Annual report 2023 78 Per Oluf Solbraa Board Member and Member of the Remuneration Committee Member since March 2021 Background: Per Oluf Solbraa was born in 1962 and lives in Sør-Fron in Gudbrandsdalen. He is the CEO of Gudbrandsdal Energi Holding AS and has been deputy Managing Director of Gudbrandsdal Energi Holding AS 2012-2019. From 2005 until 2012 he was an executive direc- tor in the municipality of Nord-Fron and has since 1989 held several positions within the adminis- tration of the municipality of Nord-Fron. Per Oluf Solbraa was elected as Board Member by the general meeting in 2021. Mr. Solbraa is a member of the Board of Directors in Gudbrandsdal Energi AS and On Energi AS. He has former experience as member of the Board of Directors in Innlandskraft AS and Eidsiva Marked AS, Gudbrandsdal ski- og frit- idssenter AS and a deputy member of the Board of Directors in Sparebank 1 Gudbrandsdal. Mr. Solbraa holds a master’s degree in business administration from the Norwegian University of Life Sciences (NMBU) 1985-1989. He attended the AFF management programme in 2014. He represents Gudbrandsdal Energi Holding AS and personally holds 4,254 shares in Elmera Group ASA. Part 2 – 2.6 Board of Directors Steinar Sønsteby Chair of the Board and Chair of the Remunera- tion Committee Chair from 21 April 2021 Member since 21 March 2018 Background: Steinar Sønsteby was born in 1962 and lives in Bærum. He was elected to the Board of Directors by the General Meeting on 27 February 2018 with eﬀect on and from the date of Listing. Mr. Sønsteby is currently the Chief Executive Oﬃcer of Atea ASA. Mr. Sønsteby is an IT and technology expert and has been instrumental in estab- lishing the IT infrastructure industry in Norway. He has since 1996 held the position of Chief Executive Oﬃcer and Chief Operating Oﬃcer of entities that have since been combined with Atea ASA, including Merkantildata (Norway and Sweden). Prior to this, Mr. Sønsteby has held several managerial positions, includ- ing CEO of Skrivervik Data AS and Section Manager NPC Civil AS. Mr. Sønsteby has extensive M&A and integration experience, having been involved in over 50 acquisitions. Mr. Sønsteby is Board Member of various enti- ties in the Atea Group. Education: Mr. Sønsteby holds a Master of Science in Mechanical Engineering (Civil Engineering) from the University of Utah and is a Business Candidate in ﬁnance from the Norwegian Business School (BI). He currently holds 18,668 shares in Elmera Group ASA. Annual report 2023 79 Heidi Theresa Ose Board Member and Member of the Audit Committee Member since 14 May 2019 Background: Heidi Theresa Ose was born in 1983 and lives in Oslo. She has served as board member of Fjordkraft Holding ASA/ Elmera Group ASA since 14 May 2019. Heidi Theresa currently holds the position of CEO of Store Norske Energi AS. Ms. Ose was appointed CEO of Akerhus Energi Sol AS from April 2021. From 2018 to 2021 she worked in SN Power where she held the posi- tions as Director Business Development Asia (2019-2021) and Director of Hydropower Development (2018-2019). Ms. Ose was employed at Sweco Norway in 2009 and has broad experience from hydropower projects in South-America, Africa and Asia. She has been Senior Vice President of Hydropower and Dams in Sweco Norge AS (2017-2018) and Area Manager for Hydropower (2013- 2016), Project Manager and Hydropower Planner (2011-2013), Trainee in hydropower (2009-2011). She has worked for Statkraft AS with hydropower in Albania (2008-2009). Education: Heidi T. Ose helds a Master of Science in Energy and Environment from the Norwegian University of Science and Technology (NTNU). She has studied Energy Systems for Developing Countries at Makerere University in Uganda. She has also studied Project Management at Oslo University of Applied Science and Management Competence at Board Level at the Norwegian Business School (BI). She currently holds 3,181 shares in Elmera Group ASA. Live Haukvik Board Member and Chair of the Audit Committee Member since 21 March 2018 Background: Live Haukvik was born in 1963 and lives in Tønsberg. Ms. Haukvik was elected to the Board of Directors by the General Meeting on 27 February 2018 with eﬀect on and from the date of Listing. Live Haukvik currently holds the position as CFO in ENRX Group. Ms Haukvik has been Assistant Professor at the University of South- Eastern Norway and is the owner of Haukvik Konsult. She has been COO of Komplett Group 2017-2019. Ms. Haukvik has extensive experi- ence as an executive and director of a diverse range of listed and fast-growing companies. She has been CEO of Goodtech ASA (2000–2005), CFO of Tandberg Data ASA (2006–2007), CFO of Grenland Group ASA (2007–2008) as well as CFO of Komplett Group (2012–2017). She also has experience as partner at Considium Consulting Group from 2008 until 2011 and as supervisor and manager at KPMG. Ms. Haukvik ha been Member of the Board of Directors in Komplett Bank ASA since 2013 and was Chairman of the Board from December 2013 until August 2019. Ms Haukvik has extensive board experience from several blue-chip compa- nies including, amongst others: Eksportﬁnans, Agasti ASA, Kvaerner ASA, BI Norwegian Business School, SpareBank 1 BV (Buskerud Vestfold). Education: Ms. Haukvik holds a Master of Finance (liz.rer.pol.) from Université de Fribourg, Switzerland, and a Master of Management, with specialisation in Service Management, Cognitive Psychology and Scenario Building from The Norwegian Business School (BI). She currently holds 6,870 shares in Elmera Group ASA. Part 2 – 2.6 Board of Directors Annual report 2023 80 Frank Økland Board Member (employee representative) and Member of the Audit Committee Member since 15 December 2017 Background: Frank Økland was born in 1969 and lives in Bergen. He has served as Board Member of Fjordkraft Holding ASA since 15 December 2017 and as a board member and employee representative of Fjordkraft AS since May 2003 in various periods. Frank Økland currently holds the position as Manager of Market and Partnerships in Elmera Group ASA. Mr. Økland has been a sales manager in the Alliances and Concessionary division of Fjordkraft since 2014 and was a Key Account Manager for major customers from 2006 until 2014. Mr. Økland has held secretarial posi- tions with Fjordkraft from 2000 until 2004, with BKK Kraftsalg from 1996 until 1999 and with Bergen Lysverker AS from 1993 until 1996. He also has work experience from Heﬀermehl Inkasso AS, Forsvaret, Bergen Kommune and Nordbye Engros AS. Education: Mr. Økland holds two diplomas, one from the Norwegian School of Information Technology (NITH) in computer science and one from the Norwegian School of Economics (NHH) in mathematics and statistics. He currently holds 1,149 shares in Elmera Group ASA. Part 2 – 2.6 Board of Directors Anne Marit Steen Board Member Member since June 2023 Background: Anne Marit Steen was born in 1961 and lives in Bergen. Anne Marit Steen held the position as CFO in the Eviny Group (formerly BKK) for 8 years, from 2015 to 2023. Prior to that she held the position as Head of ﬁnance in DNB Livforsikring from 2008 to 2015. She has 8 years of experience as ﬁnance director in GC Rieber, from 2000 to 2008 and has held several positions in GC Rieber Eiendom and the property department of Vital Forsikring. Ms. Steen has extensive experience within ﬁnance. Ms. Steen has been responsible for ﬁnance and performance management in Eviny and represented the administration in the Audit Committee. Systems for integrated ﬁnancial reporting and ESG reporting has been a key focus area over the last years. Ms. Steen has been a member of several board of directors, both within and outside the Eviny group. Education: Anne Marit Steen holds a Master of Science in Economics and Business Administration (siviløkonom) from Bodø and an MBA from the Norwegian School of Economics (NHH). She also holds a Master of Science in Construction Engineering (siv- ilingeniør) from the Norwegian University of Science and Technology (NTNU) and has participated in NHH’s board program. She currently holds 6,681 shares in Elmera Group ASA. Annual report 2023 81 Stian Madsen Board Member (employee representative) Member since June 2023 Background: Stian Madsen was born in 1978 and lives in Bergen. He has served as a mem- ber of the board since June 13, 2023. Mr. Madsen has worked in Elmera Group since 2019 and currently holds the position as Director of Public and Government Relations. Prior to joining Elmera Group he has spent several years in ﬁnancial institutions such as DNB, Vital and Pareto Securities, where he has held various managing positions within the ﬁelds of Asset Management, life insurance and banking services. Education: Mr. Madsen holds an MBA from the Norwegian School of Economics (NHH), a master’s degree in international ﬁnance from Griﬃth University (AU) and a bachelor’s degree in IT-management from BI Norwegian Business School. He currently holds 2,009 shares in Elmera Group ASA. Part 2 – 2.6 Board of Directors Magnhild K. B.Uglem Board Member (employee representative) Member since June 2023 Background: Magnhild Uglem was born in 1980 in Trøndelag, and lives in Bergen. She has served as board member and employee representative of Elmera Group ASA since 13th of June 2023. Ms. Uglem has worked as a senior project manager in Elmera Group since January 2020, and has taken on large projects such as IT system implementation projects, M&A initiatives, product develop- ment projects and acquisition migration pro- jects. Her previous experience spans from revenue management in the Hotel business to project management in the oil- and gas business. Education: Ms. Uglem holds a bachelor in management, with specialization in project management, from Handelshøyskolen BI. She currently holds 1,261 shares in Elmera Group ASA 3.1 Strategy and strategy planning at Elmera Group The Elmera Group’s strategy process is closely related to our management philosophy, ensuring that the strategy work is broad-based on the collective insight and knowledge of the Group and not an exclusive province of the senior management. An important element of a good strategy is to be prepared for different future scenarios. To enable the Group to foresee, monitor and prepare for different future outcomes, scenario planning is an important part of our strategy work. Elmera’s strategy addresses how the Group will optimise and develop its current competitive advantages and earnings, our approach to developing new competitive advantages and business areas, and how we approach partnerships and working with strategic partners. Part 3 Part 3 – 3.1 Strategy and strategy planning Annual report 2023 82 Annual report 2023 83 Part 3 – 3.1 Strategy and strategy planning In our strategy process, we focus both on the Group and the individual companies and brands. The Group strategy needs to be ambitious and set the overall direction. Business segments strategies Strategy Elmera Group ASA Business segments strategies Business segments strategies Business segments strategies BUSINESS CONSUMER NORDICS NGI Financial Prerequisites Purpose Vision Values Strategic goals Strategic Focus Areas (Balanced Scorecard) Section Strategies and Strategic Key Activities KPIs Employee commitments Our philosophy Elmera Group’s strategy work is based on a high degree of involvement, in which we focus on deﬁning collective ambitions in all areas of the organisation. This process ensures continuity from our overarching stra- tegic choices right down to the individual employees’ activities. Strategy work provides us with motivation, direction, and diﬀerenti- ation. The strategy plan also serves as the basis for decisions in our everyday work, providing us with the power to implement changes and to take a long-term perspec- tive. Rapid changes due to digitalisation, market conditions, and regulative changes mean all managers must be strategists for their area. They must be familiar with the best practices and always be looking ahead. The development of sub-strategies and key activities ensures there is a clear focus on strategic challenges and opportunities within all key areas. Our proprietary strategic plan- ning process is a hybrid model where strat- egy and tactics are merged throughout the organisation. Elmera Group wants to con- tinuously adapt to trends and surroundings. We ﬁrmly believe that creating economies of scale will be a critical success factor going forward. We will optimise our business oper- ations to ensure we are always rigged to be able to deliver satisfactory returns to our owners, regardless of the price pressure in the industry. Annual report 2023 84 Part 3 – 3.1 Strategy and strategy planning Scenario planning The electricity market is evolving rapidly, in part because of the electriﬁcation of society and adjustments to the framework conditions. This clearly underlines the importance of hav- ing a comprehensive and well-aligned strat- egy in place; decisions one takes today could be vital for the value proposition and customer relationships in the future. In such circum- stances, conventional strategy plans with a 2–3-year perspective are not always suﬃ- cient. Scenario planning is an approach that extends beyond this. By isolating selected risk elements and opportunities, we have pointed out some potential outcomes for the power market in 2030. Working on the 2030 scenario has given the organisation greater conﬁdence and the capacity to follow through and a better under- standing of which factors we can and cannot control. In addition, thinking about how we will act in diﬀerent scenarios means adaptation to new realities can be implemented quickly. We have also acquired a good basis for testing the robustness of our strategy against the var- ious scenarios. By making the driving forces behind the scenarios visible, we are better able to consider them and adapt our strategy accordingly. In this context, we have prepared clear “ﬂags” describing which events might trig- ger the individual scenarios. The events are related to the critical uncertainties in the sce- nario model, and the scenario ﬂags are eval- uated and reported quarterly. Additionally, we have utilized a digital plat- form called GamePlan in the strategy pro- cess. Through gamiﬁcation, GamePlan uses Business Wargames, a strategic planning tool, to simulate a competitive environment. This allowed us to pre-test our new strategies and make adjustments based on the insights. The process led to increased involvement, better insights, and a measured improvement in strategy quality. Strategic context The electricity market is highly complex and is inﬂuenced by several factors. The strategy process must be designed to comprehend and utilize the contextual factors that surround our operations. The electricity market was heavily aﬀected by geopolitical conditions in Europe, as the Russian invasion of Ukraine made Russian energy a pawn in a political standstill between Russia and Europe. Russia was at the time of the invasion Europe’s largest supplier of gas. A stark reduction in deliveries following the invasion escalated the European energy crisis, causing energy prices to skyrocket. As the Nordic market is connected to other European countries through overseas power cables we have experienced extreme price volatility also in the Nordic countries. Political interventions The challenging market conditions have led to increased political risk and several political interventions, to ease the economic burden of high electricity prices on households and businesses. The Norwegian government launched an electricity support package for households at the end of 2021. The Norwegian Minster of Finance has announced that the scheme will be prolonged to be in place at least throughout 2025. Initially, the scheme would provide a deduction based on the aver- age monthly market rate for electricity. 90 per cent of the average monthly market rate that exceeded 87,5 øre/kWh including VAT was deducted until March 2023. Then, the deduc- tion was reduced to 80 per cent before the scheme was revised from September 2023. Since September ﬁnancial support has been calculated based on hourly electricity prices. Households received a deduction of 90 per cent of the hourly electricity price exceeding 87,5 øre/kWh including VAT from September to December 2023. From January 2024 the threshold for support has increased to 91,25 øre/kWh including VAT. The change that was put in place in September, going from calcu- lating ﬁnancial support based on the average monthly market rate to the hourly market rate, is hurting the incentive to adapt consumption based on the price signal. Before the change, all households in the same price area would get the same deduction per kWh through the support scheme, and thus, would still be incentivized to optimize their consumption. As long as the market rate exceeds the threshold for support there is little incentive to adjust consumption with the new calculation model. However, as the electricity price varies, with examples of negative prices, solutions like smart charging can still provide substantial cost reductions. We are currently develop- ing an improved smart charging solution that adjusts for grid tariﬀs as well as electricity prices, allowing customers to optimize con- sumption even further. The support scheme for businesses had an application deadline on the 11th of December 2022. The scheme paid approximately 2.8 billion NOK to just short of 3200 businesses, meaning that the majority of Norwegian busi- nesses did not receive support. In addition to compensating those who suﬀer from increased prices, the Norwegian government decided to demand higher taxes from those who proﬁt from them. Thus, they proposed an increased resource rent tax for hydropower and introduced it for onshore wind power in 2022. Resource rent tax for wind power was later postponed and is now proposed to be implemented from 2024. Furthermore, they introduced a windfall tax from wind and hydropower, meaning a tax of 23 % of the part of the price that exceeds 70 øre per kWh. This was eliminated in the national budget for 2024 with eﬀect from 1st of October 2023. This has been a positive devel- opment for the liquidity on the future market and the access to hedging instruments. Regulatory changes The Price Disclosure Act entered into force from November 2022, introducing stricter requirements for electricity suppliers in how they inform their customers. The customer must be notiﬁed of any contractual change 30 days in advance, an increase from 14 days prior to the new act. This means that price changes for our variable contracts must be announced 30 days in advance, while the customers can change to another contract at any time. The asymmetric risk distribu- Annual report 2023 85 tion, combined with the support scheme for households, continues to hamper the variable product. Resultingly, it is still taken out of sale. Enova increased the ﬁnancial support for power production solutions substantially in 2022. The support was then reduced in 2023, which combined with lower electricity prices in Norway led to a lower demand for solar panels. Strategic focus areas Based on the evolvements described above and other insights we have identiﬁed three strategic focus areas which we believe will lead to sustainable growth going forward. Revenue growth We will utilize our experience and track record from the Norwegian electricity mar- ket to increase penetration in Sweden and Finland, both in the consumer and business segments. By introducing proven concepts and solutions we will replicate the success of our Norwegian brands. We have revised our product strategy in the Consumer segment, tailoring it for today’s market conditions. As a risk-mitigating measure, we have reduced complexity and enhanced transparency connected to all our products and services. Cost efﬁciency In order to further improve our competi- tiveness, we have increased our eﬀorts to become more cost-eﬃcient. A cost reduction programme was conducted in 2023, reduc- ing the annual run-rate of adjusted operating expenses by 100 MNOK, and we will continue to take measures to improve cost eﬃciency in 2024. We focus on scalability in tech and operating platform solutions. Thus, we have initiated a project which will unite all subsidi- aries on the Elmera platform. We will pursue M&A opportunities and capitalize on this scalability. New Business We will strengthen the contribution from the NGI segment by capitalising on our partner- ship with Telia in Fjordkraft Mobil, establish AllRate as a service provider to the grid com- panies, and by growing Steddi Payments through our electricity retailers. We will develop new revenue streams and build assets by utilizing our distribution power in new markets. By capitalizing on the strengths of two industry leaders in Elmera Group and Solcellespesialisten, we will develop SunPool into a substantial contribu- tor to more local energy production, taking a bigger role in selling and leasing solar panels. Revenue growth Cost efficiency New business Increase penetration in the Business and Nordic segments Revise product strategy in the Consumer segment Improve cost efficiency Pursue accretive acquisitions Strengthen contribution from the NGI segment Develop new revenue streams and assets Annual report 2023 86 Part 3 – 3.1 Strategy and strategy planning Where do we create value? Elmera Group works continuously to optimise the value proposals and services we oﬀer to our various customer segments. We are focusing on four segments: Consumer segment The Consumer segment comprises energy sales to private households across Norway. Fjordkraft, as the largest player, has a nation- wide presence and a leading market posi- tion with the most well-known brand in the Norwegian consumer market. Fjordkraft oper- ates the brand TrøndelagKraft with a regional focus in Trøndelag. The Elmera Group also operates the brand Gudbrandsdal Energi as a strong ﬁghting brand with a nationwide approach. Gudbrandsdal Energi is known for having the industry’s most satisﬁed customers. During 2023, we have focused on stream- lining our electricity products in the con- sumer segment to mitigate complexity and simplify the decision-making process for our customers. As part of this initiative, we have introduced a comprehensive price list that transparently presents all available prod- ucts along with their corresponding prices and terms for each brand, available on their website. Our oﬀering to new customers has focused on spot products and our digital services that help customers optimise their consumption. The Elmera digital ecosystem has a wide range of apps and websites serving speciﬁc roles and solving speciﬁc tasks for our cus- tomers. This includes apps and websites for Fjordkraft, TrøndelagKraft and Gudbrandsdal Energi. We work continuously to improve our apps, both by increasing their stability, mak- ing them capable of handling the extreme growth in users, and by developing new rel- evant services. In 2023 more than 700.000 unique users have gained insights about their electricity consumption by using an app from either Fjordkraft, TrøndelagKraft or Gudbrandsdal Energi. The new hour-based compensation for high electricity prices, introduced 1st of September 2023, has been a relief to consumers, and electricity usage has increased in 2023 com- pared to 2022. However, app users are still more likely to reduce their usage compared to non-users. To help consumers get even more insight into their electricity habits and help them save energy and electricity costs, we oﬀer the Puls meter, available for all brands. This unit can be connected to the smart meter in the house and give real-time data of their electric- ity usage straight into the app’s of Fjordkraft, TrøndelagKraft and Gudbrandsdal Energi. A survey of Puls users revealed that more than 75 % feel they have better control over their consumption, and they have a high satisfac- tion score. Private household customers’ savings on moving consumption to the cheapest hours have been reduced because of the hour- based price compensation, and the main savings come from staying on the right grid tariﬀ. Elmera Group is developing services that control the power usage of household devices such as EV chargers, water heaters and other devices used for heating, automat- ically distributing the electricity consumption to adjust for electricity price and grid tariﬀ, to ensure cost-eﬃciency. Adjusting for grid tariﬀ requires real-time data, and thus, a Puls meter. The services will still be available with- out a Puls meter but will then only adjust for electricity price. SmartVVB, smart heating and smart charging that accounts for grid tariﬀ will be launched in 2024. Our Marketplace was launched in early 2021 and is based on a platform business model. It is currently available through Fjordkraft and TrøndelagKraft and scheduled to be launched for Gudbrandsdal Energi in 2024. We are oﬀering quality goods from 3rd part vendors and have created an attractive distribution channel for our partners and at the same time we keep our position as an intangible service provider, letting the customers control their hardware through the apps. The demand for household appliances and gadgets that can be connected and controlled has increased along with the adoption of IoT in consumers’ homes. The Marketplace will play a strategically signiﬁcant role going forward in helping cus- tomers reduce and optimise their electricity consumption. We will be selling products that can be controlled through the apps and have many exciting new partners set to be launched in 2024. Additionally, the market- place will be selling electricity and mobile subscriptions, as these can be purchased directly on the platform when acquiring a physical product. This introduces a new approach to selling our products and services. Fjordkraft Fjordkraft has a leading market position as a recognized brand. This is proven by various consumer surveys and the fact that we were the most chosen electricity retailer in 2023. In the consumer segment, Fjordkraft is the largest and most well-known electricity retail brand in Norway. We oﬀer an attractive range of products and value-added services that match varied consumer preferences com- bined with an industry-leading loyalty pro- gram. Being a market leader in the industry, we know that excellent customer service is a competitive advantage. We are proud to be voted Norway’s best in the Customer Service Award “Best in Test” in the Energy category for 2023. Additionally, we won Service Company of the year in Bergen, across all industries. The score was impressive 95 out of 100 achievable points. In 2023 Customer service carried out a suc- cessful reorganization and reduced customer service operations from ﬁve to two locations. We have hired new customer advisors and team leaders in Sandefjord and Bergen, and the management group in Customer service has been reduced from eight to four people. We left 2023 with 26 % FTEs fewer than at the start of the year, resulting in a signiﬁcant cost reduction. However, we still managed to strengthen deliveries and increase customer satisfaction, supported by reduced complex- ity and improved digital communication. Annual report 2023 87 Part 3 – 3.1 Strategy and strategy planning In addition to the traditional spot contracts, we oﬀer spot with trading, allowing con- sumers to capitalise on the Group’s power trading competence. Furthermore, we have an attractive product range tailored for cus- tomers aﬃliated with one of our collaborative organisations. Furthermore, in 2023 we have systemati- cally focused on enhancing customer satis- faction. This eﬀort has been organized, with a quarterly implementation of a customer satisfaction day, involving participation and commitment from all business units to execute measures for the beneﬁt of customers. The Customer Satisfaction Index has shown an increase over the past year, and our score has not been this high since 2021. The Fjordkraft cash point program, launched in 2022, has been a success with customers saving up more than 7 million kroner in cash points during 2023. The points can within a time limit of 15 months be used to pay their electricity bill or get a discount on products at Fjordkraft’s online Marketplace. In 2023, we discontinued collaborations that customers did not ﬁnd relevant in the Fjordkraft beneﬁt program. Instead, we have focused on onboarding new partners who are digital, environmentally friendly, and oﬀer nationwide advantages in Norway. Furthermore, we have placed a greater focus on cash points and our own Fjordkraft Marketplace. We will continue to work towards creating the most appealing customer loyalty program within the industry in 2024. In 2023 we have ensured that the products oﬀered through the Marketplace will be prod- ucts that complement and strengthen our core value proposition. We have been focusing on the sales of Fjordkraft Pulse, mobile phones, EV chargers and heat pumps. During 2023 we also launched a campaign in collabora- tion with the Bergen Municipality, allowing customers to receive support for purchasing heat pumps. Our sales representatives and customer service team can now directly oﬀer Fjordkraft Pulse from the marketplace through their systems, making the customer journey even better. This is an initiative we plan to further develop in 2024 to fully leverage our distribution capabilities. During 2023 we have launched a wide range of new app services that have signiﬁ- cantly increased customer engagement and satisfaction. We enhanced the customer jour- ney for Fjordkraft Pulse, leading to a substan- tial increase in overall customer satisfaction. Furthermore, we introduced 24-hour moni- toring of energy usage, both for customers with and without Fjordkraft Pulse, accompa- nied by relevant notiﬁcations to encourage the consumer to take measures regarding their electricity consumption and grid rent. It is noteworthy that customers who have acti- vated notiﬁcations express higher satisfaction compared to those who have not. Additionally, we pioneered the introduction of spot price forecasts, allowing customers to anticipate their spot prices for the next 7 days. The con- tinuous focus on improvements has led to new all-time high scores for the Fjordkraft app in Google Play and App Store. More services will follow, which all help customers to a more friction-free daily life. With the Fjordkraft app, we put ourselves in a great position to develop and launch more attractive products and services as customer demands evolve. Gudbrandsdal Energi Gudbrandsdal Energi is the most awarded electricity retailer in Norway, having won the EPSI rating ﬁve times and the Norwegian cus- tomer barometer eleven times, including in 2023, based on customer satisfaction. Our customer service was also deemed the best in the industry in 2023 by Norway Customer Service Index. In addition to oﬀering competitive products and prices, we believe that one of our most important tasks is to help customers save electricity and reduce their costs. GE has helped Wattlet AS introduce SmartVVB to the market, a device controlling old water heaters. The product will be tightly integrated into the power control system. By leading the way in the development of digital solutions and new smart services, GE shall be in front of understanding and oﬀering the customer relevant and attractive products and services, related to the core product elec- tricity. Through insight and innovative tech- nological solutions, we assist the customer in using an increasingly complex electricity product in a smarter and more cost-eﬃcient way. Business segment The business segment consists of the B2B part of our Norwegian brands Fjordkraft, TrøndelagKraft and Gudbrandsdal Energi.We have a strong position in the business seg- ment and a leading brand position through Fjordkraft, which is the best known electricity retailer brand in Norway with 89 % awareness in the B2B segment and the highest top-of- mind score in the industry. Approximately 20 Norwegian players are working on a national scale. Fjordkraft, along with two other competitors, are the only ones operating in the entire Business segment, which includes SOHO (small oﬃce/home oﬃce), SMEs, Large Customers and Public Entities. This is a strength for us, and it con- tributes to our awareness and our position as a professional player. Our biggest competitive advantage is our distribution power and our national pres- ence. Our presence does reﬂect a seg- mented and a national commitment. Including Gudbrandsdal energi and our activities in the Nordic segment through Nordic Green Energy in Sweden and Finland, we are well positioned to increase our B2B market position in the Nordics. The business segment is characterised by higher complexity and greater volums, com- pared to the consumer segment, and thus, have a higher margin per kWh. Therefore, we have a higher net revenue per delivery compared to the Consumer segment. Our Portfolio is highly diversiﬁed. We recognize that diﬀerent customers need diﬀerent solu- tions, and we are targeting speciﬁc segments of the market with a wide range of products designed to meet their needs. Our main product is Spot including Risk Management. Many business customers have Annual report 2023 88 a great need for predictable power costs, therefore they choose electricity plans that include risk management. We experience a higher loyalty and satisfaction from the cus- tomers that have electricity plans that includes risk management in combination with other value adding services. We have a very low risk associated with risk management prod- ucts, because the customers fully own their positions. Value adding services are becoming more important to diﬀerentiate us from our compet- itors and to attract new customers. Through our online customer portal - Min Bedrift, we oﬀer reports on consumption, comparison of consumption with temperature, cost reports, price forecasts and risk management reports. We oﬀer local “energy as a service” - solu- tions in the form of solar panels, giving our customers the possibility to implement sus- tainable energy solutions without the need of a major capital investment. In our portfolio of “climate smart”-products, we also oﬀer systems for energy optimalization in build- ings, charging for electrical cars and solar panels for sale. In late 2022, we launched a new beta-project, using second-life batteries from electrical cars as local storage units for energy. We will continue to expand this portfolio with new products that help our customers reduce their energy costs and emissions. We have transitioned from an electricity sup- plier to an energy partner with value adding services that reduce our customers emissions. This attracts an even larger share of business customers. As a pan-Nordic retailer, we expe- rience new opportunities for further growth within both our core oﬀering and climate smart services. Elmera Group is well organized and positioned for further growth in the business segment! Nordic segment Through the acquisition of Switch Nordic Green AB in 2020, Elmera Group entered the Swedish and Finnish markets through the Nordic Green Energy brand. The Nordic segment comprises both B2C and B2B activ- ities for this brand. We are a challenger in these markets with growth ambitions in both Sweden and Finland. Due to the energy crisis, both markets changed fundamentally. Nordic Green Energy stopped selling ﬁxed price products early 2022. Instead, spot-based products are oﬀered and the ﬁxed price volume has decreased from approximately 80 per cent to approximately 20 per cent of the total. The risk in the portfolio has been reduced fundamentally. Nordic Green Energy launched the Elmera Group app and several digital services in Finland in March 2023, with great success. Customers are pleased and a lot of posi- tive media has followed. As a consequence, Nordic Green Energy received third place in the Finnish EPSI rating for 2023. In Sweden, we are about to relaunch in the consumer segment with the same services as in Finland and Norway. In 2024 we will prepare for migration of Nordic Green Energy onto the Elmera Group technological platform scheduled for Q1 2025. This will also enable further development of our cross-border B2B activity in the Nordic. 2023 has been a year concluding the turn- around of the Swedish-Finnish portfolio with corresponding risk reduction as well as re-es- tablishing proﬁtability in the segment. We will focus on continuing the positive trend in 2024. New Growth Initiatives segment (NGI) The NGI segment includes our mobile ser- vice oﬀering, the Alliance concept, AllRate AS, Steddi Payment AS and the Marketplace. With a strong brand, award-winning customer service and by oﬀering used mobile phones through Fjordkraft Marketplace, Fjordkraft Mobil will challenge the Norwegian mobile phone market. Fjordkraft Mobil has competitive prices for all customers. Those who also have their electricity delivery through Fjordkraft will get added value. Customer surveys show that customers with both products, mobile sub- scription and electricity delivery, are more sat- isﬁed than customers with only one product. In January 2023 Fjordkraft Mobil was sepa- rated from Fjordkraft as a legal entity and Telia entered into an ownership share of 39 per- cent. Customers were migrated from Telenor to Telia’s network in spring 2023, resulting in better terms which will beneﬁt both Fjordkraft Mobil and the customers. Additionally, cus- tomers from Gudbrandsdal Energi Mobil have been migrated to Fjordkraft Mobil. By the end of the year, Fjordkraft Mobil had approximately 115 thousand subscriptions. Our Extended Alliance concept oﬀers oper- ating services within data exchange, account settlement, invoicing and payment collection for alliance partners, capitalising on econo- mies of scale in our IT platform. The platform has been developed to digitalise and simplify the Group’s account settlement, invoicing, and payment collection processes. Additionally, members of the Extended Alliance who are using AllRate’s settlement services are oﬀered the opportunity to use the Elmera app with their branding. Currently, 14 members of the Extended Alliance oﬀer the Elmera app to its end-users. AllRate is expanding its technology plat- form by developing services for distribution network operators (DNOs). Currently, the platform delivers settlement services for elec- tricity, broadband, and district heating. The service is being developed in cooperation with two DNOs who have functioned as pilot customers. Furthermore, AllRate has signed agreements with other suppliers necessary to complete the service oﬀering to DNOs. The pilot has been ongoing throughout 2023. The ﬁrst delivery of services is expected to start in the second quarter of 2024, to one of the pilot customers. If this goes according to plan, AllRate will be fully focused on expanding its presence in the SME segment for DNOs. Steddi Payments oﬀers predictable pay- ment plans for households. With a normal payment plan, electricity bills vary from month to month. For customers with a predictable payment plan their future electricity costs are calculated and distributed over the next year, helping them budget their electricity costs. Customers with a predictable payment plan will always know how much their electricity bill will be the next month. Increased predict- Part 3 – 3.1 Strategy and strategy planning Annual report 2023 89 ability goes hand in hand with reduced uncer- tainty and fewer negative surprises, which has led to higher customer satisfaction during a period with volatile electricity prices. How do we find new sources of growth? Customer pains are often a good starting point when looking for new opportunities. Solving customer pains is at the centre of our inno- vation agenda. We want to build an attractive ecosystem of products and services that are solving customer problems that together are adding more value to our customers, and thereby increasing customer loyalty. Elmera Group have experienced that solar production, smart building, and EV charg- ing are vital interest areas for electricity customers in the Nordics. Consequently, it is essential for modern electricity retailers to deliver good value propositions in these areas. Elmera Group have developed sev- eral new services within these areas over the years, ensuring that our electricity retailers are well-positioned closest to the customer. With an in-house digital ecosystem that con- tinuously works to improve existing services, as well as develop new ones, we will keep delivering customer value. Identifying opportunities that are commer- cially viable and can be developed into val- ue-adding products and services is key when it comes to ﬁnding new sources of growth. In a world where digitalisation is accelerating and customer needs are changing fast, we have chosen an open innovation approach as we acknowledge that there are many bright opportunities outside the Group. This means that the Group doesn’t just rely on our inter- nal knowledge, expertise and resources for innovation, we also actively look for poten- tial collaboration partners outside the group that can help us identify and develop new growth areas. By choosing partners who are experts in their ﬁeld and oﬀering them market access through our digital ecosystem and Marketplace, we can deliver on customer needs faster and more eﬃciently. When it comes to investing, we are willing and able to invest in promising ideas and start-ups that ﬁt into our ecosystem and strengthen our customer oﬀerings. We are taking a more proactive role in the green transition and are investing in the extended value chain. As an active industrial owner, we will add competence, distribution power, and increased revenue to the companies we choose to invest in. We have made successful spinoﬀs from within the Group in the past few years through Metzum AS, AllRate AS, Steddi Payments AS and SunPool AS. Metzum AS is a software development com- pany where Elmera Group controls a minority stake of 40 per cent. Metzum have devel- oped a cloud-based software solutions called Moment which aims to eﬃciently handle rating and billing processes with major transaction Part 3 – 3.1 Strategy and strategy planning volumes through automation. The company provides solutions to both electricity retailers and DNOs. Major actors not associated with Elmera Group have chosen Metzum as their service provider on rating and billing, and the company have Nordic growth ambitions going forward. Elmera Group established SunPool AS in 2023, together with Solcellespesialisten AS. By capitalizing on Elmera Group’s distribu- tion power and positioning closest to the end- user, and Solcellespesialisten’s experience and expertise from the solar power industry, SunPool will accelerate solar power gener- ation in Norway, contributing towards the governments ambition of 8 TWh of new solar power by 2030. ESG Elmera Group is a multinational group consist- ing of several electricity retailers in the Nordic countries of Norway, Sweden, and Finland. To manage all parts of our organisation well, we are continuously developing our governance model and IT-infrastructure design. This will secure us leveraging synergies and further achieve economies of scale across our group, while ensuring that our companies continue to understand the uniqueness of their local markets. Thus, we will have a scalable foun- dation for increased proﬁt and growth across the Nordics in the years to come. In terms of ESG, our strategy process is designed to make sure the Group is compliant with relevant standards and reporting require- ments. All relevant standards are identiﬁed and analysed, and the implications of these provides important guidance for the upcom- ing strategy period. Since 2020, the company has reported on sustainability indicators in accordance with the GRI standards. Since the ﬁnancial year 2021, GRI reporting has been reviewed by the auditing ﬁrm Deloitte in accordance with the requirements for audi- tor-approved reporting. With the introduction of the Corporate Sustainability Reporting Directive (CSRD) from the EU, the reporting requirements will change. The European Sustainable Reporting Standards (ESRS), the standards which companies subject to CSRD must report on, have been formally adopted by the European Commission. As of now, Elmera Group will be subject to CSRD from the ﬁnancial year 2025. We will use the next year to gain insights into the requirements that ESRS brings and start the transition to become compliant with CSRD. To learn more about our ESG work and reporting, please view the ESG section in this report. 4.1 Board of Directors’ Report The Group achieved an operating proﬁt (EBIT adjusted) of NOK 513 million in 2023. The equivalent ﬁgure for 2022 was NOK 460 million. While 2022 resulted in a decline in volume, lower prices and colder weather contributed to higher volumes in 2023. The segments gave strong performance throughout the year and the Group’s cost savings programme reached the intended results. Elmera Group ASA and Group Part 4 Part 4 – 4.1 Board of Directors’ Report Annual report 2023 90 Annual report 2023 91 Summary of the ﬁgures for 2023 The Group’s total revenues in 2023 amounted to NOK 18,921 million, com- pared to NOK 25,522 million in 2022. EBIT adjusted was NOK 513 million, up from NOK 460 million in 2022. The reduction in elspot prices was the main reason for lower total revenues and direct cost of sales in 2023. In total, the Group had 1,003 thousand electricity deliveries at year-end 2023. This is a decrease of 38 thousand electricity deliveries from 2022. The Group’s total volume sold amounted to 17.9 TWh, up from 17.5 TWh in 2023. The ﬁnancial statements for 2023 have been prepared in accordance with the IFRS accounting standards. The Group’s overall operations Elmera Group ASA provides consumers, businesses and the wholesale market with electricity, mobile telephony, billing and rating services and electricity related technology solutions. Customers are end users of elec- tricity in the private and business markets, the wholesale market and energy companies in Norway, Sweden and Finland. The head oﬃce of Elmera Group ASA is located in Bergen, Norway. The Group comprises four electricity retailers, three of which operate in Norway: Fjordkraft AS, TrøndelagKraft AS and Gudbrandsdal Energi AS. In Finland and Sweden, the Group owns the electricity retailer Switch Nordic Green AB, branded Nordic Green Energy. The subsidiary Elmera Industrial Ownership AS (EIA) owns AllRate AS, Steddi Payments AS, Gudbrandsdal Energi AS, Energismart Norway AS and Elmera Nordic AS which is the mother company of Switch Nordic Green AB. EIA also owns 40 per cent of the soft- ware company Metzum AS. SunPool AS was established in 2023 and the group holds 50 per cent ownership. The subsidiary Fjordkraft AS is Norway’s largest electricity retailer and owns TrøndelagKraft AS. Fjordkraft AS also owns 61 per cent of Fjordkraft Mobil AS, while the remaining share is owned by Telia Norge AS. In 2023, Elmera Group’s ﬁnancial reporting was divided into the following segments: • Consumer, Norway – sale of electricity and related services • Business, Norway – sale of electricity and related services • Nordic region – sale of electricity and related services in Finland and Sweden. • New Growth Initiatives – purchase and sale of electricity for other energy companies – Kraftalliansen, mobile telephony, sale of solar panels, billing and rating services through AllRate AS, and other products in Norway. Wholesale market and fundamental conditions Since 2019, Elhub has been a national neutral data hub in Norway that handles all metering data and market processes in the Norwegian power market. Denmark has implemented Datahub. In Finland, Datahub was introduced in 2022. In Sweden, the work on a Datahub has been postponed indeﬁnitely. While total electricity consumption in Norway fell from 2021 to 2022, it increased again in 2023. Consumption was 136.1 TWh in 2023, compared to 134 TWh in 2022. Norwegian power consumption is expected to increase sharply in coming years, in order to meet cli- mate targets. Power generation in Norway was at a high level in 2023, with production of 154 TWh, compared to 146 TWh in 2022. Signiﬁcant variation in area prices and hourly rates The average price on the Nordic power exchange was 64.2 øre/kWh for 2023, com- pared to 137.3 øre/kWh for 2022 and 63.4 øre/hWh for 2021. The system price is a theoretically calculated average price for the Nordic and Baltic countries. Norway and Sweden are divided into respectively ﬁve and four diﬀerent price areas for power ﬂows. The area prices may deviate signiﬁ- cantly from the system price, depending on transmission capacity, and production and consumption within the price range. Finland is one price range. The most expensive months in Norway (NO1) were January and November, in Sweden January and February (SE4), and in Finland the ﬁrst and last months of the year. Also in 2023, there were intermittent large area- and hourly price-diﬀerences in the Nordic power market. The highest hourly rate in Norway occurred on 5 December and amounted to 387.4 øre/kWh for the NO1, NO3 and NO4 price ranges. In November, Finland experienced enormous price dif- ferences on a few days, with large intraday variations in the spot price for electricity in connection with a brief reduction of nuclear power production. On 21 November, con- verted to Norwegian kroner the cheapest hour cost 106.9 øre/kWh and later that day the price was 912 øre/kWh. Part 4 – 4.1 Board of Directors’ Report Annual report 2023 92 The electricity retailers in the Group are continuously working on various measures to improve the customer experience and our reputation. In 2023, a number of measures were taken to simplify customer communi- cation, reduce the number of power agree- ments and clarify the terms and conditions. Customer surveys show that the satisfaction of our own customers, based on their own experience, increased during the year, with satisfaction at a favourable level. In terms of general reputation among the population, there is still a long way to go to improve this. Customer service awards In April, customer service in Fjordkraft and Gudbrandsdal Energi won awards in the Best Customer Service and Best Customer Experience categories, respectively. Thirteen electricity retailers were included in the assessment. The company SeeYou nomi- nates winners in diﬀerent industries, based on “mystery calls”. In October, Fjordkraft’s customer service centre was named the best service company, in competition with 38 companies operating call centres in Bergen The Trygg Strømhandel certification scheme IIn 2021, the industry associations Renewable Norway (formerly known as Energi Norge) and Distriktsenergi introduced a voluntary certiﬁ- cation scheme for electricity retailers. The cer- tiﬁcation scheme is called Trygg Strømhandel. The scheme sets a number of requirements concerning the sale of electricity, and for infor- mation and transparency in products and cus- tomer communication. The scheme includes auditing and deviation reporting processes, to stimulate continuous improvement. The Group’s electricity companies operat- ing in Norway carried out the recertiﬁcation process in the summer of 2023 under the aus- pices of the DNV certiﬁcation company. The Group has in 2023 appointed a compliance oﬃcer with ongoing responsibility for mon- itoring internal follow-up of the certiﬁcation requirements. Change in product portfolio In the beginning of 2023, the Group’s Norwegian electricity retailers decided to discontinue the sale of “variable” electricity agreements. Regulations introduced in 2022 requiring 30 days’ advance notice of price changes signiﬁcantly increased the retailer’s acceptance risk, since the customer could switch electricity retailer within a signiﬁcantly shorter timescale. For customers, it has become an advantage to have an electric- ity agreement that follows the spot price, because the government’s electricity subsidy is pegged to the spot price. Consequently, the share of customers with variable contracts has decreased to below 7 per cent of the port- folio at year-end. IT project The Group is committed to enhancing econo- mies of scale from the IT infrastructure, opera- tion of invoicing and payment collection, and the system platform. In 2024, a project will run to migrate Gudbrandsdal Energi to the Electricity price affects reputation and satisfaction The electricity industry’s reputation score strengthened throughout 2023 both due to lower electricity prices and increased trans- parency. The Norwegian Customer Barometer is published annually in May and measures customer satisfaction with their own supplier among Norwegian electricity customers. In total, eight regional and national suppliers are measured. For customers to be character- ised as satisﬁed, the total score must exceed 70. For the 11th time, Gudbrandsdal Energi came out as an industry winner in this sur- vey, with 74.8 points for satisfaction. Fjordkraft improved its score by 5, achieving 65.2 and a shared 7th place. The annual survey published by EPSI Norway in November 2023 also measures Norwegian electricity customers’ satisfaction with their own supplier. The survey includes regional and national electricity retailers and shows an industry average of 67.1 points, up by 1.9 points from the previous survey. The supplier with the highest score achieved 72.7 points. Gudbrandsdal Energi was in 5th place with 69.7 points. Two of the players with the highest score are regional, with the majority of their customers in the price areas that in 2023 had unusually low electricity prices. Fjordkraft gained 65.3 points, a decrease of 0.5 point from the previous survey, and is thereby num- ber 8 on the list of 10 electricity retailers in total. The largest of the other national retailers are placed as number 9 and 10, respectively. The business areas The Consumer, Business and Nordic seg- ments in the Elmera Group sold a total vol- ume of 17.9 (17.5) TWh of electricity in 2023. In addition, a volume of 6.5 TWh, reported in the New Growth segment, comes from power procurement and the management of produc- tion and yield of power due to concession on behalf of the companies in the Alliance segment. Consumer segment The Consumer business area is a separate proﬁt unit, which comprises the private cus- tomers in Fjordkraft AS, TrøndelagKraft AS and Gudbrandsdal Energi AS. For many years, power agreements and power con- sumption were a low-interest product for most consumers. This has changed since the start of 2022, due to higher electricity prices, as well as heightened national and international awareness of energy supply and prices. Norwegian households’ total consumption increased from 35 TWh in 2022 to 38 TWh in 2023, an increase of 7.3 per cent according to Elhub. In 2022, households reduced their con- sumption, since high prices gave an incentive to save energy. Despite the increased con- sumption in 2023, the level was lower than in 2021.The ﬁgures are before temperature adjustment and do not take account of the increasing number of electric cars and their home charging. Part 4 – 4.1 Board of Directors’ Report Annual report 2023 93 check their own electricity consumption, mon- itor production from solar panels on their own roof, control their heat pump, use their cus- tomer beneﬁts, check outdoor temperatures, keep track of invoices, receive power saving tips, check their climate footprint and order additional services. For Fjordkraft customers, the same app provides an overview of their own mobile phone use, and enables them to order additional services. In 2023, several new app services were launched to provide an overview of the grid tariﬀ costs, and to avoid increased costs associated with pay- ment for the power element in the grid tariﬀ. By choosing additional services to the electricity agreement, customers can oﬀset any large variation in their monthly invoice amounts due to the normally signiﬁcantly higher electricity consumption and prices in the winter season. The service is provided by Steddi Payments AS to Fjordkraft AS and TrøndelagKraft AS. Business segment The Group’s Business area is the leading player in the Norwegian B2B market. The Business area is a separate proﬁt unit in the Group containing ﬁnancial results from activ- ities in the Norwegian brands. The area also holds operational responsibility for B2B sales in the NGE brand operating in Sweden and Finland, ﬁnancial reported under the Nordic segment. Like the consumer market, the business market for power agreements and portfolio management of electricity is fragmented, with many providers. The Group’s business customers range in size from large com- panies and energy-intensive enterprises to small and medium-sized local production and service companies. The Group’s electricity retailers have a wide distribution network due to a presence and sales oﬃces in Bergen, Hamar, Oslo, Sandefjord, Trondheim, Vinstra, Stockholm and Vasa. Climate-smart services and energy monitor- ing systems for the business sector account for a steadily more important part of the oﬀer- ing and expertise when electricity contracts with major electricity consumers are estab- lished. Financial instruments and fixed price agreements A high proportion, 78 per cent, of the Group’s business customers have electricity manage- ment agreements that reduce the exposure to price ﬂuctuations by ensuring that some ele- ments of the business’ consumption volume are ﬁnancially hedged via the Group’s prod- ucts. The ﬁnancial power exchange, Nasdaq, provides electricity retailers and customers with the instruments to be able to oﬀer this. In 2023, the Norwegian government changed the tax calculation model for power production to provide an incentive for large power producers to oﬀer ﬁxed-price agreements to business customers. The agreements were launched in the market in December 2022, are oﬀered via electricity retailers and have a duration of 3, 5 or 7 years. Fjordkraft has intermediated the long-term agreements from Statkraft. The producers oﬀer ﬁxed-price agreements on market terms. So far, there has been rel- atively little interest in these agreements. Customers are sceptical about entering a long-term commitment while prices are run- ning high, and a lot of businesses already have electricity agreements with ﬁnancial price hedging to dampen ﬂuctuations in electricity prices. As future prices have fallen, interest has increased somewhat. Nordic segment Switch Nordic Green AB (Nordic Green Energy) Switch Nordic Green AB sells renewable energy and electricity contracts with guaran- tees of origin (GoOs) under the Nordic Green Energy (NGE) brand name. In Sweden, the customer group is business customers, while in Finland it is both private and business cus- tomers. In March, the launch of the app for electricity customers in Finland’s private market received a lot of attention among customers and from the media. The aim is to attract new customers from the customer segment who run electric vehicles. The app was developed on the basis of the platform and interface for the Fjordkraft app. Customers using the app experience good value for their money as electricity cus- tomers, according to a customer survey con- ducted by EPSI in the autumn of 2023. In this year’s survey, Nordic Green Energy climbed to 3rd place among 18 suppliers and increased its score from the previous year by 6.3 points to 74.2 for customer loyalty. The Elmera Group’s IT platform. We also prepare for migrating the customers in Nordic Green Energy early in 2025. Right of cancellation Private customers have a regulatory right of cancellation when entering into electric- ity agreements. In 2023, the Norwegian Consumer Authority inspected the electricity retailers to check that the right of cancella- tion is correctly communicated to customers, and that customers have received the right of cancellation forms in a durable format. The Group’s electricity retailers have reviewed their procedures for this and complied with the Consumer Authority’s requirements for issue and veriﬁcation to aﬀected customers. App important for customers In total the app developed had 777,000 (unique users) at the end of 2023. Of these 702,000 are the Group’s electricity custom- ers and family members (unique users) in the Norwegian consumer market. The app is used for checking electricity prices throughout the day/night, and smart charge electric cars in the cheapest hours of the day/night, as well as other services. The app raises customers’ awareness of their own electricity consump- tion and provides the knowledge customers need to be able to adjust their consumption. With media attention on electricity prices, the number of app users is increasing. The Group’s Norwegian electricity cus- tomers can monitor prices, electricity price forecasts, and charge automatically when the electricity price is at its lowest. They can also Part 4 – 4.1 Board of Directors’ Report Annual report 2023 94 app is assessed to be a major reason for the improvement. Fixed-price agreements without committed volume restrictions have traditionally been the most common electricity agreement for busi- ness customers in Sweden and Finland. This entails a high-volume risk for the electricity retailer. Nor does it give any incentive for eﬃ- cient energy utilisation and energy savings by the customer. Since the ﬁrst quarter of 2022, the company has taken measures to reduce the volume of this type of agreement and has increased the ratio of electricity agreements that are pegged to the spot price. This has also become a more general trend in the Swedish and Finnish markets. Just as for Gudbrandsdal Energi, a Group project is underway to move NGE onto the Elmera Group’s IT platform. The project includes PCs and infrastructure, operating environment and system platform, and will pre- pare for migration of customers early in 2025. New growth initiatives segment This segment consists of new strategic initia- tives and other business areas. Kraftalliansen (the Power Alliance): Services for other electricity companies One of the Group’s business areas is the operation of an alliance concept comprising several small and medium-sized Norwegian electricity companies that purchase various market, advisory and power trading services from Elmera Group and related companies. The concept also includes the purchase of production from smaller power producers, and the purchase of licensed power, as well as grid losses and the power grid compa- nies’ supply obligation. The consept operates under the brand name of «Kraftalliansen” and the companies included represents approxi- mately 200,000 customers. The potential for future growth in service sales is assessed to be good, both within and outside Norway. In total, by the end of 2023, the app for electricity customers in the private market is designed for 14 companies that are not part of Elmera Group. AllRate AS AllRate AS oﬀers billing and rating service to electricity, broadband and district heating providers. During 2023 the company has also run a pilot towards grid companies oﬀering designated billing and rating services. The billing and rating services handles every process, including metering, settle- ment, billing, payment collection and mes- sage exchange with Elhub. The platform is scalable, with the capacity to handle higher transaction volumes resulting from acquisi- tions, to support the company’s consolidation ambitions. Steddi Payments AS In 2022, the company changed its name from Betalservice AS. Steddi Payments provides services related to payments from private consumers to the Group’s electricity retailers. In a rapidly changing electricity market with increased price volatility, customers request predictability with respect to their monthly payments. Steddi Payment’s primary service is to provide customers with even billing of electricity over time. Such service deliveries entail a need for diﬀerent approaches and systems to those used by electricity retailers. The aim is also to provide services to compa- nies outside Elmera Group. Fjordkraft Mobil AS Fjordkraft AS and Telia Norge AS joined forces in 2023 to create Fjordkraft Mobil AS. Fjordkraft AS owns 61 per cent and Telia Norge 39 per cent of the company. Fjordkraft AS started its mobile activities to private consumers in 2017 as part of the electricity sales company’s operations. Fjordkraft AS continues to provide services and customer services to Fjordkraft Mobil AS. Fjordkraft Mobil AS is the largest mobile telephony provider without its own telecom- munications network. During the year, cus- tomers were migrated from Telenor’s to Telia’s mobile network. The aim was to strengthen the competitiveness of the largest independent mobile operator in Norway, and to facilitate more attractive oﬀers and services to cus- tomers. Joint ownership with Telia Norge of Fjordkraft Mobil AS ensured the favourable development of mobile activities in 2023, and from the third quarter this represented a marked improve- ment in the results from the mobile operation. Services to customers and proﬁtability are developing as intended for this cooperation. PPA for solar business Through their partners, the Group’s electricity retailers can facilitate more rapid establish- ment of solar panel systems and new heat pump technology in the business market, by oﬀering Power Purchase Agreements (PPA). Under a PPA between an electricity retailer and owners of commercial properties, the electricity retailer purchases energy from the property company that is generated from solar panels on the roof, or from heat pumps, at an agreed, guaranteed price for a given period of time. This provides a predictable income for the power producer or building owner. In this business model, the customer undertakes to purchase energy from the energy source, and Fjordkraft or Gudbrandsdal Energi, with asso- ciated partners, arrange installation, ﬁnanc- ing and operation. Fjordkraft also oﬀers solar panel installation and a virtual battery solution, the solar account, to private customers. Organisation Employees As a consequence of the Group’s cost reduc- tion programme, Fjordkraft AS discontinued three of the customer centres for private customers and consolidated customer cen- tre operations at the head oﬃce in Bergen and at the oﬃce in Sandefjord. Employees were oﬀered jobs at the continuing customer centres and were also oﬀered severance packages. In addition to the measures involving cus- tomers service, other parts of the Groups organisation was aﬀected by downsizing. Part 4 – 4.1 Board of Directors’ Report Annual report 2023 95 The total number of employees that left the Group was 50 full time employees. The Board experienced very good and con- structive dialogue with the staﬀ representa- tives during this process. The process was concluded during 2nd quarter. In the business market, the customer ser- vice operating model was converted to a pooling of 1st and 2nd line requests, and an external partner was commissioned to handle the 1st line requests. To achieve full impact in the operating model, AI-powered automation is used. The results so far are very positive in terms of eﬃciency and customer satisfaction. As a consequence of the change in the rules for hiring of manpower in Norway, the number of contract employees for customer service and telemarketing in Fjordkraft was reduced and positions were converted to per- manent positions. In overall terms, Elmera Group’s whol- ly-owned companies, including operations in Sweden and Finland, had a total of 459 permanent employees at the end of 2023, equivalent to 433.9 FTEs. In Norway, there were 385 permanent employees in total at the end of 2023, equivalent to 369.3 FTEs. At the end of 2023, the parent company Elmera Group ASA had a total of 95 employees and 93.4 FTEs. Part-time work is described in the 2023 Equality and Diversity Report. At the end of 2023, the Group had a total of 16.6 FTEs covered by staﬀ contracted from manpower agencies. Hiring from a man- power agency took place mainly to cover a temporary need and to provide extra capacity during sick leave in customer service and telemarketing. In Norway, the Group is covered by the collective agreements for the Electricity and IT Union, the Norwegian Union of Municipal and General Employees (NUMGE) and NITO. Switch Nordic Green AB in Sweden and Finland is not covered by collective agree- ments. The ﬁgures for sick leave are not compa- rable to the previous year as a major organi- sational change was implemented in August 2022. The total absence due to illness for the Group’s companies was 7.6 per cent in 2023. This exceeded the goal of an absence rate below 4.9 per cent. Absence due to illness in Elmera Group ASA was 5.1 per cent in 2023. Absence due to illness in Fjordkraft amounted to 10 per cent and in Gudbrandsdal Energi to 1.9 per cent. The general rate of absence due to illness in society has increased after the pandemic. Prevention and follow-up of absence due to illness was an important task in 2023. The reason for the absence is complex and meas- ures will also be worked on in 2024 in relation to prevention. In 2023, two employee surveys were conducted in the Group to investigate how employees experienced their work situation and the extent to which they identiﬁed with the Group’s and the companies’ goals and values. Satisfaction among our employees is high and the employees generally have a strong com- mitment to their workplace. In the parts of the Group that have been through a downsizing and cost reduction process, measures have been implemented to strengthen identiﬁcation with the workplace and employer branding. Equal opportunities The purpose of the Norwegian Anti- Discrimination Act is to promote equality, ensure equal opportunities and rights, and prevent discrimination. In Elmera Group, men and women enjoy equal rights, oppor- tunities and pay conditions for the same type of position. The company and the Group work actively to promote the aims of the Act. The activities encompass recruitment, pay and working conditions, promotion, development opportunities and protection against discrim- ination or harassment. A full statement on gender equality is part of the 2023 Equality and Diversity Report. The ratio for shareholder-elected Board members in Elmera Group is 60 per cent women and 40 per cent men. Including employee-elected members, the proportion of women on the Board totals 50 per cent. Furthermore, the Group’s objective is for the ratio of female/male managers to be equiv- alent to the ratio for the general distribution of women and men among the employees. Elmera’s Group management team had a total of ten members at the end of the year, and the distribution between women and men is 40 and 60 per cent, respectively. The distribu- tion between women and men employed by the company is 45 per cent and 55 per cent. For management positions with personnel responsibility in Elmera Group ASA at senior management level, and for those reporting to Group management, the distribution is that 36 per cent of these positions are held by women. Ownership and legal form The Board of Directors has eight members, of whom ﬁve are elected by the shareholders, and three are elected by the employees. As from the annual general meeting on 21 April 2021, Steinar Sønsteby has been Chairman of the Board of Directors. The composition of the Board is in line with the recommendations of the Norwegian Corporate Governance Board (NUES). A full statement on Corporate Governance and the work of the Board of Directors is part of this Annual Report. The Board held a total of 12 meetings dur- ing the year. In addition, two Board meetings were held as the circulation and signing of documents via email. No Board committees involving only a selection of Board members were used during the year over and above what is required by law in the form of an audit committee and a remuneration committee. In March 2023, the Board conducted an evalu- ation of its work. Elmera Group ASA has taken out Board lia- bility insurance. Coverage applies to mem- bers of the Board of Directors, the general manager and other employees with inde- pendent management responsibility. The Board liability insurance also concerns the Part 4 – 4.1 Board of Directors’ Report Annual report 2023 96 subsidiaries. The insurance thus covers the insured’s liability for damage to assets due to claims against the insured during the insur- ance period. For 2023, an executive remuneration report was prepared for submission to the annual general meeting. The report is available on the company’s website prior to the annual general meeting: elmeragroup.no Strategy Throughout the year, the Board has been reg- ularly engaged in the revision of the Group’s strategy plan for the 2024-2026 strategy period. The strategy work was adapted to the increase in the number of companies in the Group and to ensuring synergies in the Group. The strategy provides the basis for the Group’s collective ambitions, decisions and activities for owners, the Board, managers and employees in the company. All ordinary Board meetings include strategy assessments and discussions. The strategy plan of the Elmera Group plays an important role in the managers’ and employees’ planning and everyday work. Managers at several levels help to shape the strategy for their areas of responsibility. Every year, as part of its evaluation and audit process, the Group chooses one priority area from the strategic plan which it subjects to particular scrutiny to test the validity of the assumptions. The company has a well proven strategy process and evaluates annually how to develop and adapt the process. Over time, the company has developed a good process for involving and building commitment to the strategy plan from the company’s middle management and other employees. The company’s strategy process is linked to the Group’s management philos- ophy. Since 2004, promise-based manage- ment has been an important element of the company’s culture and working methods to ensure that the strategy is converted to action in each employee’s everyday work. The Group’s strategy concerns defend- ing and maintaining the current competitive advantages and earnings, and develop- ing new advantages and business areas. Scenario modelling is an important tool in the strategy work. The company has devel- oped strategy accounts, which it has used for several years to measure and document its capacity for implementing strategic decisions and objectives. For more information, see the strategy chap- ter in the Annual Report. Investor Relations Elmera Group ASA has been listed on the main list of the Oslo Stock Exchange since 21 March 2018. The share price (ticker ELMRA) increased by 89 per cent in the period from 1 January to 31 December 2023. The main index of the Oslo Stock Exchange rose by 10 per cent in the same period. The company’s market capitalisation at year-end was around NOK 3.3 billion. The company had around 8,500 sharehold- ers at the close of the year. A list of the com- pany’s 20 largest shareholders is available at elmeragroup.no In 2023, the company operated its inves- global warming and achieving the EU climate goals by stipulating requirements for its sup- pliers and, not least, by working to ensure that other companies do the same. The company can achieve annual cuts in carbon emissions though the suppliers that multiplies the ﬁgure achieved by just cutting its own emissions. Klimanjaro and Klimahub.no At the UN climate conference in Katowice in 2018, Fjordkraft’s climate initiative “Klimanjaro” was chosen as one of the winners of UN’s Momentum for Change climate action award. Fjordkraft is the ﬁrst and only Norwegian com- pany to win this award. Klimanjaro won the award in the Climate Neutral Now category Trough Klimanjaro, the company used its pur- chasing power and set climate neutrality as a requirement for those who wished to sup- ply goods and services to Fjordkraft. The UN has since changed Climate Neutral Now, the initiative which Klimanjaro was based upon. Climate neutrality is no longer in the initiative’s scope. Therefore, Klimanjaro was changed accordingly. The revised climate pledge states that all regular suppliers must be climate commit- ted. This implies that suppliers are required to deliver climate accounts, make a list of measures to reduce their emissions, and compensate their emissions with carbon oﬀ- sets. Additionally, companies with approved science-based targets in line with the Science Based Targets initiative are also considered climate committed and accepted as a sup- plier In 2020 we launched the web portal Klimahub.no. Users can check Norwegian tor relations activities in line with the strategy adopted for the area. CSR/ESG The ESG Report is included as a separate chapter of this Annual Report and concerns the initiatives on which the company has been working, as well as its GRI reporting. The GRI reporting has been reviewed by the Group’s auditor, Deloitte. The report includes climate risk and greenhouse gas accounts. Throughout the year, the Board regularly included ESG-related topics as part of its agenda. Climate risk, climate goals and sus- tainability were included in the Board’s discus- sions and work in connection with the Group’s strategy. Elmera Group has chosen four of the UN Sustainable Development Goals as the Group’s focus areas. The Group has low greenhouse gas emis- sions as a consequence of the companies’ activities. Target ﬁgures for reductions have been set; see the ESG Report. In 2024, Elmera Group will work on its ambition to play an important business role in achieving the objective set by the Norwegian government for electricity generated from solar panels to amount to 8 TWh by 2030. The Board believes that companies such as Elmera Group ASA can contribute to the EU sustainability goals to stop climate change and curb global warming. Meanwhile, the company can make the greatest contribution to, and have the biggest impact on, reducing Part 4 – 4.1 Board of Directors’ Report Annual report 2023 97 companies’ climate footprints, produce cor- porate climate accounts and invite partners to do the same. We aim to formalise partners to Klimahub in 2024. Greenhouse gas accounts Greenhouse gas accounts for 2023 have been prepared for the Group and for the companies comprising Fjordkraft, Elmera Group ASA, TrøndelagKraft, Gudbrandsdal Energi and Switch Nordic Green AB concerning Scope 1, 2 and 3 emissions. The operations are exclusively oﬃce-based and do not include any production processes or premises. The business does not cause emissions to the air or water beyond what is consumed by the company’s employees’ use of the oﬃces and travel related to their work. Electricity con- sumed in the company’s premises has guar- antees of origin (GoOs) from hydroelectric power. This is described in the ESG chap- ter of the Annual Report, Greenhouse Gas Accounts. Climate risk assessment Elmera Group undertakes climate risk assess- ment as part of the overall risk management and reporting in the Group The company is preparing for the introduction of the stricter formal requirements for how climate risk should be analysed and reported in accord- ance with the Task Force on Climate Related Financial Disclosures (TCFD). Based on the company’s deliveries and cus- tomer base, climate change is not believed to represent any critical risks or signiﬁcant threats to the company’s operations and customer base in the short term. In the long term, it is assessed that new guidelines from the authorities, the taxonomy and the new EU Sustainability Directive can result in regulation with a stronger impact on the company and the Group. There is a direct link between global climate challenges and the electricity price level in the Nordic region. High electricity prices lead to changes in customers’ consumption and have a direct impact on the company. Volatile electricity prices will increase demands for sustainable products and investments in the future. The climate risk in relation to the company’s ability to implement its strategy is assessed to be low. See Chapter on Climate Risk in the ESG Report and in the notes to the ﬁnancial state- ments. Ethics and compliance Elmera Group’s Corporate Governance Report is part of the company’s Annual Report for 2023. The report is prepared to describe all elements of the Norwegian Code of Practice for Corporate Governance. As from 1 July 2022, the Transparency Act entered into force in Norway. The Act pro- motes businesses’ respect for fundamental human rights and decent working conditions, and ensure access to information for the gen- eral public. The Act imposes a disclosure obli- gation on companies in Norway and a duty to undertake due diligence assessment of suppliers. The company has published its ﬁrst due diligence assessment in accord- ance with the Act, available on the webside: fjordkraft.no/apenhetsloven. The company is aware of the issues related to suppliers of solar panels with production in China, includ- ing the risk of child labour and human rights issues. The company satisﬁes the requirements of the eight core conventions of the International Labour Organization (ILO) regarding the right to organise, prohibitions against discrimina- tion and forced labour, prohibitions against child labour, as well as provisions for prevent- ing corruption, and requires the company’s suppliers to do the same. The Group’s ethical guidelines are dis- cussed and addressed by the Board. The Group’s ethical guidelines include a duty for employees to notify any censurable condi- tions, including breaches of internal guide- lines, and statutory and regulatory provisions, and procedures for how such information is to be provided. Finances Group results Adjusted operating proﬁt (EBIT adjusted) amounted to NOK 513 million in 2023, an increase from NOK 460 million in 2022. In the Consumer segment, adjusted operating proﬁt increased by NOK 14 million from 2022, driven by cost reductions through the Group’s cost eﬃciency program and a revision of the segment’s product strategy. Through these measures, the segment’s ﬁnancial robustness has increased, and the associated market risk has been reduced. The Business segment delivered strong results also in 2023 and main- tained the position as the leading player in the Norwegian B2B market. Adjusted operating proﬁt decreased by NOK 54 million from an all- time high 2022 due to increased IT expenses and extraordinary tailwind from high elspot prices in 2022. The Nordic segment increased adjusted operating proﬁt by NOK 69 million from 2022. The majority of legacy ﬁxed price contracts with price and volume risk has been phased out and this was the key driver for the increased proﬁtability from 2022. In the New Growth Initiatives segment, the adjusted operating proﬁt increased by NOK 24 million from 2022. The improvement was driven by the Group’s mobile service provider business, where the migration to Telia’s mobile network had a signiﬁcant positive impact. The operating proﬁt in 2023 was NOK 359 million compared to NOK 273 million in 2022. Net proﬁt for the year was NOK 197 million up from NOK 74 million in 2022. Financial statements The consolidated ﬁnancial statements for Elmera Group include the operations of Elmera Group ASA and its subsidiaries Fjordkraft AS, TrøndelagKraft AS, Gudbrandsdal Energi AS, Fjordkraft Mobil AS, Energismart Norge AS, Elmera Industrial Ownership AS, AllRate AS, Steddi Payments AS, Elmera Nordic AS, Fjordkraft AB and Switch Nordic Green AB. The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) Part 4 – 4.1 Board of Directors’ Report Annual report 2023 98 and the interpretations issued by the IFRS Interpretations Committee (IFRS IC) applica- ble to companies reporting under IFRS. The consolidated ﬁnancial statements also com- ply with IFRS as issued by the International Accounting Standards Board (IASB). The going concern assumption is the basis for the statements, and according to the Board of Directors the ﬁnancial statements provide a true and fair view of the Elmera Group’s assets and liabilities, ﬁnancial position, and result of operations. The Group’s total revenues in 2023 amounted to NOK 18,921 million, compared to NOK 25,522 million in 2022 and direct cost of sales amounted to NOK 17,193 mil- lion in 2023 compared to NOK 23,824 million in 2022. The reduction in elspot prices was the main reason for lower total revenues and direct cost of sales in 2023. Total personnel and other operating expenses amounted to NOK 997 million, compared to NOK 996 mil- lion the previous year. The Group’s proﬁt before tax was NOK 238 million (NOK 129 million). Tax expenses was NOK 41 million (NOK 55 million). Proﬁt after tax for 2023 was NOK 197 million (NOK 74 million). The 2023 operating revenue of the parent company Elmera Group ASA was NOK 223 million (NOK 86 million) and operating expenses was NOK 339 million (NOK 132 million). The 2023 operating revenue in Elmera Group ASA are revenues from providing man- agement-, IT, and other support services to Group companies. The parent company’s proﬁt before tax was Part 4 – 4.1 Board of Directors’ Report NOK 404 million (2022: NOK 124 million). Tax expenses was NOK 28 million (2022: NOK 11 million). Proﬁt after tax for 2023 was NOK 376 million (2022: NOK 112 million). The increase in proﬁt is primarily due to an increase in dividends from subsidiaries, which are rec- ognised as Income from investments in sub- sidiaries. Allocation of the year’s proﬁt As per IFRS accounting rules, the IFRS ﬁnan- cial statements for 2023 show no provisions for dividends on 31 December 2023. The board has proposed a dividend of NOK 2.30 per share to be approved by the General Meeting. Statement of ﬁnancial position The assets in the Elmera Group mainly consist of current assets in the form of trade receiva- bles and derivative ﬁnancial instruments, and non-current assets in the form of goodwill and intangible assets. Current assets amount to approximately 60 per cent of the Group’s total assets, while non-current assets cor- respond to 40 per cent. Due to variations in electricity price and consumption, the value of total assets varies signiﬁcantly from period to period. Total assets have decreased with NOK 6,037 million in 2023, mainly due to a reduction in trade receivables and deriva- tive ﬁnancial instruments. In 2023, equity has increased by NOK 279 million from NOK 1,240 million to NOK 1,519 million.The Group’s equity ratio has increased from 9 per cent on 31 December 2022 to 18 per cent on 31 December 2023. Total current liabilities have decreased by NOK 4,950 million from 2022. This is largely related to decreased trade and other payables and derivative ﬁnancial instruments. Total non-current liabilities have decreased by NOK 1,366 million. The main reasons are reductions in derivative ﬁnancial instruments and onerous contract provisions. In 2023, Elmera Group ASA’s total assets have decreased with NOK 243 million, mainly due to a decrease in Receivables from group companies, which are the amounts the Group companies have drawn on the group account system. The parent company is the holder of the group account system, which is connected to the Group’s Overdraft facility. Drawing under the facility decreased with NOK 534 million in 2023. Compared to 2022, Interest-bearing long-term debt has decreased with NOK 44 million, liabilities to related parties has increased with NOK 91 million, and Interest-bearing short-term debt was unchanged. Elmera Group ASA’s equity has increased with NOK 142 million, and the equity ratio has increased from 46 per cent on 31 December 2022 to 54 per cent on 31 December 2023. Key ﬁgures In total, the Group had 1,003 thousand elec- tricity deliveries at year-end 2023. This is a decrease of 38 thousand electricity deliveries from 2022. The number of mobile subscribers in the Group was 115 thousand. There has been a 7 per cent increase in total volume delivered to the Consumer and Business seg- ments, from 14.6 TWh in 2022 to 15.7 TWh in 2023. The Nordic segment delivered 2.20 TWh in 2023. ROE (Return on equity) was 14 per cent in 2023, compared to 5 per cent in 2022. Cash ﬂow analysis Due to ﬂuctuations in price and consumption, both between years and within a year, the cash ﬂow analysis can vary signiﬁcantly. Net cash from operating activities has increased from NOK -370 million in 2022 to NOK 1 018 million in 2023. The increase was mainly driven by change in trade receivables and trade payables. Net cash used in investing activities was NOK 65 million in 2023 com- pared to 24 million in 2022. Corporate Finance The governance of the Elmera Group is based on the Norwegian Code of Practice for Corporate Governance (NUES). See separate chapter in the report, Corporate Governance report, for more about the governance prin- ciples and practice. Financial risk management The Group classiﬁes the following categories of ﬁnancial risks: • Climate risk • Market risk • Credit risk • Liquidity risk Climate risk In preparing Elmera Group’s annual ﬁnancial statements, a comprehensive evaluation of climate-related risks was conducted to accu- rately reﬂect the Group’s ﬁnancial position and Annual report 2023 99 outlook. This evaluation considered the poten- tial impacts of physical risks, such as extreme weather events and shifts in climate patterns, as well as transition risks associated with the global move towards a low-carbon economy. Physical risk involves costs associated with physical damage due to climate change. Elmera Group has very few assets that could be physically damaged as a consequence of climate change. The increased frequency of extreme weather conditions could result in signiﬁcant damage to grid owners’ infra- structure, which could aﬀect Elmera Group’s reputation in the event of prolonged power outages. The Group’s exposure to physical risk is considered to be low. Transitional risk involves economic uncer- tainty related to the transition to a low-emis- sion society, and is divided into four categories: Technology, Market, Policy and Reputation. As we are transitioning towards a low-emis- sion society, the mix of production sources will change, which again can aﬀect commodity prices. This is further described under “mar- ket risk – commodity prices”. Elmera Group is operating in a renew- able industry and the demand for electric- ity is expected to increase going forward. Increased penetration of solar panels among consumers can reduce the customers’ con- sumption of electricity through the electricity retailers, but also represents growth oppor- tunities for the Group, as the Group is both a distribution channel of solar panels and facil- itates solutions for i.a. insight and virtual stor- age of production. This area is an important focus area for the Group in the years to come. The various aspects of climate risk men- tioned above have been assessed for their potential inﬂuence on the recognition, meas- urement, depreciation proﬁles and impairment considerations of the Group’s assets and lia- bilities, and it was concluded that, as of the current reporting period, climate-related risks do not have material eﬀects on the Group’s ﬁnancial statements. The Group’s ESG-report contains more information about climate risk and how these are managed. Market risk Market risk is the risk of losses arising from movements in market prices. The Group is pri- marily exposed to the market risks of changes in commodity prices, climate risk, interest rates, security prices and foreign currency exchange rates. Market risk – commodity prices The commodity price risks related to sales of electricity to end-users are primarily related to market prices for electricity, but also to mar- ket prices of el-certiﬁcates and guarantees of origination (GoOs). The market price for electricity (spot price) is the hourly price from the Nordic power exchange Nord Pool Spot. Norway, Sweden, and Finland are geographically divided into diﬀerent electricity price areas. The spot price is determined by Nord Pool Spot within each of these price areas by the balance between demand and supply. Diﬀerent factors have contributed to high price volatility for a sustained period. These include geopolitical conditions, such as Russia’s invasion of Ukraine and the conse- quences of this for gas supplies in Europe, high CO2 prices, and the transition to renewa- bles that bring more non-regulated power into the system. Going forward, the new normal is expected to be characterised by higher price volatility than before the electricity price crisis. This leads to unpredictability related to electricity costs, perceived as challenging by many in both the private and corporate sectors. A higher ratio of renewable energy in the power system also increases price volatil- ity. Production will vary according to weather conditions. The price of electricity produced from coal and gas is aﬀected by high CO2 prices. Weather conditions also aﬀect the demand side. Climate change therefore aﬀects key factors such as price and volume. It also drives regulation and increased reporting requirements, as well as the demand for prod- ucts such as solar panels and guarantees of origin. The Group’s ESG-report contains more information about climate risk and how these are managed. When selling electricity to end users, the Group oﬀers a large scale of diﬀerent product types with diﬀerent pricing structures. The product types vary from spot-priced products, where the sales prices are connected to the spot price the Group pays when purchasing the electricity in the spot market, to variable price and ﬁxed price contracts where the sales price is a ﬁxed price for a ﬁxed period. The diﬀerent product types expose the Group to diﬀerent risks, including price risk, proﬁle risk, and volume risk. Proﬁle risk arises when using standardised electricity deriva- tives, where the contractual price is ﬁxed for all hours during the contractual period, to hedge power sales in the retail market where power prices vary from hour to hour throughout the day and week. The majority of end-user-sales in Norway are from spot-priced product types, where there is no price-, proﬁle- or volume risk. Variable price contracts oﬀer the customers a set price with no volume limitation. The price in the variable price products in the consumer segment can be changed with a 30 days’ notice period. In the business segment the notice period is seven days. In the Consumer segment, the Group has initiated a soft phase-out of these contracts and year-end 2023 this contract type represents less than 7 per cent of the custom- ers in the segment. A portion of end-user sales in the Nordic segment are at ﬁxed price contracts. The volume of ﬁxed price power contracts has decreased during the year due to a phase-out of the product and movement to solely spot- based products for new customers. These legacy ﬁxed price contracts were contracts without ﬁxed volume, exposing the Group to both price-, proﬁle-, and volume risks. The Group ended new sales of this type of ﬁxed price contracts in the Nordic segment during the ﬁrst quarter of 2022. Since then, new sales of ﬁxed price contracts are contracts where the customer carries the price-, proﬁle-, and volume risks. Thus, the Group’s exposure to these risks was signiﬁcantly decreased in 2022 Part 4 – 4.1 Board of Directors’ Report Annual report 2023 100 and further decreased through 2023, as ﬁxed price contracts expired. Whenever Elmera enters into customer contracts where the electricity sales price is ﬁxed or partially ﬁxed, the related price risk is managed by purchasing ﬁnancial electric- ity derivatives for hedging purposes. When hedging the price risk from ﬁxed price con- tracts without ﬁxed volume, the electricity vol- ume expected to be delivered on the ﬁxed price contracts is estimated. To manage the volume risk in these customer contracts the volume estimates are periodically updated, and the portfolios of hedging derivatives are rebalanced accordingly. The remaining risk exposure is taken into account when pricing these customer contracts. The Group oﬀers large business customers and Alliance partners to enter into ﬁnancial power contracts, enabling them to utilize the market for ﬁnancial trading of electricity to hedge the price risks in (parts of) their elec- tricity purchases and/or sales. Any ﬁnancial derivative sold to a business customer is hedged back-to-back by purchasing a cor- responding ﬁnancial derivative from a third party, thus any price or volume risk on these ﬁnancial customer contracts is eliminated. The Group’s ﬁnancial electricity trade is mainly conducted through agreed bilateral frame- works with Statkraft as the main trade counter party. When selling electricity to end users in Norway and Sweden, the Group is required to purchase and cancel el-certiﬁcates. Further, when selling electricity on products includ- ing guarantees of origination, the Group is required to purchase and cancel GoOs. To manage risk exposure towards ﬂuctuations in el-certiﬁcate and GoO market prices, the Group purchases el-certiﬁcates and GoOs, either in the spot market, or by purchasing forward contracts. Market risk – interest rates The Group’s exposure to interest rate risk arises from the Group’s variable rate credit facilities. The long-term loans, the revolving credit facility, the guarantee facility and the overdraft facility, are all variable rate facili- ties. In addition, interest rate risk is related to short-term trade payables towards Statkraft related to purchase of electricity, and short- term receivables for customers who choose to extend their payment terms. Variable rate credit facilities, trade payables, and trade receivables expose the Group to cash ﬂow interest rate risks. The Group has set out parameters to actively monitor this risk going forward. Market risk – security prices The Group is indirectly exposed to security price risk through its deﬁned employee beneﬁt obligations where parts of the pension plan assets are invested in securities. This risk is managed through investment in diversiﬁed portfolios managed by external insurance companies. Market risk – foreign exchange rates Following the acquisition of Troms Kraft Strøm AS and its subsidiaries’ operations in Sweden and Finland, the Group increased its expo- sure to foreign exchange risk (primarily the Swedish Krone and the Euro). The acquisition was ﬁnanced by a term loan denominated in NOK, and cash in hand. The Group’s operations however still have limited exposure to foreign exchange cur- rency ﬂuctuations, as the vast majority of local revenues, operating expenses and ﬁnancial expenses are denominated in local currency. Through its agreement with Statkraft, the Group has the opportunity to conduct all of its physical and ﬁnancial purchase of electricity in local currency. Credit risk Credit risk refers to the risk that a counter- party will default on its contractual obligations resulting in ﬁnancial loss to the Group. As of 31 December 2023, the Group’s maximum exposure to credit risk without taking into account any collateral held or other credit enhancements, equals the carrying amount of the respective recognised ﬁnancial assets as stated in the consolidated statement of ﬁnancial position. Trade receivables consists of a large num- ber of receivables on end-user customers, mainly households and business customers spread across diverse industries in Norway, Sweden and Finland. The Group uses an external credit scoring system to assess the potential customer’s credit quality before accepting any new customer. The Group uses publicly available ﬁnancial information and its own trading records to rate its business customers. In addition to invoicing electricity sales and other services provided to customers, the Group provides re-invoicing to customers in Norway related to grid rent on behalf of the grid owners (“gjennomfakturering”). This contributes to an increase in credit risk as the amount of trade receivables increases with the re-invoiced grid rent. However, the Norwegian power support scheme (“strøm- støtteordningen”) has signiﬁcantly reduced the amounts which are re-invoiced, and thus the related credit risk. The power support scheme has been revised by the Norwegian government and extended to include the year 2024. The government has recognised the need for extension also throughout 2025, but no ﬁnal decisions will be made before fall 2024.The Group is required to provide letters of credit to the grid owners, guaranteeing their settlement of re-invoiced grid rent. However, the grid owners are not required to reimburse the Group for any re-invoiced grid rent not settled by the customer. The credit risk on bank deposits is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies. Derivative ﬁnancial contracts are traded either bilaterally with third party counterparties (mainly Statkraft), or customers (mainly large business customers and Alliance partners). Credit risk associated with derivative ﬁnan- cial contracts with Statkraft (and other third parties) is considered to be limited as these counterparties are highly rated state-owned enterprises. The credit risk related to deriv- ative ﬁnancial contracts with customers is managed by only oﬀering ﬁnancial contracts to customers with a suﬃcient credit rating, or Part 4 – 4.1 Board of Directors’ Report Annual report 2023 101 by requiring security from the customer in the form of a deposit or a letter of credit. Liquidity risk The Group manages liquidity risk by maintain- ing adequate cash reserves, bank overdraft facilities and reserve credit facilities, by con- tinuously monitoring forecasts and actual cash ﬂows, and by matching the maturity proﬁles of ﬁnancial assets and liabilities. Electricity purchased under the Group’s electricity pur- chase agreement with Statkraft, which is the Group’s most signiﬁcant purchase agreement, are invoiced monthly in arrear, with a 45-day payment term. In addition, the agreement in Norway includes a right for the Group to post- pone these payments for additional 15 days if the volume weighted average price excl. VAT exceeds NOK 1.00 per kWh. Outlook National and international energy situation While 2022 was an extreme year for the energy markets, the situation changed a lot during 2023. There are still periods with high electricity prices, but the supply side in the European energy markets is back at a level with suﬃcient access to electricity and gas to address the ongoing needs. There is still a great need for continued investment in and development of electricity production from renewable energy sources nationally and internationally. In October, the Extraordinary Power Price Committee presented its report on the energy and electricity market that was commissioned by the Norwegian government. The report can be summarised to state that Norway generally has a well-functioning electricity market and that there is an urgent need to increase the production of renewable energy. The report points out that expansion with greater produc- tion capacity is delayed by long processing times, and that climate change and environ- mental issues are set oﬀ against each other. The Norwegian debate in 2023 also con- cerned infrastructure and how to obtain suf- ﬁcient transmission capacity in the grid to increase electriﬁcation. As of today, capacity limitations in the electricity distribution net- work impose establishment barriers for the business sector in some regions, and the investment requirement in the transmission network is signiﬁcant. From the perspective of Elmera Group, this also entails a number of opportunities. There will be a need for prod- ucts and services that facilitate power bal- ancing, alternative solutions for grid capacity and decentralised production. The Group will strengthen its services related to solar energy, the ﬂexibility market and energy optimisation. Regulatory framework conditions With the special situation from 2023 as a backdrop, it is natural that power generation, capacity in the transmission grid, predicta- bility of electricity costs for businesses, and consumer rights have been the subject of a number of consultations launched by authori- ties and in reports. Power and energy-related issues have been important in the open politi- cal discussion and within the political parties. Throughout this year, the Group has taken a very active role in its governance work and has strengthened its dialogue with trade asso- ciations, authorities and politicians. Elmera Group is a major player in both the business and consumer market, with operations in Norway, Sweden and Finland. The company believes that a positive dialogue can be achieved by contributing relevant expertise on the key issues, and through a willingness to consider diﬀerent aspects of a case and enable sound and feasible solutions to spe- ciﬁc challenges. The company’s innovation experience, and experience with the formula- tion of guidelines, and as a representative of the Norwegian industry in Eurelectric, means that the company is listened to as a source of expertise by various political, regulatory and other professional environments. Among the most important issues for the Group to work on are the following: The frame- work conditions must facilitate a well-function- ing ﬁnancial market for electricity trading. The power market is expected to remain volatile going forward. It is very important to maintain a liquid, transparent and well-functioning mar- ket for trading in ﬁnancial electricity contracts. The ﬁnancial market provides risk mitigation for major consumers of electricity, private customers, power producers and electricity retailers. The Group will also work to improve the sub- sidy schemes for energy eﬃciency and local electricity production. If the national energy eﬃciency goals and new local production are to be achieved by 2030, sales-triggering sub- sidy schemes must be in place. These must also include known technologies in function- ing markets, although they may be marginally proﬁtable. In 2022 and 2023, the consumer market in Norway received considerable attention from the government and other politicians, the reg- ulator, the Energy Commission, the Consumer Authority and the Consumer Council. Several clariﬁcations and changes in the regulations for consumers in the Norwegian electricity market were introduced during the year. Today’s system of government electricity subsidies will last for the rest of 2024 and the Government has recognised the need for continuation through 2025. Final decision is expected to be announced during fourth quarter. The company has provided input to author- ities of relevance to the introduction of new regulations. For Elmera as a large and serious player it is important to contribute expertise and experience from the market. Cybersecurity and artiﬁcial intelligence The risk of cyberattacks and compromis- ing of business data is a worldwide threat. Throughout the year, the Board engaged in risk assessments related to cyber security and preventive measures against attacks. This is something the Board will also follow closely in the future. The use of generative artiﬁcial intelligence (AI) is expected to lead to major changes over the next few years. AI creates both major challenges and great opportunities. Increased threats to companies’ data security, dissem- Part 4 – 4.1 Board of Directors’ Report Annual report 2023 102 ination of misinformation, and privacy and copyright violations are some of the possi- ble negative eﬀects. There is also reason to expect positive eﬀects both on the top and bottom line. These are technological changes that require great human capacity for change and a willingness to leverage innovations to increase competitiveness. The Group is working on multiple projects related to the use of generative AI, both within customer relations, forecasting of consump- tion and power purchasing. The Board’s focus in this area will be to choose good strategies for protection against cyberattacks and for how artiﬁcial intelligence should be exploited for business purposes in the Group. Continued consolidation The Group did not make any acquisitions in 2023. Assuming that the right opportunities are in place, the Board wishes to continue the Group’s consolidation strategy in Norway and the Nordic region in the coming years. The future Authorities and companies align with the need for decarbonisation, increased renewable pro- duction and more eﬃcient energy utilisation. Climate targets are part of most companies’ business operations. This leads to demand for climate-friendly products and services. The Group is adapting its organisation and innova- tion portfolio to leverage these opportunities. Elmera Group’s companies will continue their eﬀorts to further develop the value prop- ositions adapted to the green transition with products and services that create increased predictability, and opportunities for local energy production, energy saving and man- agement. With its size, resources and expertise, Elmera Group is well-prepared for further development and operation. The Board wishes to thank everyone who works for the Group for their eﬀorts and contributions to this year’s results. Per Oluf Solbraa Board member Heidi Theresa Ose Board member Rolf Barmen CEO Frank Økland Board member Steinar Sønsteby Chairman Live Bertha Haukvik Board member Stian Madsen Board member Magnhild K. B. Uglem Board member Anne Marit Steen Board member Part 4 – 4.1 Board of Directors’ Report The Board of Directors of Elmera Group ASA, Bergen, 22 March 2023. 4.2 Financial statements Elmera Group Part 4 – 4.2 Financial statements Elmera Group Consolidated statement of proﬁt or loss 104 Consolidated statement of comprehensive income (loss) 105 Consolidated statement of ﬁnancial position 106 Consolidated statement of changes in equity 108 Consolidated statement of cash ﬂows 109 Annual report 2023 103 Annual report 2023 104 NOK in thousands Note 2023 2022 Continuing operations Revenue 3, 4 18 920 598 25 521 514 Direct cost of sales 3, 5, 18 (17 192 526) (23 823 519) Personnel expenses 3, 10, 17, 22 (454 622) (421 029) Other operating expenses 3, 11 (542 277) (574 946) Depreciation and amortisation 3, 4, 14, 15, 24 (386 519) (389 956) Impairment of intangible assets and cost to obtain contracts 15,18 14 548 (39 282) Operating proﬁt 359 202 272 781 Income/loss from investments in associates and joint ventures 27 750 429 Interest income 6 32 069 26 952 Interest expense lease liability 24 (1 621) (1 934) Interest expense 6 (148 268) (156 876) Other ﬁnancial items, net 6, 11 (4 555) (12 660) Net ﬁnancial income/(cost) (121 625) (144 089) Proﬁt/(loss) before tax 237 577 128 692 Income tax (expense)/income 12 (41 030) (54 845) Proﬁt/(loss) for the year 196 546 73 847 Proﬁt/(loss) for the period attributable to: Non-controlling interest 25 4 258 - Equity holders of Elmera Group ASA 192 288 73 847 Basic earnings per share (in NOK) 13 1,77 0,67 Diluted earnings per share (in NOK) 13 1,74 0,66 Consolidated statement of profit or loss Part 4 – 4.2 Financial statements Elmera Group Annual report 2023 105 NOK in thousands Note 2023 2022 Proﬁt/(loss) for the year 196 546 73 847 Other comprehensive income: Items which may be reclassiﬁed over proﬁt or loss in subsequent periods: Hedging reserves, cash ﬂow hedges (net of tax) 9 57 270 16 209 Currency translation diﬀerences 42 923 (756) Total 100 193 15 454 Items that will not be reclassiﬁed to proﬁt or loss: Actuarial gain/(loss) on pension obligations (net of tax) 12, 17 24 504 3 610 Total 24 504 3 610 Total other comprehensive income/(loss) for the year, net of tax 124 698 19 064 Total comprehensive income/(loss) for the year 321 244 92 911 Total comprehensive income/(loss) for the period attributable to: Non-controlling interest 25 4 258 - Equity holders of Elmera Group ASA 316 986 92 911 Consolidated statement of comprehensive income (loss) Part 4 – 4.2 Financial statements Elmera Group Annual report 2023 106 NOK in thousands Note 2023 2022 Assets Non-current assets Deferred tax assets 12 37 466 34 990 Right-of-use assets property plant and equipment 24 57 121 66 195 Property, plant and equipment 14 5 315 8 198 Goodwill 15 1 439 389 1 418 776 Intangible assets 15 454 051 558 325 Cost to obtain contracts 4 265 350 295 980 Investments in associates and joint ventures 27 21 484 14 234 Derivative ﬁnancial instruments and ﬁrm commitments 6, 7, 8 878 524 1 863 551 Net plan assets of deﬁned beneﬁt pension plans 17 30 900 4 178 Other non-current ﬁnancial assets 6, 28 133 665 48 285 Total non-current assets 3 323 265 4 312 711 Current assets Intangible assets 15 3 854 763 Inventories 371 460 Trade receivables 6, 21 3 989 741 7 551 433 Derivative ﬁnancial instruments and ﬁrm commitments 6, 7, 8 666 196 2 370 117 Other current assets 20 12 471 66 025 Cash and cash equivalents 6 338 746 70 548 Total current assets 5 011 380 10 059 347 Total assets 8 334 645 14 372 058 Equity and liabilities Equity Share capital 16 32 601 32 590 Share premium 16 993 294 993 294 Other equity 371 839 214 241 Non-controlling interests 25 121 175 - Total equity 1 518 911 1 240 126 Consolidated statement of financial position Part 4 – 4.2 Financial statements Elmera Group Annual report 2023 107 NOK in thousands Note 2023 2022 Non-current liabilities Net employee deﬁned beneﬁt plan liabilities 17 63 921 79 780 Interest-bearing long term debt 6 537 617 629 169 Deferred tax liabilitites 12 82 843 100 280 Lease liability- long term 24 40 945 49 477 Derivative ﬁnancial instruments and ﬁrm commitments 7, 6, 8 872 366 1 492 743 Onerous contract provisions 18 68 383 784 239 Other provisions for liabilities 28 132 884 29 619 Total non-current liabilities 1 798 961 3 165 307 Current liabilities Trade and other payables 6, 21 3 246 231 5 828 373 Overdraft facilities 6 - 534 112 Interest-bearing short term debt 6 368 700 368 700 Current income tax liabilities 12 82 910 50 506 Derivative ﬁnancial instruments and ﬁrm commitments 6, 7, 8, 9 599 909 1 692 584 Social security and other taxes 125 608 313 504 Lease liability- short term 24 19 391 20 284 Onerous contract provisions 18 24 879 285 336 Other current liabilities 6, 19 549 145 873 227 Total current liabilities 5 016 773 9 966 625 Total liabilities 6 815 734 13 131 932 Total equity and liabilities 8 334 645 14 372 058 Consolidated statement of ﬁnancial position Part 4 – 4.2 Financial statements Elmera Group The Board of Directors of Elmera Group ASA, Bergen, 22 March 2024. Per Oluf Solbraa Board member Heidi Theresa Ose Board member Stian Madsen Board member Magnhild K. B. Uglem Board member Rolf Barmen CEO Frank Økland Board member Steinar Sønsteby Chairman Live Bertha Haukvik Board member Anne Marit Steen Board member Annual report 2023 108 Consolidated statement of changes in equity NOK in thousands Issued capital Treasury shares Share premium Hedging reserves Foreign currency translation reserve Retained earnings Attributable to owners of parent Non-con- trolling interests Total Balance at 1 January 2022 34 291 - 992 094 (71 347) (67 775) 787 005 1 674 269 - 1 674 269 Proﬁt/(loss) for the year - - - - - 73 847 73 847 - 73 847 Share-based payment (note 26) - - - - - 4 790 4 790 - 4 790 Other comprehensive income/(loss) for the year, net of tax - - - 16 209 (756) 3 610 19 064 - 19 064 Total comprehensive income/(loss) for the period incl. share-based payment - - - 16 209 (756) 82 247 97 701 - 97 700 Share buyback (note 16) - (1 715) - - - (131 112) (132 827) - (132 827) Share capital increase (note 13) 15 - 1 200 - - - 1 215 - 1 215 Dividends paid (note 13) - - - - - (400 231) (400 231) - (400 231) Transactions with owners 15 (1 715) 1 200 - - (531 343) (531 843) - (531 843) Balance at 31 December 2022 34 306 (1 715) 993 294 (55 137) (68 531) 337 909 1 240 126 - 1 240 126 Balance at 1 January 2023 34 306 (1 715) 993 294 (55 137) (68 531) 337 909 1 240 126 - 1 240 126 Proﬁt/(loss) for the year - - - - - 192 288 192 288 4 258 196 546 Share-based payment (note 26) - - - - - 2 828 2 828 - 2 828 Other comprehensive income/(loss) for the year, net of tax - - - 57 270 42 923 24 504 124 698 - 124 698 Total comprehensive income/(loss) for the period incl. share-based payment - - - 57 270 42 923 219 620 319 814 4 258 324 072 Sale of treasury shares (note 16) - 11 - - - 736 747 - 747 Transactions with non-controlling interests (note 25) - - - - - - - 116 917 116 917 Dividends paid (note 13) - - - - - (162 951) (162 951) - (162 951) Transactions with owners - 11 - - - (162 215) (162 204) 116 917 (45 287) Balance at 31 December 2023 34 306 (1 704) 993 294 2 133 (25 608) 395 315 1 397 736 121 175 1 518 911 Part 4 – 4.2 Financial statements Elmera Group Annual report 2023 109 NOK in thousands Note 2023 2022 Operating activities Proﬁt/(loss) before tax 237 577 128 692 Adjustments for: Depreciation 14, 15 172 280 183 760 Depreciation right-of-use assets 24 20 230 20 303 Amortisation of cost to obtain contracts 4 194 008 185 893 Impairment of intangible assets and cost to obtain contracts 15 (14 548) 39 282 Interest income 6 (32 069) (26 952) Interest expense lease liability 24 1 621 1 934 Interest expense 6 148 268 156 876 Income/loss from investments in associates and joint ventures 27 (750) (429) Change in long-term receivables 6 21 686 25 Share based payment expense 26 2 828 4 790 Change in post-employment liabilities 17 (11 165) (13 607) Payments to obtain a contract 4 (140 991) (237 550) Changes in working capital (non-cash eﬀect): Impairment loss recognised in trade receivables 6 (10 245) 4 402 Provision for onerous contracts 18 (1 048 166) (39 256) Change in fair value of derivative ﬁnancial instruments 6, 7 1 120 697 12 182 Changes in working capital: Inventories 90 1 686 Trade receivables 6, 21 3 596 368 (2 385 823) Purchase of el-certiﬁcates, GoOs and Climate Quotas 15 (93 300) (38 527) Non-cash eﬀect from cancelling el-certiﬁcates, GoOs and Climate Quotas 15, 19 90 209 45 373 Other current assets 20 54 472 (26 609) Trade and other payables 6, 21 (2 571 647) 1 297 999 Other current liabilities 19 (528 744) 515 278 Cash generated from operations 1 208 709 (170 276) Interest paid (172 046) (123 449) Interest received 32 069 26 952 Income tax paid 12 (50 336) (103 339) Net cash from operating activities 1 018 397 (370 112) Condensed consolidated statement of cash flows Part 4 – 4.2 Financial statements Elmera Group Annual report 2023 110 NOK in thousands Note 2023 2022 Investing activities Purchase of property, plant and equipment 14 (627) (3 325) Purchase of intangible assets 15 (52 124) (41 007) Net cash outﬂow on acquisition of shares in associates 27 (6 500) - Net (outﬂow)/proceeds from non-current receivables 6 (3 716) 6 474 Net (outﬂow)/proceeds from other long-term liabilities (2 010) 13 485 Net cash used in investing activities (64 977) (24 373) Financing activities Proceeds from overdraft facilities 6 (534 112) 534 112 Proceeds from revolving credit facility 6 150 000 275 000 Repayment of revolving credit facility 6 (150 000) - Proceeds from issuance of shares 13 - 1 215 Dividends paid 13 (162 951) (400 231) Purchase of treasury shares 16 - (132 827) Sale of treasury shares 16 747 - Instalments of long term debt 6 (93 700) (93 700) Transactions with non-controlling interests 25 116 917 - Payment of lease liability 24 (20 606) (20 245) Net cash used in ﬁnancing activities (693 705) 163 324 Net change in cash and cash equivalents 259 715 (231 162) Cash and cash equivalents at 1 January 70 548 306 627 Eﬀects of exchange rate changes on cash and cash equivalents 8 483 (4 918) Cash and cash equivalents at 31 December 338 746 70 548 Consolidated statement of cash ﬂows Part 4 – 4.2 Financial statements Elmera Group 4.3 Notes Elmera Group Part 4 – 4.3 Notes Elmera Group Note 1 Accounting policies 112 Note 2 Signiﬁcant accounting judgements, estimates and assumptions 123 Note 3 Segment information 125 Note 4 Revenue recognition 128 Note 5 Direct cost of sales 132 Note 6 Financial assets and ﬁnancial liabilities 132 Note 7 Fair value measurement of ﬁnancial instruments 139 Note 8 Financial risk management objectives 142 Note 9 Hedge accounting 147 Note 10 Personnel expenses 151 Note 11 Other operating expenses and other ﬁnancial items 152 Note 12 Income tax 153 Note 13 Earnings per share 156 Note 14 Property, plant and equipment 157 Note 15 Intangible assets 158 Note 16 Share capital 162 Note 17 Pension liabilities 164 Note 18 Onerous contract provisions 171 Note 19 Other current liabilities 173 Note 20 Other current assets 173 Note 21 Related party transactions 174 Note 22 Remuneration to the Executive management and Board of Directors 175 Note 23 Collateral and restricted assets 179 Note 24 IFRS 16 Leases 180 Note 25 Subsidiaries and subsidiaries with non-controlling interests 182 Note 26 Option Program 184 Note 27 Investments in associates and joint ventures 186 Note 28 Provisions for other liabilities and other assets 186 Note 29 Events after the reporting period 186 Directors responsibilty statement 187 Alternative performance measures 188 Annual report 2023 111 Annual report 2023 112 Part 4 – 4.3 Notes Elmera Group Note 1 Accounting policies General information (EU) and interpretations issued by the IFRS ® These consolidated ﬁnancial statements for Interpretations Committee (IFRS IC) applica- Elmera Group ASA for the year ended 31 ble to companies reporting under IFRS. The The Group has not early adopted any account- December 2023, was approved by the Board consolidated ﬁnancial statements also com- ing standard, interpretation or amendment of Directors on 22 March 2024. ply with IFRS as issued by the International that has been issued but is not yet eﬀective. Elmera Group ASA and its subsidiaries Accounting Standards Board (IASB). The Group will adopt new amendments and (together ‘the Group’, “Elmera” or “the Elmera interpretations, if relevant, when they become Group”) is a supplier of electrical power in eﬀective. Norway, Sweden and Finland. The company Below is a list of new amendments not yet is listed on Oslo Stock Exchange. The Group’s The accounting policies adopted are consist- eﬀective: core business is the purchase, sale and portfo- ent with those of the previous ﬁnancial year, lio management of electrical power to house- except for the amendments to IFRS which • Amendments to IFRS 16 – Lease liability in holds, private and public companies, and have been implemented by the Group dur- a sale and leaseback municipalities. The Group is also a provider of ing the current ﬁnancial year. Below we have • Amendments to IAS 1 – Classiﬁcation mobile phone services to private customers listed the amendments in IFRS which have of Liabilities as Current or Non-current in Norway. been applicable for the Group’s 2023 ﬁnancial Liabilities with Covenants Elmera Group ASA is incorporated and dom- statements: • Amendments to IAS 7 and IFRS 7 – iciled in Norway. The entity name was changed Supplier Finance Arrangements from Fjordkraft Holding ASA to Elmera Group • Amendments to IFRS 17 – Insurance • Amendments to IFRS 10 and IAS 28 – ASA in 2022. The address of its registered Contracts and Initial Application of IFRS Sale or Contribution of Assets between an oﬃce is Folke Bernadottes Vei 38, 5147 17 and IFRS 9 – Comparative information Investor and its Associate or Joint Venture. Bergen, Norway. • Amendments to IAS 8 – Deﬁnition of Basis of consolidation This note discloses material accounting Accounting Estimates policy information for the accounting policies • Amendments to IAS 12 – Deferred Tax These consolidated ﬁnancial statements adopted in the presentation of these consoli- related to Assets and Liabilities arising include the accounts of Elmera Group ASA dated ﬁnancial statements to the extent they from a Single Transaction and its subsidiaries (note 25). have not been disclosed in the other notes • Amendments to IAS 12 – International tax Going concern below. These policies have been consistently reform – pillar two model rules applied to all the years presented, unless oth- • Amendments to IAS 1 – Disclosure of The Group’s consolidated ﬁnancial statements erwise stated. Accounting Policies and IFRS Practice are prepared on a going concern basis. When Basis of preparation Statement 2 assessing this assumption, management has assessed all available information about the These amendments have not had a material future. This comprises information about net These consolidated ﬁnancial statements impact on the Group’s consolidated ﬁnancial cash ﬂows from existing customer contracts have been prepared in accordance with statements in the current reporting period. and other service contracts, debt service and International Financial Reporting Standards obligations. After making such assessments, (IFRS) as adopted by the European Union management has a reasonable expectation Compliance with IFRS New and amended standards adopted by the group New standards and interpretations not yet adopted Annual report 2023 113 Part 4 – 4.3 Notes Elmera Group that the Group has adequate resources to continue its operational existence for the fore- seeable future. Basis of measurement The consolidated ﬁnancial statements have been prepared under the historical cost con- vention, except for ﬁnancial assets recog- nised at fair value through proﬁt or loss, fair value through other comprehensive income, derivative ﬁnancial instruments, and deﬁned beneﬁt pension plans, which are measured at fair value. The preparation of consolidated ﬁnancial statements in conformity with IFRS requires the use of certain critical account- ing estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving higher degree of judgement or complexity, or areas where the assumptions and estimates are signiﬁcant to the consol- idated ﬁnancial statements are disclosed in note 2. Principles of consolidation Subsidiaries and subsidiaries with non-controlling interests Subsidiaries are all entities (including struc- tured entities) over which the Group has con- trol. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to aﬀect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the trans- action provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where nec- essary to ensure consistency with the policies adopted by the Group. The Group presents non-controlling inter- ests in its consolidated statement of ﬁnancial position within equity, separately from the equity of the owners of the parent company. Non-controlling interests are measured and recognized by the Group at fair value on the acquisition date. At each reporting period, the Group attributes the proﬁt or loss and each component of other comprehensive income to the owners of the parent and to the non-con- trolling interests. Joint ventures and associates The Group’s investments in joint ventures and associates are accounted for by using the equity method of accounting. Under this method, the investment is initially recognized at cost. Goodwill relating the associate or joint venture is included in the carrying amount of the investment and not tested for impairment individually. The income statement reﬂects the Group’s share of the net result after tax of the associate or joint venture. Any depreciation or amortization of the Group’s excess values are included in the net result from the joint ventures. Any change in other comprehen- sive income of the associate or joint venture is presented separately in the Group’s other comprehensive income. The ﬁnancial statements of the associate or joint venture are prepared for the same report- ing period as the Group. When necessary, adjustments are made to bring the accounting principles in line with those of the Group. The Group determines whether it is neces- sary to recognize an impairment loss on its investments in joint ventures or associates. At each reporting date, the Group determines whether there is objective evidence that the investments are impaired. If there is such evidence, the Group calculates the amount of impairment as the diﬀerence between the recoverable amount and the carrying amount of the investment. Any impairment loss is recognized as ‘share of proﬁt or loss from joint venture and associates’. The recovera- ble amount is the higher of value in use and fair value less cost to sell. The entire carry- ing amount of the investments are tested for impairment as one single asset. Changes in ownership interests When the Group ceases to consolidate or equity account for an investment because of a loss of control, joint control or signiﬁcant inﬂuence, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in proﬁt or loss. This fair value becomes the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or ﬁnancial asset. Business combinations and goodwill In order to consider an acquisition as a busi- ness combination, the acquired asset or groups of assets must constitute a business (an integrated set of operations and assets conducted and managed for the purpose of providing a return to the investors). The combination consists of inputs and processes applied to these inputs that have the ability to create output. Acquired businesses are included in the ﬁnancial statements from the acquisition date. The acquisition date is deﬁned as the date on which the company obtains control of the acquiree, which is generally the date on which the acquirer legally transfers the considera- tion, acquires the assets and assumes the liabilities of the acquiree. For convenience, the group may designate the acquisition date to the date at the end or the beginning of the month, rather than the actual acquisition date, unless events between this “convenience date” and the actual acquisition date result in material changes in amounts recognised. Comparative ﬁgures are not adjusted for acquired, sold or liquidated businesses. For accounting purposes, the acquisition method is used in connection with the purchase of businesses. Acquisition cost equals the fair value of the assets used as consideration, including contingent consideration, equity instruments issued and liabilities assumed in connec- Note 1 Accounting policies Annual report 2023 114 Part 4 – 4.3 Notes Elmera Group Note 1 issue debt or equity securities, are expensed the statement of proﬁt or loss on a net basis Goodwill and fair value adjustments arising Accounting policies as incurred. within other ﬁnancial items. on the acquisition of a foreign operation are Foreign currency translation Non-monetary items that are measured treated as assets and liabilities of the for- at fair value in a foreign currency are con- eign operation and translated at the closing verted to NOK using the exchange rates at rate. tion with the transfer of control. Acquisition the date when the fair value was determined. Revenue recognition cost is measured against the fair value of the acquired assets and liabilities. Identiﬁable intangible assets are included in connection with acquisitions if they can be separated from other assets or meet the legal contrac- tual criteria. If the acquisition cost at the time cial statements are presented in Norwegian revaluated. exchange for those goods or services. of the acquisition exceeds the fair value of the kroner (NOK), which is Elmera Group ASA’s The Group applies the following ﬁve step acquired net assets (when the acquiring entity functional and presentation currency. The method outlined in IFRS15 Revenue from achieves control of the transferring entity), goodwill arises. If the fair value of the net identiﬁable assets acquired exceeds the acquisition cost on the acquisition date, the excess amount is recog- Sweden, and Euro for its branch operating follows: contract; nised in proﬁt or loss immediately. in Finland. • assets and liabilities for each statement of 3. determine the transaction price; Goodwill is not depreciated, but is tested ﬁnancial position presented are translated 4. allocate the transaction price to the per- at least annually for impairment. In connec- at the closing rate at the date of that state- formance obligations in the contract; and tion with this, goodwill is allocated to the cash-generating units (CGUs) or groups of CGUs that are expected to beneﬁt from syn- ergy eﬀects of the acquisition. The allocation of goodwill may vary depending on the basis for its initial recognition. The estimation of fair value and goodwill may be adjusted up to 12 months after the takeover date if new information has emerged about facts and circumstances that existed at the time of the takeover and which, had they been known, would have aﬀected the calculation of the amounts that were included from that date. Acquisition-related costs, except costs to Functional and presentation currency Items included in the ﬁnancial statements of each of the Group’s entities are presented in the currency of the primary economic envi- ronment in which the entity operates (‘the functional currency’). The consolidated ﬁnan- functional currency in all Norwegian subsidi- aries in the Group is NOK. The functional cur- rency in the subsidiary Switch Nordic Green is Swedish Kroner (SEK) for its operations in Transactions and balances Transactions in currencies other than the enti- ty’s functional currency (foreign currency) are translated into the functional currency using the exchange rates at the dates of the trans- actions. Foreign exchange gains and losses result- ing from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign curren- cies at year end exchange rates are generally recognised in proﬁt or loss. Foreign exchange gains and losses that relate to borrowings are presented in the statement of proﬁt or loss, within ﬁnance costs. All other foreign exchange gains and losses are presented in Translation diﬀerences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are not subsequently Group companies The results and ﬁnancial position of foreign operations that have a functional currency diﬀerent from the presentation currency are translated into the presentation currency as ment of ﬁnancial position, • income and expenses for each statement of proﬁt or loss and statement of compre- hensive income are translated at average exchange rates (unless this is not a rea- sonable approximation of the cumulative eﬀect of the rates prevailing on the trans- action dates, in which case income and expenses are translated at the dates of the transactions), and • all resulting exchange diﬀerences are rec- ognised in other comprehensive income and accumulated in a foreign currency translation reserve. The Group recognises revenue when a cus- tomer obtains control of promised goods or services in an amount that reﬂects the con- sideration the Group expects to receive in Contracts with Customers, to all revenue streams: 1. identify the contract(s) with a customer; 2. identify the performance obligations in the 5. recognise revenue when (or as) the Group satisﬁes a performance obligation. The Group only applies the ﬁve-step model to contracts when it is probable that the Group will collect the consideration it is entitled to in exchange for the goods or services it trans- fers to the customer. At contract inception, once the contract is determined to be within the scope of IFRS 15, the Group assesses the goods or services promised within each contract and determines those that are per- formance obligations, and assesses whether each promised good or service is distinct. The Annual report 2023 115 Part 4 – 4.3 Notes Elmera Group Group then recognises as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or The carrying amount of deferred tax assets current and deferred tax are also recognised as) the performance obligation is satisﬁed. is reviewed at each balance sheet date and in other comprehensive income or directly in For a complete discussion of accounting for revenue, see Note 4 - Revenue Recognition. A proportion of the ﬁnal settlement of the Group’s sale of electrical power is made after the Group has ﬁnalised its annual ﬁnancial statements. Revenues related to sale of elec- tricity are estimated based on the volumes that have been physically delivered during the period. The physically delivered volume is apportioned in accordance with consump- tion forecasts for each customer group and price plan. The model is rooted in historical information however there is a degree of esti- mation uncertainty attached to the volume recognised if the temporary diﬀerence arises in other comprehensive income. Trade receivables, loans and other receivables apportioned to the various price segments from the initial recognition of goodwill or from The measurement of deferred tax liabilities that requires judgment by management when the initial recognition (other than in a business and assets reﬂects the tax consequences assessing. combination) of other assets and liabilities in that would follow from the manner in which Trade receivables, loans and other receiva- Income tax a transaction that aﬀects neither the taxable the Group expects, at the end of the report- bles are recognised initially at fair value and proﬁt nor the accounting proﬁt. ing period, to recover or settle the carrying subsequently measured at amortised cost Deferred tax liabilities are recognised for amount of its assets and liabilities. Deferred using the eﬀective interest method, less pro- taxable temporary diﬀerences arising on tax assets and liabilities are oﬀset when there vision for impairment. See note 6 and 8 for fur- Income tax The tax expense represents the sum of the tax currently payable and deferred tax. Current tax the group is able to control the reversal of the when they relate to income taxes levied by and credit risk. temporary diﬀerence and it is probable that the same taxation authority and the Group Financial assets The tax currently payable is based on taxable the temporary diﬀerence will not reverse in the intends to settle its current tax assets and proﬁt for the year. Taxable proﬁt diﬀers from foreseeable future. liabilities on a net basis. 1. Classiﬁcation net proﬁt as reported in the income state- Deferred tax assets arising from deduct- The Group classiﬁes its ﬁnancial assets in ment because it excludes items of income ible temporary diﬀerences associated with the following measurement categories: Note 1 or expense that are taxable or deductible in such investments and interests are only rec- Accounting policies other years and it further excludes items that ognised to the extent that it is probable that are never taxable or deductible. The group’s there will be suﬃcient taxable proﬁts against Current and deferred tax are recognised in liability for current tax is calculated using tax which to utilise the beneﬁts of the temporary proﬁt or loss, except when they relate to items rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax Deferred tax is the tax expected to be payable or recoverable on diﬀerences between the carrying amounts of assets and liabilities in the ﬁnancial statements and the corresponding tax bases used in the computation of taxable proﬁt, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable tem- porary diﬀerences and deferred tax assets are recognised to the extent that it is probable that taxable proﬁts will be available against which deductible temporary diﬀerences can be utilised. Such assets and liabilities are not investments in subsidiaries and associates, and interests in joint ventures, except where diﬀerences and they are expected to reverse in the foreseeable future. reduced to the extent that it is no longer probable that suﬃcient taxable proﬁts will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on tax laws and rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited in other comprehensive income, in which case the deferred tax is also dealt with is a legally enforceable right to set oﬀ current tax assets against current tax liabilities and Current tax and deferred tax for the year that are recognised in other comprehensive income or directly in equity, in which case, the equity respectively. Cash and cash equivalents The cash ﬂow statement is prepared using the indirect method. For the purpose of pres- entation in the statement of cash ﬂows, cash and cash equivalents includes cash on hand, deposits held at call with ﬁnancial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insigniﬁcant risk of changes in value. ther information about the Group’s accounting for trade receivables, loans, other receivables Annual report 2023 116 Part 4 – 4.3 Notes Elmera Group Note 1 ﬁnancial asset at its fair value plus, in the case For trade receivables, the Group applies accordance with IFRS 15 or as cost of sales. Accounting policies of a ﬁnancial asset not at fair value through the simpliﬁed approach permitted by IFRS Energy contracts that are electricity deriv- proﬁt or loss, transaction costs that are directly 9, which requires expected lifetime losses to atives and qualify for recognition in the state- attributable to the acquisition of the ﬁnancial be recognised from initial recognition of the ment of ﬁnancial position in accordance with asset. Transaction costs of ﬁnancial assets receivables. IFRS 9, are measured at fair value through • those to be measured subsequently at fair carried at fair value through proﬁt or loss are proﬁt and loss (unless they are designated value (either through other comprehensive recognised in proﬁt or loss. 4. Derecognition as hedging instruments - see below). This income, or through proﬁt or loss), and The Group derecognises a ﬁnancial asset includes the following types of energy con- • those to be measured at amortised cost. when the contractual rights to the cash ﬂows tracts: Subsequent measurement of debt instruments from the asset expire, or when it transfers • Physical power sales contracts which are The classiﬁcation depends on the entity’s business model for managing the ﬁnancial assets and the contractual terms of the cash ﬂows. For assets measured at fair value, gains and losses will either be recorded in proﬁt or loss or other comprehensive income. For invest- ments in debt instruments, this will depend on the business model in which the investment is held. For investments in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevoca- ble election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income. impaired. Interest income from these ﬁnan- proﬁt or loss. or purchased for the purpose of hedging Financial assets with embedded derivatives cial assets is included in ﬁnance income Energy contracts and hedging activities physical or ﬁnancial customer contracts. are considered in their entirety when deter- using the eﬀective interest rate method. Hence electricity derivatives are only used mining whether their cash ﬂows are solely for economic hedging purposes and not as payment of principal and interest. 3. Impairment Energy contracts that are entered into and speculative investments. However, where See note 6 and 8 for details about each type of ﬁnancial asset. The Group reclassiﬁes debt investments when and only when its business model for managing those assets change. 2. Measurement At initial recognition, the Group measures a Debt instruments depends on the Group’s business model for managing the asset and the cash ﬂow char- acteristics of the asset. There are three meas- urement categories in IFRS 9. The Group only applies the following measurement category for debt instruments: • Amortised cost: Assets that are held for collection of contractual cash ﬂows where those cash ﬂows represent solely payments of principal and interest are measured at amortised cost. A gain or loss on a debt investment that is subsequently measured at amortised cost is recognised in proﬁt or loss when the asset is derecognised or The Group assesses on a forward looking basis the expected credit losses associ- ated with its debt instruments at amortised cost. The impairment methodology applied depends on whether there has been a sig- niﬁcant increase in credit risk. Note 6 and 8 details how the Group determines whether there has been a signiﬁcant increase in credit risk. the ﬁnancial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Group retains substan- tially all the risks and rewards of the owner- ship of a transferred ﬁnancial asset, the Group continues to recognise the ﬁnancial asset and also recognises a collateralised borrowing for the proceeds received. At derecognition the diﬀerence between the asset’s carrying amount (including any cumu- lative gain or loss that previously has been recognised in other comprehensive income and accumulated in equity) and the sum of the consideration received is recognised in continue to be held for the purpose of the receipt or delivery of the power in accordance with the Group’s expected purchase or sale are accounted for as “own use” contracts. These contracts do not qualify for recogni- tion in the statement of ﬁnancial position in accordance with IFRS 9 but are accounted for as revenue from contracts with customers in considered as readily convertible to cash and are not entered into for own use. • Financial contracts to purchase and sell energy-related products classified as derivatives. • Embedded derivatives are separated and treated as derivatives when the risks and characteristics of the derivative are not closely related to the host contract, and the host contract is not measured at fair value. Electricity derivatives All of the Group’s ﬁnancial electricity deriva- tives are either ﬁnancial customer contracts, derivatives do not meet the hedge account- ing criterias, they are classiﬁed as ‘held for trading’ for accounting purposes and are accounted for at fair value through proﬁt or loss. Derivatives are presented as current assets or liabilities to the extent they are expected to be settled within 12 months after the end Annual report 2023 117 Part 4 – 4.3 Notes Elmera Group of the reporting period. Changes in the fair value of any derivative instrument that does not qualify for hedge accounting are recog- nised immediately in proﬁt or loss and are included in • Revenue - when the derivative instrument is a ﬁnancial custumer contract, or • Direct cost of sales - when the derivative instrument is purchased for the purpose of hedging physical or ﬁnancial customer contracts. See note 6, 7, 8 and 9 for details about each type of derivatives. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-meas- ured to their fair value at the end of each reporting period. The accounting for sub- sequent changes in fair value depends on whether the derivative is designated as a hedging instrument and, if so, the nature of the item being hedged. The group designates certain derivatives as hedges of a particular risk associated with the cash ﬂows of recog- nised assets and liabilities and highly prob- able forecast power purchase transactions (cash ﬂow hedges). Cash ﬂow hedges that qualify for hedge accounting The Group uses forward contracts to hedge forecast power purchase transactions. The eﬀective portion of changes in the fair value of derivatives that are designated and qualify as cash ﬂow hedges is recognised in the cash ﬂow hedge reserve within equity. The gain or loss relating to the ineﬀective portion is rec- ognised immediately in proﬁt or loss, within Direct cost of sales. Hedge eﬀectiveness is determined at the inception of the hedge relationship, and through periodic prospective eﬀectiveness assessments, to ensure that an economic relationship exists between the hedged item and hedging instrument. The gains or losses relating to the eﬀective portion of the change in fair value of the entire forward contract are recognised in the cash ﬂow hedge reserve within equity. Amounts accumulated in equity are reclassiﬁed in the periods when the hedged item aﬀects proﬁt or loss. When a hedging instrument expires, or is sold or terminated, or when a hedge no longer meets the criteria for hedge account- ing, any cumulative deferred gain or loss and deferred costs of hedging in equity at that time remains in equity until the forecast transac- tion occurs. When the forecast transaction is no longer expected to occur, the cumulative gain or loss and deferred costs of hedging that were reported in equity are immediately reclassiﬁed to proﬁt or loss. The fair values of derivative ﬁnancial instru- ments designated in hedge relationships, and movements in the hedging reserve in share- holders’ equity are shown in note 9. Fair value hedges that qualify for hedge accounting The Group designates certain derivatives as fair value hedges of power price risk associ- ated with certain ﬁrm commitments. The ﬁrm commitments which are the hedged items are ﬁxed price power purchase contracts, where the price is ﬁxed for the delivery of a ﬁxed volume in a ﬁxed delivery period in a desig- nated price area. The hedging instruments are ﬁxed price power sales contracts classiﬁed as ﬁnancial electricity derivatives. The objective of the economic hedging arrangements is to hedge the exposure to changes in the fair value of the ﬁxed price purchase contracts. The hedge ratio is 1:1 as the critical terms of the hedged items and the hedging instru- ments are identical. The fair value hedges are expected to be highly eﬀective. In a fair value hedge the value change in unrealised gains or losses of the hedg- ing instrument will meet the corresponding change in value of the hedged item and it is presented on the same line item in the state- ment of proﬁt or loss. Ineﬀectiveness is recog- nised in proﬁt or loss. Accumulated unrealised gains or losses on the hedged items are rec- ognised as ﬁrm commitments in the line item Derivative ﬁnancial instruments and ﬁrm com- mitments in the statement of ﬁnancial position. El-certiﬁcate foward contracts The sale of electricity to end users in Norway and Sweden gives rise to an el-certiﬁcate can- cellation liability. The Group enters into for- ward contracts to purchase el-certiﬁcates to be remitted to the government as settlement for the el-certiﬁcate cancellation liability. As a result, the Group’s contracts to purchase and sell electricity, and to purchase and remit el-certiﬁcates is delivered in quantities that will be used or sold in the Groups’ normal course of business. Hence, the contracts have been accounted for under the “own use” exemp- tion, are considered executory contracts, and are recognised in the consolidated ﬁnancial statements when the underlying purchase or sale has occurred. Property, plant and equipment Property, plant and equipment is stated at his- torical cost less depreciation. Historical cost includes expenditure that is directly attribut- able to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic beneﬁts associated with the item will ﬂow to the Group and the cost of the item can be measured reliably. The carry- ing amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to proﬁt or loss during the report- ing period in which they are incurred. The depreciation methods and periods used by the Group are disclosed in note 14. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period with the eﬀect of any changes in estimate accounted for on a prospective basis. An asset’s carrying amount is written down immediately to its recoverable amount if the Note 1 Accounting policies Annual report 2023 118 Part 4 – 4.3 Notes Elmera Group asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are deter- mined by comparing proceeds with carrying amount. These are included in the consoli- To determine the incremental borrowing • any initial direct costs, and 2. Software dated statement of proﬁt or loss. rate, the Group: • restoration costs. Costs associated with maintaining software Leases programs are recognised as an expense • where possible, uses recent third-party Right-of-use assets are generally depreci- as incurred. Development costs that are Right-of-use assets and lease liabilities aris- ing from a lease are initially measured on a present value basis. Lease liabilities Lease liabilities include the net present value of the following lease payments: not have recent third party ﬁnancing, and software so that it will be available for use • ﬁxed payments (including in-substance • makes adjustments speciﬁc to the lease, • management intends to complete the soft- ﬁxed payments), less any lease incentives eg term, country, currency and security. ware and use or sell it receivable Payments associated with short-term leases • there is an ability to use or sell the software • amounts expected to be payable by the group under residual value guarantees • the exercise price of a purchase option if the group is reasonably certain to exercise that option, and • payments of penalties for terminating the lease, if the lease term reﬂects the group reassessed and adjusted against the right- Intangible assets 1) Intangible assets acquired separately able, and exercising that option. of-use asset. Lease payments are allocated • the expenditure attributable to the software between principal and ﬁnance cost. The during its development can be reliably Lease payments to be made under reasona- bly certain extension options are also included in the measurement of the liability. The lease payments are discounted using the interest Note 1 rate implicit in the lease. If that rate cannot with IAS 38 - Intangible Assets and measured Accounting policies be readily determined, which is generally Right-of-use assets are measured at cost using the cost model. The el-certiﬁcates have the case for leases in the Group, the lessee’s comprising the following: an inﬁnite life and are acquired to be used to incremental borrowing rate is used, being the settle the el-certiﬁcate cancellation liability rate that the individual lessee would have to • the amount of the initial measurement of by remitting the respective numbers of certif- pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions. ﬁnancing received by the individual les- see as a starting point, adjusted to reﬂect changes in ﬁnancing conditions since third party ﬁnancing was received a purchase option, the right-of-use asset is intangible assets if, and only if all of the fol- • uses a build-up approach that starts with a depreciated over the underlying asset’s useful lowing conditions have been demonstrated: risk-free interest rate adjusted for credit risk for leases held by the Group, which does The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take eﬀect. When adjustments to lease payments based on an index or rate take eﬀect, the lease liability is ﬁnance cost is charged to proﬁt or loss over the lease period in order to produce a con- stant periodic rate of interest on the remaining balance of the liability for each period. Right-of-use assets lease liability • any lease payments made at or before the commencement date less any lease incen- tives received ated over the shorter of the asset’s useful life and the lease term on a straight-line basis. If the group is reasonably certain to exercise life. The group has chosen not to revalue the right-of-use buildings held by the group. Short-term leases and leases of low value assets and all leases of low-value assets are recog- nised on a straight-line basis as an expense in proﬁt or loss. Short-term leases are leases with a lease term of 12 months or less. Low- value assets comprise IT-equipment and small items of oﬃce furniture. 1. El-certificates and Guarantees of Origination (GoOs) Holdings of el-certiﬁcates and GoOs are rec- ognised as intangible assets in accordance icates to the government (refer to accounting policy ‘Provision of El-certiﬁcate cancellation liability’). directly attributable to the design and testing of identiﬁable and unique software products controlled by the Group are recognised as • it is technically feasible to complete the • it can be demonstrated how the software will generate probable future economic beneﬁts • adequate technical, ﬁnancial and other resources to complete the development and to use or sell the software are avail- measured. Capitalised development costs are recorded as intangible assets and amortised from the point at which the asset is ready for use. Annual report 2023 119 Part 4 – 4.3 Notes Elmera Group Note 1 5. Tradenames • it is technically feasible to complete the reviews whether there are indication that the Accounting policies Tradenames acquired in a business com- software so that it will be available for use carrying amount of the Group’s tangible and bination are recognised at fair value at the • management intends to complete the soft- intangible assets have suﬀered an impairment acquisition date. Tradenames that due to ware and use or sell it loss. contractual agreements have a ﬁnite useful • there is an ability to use or sell the software Tangible and intangible assets are tested life are subsequently carried at cost less • it can be demonstrated how the software for impairment whenever events or changes 3. Customer portfolios Customer portfolios are recognised at fair value in the consolidated statement of ﬁnan- cial position at the time of acquisition. The customer portfolios have a limited useful eco- nomic life and are recognised at cost less deductions for accumulated depreciation. Depreciation is calculated using a straight- line method where estimated useful life is assets in note 16. measured. cash ﬂow or other beneﬁts that the asset is based on the expected customer churn rate. expected to contribute to the generation of, Fixed price elements of customer contracts 6. Goodwill Directly attributable costs that are capitalised through its use by the Group). are recorded as separate assets. Goodwill is reported as an indeﬁnite life as part of software includes directly related For the purposes of assessing impairment, intangible asset at cost less accumulated employee costs. assets are grouped at the lowest levels for 4. Fixed price customer contracts When customer portfolios are acquired the ﬁxed price elements of the customer contracts in the customer portfolios acquired are rec- ognised as separate assets. Unless the ﬁxed price element of customer contracts meets the deﬁnition of a derivative ﬁnancial instru- ment (and recognised accordingly), they are recognised as intangible assets at fair value Development costs previously recognised as but so that the increased carrying amount at the time of acquisition. The ﬁxed price cus- expenses are not recognised as an asset in a does not exceed the carrying amount that tomer contracts have deﬁned contract periods subsequent period. would have been determined had no impair- and are recognised at cost less deductions 1. Software Refer to note 15 for details about amortisa- ment loss been recognised for the asset (or for accumulated depreciation. Depreciations follow a pattern that reﬂects how the acquisi- tion value of the contracts are distributed over identiﬁable and unique software products Impairment of tangible and ately in proﬁt or loss. the remaining contract periods. controlled by the Group are recognised as intangible assets if, and only if all of the fol- intangible assets Trade and other payables lowing conditions have been demonstrated: At each balance sheet date, the Group These amounts represent liabilities for goods accumulated amortisation and impairment losses. Tradenames that have an indeﬁnite useful life are not amortised but is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Tradenames are included in Other intangible impairment losses. Cost of Goodwill acquired through business combinations is measured as residual amount after allocation of pur- chase price to identiﬁable assets at fair value. All intangible assets with indeﬁnite useful lives are tested for impairment at least once every year. Single assets can be tested more often in case there are indications of impairment. 2) Internally generated intangible assets Internal development costs that are directly attributable to the design and testing of will generate probable future economic beneﬁts • adequate technical, ﬁnancial and other resources to complete the development and to use or sell the software are avail- able, and • the expenditure attributable to the software during its development can be reliably Capitalised development costs are recorded as intangible assets and amortised from the point at which the asset is ready for use. Research expenditures as well as devel- opment expenditures that do not meet the criterias above are recognised as expenses within other operating expenses in the consol- idated statement of proﬁt or loss, as incurred. tion methods and periods used by the Group for intangible assets. in circumstances indicate that the carrying amount may not be recoverable. An impair- ment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use (the net present value of a which there are separately identiﬁable cash ﬂows which are largely independent of the cash inﬂows from other assets or groups of assets (cash-generating units). Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash generating unit) is increased to the revised estimate of its recoverable amount, cash-generating unit) in prior years. A reversal of an impairment loss is recognised immedi- Annual report 2023 120 Part 4 – 4.3 Notes Elmera Group and services provided to the Group prior to the end of ﬁnancial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current lia- bilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and sub- Provisions tracts are not intended to be settled within 12 or through forward contracts are not suﬃcient sequently measured at amortised cost using months of the reporting date. to oﬀset estimated number of certiﬁcates to the eﬀective interest method. Provisions are recognised when the Group be handed over to the government). Borrowings and credit facilities has a present obligation (legal or constructive) The cancellation liability is presented within as a result of a past event, and it is proba- other current liabilities and any el-certiﬁcates Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any diﬀerence between the proceeds (net of transaction costs) and the redemption amount is recognised in proﬁt or settle the present obligation at the reporting for every MWh of power sold to end users in Employee beneﬁts loss over the period of the borrowings using date, taking into account the risks and uncer- Norway and Sweden. the eﬀective interest method. Borrowings are derecognised when the obli- gation speciﬁed in the contract is discharged, cancelled or expired. The diﬀerence between the carrying amount of a ﬁnancial liability that has been extinguished or transferred to another party and the consideration paid, including any non cash assets transferred or liabilities assumed, is recognised in consoli- dated statement of proﬁt or loss within the line Note 1 Other ﬁnancial items, net. the amount of the receivable can be meas- provisions using the net liability approach. Accounting policies Borrowings are classiﬁed as current liabil- ured reliably. There is no specific guidance on such ities unless the Group has an unconditional schemes under IFRS; however, the net lia- right to defer settlement of the liability for at bility approach is one of the commonly used least 12 months after the reporting period. Present obligations arising under onerous approaches adopted. Hence, the part of the Transactions costs incurred when estab- contracts are recognised and measured as cancellation liability that is covered by the lishing bank overdraft facilities, revolving provisions. An onerous contract is considered Group’s holdings of el-certiﬁcates is meas- credit facilities, and guarantee facilities are capitalised and amortised on a straight line basis over the period from establishing the facilities to the termination date. These capi- talised transaction costs are included in Other non-current ﬁnancial assets in the Statement of ﬁnancial position. ble that the Group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to tainties surrounding the obligation. Where a provision is measured using the cash ﬂows estimated to settle the present obligation, its carrying amount is the present value of those cash ﬂows (when the eﬀect of the time value of money is material). When some or all of the economic beneﬁts required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually cer- tain that reimbursement will be received and Onerous contracts to exist where the Group has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic beneﬁts expected to be received under it. Onerous contract provisions are presented as non-current in the statement of ﬁnancial position when the onerous con- Provision for El-certiﬁcate cancellation liability The Group’s electricity retailer operations in Norway and Sweden are subject to the Norwegian-Swedish El-certiﬁcate scheme, which requires the group to purchase and cancel a ﬁxed annual quota of El-certiﬁcates The annual quotas are determined by the Norwegian and Swedish governments before the relevant year starts. All el-certiﬁcates nec- essary to meet the Group’s certiﬁcate obliga- tion are either purchased in the spot market, or by entering into forward contracts. Provisions for the el-certiﬁcate cancella- tion liabilities are estimated based on actual delivered volume required to be covered by el-certiﬁcates. The Group accounts for these ured at the cost of acquired el-certiﬁcates, the part covered by forward contracts is meas- ured at contractual price of el-certiﬁcates, while any liability in excess of those amounts is recognised at fair value of the el-certiﬁcates that are required to be purchased (applicable when level of el-certiﬁcates acquired directly on hand at year end are presented as part of Intangible assets. The corresponding cost is recorded as part of Direct cost of sales as it is considered an incremental cost of power purchased. Pension schemes and pension obligations The Group operates various post-employment schemes, including both deﬁned beneﬁt and deﬁned contribution pension plans. Deﬁned beneﬁt pension plans Deﬁned beneﬁt schemes entitles employee members to deﬁned future beneﬁts. These beneﬁts are normally dependent on the Annual report 2023 121 Part 4 – 4.3 Notes Elmera Group Note 1 in the statement of proﬁt or loss. the options. On each balance date, the Group ordinary shares issued during the year Accounting policies Remeasurement gains and losses arising revises its estimates of the number of options and excluding treasury shares (note 14) from experience adjustments and changes in that are expected to be exercisable. Any actuarial assumptions are recognised in the adjustments will be recognised in the income 2. Diluted earnings per share: period in which they occur, directly in other statement and corresponding adjustment to Diluted earnings per share adjusts the ﬁgures comprehensive income. They are included in equity over the remaining vesting period. The used in the determination of basic earnings retained earnings in the consolidated state- proceeds received net of any directly attribut- per share to take into account: ment of changes in equity and in the state- able transaction costs are credited to share • the after income tax eﬀect of interest and ment of ﬁnancial position. capital and share premium when the options other ﬁnancing costs associated with dilu- number of years of service, the salary level Changes in the present value of the deﬁned are exercised. tive potential ordinary shares, and at retirement age and the portion of beneﬁts beneﬁt obligation resulting from plan amend- Treasury shares • the weighted average number of additional that are paid by the national insurance. The ments or curtailments are recognised imme- ordinary shares that would have been out- deﬁned beneﬁt pension obligations may be covered by plan assets invested through an (treasury shares) are deducted from equity. dilutive potential ordinary shares. insurance company (funded plan). No gain or loss is recognised in the income Government grants The liability or asset recognised in the con- solidated statement of ﬁnancial position in respect of deﬁned beneﬁt pension plans is the present value of the deﬁned beneﬁt obli- (a fund). The entity has no further payment fying assets or in relation to qualifying expend- gation at the end of the reporting period less obligations once the contributions have been Dividends iture (e.g. the Research & Development tax the fair value of any plan assets. The deﬁned beneﬁt obligation is calculated annually by independent actuaries using the projected unit credit method. when they are due. before the end of the reporting period but not the Group will comply with the conditions The present value of the deﬁned beneﬁt Share-based compensation distributed at the end of the reporting period. attaching to them and that the grants will be obligation is determined by discounting the Earnings per share received. Government grants are recognised estimated future cash outﬂows using interest Employee share options at Elmera Group rep- in the consolidated statement of proﬁt and rates of high-quality corporate bonds that are denominated in the currency in which the ben- eﬁts will be paid, and that have terms approx- imating to the terms of the related obligation. The net interest cost is calculated by apply- ing the discount rate to the net balance of the deﬁned beneﬁt obligation and the fair value of plan assets. This cost is included in Pension expenses which is part of Personnel expenses diately in proﬁt or loss as past service costs. Deﬁned contribution plans Deﬁned contribution plans are post-employ- ment beneﬁt plans under which an entity pays ﬁxed deﬁned contributions into a separate entity paid. The contributions are recognised in Pension expenses which is part of Personnel expenses in the statement of proﬁt or loss resents rights for employees to buy shares in the company at a future date at a predeter- mined exercise price. To exercise the option, the employee must remain an employee of the Company or an aﬃliated company at the end of the vesting period. The fair value of the employee services received in exchange for the allotment of options is recognised as an expense over the vesting period based on the fair value of Own equity instruments which are reacquired statement on the purchase, sale, issue, or cancellation of the Company’s own equity instruments. Provision is made for the amount of any divi- dend declared, appropriately authorised and no longer at the discretion of the entity, on or 1. Basic earnings per share: Basic earnings per share is calculated by dividing: • the proﬁt attributable to owners of the com- pany, excluding any costs of servicing equity other than ordinary shares • by the weighted average number of ordi- nary shares in issue during the ﬁnancial year, adjusted for bonus elements in standing assuming the conversion of all Companies within the Group may be entitled to claim refunds / grants for investments in quali- incentive scheme “SkatteFUNN”). Government grants are not recognised until there is a reasonable assurance that loss on a systematic basis over the periods in which the Group recognises the corre- sponding expenses for which the grants are intended to compensate. Speciﬁcally, gov- ernment grants whose primary condition is that the Group should purchase, construct or otherwise acquire non-current assets are recognised by deducting the grant from the carrying amount of the asset. The grant is Annual report 2023 122 Part 4 – 4.3 Notes Elmera Group Note 1 recognised in the Consolidated statement of The instalments on term loans that are due Accounting policies proﬁt or loss over the life of the depreciable within 12 months from the reporting date has asset as a reduced depreciation expense. in previous reporting been reported in Other Government grants that are receivable as current liabilities in the statement of ﬁnancial compensation for expenses or losses already position. From 2023 the amounts of term loan incurred with no future related costs to be that are due within the next 12 months are incurred by the Group are recognised in the reported in Interest-bearing short term debt. Consolidated statement of proﬁt or loss in the Comparative ﬁgures have been reclassiﬁed period in which they become receivable. to align with current presentation increasing Rounding of amounts Interest-bearing short term debt / decreasing Other current liabilities with NOKt 93 700 at All amounts disclosed in the consolidated 31 December 2022. ﬁnancial statements and notes have been Change in statement of ﬁnancial position from reported in quarterly rounded oﬀ to the nearest thousand currency units unless otherwise stated. Comparable ﬁgures and reclassiﬁcations ﬁnancial statement Due to reclassiﬁcation of balances in trade receivables to other current liabilities, total The consolidated statements of proﬁt or loss, assets and total liabilities are both decreased comprehensive income, ﬁnancial position, by NOKt 27 220, compared to the ﬁgures equity, cash ﬂow and notes provide compa- reported in the Q4 2023 quarterly ﬁnancial rable information in respect of the previous statement. period. The following changes have been made in comparative ﬁgures at 31 December 2022: Presentation of instalments on long term loan due within 12 months Annual report 2023 123 Part 4 – 4.3 Notes Elmera Group Note 2 Significant accounting judgements, estimates and assumptions The preparation of financial statements requires the use of accounting estimates which, by deﬁnition, will seldom equal the actual results. Management also needs to exercise judgement in applying the Group’s accounting policies. This note provides an overview of the areas that involved a higher degree of judgement or complexity, and of items which are more likely to be materially adjusted due to esti- mates and assumptions turning out to be wrong. Estimates and judgements are con- tinually evaluated. They are based on histor- ical experience and other factors, including ferent product types and related market risks. things, based on risk-free 10-year govern- expectations of future events that may have Fixed price customer contracts are ment bond rate, observed market risk pre- a ﬁnancial impact on the entity and that are assessed as onerous contracts if the esti- mium, industry-speciﬁc risk premium and the believed to be reasonable under the circum- mated unavoidable costs of purchasing the Group’s cost of debt. For the calculation of the stances. estimated power volumes to be delivered on in-perpetuity value, Gordon’s growth model is these contracts exceed the ﬁxed price to be used. According to Gordon’s model, the termi- The areas involving signiﬁcant estimates or received from the custumers. The hedged nal value of a growing cash ﬂow is calculated judgements are: forward power prices in the corresponding as the starting cash ﬂow divided by cost of portfolios of derivative hedge contracts are capital less the growth rate. Please see note however not taken into consideration when 15 for more details regarding impairment test- At each reporting date, management estimating the unavoidable costs as hedge ing of goodwill at year end, including a sen- assesses if there are contracts in which the accounting is not applied. Please see note sitivity analysis for signiﬁcant assumptions. unavoidable costs of meeting the Group’s 18 for details of the movement in provisions obligations under the contract exceed the for onerous contracts. economic beneﬁts expected to be received in accordance with IAS 37. The Group has certain portfolios of ﬁxed Deferred tax assets include an amount which price power contracts with end user custom- Goodwill and intangible assets with indeﬁnite relates to carried-forward tax losses of the ers, mainly in the Nordic segment, in which the useful lives are tested for impairment at least subsidiary Switch Nordic Green AB. The sub- volume is not ﬁxed. These customer contracts once every year. Single assets can be tested sidiary has incurred substantial accumulated do not qualify to be recognised as ﬁnancial more often in case there are indications of tax losses in its operations in both Sweden instruments. The price risk in these ﬁxed price impairment. The recoverable amounts of the and Finland in periods prior to when the Group customer contracts are hedged with ﬁnan- cash-generating units are determined based acquired this entity in November 2020. The 1) Onerous contract provisions cial electricity derivatives which however are recognised as ﬁnancial instruments. When hedging the price risk from these ﬁxed price contracts, the electricity volume expected to be delivered on the ﬁxed price contracts is estimated. To manage the volume risk in customer contracts without ﬁxed volume the volume estimates are periodically updated, and the portfolios of hedging derivatives are rebalanced accordingly. The remaining risk exposure is taken into account when pricing these customer contracts. Please see note 8 for more information regarding the Group’s dif- 2) Impairment of goodwill and intangible assets on value in use calculations. The cash-gen- erating units equal the reportable segments. Value in use is calculated using the dis- counted cash-ﬂow model and based on a ﬁve- year forecast made by Group management. Management has projected cash ﬂows based on ﬁnancial forecasts and strategy plans. The preparation of the forecast requires a number of key assumptions such as growth in net revenue and operating expenditure. The cash ﬂow for the ﬁfth year is used as the base for the sixth year and onwards in perpetuity. The discount rates used are, amongst other 3) Recognition of deferred tax asset for tax losses carried forward Group has concluded that a portion of the deferred assets will be recoverable using the estimated future taxable income based on the approved business plans and budgets for the subsidiary. The majority of tax losses carried forward are losses in Sweden which can be carried forward indeﬁnitely and have no expiry date. The tax losses in Finland expires after ten years. Please see note 12 for more details regarding deferred tax asset recognised in the Statement of ﬁnancial position. Annual report 2023 124 Part 4 – 4.3 Notes Elmera Group 4) Deﬁned beneﬁt occupational pension scheme The Group has a deﬁned beneﬁt pension scheme for employees born before 1963, and a deﬁned contribution pension scheme for employees born from 1963. services. NO5). The designated ﬁnancial electricity designated for hedging area price risks in The cost of the deﬁned beneﬁt pension derivatives are in general forward contracts forecast power purchases in NO3 and NO4, scheme and the present value of the pen- sion obligation are determined using actuar- ial valuations. An actuarial valuation involves making various assumptions that may diﬀer from actual developments in the future. These appropriate. and / or hedging instrument and the hedged item (all include the determination of the discount rate, iii) the diﬀerence between the Nordic system variability in the area price) for the hedging future salary increases, mortality rates and price and an area price (EPAD contract). relationship to qualify for the hedge eﬀective- future pension increases. Due to the complex- ness requirement in IFRS 9.6.4.1.c. Due to ities involved in the valuation and its long-term Assessing whether the qualifying criterias for changes in market conditions the correlation nature, a deﬁned beneﬁt obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at the reporting date. Please see note 17 for details of the assumptions used in the actuarial valuation of deﬁned beneﬁt pension obligations, and a sensitivity analysis for signiﬁcant ﬁnancial assumptions. 5) Gross vs. net presentation When evaluating the classiﬁcation and pres- entation of revenue transactions with custom- ers, management make judgement to what extent the Group in fact controls the speciﬁc goods and services before it is transferred detailed review and evaluation of the historical is expected to be positive, system price for- Note 2 to the customers. In making the judgement, behavior of these customers, management is ward contracts does qualify to be designated management applies indicators set out in IFRS 15, of which key indicators are: tions • is the Group primarily responsible for ful- chases, but only for variability due to change ﬁlling the promise to provide the speciﬁed in system price. This assessment applies to goods or services, The group applies hedge accounting when the price areas NO1, NO2, and NO5 (in south- • does the Group have inventory risks before accounting for ﬁnancial electricity derivatives ern Norway). The assessment does however or after transferring goods or services to which are designated to hedge the area price not apply when designating system price for- the customer, • does the Group have discretion in estab- lishing prices for the speciﬁc goods or Following the detailed evaluation of these cri- teria, management is satisﬁed that the clas- siﬁcation and presentation of revenue from sale of our various products and services are 6) Determining the amortisation rate of cost to obtain contracts with customers In determining which sales commissions represents incremental costs to obtain a contract, management evaluates the vari- ous type of sale commissions. A determin- ing factor is to what extent the costs have led to a new contract being signed by the customer. Management also make judgment in determining the amortisation rate that provides the best match for the economic system price forward contracts are the desig- and NO5 has from 2022 changed towards beneﬁts the Group derives from these new nated hedging instruments. using area price forward contracts as hedg- contracts. A detailed analysis have been carried out to identify how long the various customers remain with the signed contract before cancelling the contract. Following the Signiﬁcant accounting judge- ments, estimates and assump- satisﬁed that the amortisation method used provides the best allocation of these costs. 7) Hedge accounting risk associated with forecast power purchase expenses in each of the ﬁve diﬀerent price areas in Norway (NO1, NO2, NO3, NO4, and with an underlying asset that is either i) the Nordic system price (system price for- ward contract), ii) an area price (area price forward contract), hedge accounting are met requires the use of judgment, in particular when a) assessing whether system price risk con- stitutes a risk component of area price risk in accordance with IFRS 9.6.3.7.a, and b) when assessing whether hedging of area price risk in price areas NO3 and NO4 will be suﬃciently eﬀective (IFRS 9.6.4.1.c) when When assessing IFRS 9.6.3.7.a, the Group’s assessment is that when hedging area price risk in price areas where the dif- ference between area price and system price as a hedging instrument to hedge the area price risk in forecast cash ﬂows for power pur- ward contracts to hedge the area prices in price areas NO3 and NO4 in northern Norway. When system price forward contracts are the hedged item is therefore deﬁned to include all variability in the forecast cash ﬂow. In 2021 the Group’s assessment was that there was a suﬃcient economic relationship between the between the Nordic system price and area prices in NO3 and NO4 has been signiﬁcantly weakened. Thus from the beginning of 2022 the Group does no longer assess such hedg- ing relationship to qualify for this hedge eﬀec- tiveness requirement. The Group’s strategy when hedging the future cash ﬂows related to power purchases in price areas NO1, NO2 ing instruments, rather than Nordic system price forward contracts. Please see note 9 for details and further description regarding hedge accounting. Annual report 2023 125 Part 4 – 4.3 Notes Elmera Group Note 3 Segment information Disaggregation of revenue from contracts with customers Operating segments are reported in a manner consistent with the internal ﬁnancial report- ing provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identiﬁed as the Board of Directors. The Board of Directors exam- ines the Group’s performance from a type of services perspective. Segment performance is evaluated based on proﬁt or loss and is measured consistently with proﬁt or loss in the consolidated ﬁnancial statements. The Group’s reportable segments under IFRS 8 - “Operating Segments” are therefore as follows: • Consumer segment - Sale of electrical power and related services to private con- sumers in Norway • Business segment - Sale of electrical power and related services to business consumers in Norway • Nordic segment - Sale of electrical power and related services to consumers in Finland and Sweden. Information reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment per- formance is focused on the category of cus- tomer for each type of activity. No operating segments have been aggregated in arriving at the reportable segments of the Group. The principal categories of customers are direct sales to private consumers, business consum- ers and alliance partners. The segment proﬁt measure is adjusted operating proﬁt which is deﬁned as operat- ing proﬁt earned by each segment without the allocation of: acquisition related costs and other one-oﬀ items, estimate deviations from previous periods, unallocated revised net rev- enue, unrealised gains and losses on deriva- tives, impairment of intangible assets and cost to obtain contracts, depreciation of acquisi- tions, and change in provisions for onerous contracts. This is the measure reported to the chief operating decision maker for the pur- poses of resource allocation and assessment of segment performance. The accounting pol- icies of the reportable segments are the same as the Group’s accounting policies. All of the Group’s revenue is from external parties and is from activities currently carried out in Norway, Sweden and Finland. There are no customers representing more than 10% of revenue. The tables below is an analysis of the Group’s revenue and proﬁt by reportable segment. New growth initiatives comprise of other business activities (sale of EV chargers, PV panels, mobile services, power sale and related services to Alliance partners and pay- ment solutions and strategic expenditures) which are not considered separate operating segments. Annual report 2023 126 Part 4 – 4.3 Notes Elmera Group Note 3 2023 Segment information NOK in thousands Consumer Business Nordic Total reportable New growth Total segments initiatives Revenue adjusted 7 409 534 7 706 514 1 873 940 16 989 988 332 907 17 322 895 Direct cost of sales adjusted (6 588 585) (7 157 803) (1 667 498) (15 413 886) (176 011) (15 589 897) Net revenue adjusted 820 949 548 711 206 442 1 576 102 156 896 1 732 998 Personnel and other operating expenses adjusted (468 820) (251 824) (114 829) (835 473) (120 915) (956 388) Depreciation and amortisation adjusted (172 370) (28 575) (56 546) (257 491) (5 948) (263 439) Total operating expenses adjusted (641 190) (280 399) (171 375) (1 092 964) (126 863) (1 219 827) Operating proﬁt adjusted 179 759 268 312 35 067 483 138 30 033 513 171 Other one- oﬀ items (6 434) Depreciation of acquisitions * (123 080) Estimate deviations (1 924) Unrealised gains and losses on derivatives (1 085 244) Change in provisions for onerous contracts 1 048 166 Impairment of intangible assets and cost to obtain contracts 14 548 Operating proﬁt (EBIT) 359 202 Depreciation of acquisitions consists of depreciations of customer portfolios acquired seperately and recognised as intangible assets, and depreciations of customer portfolios and other intangible assets recognised as part of a business combination. NOK in thousands 2023 TrønderEnergi Marked acquisition (4 927) Oppdal Everk Kraftomsetning acquisition (1 275) Vesterålskraft Strøm acquisition (1 093) Innlandskraft acquisition (66 907) Troms Kraft Strøm acquisition (35 620) Other customer acquisitions (13 258) Depreciation of acquisitions (123 080) ** Refer to note 4 for a reconciliation of revenue from segments to reported revenue in the Consolidated statement of proﬁt or loss. Annual report 2023 127 Part 4 – 4.3 Notes Elmera Group Note 3 2022 Segment information NOK in thousands Consumer Business Nordic Total reporta- New growth Total ble segments initiatives Revenue adjusted 13 122 968 11 095 287 2 228 015 26 446 270 360 006 26 806 277 Direct cost of sales adjusted (12 215 674) (10 535 045) (2 100 425) (24 851 144) (244 130) (25 095 275) Net revenue adjusted 907 294 560 242 127 590 1 595 126 115 876 1 711 002 Personnel and other operating expenses adjusted (565 940) (209 153) (114 243) (889 336) (103 979) (993 315) Depreciation and amortisation adjusted (175 347) (28 983) (47 712) (252 042) (5 591) (257 633) Total operating expenses adjusted (741 287) (238 136) (161 955) (1 141 378) (109 570) (1 250 948) Operating proﬁt adjusted 166 007 322 106 (34 365) 453 748 6 306 460 054 Other one- oﬀ items (2 660) Depreciation of acquisitions * (132 323) Estimate deviations (4 472) Unrealised gains and losses on derivatives (47 791) Change in provisions for onerous contracts 39 256 Impairment of intangible assets and cost to obtain contracts (39 282) Operating proﬁt (EBIT) 272 781 NOK in thousands 2022 TrønderEnergi Marked acquisition (5 761) Oppdal Everk Kraftomsetning acquisition (1 702) Vesterålskraft Strøm acquisition (1 492) Innlandskraft acquisition (83 343) Troms Kraft Strøm acquisition (32 572) Other customer acquisitions (7 453) Depreciation of acquisitions (132 323) ** Refer to note 4 for a reconciliation of revenue from segments to reported revenue in the Consolidated statement of proﬁt or loss. * Depreciation of acquisitions consists of depreciations of customer portfolios acquired seperately and recognised as intangible assets, and depreciations of customer portfolios and other intangible assets recognised as part of a business combination. Annual report 2023 128 Part 4 – 4.3 Notes Elmera Group Note 4 Revenue recognition The following table summarises revenue from contracts with customers: Revenue from segments Over time: NOK in thousands 2023 2022 Revenue - Consumer segment 7 340 946 13 025 916 Revenue - Business segment 7 650 047 11 041 944 Revenue - Nordic 1 873 940 2 228 015 Revenue - New growth initiatives 311 425 340 764 Total 17 176 358 26 636 639 At a point in time: Revenue - Consumer segment 68 588 97 053 Revenue - Business segment 56 467 53 343 Revenue - Nordic - - Revenue - New growth initiatives 21 482 19 242 Total 146 537 169 638 Total revenue from segments 17 322 895 26 806 276 Other revenue Over time: NOK in thousands 2023 2022 Estimate deviations 8 965 - Unrealised gains and losses on derivative customer contracts 1 554 634 (1 284 761) Total other revenue recognised over time 1 563 599 (1 284 761) At a point in time: Other revenue - Nordic Segment 34 104 - Total other revenue recognised at a point in time 34 104 - Total other revenue 1 597 703 (1 284 761) Total revenue 18 920 598 25 521 514 * Other revenue - Nordic Segment is related to customers in the Nordic segment that have breached their agreement with Nordic Green Energy, where Nordic Green Energy is entitled to a termination fee. Annual report 2023 129 Part 4 – 4.3 Notes Elmera Group Note 4 from Statkraft AS in Norway. Services are The fees depend on the type of service and reﬂecting the consumer’s consummation Revenue recognition billed on a rate per kWh of electricity procured can be ﬁxed monthly, ﬁxed annually and / or of the services as the customer receives a on behalf of the alliance partner. The rate stip- ﬁxed fees per transactions. With respect to ﬁxed amount to use each month and cannot ulated in the contract with alliance partners these deliveries the Group is not an agent and transfer unused amounts to the next period. is based on the market price for electricity in revenue is recognised, over time or at a point Revenue from data is recognised over time the Norway electricity wholesale market plus in time corresponding to the Group’s perfor- reﬂecting the actual use of data by the cus- a ﬁxed markup. The Group is the agent in this mance obligations for respective services. tomer. To the extent the customer do not use transaction as it does not have control over all of the data in a given period, the Group the electricity being procured on behalf of the Subscription – mobile phone services recognises a liability, unearned revenue, ‘alliance‘ customers and accordingly recog- which is released to revenue as and when nises revenue, over time, equal to the amount The Group oﬀers mobile phone subscriptions the customer consummate this data. of the markup billed to the alliance partners. to private consumers, and charges a ﬁxed Other Services In addition, the Group provides certain price per month for use of text messaging, additional services, namely procurement of call and data services. The customers pay a Other services revenue consist primarily of el-certiﬁcates, electricity purchase contracts monthly ﬁxed amount on each subscription revenues from: and derivative forward contracts and options and any unused data can be rolled over to • Insurance sales; contracts on behalf of the alliance partner, all the next month. The data that is rolled over • Subscription revenue - tools; and related to the electricity management strategy can not exceed the total data amount indi- • Other miscellaneous products and ser- of the alliance partners. Services related to cated in the customers subscriptions. The vices. procurement of electricity and related instru- customer is invoiced monthly in advance for Sale of electricity ments are billed on a rate per kWh of volume the ﬁxed amount, while any consumption not As it relates to insurance sales, the most sig- of electricity under contract. The rate stipu- included in the ﬁxed monthly price is invoiced niﬁcant judgment is determining whether the The Group supplies electricity to both private and corporate end-user customers pursuant to agreed upon rates. Services are billed on a rate/kWh for the total volume consumed per month. Pursuant to the terms of the agree- ment, the Group has the right to invoice the customer in an amount that directly corre- sponds with the value to the customer of the Group’s performance to date, accordingly the Company recognises revenue based on the amount billable to the customer. Electricity Procurement Services The Group has contracts with ‘alliance part- ner’ customers to jointly procure electricity lated in the contract with alliance partners is based on the market price for electricity and respective instruments in the Norway elec- tricity wholesale market plus a ﬁxed markup. Similar to procurement above, the Group is the agent in these transactions as it does not have control over the electricity being purchased and instruments being purchased on behalf of the ‘alliance ‘customers. Accordingly the Group recognises revenue, over time as these services are delivered, equal to the amount of the markup billed to the alliance partners. The Group also provides invoicing, reve- nue reporting, collection and closely related services for some of the alliance partners. in arrears. Data usage is accounted for as a separate performance obligation and ﬁxed monthly fee is allocated to data services based on estimated expected cost plus mar- gin. Customers that have a contract for delivery of electricity with the Group, are also provided with a discount on their mobile phone sub- scription. In accordance with IFRS 15.82, the monthly discount is allocated exclusively to mobile phone services on a stand-alone sell- ing price basis, as the same discount is also oﬀered to other customers on a regular basis. Revenue from messaging and call services are recognised in the month they are billed, Group is the principal or agent for insurance sales made by the Group. The reported rev- enues from these transactions are made on a net basis because the performance obliga- tion is to facilitate a transaction between the third party insurance company and end users, for which the Group earns a commission for connecting the customer with the insurance company and a markup for the invoicing and collection on behalf to the insurance com- pany. Consequently, the portion of the gross amount billed to end users for premium that is remitted to the insurance company is not reﬂected as revenues. Annual report 2023 130 Part 4 – 4.3 Notes Elmera Group Note 4 The Group charges a ﬁxed fee for access Group evaluates to determine if the promises Cost to obtain Contracts Revenue recognition to tools and these contracts are typically on are separate performance obligations. Once The Group capitalises commission expenses a month-to-month basis (with no speciﬁed the Group determines the performance obli- paid to external sales personnel that are incre- minimum term). Accordingly the Group recog- gations, the Group determines the transaction mental to obtaining customer contracts. The nizes revenue for the monthly amount billable price, which includes estimating the amount judgments made in determining the amount to the customer. of variable consideration to be included in of costs incurred include whether the commis- Contracts with Multiple the transaction price, if any. The Group then sions are in fact incremental and would not allocates the transaction price to each per- have occurred absent the customer contract. Performance Obligations formance obligation in the contract based on Costs to obtain a contract are amortised over The Group periodically enters into contracts, a relative stand-alone selling price method the expected period of beneﬁt that has been or multiple contracts at or near the same or using the variable consideration allocation determined to be approximately 36 months, time, with its customers in which a customer exception if the required criteria are met. The presented as part of Depreciation and amor- may purchase a combination of Electricity corresponding revenues are recognised as tisation.These costs are periodically reviewed services and other services, such as procure- the related performance obligations are sat- for impairment. ment solutions or professional services. These isﬁed as discussed in the revenue categories contracts include multiple promises that the above. The following table summarises assets recognised from the cost to obtain a contract: NOK in thousands 2023 2022 Balance as at 1 January Balance as at 1 January 295 980 287 728 Additions 140 991 237 550 Amortisation during the year (194 008) (185 893) Impairment 14 548 (39 282) Currency translation diﬀerences 7 840 (4 122) Balance as at 31 December 265 350 295 980 See note 18 for more details regarding impairment of cost to obtain contracts. Contract Balances The Group receives payments from its cus- period until the Group performs its obliga- The Group does not assess whether a con- tomers based on billing schedules estab- tions under these arrangements. Amounts are tract has a signiﬁcant ﬁnancing component if lished in each contract. Up-front payments recorded as accounts receivable when the the expectation at contract inception is such and fees are recorded as deferred revenue Group’s right to consideration is unconditional that the period between payment by the cus- upon receipt or when due, and may require (when the customer obtains control of prom- tomer and the transfer of the promised goods deferral of revenue recognition to a future ised goods or services). or services to the customer will be one year or less. Annual report 2023 131 Part 4 – 4.3 Notes Elmera Group Note 4 Revenue recognition The following tables present changes in the Group’s contract assets and liabilities during the year ended 31 December, 2022 and 2023: Contract assets NOK in thousands 2023 2022 Balance as at 1 January 5 829 272 3 831 626 Revenue recognised from performance obligations satisﬁed in previous periods 8 965 - New contract assets during the period less transfer to receivables (3 230 575) 2 007 670 Currency and other eﬀects 22 061 (10 024) Balance as at 31 December 2 629 723 5 829 272 Contract liabilities NOK in thousands 2023 2022 Balance as at 1 January 31 978 47 280 Revenue recognised that was included in opening balance (31 978) (47 280) New contract liabilities less transfer to revenue 27 354 31 978 Currency and other eﬀects - - Balance as at 31 December 27 354 31 978 Transaction Price Allocated to Future Performance Obligations 1. The performance obligation is part of a enue for year ended 31 December 2023 and contract that has an original expected 31 December 2022. IFRS 15 requires that the Group disclose the duration of one year or less. As of 31 December 2023 and 31 December aggregate amount of transaction price that 2. The entity recognizes revenue from its sat- 2022 the Group does not have signiﬁcant is allocated to performance obligations that isfaction of the performance obligations customers that comprises more than 10% of have not yet been satisﬁed as 31 December in the amount billable to the customer in accounts receivable. 2023 and 31 December 2022. The guidance accordance with paragraph B16 of IFRS provides certain practical expedients that 15. limit this requirement. Majority of the Groups Concentrations of Credit Risk contracts meet either of the following prac- tical expedients provided by IFRS 15 and The Group does not have any customers that accordingly the Group has applied this prac- comprised more than 10% of the Group’s rev- tical expedient. Annual report 2023 132 Part 4 – 4.3 Notes Elmera Group Note 5 Direct cost of sales NOK in thousands 2023 2022 Purchase of electrical power and el certiﬁcates 15 420 220 24 804 557 Other direct cost of sales 180 595 295 188 Change in provisions for onerous contracts (1 048 166) (39 256) Unrealised gains and losses on derivative hedge contracts 2 639 877 (1 236 970) Total direct cost of sales 17 192 526 23 823 519 Note 6 Financial assets and financial liabilities The Group holds the following ﬁnancial instruments: Financial assets NOK in thousands Notes 2023 2022 Financial assets at amortised cost Trade receivables * 6(a) 1 360 019 1 722 161 Other non-current ﬁnancial assets 6(a) 133 665 48 285 Cash and cash equivalents 6(d) 338 746 70 548 Derivative ﬁnancial instruments Derivative ﬁnancial instruments at fair value through OCI 7,8,9 - 2 077 Derivative ﬁnancial instruments at fair value through proﬁt or loss 7,8 1 281 063 4 231 590 Firm commitments 7,8 263 657 - Total ﬁnancial assets 3 377 150 6 074 662 * Excludes contract assets. Financial liabilities NOK in thousands Notes 2023 2022 Liabilities at amortised cost Trade and other payables 6(b) 3 246 231 5 828 373 Overdraft facilities 6(c) - 534 112 Interest-bearing short term debt 6(c) 368 700 368 700 Interest-bearing long term debt 6(c) 537 617 629 169 Lease liability- long term 24 40 945 49 477 Lease liability- short term 24 19 391 20 284 Derivative ﬁnancial instruments Derivative ﬁnancial instruments at fair value through OCI 7,8,9 (2 735) 72 772 Derivative ﬁnancial instruments at fair value through proﬁt or loss 7,8 1 366 362 3 112 556 Firm commitments 7,8 108 648 - Total ﬁnancial liabilities 5 685 159 10 615 440 Annual report 2023 133 Part 4 – 4.3 Notes Elmera Group Note 6 Offsetting ﬁnancial assets and ﬁnancial liabilities: Financial assets and liabilities are oﬀset and the net amount is reported in the statement of ﬁnancial position where Elmera currently has a legally enforceable Financial assets and ﬁnancial liabilities ﬁnancial assets and liabilities, the unit of account applied is the individual identiﬁable cash ﬂows of the ﬁnancial instruments. The unit of account for oﬀsetting Electricity derivatives is thus monthly settlements of such derivatives. Financial Statement Impact: The Group’s ﬁnancial instruments resulted in the following income, expenses and gains and losses recognised in the statement of proﬁt or loss: NOK in thousands Notes 2023 2022 Interest from assets held at amortised cost 32 069 26 952 Interest expense from liabilites at amortised cost (148 268) (156 876) Net impairment expense recognised on trade receivables 6(a) 34 613 40 258 Unrealised gains and losses on derivative ﬁnancial instruments ** 4,5 (1 085 244) (47 791) Total net foreign exchange gains(losses) recognised in other ﬁnancial items 11(b) 2 185 (3 351) Total ﬁnancial income and expense (1 164 645) (140 809) * Impairment expense on trade receivables is recognised as “Other operating expenses” in the Consolidated statement of proﬁt or loss. ** Unrealised gains and losses on derivative ﬁnancial instruments are recognised in a) Revenue - when the derivative instrument is a ﬁnancial custumer contract (see note 4), or b) Direct cost of sales - when the derivative instrument is purchased for the purpose of hedging physical or ﬁnancial customer contracts (see note 5). The following table presents the recognised ﬁnancial instruments that are oﬀset. 2023 Financial assets NOK in thousands Gross amount Gross amount set off Net amount Derivative ﬁnancial instruments and ﬁrm commitments Electricity derivatives 1 791 461 (510 399) 1 281 063 Firm commitments 165 473 98 184 263 657 Total derivative ﬁnancial assets and ﬁrm commitments 1 956 934 (412 214) 1 544 720 Financial liabilities NOK in thousands Gross Gross amount Net amount set off amount Derivative ﬁnancial instruments Electricity derivatives 1 874 025 (510 399) 1 363 627 Firm commitments 10 463 98 184 108 648 Total derivative ﬁnancial liabilities and ﬁrm commitments 1 884 489 (412 214) 1 472 275 Annual report 2023 134 Part 4 – 4.3 Notes Elmera Group 6(a) Trade receivables and Other non-current financial assets Trade receivables are amounts due from cus- tomers for goods sold or services performed in the ordinary course of business. If collec- tion of the amounts is expected in one year or less they are classiﬁed as current assets. Trade receivables are generally due for set- tlement within 30 days. No interest is charged on outstanding trade receivables, unless it is past due date. The Group always measures the loss allow- ance for trade receivables at an amount equal to lifetime expected credit loss (ECL). For cus- tomers in the business segment, the expected credit losses on trade receivables are esti- mated using a provision matrix by grouping trade receivables based on reference to past default experience for the group of customers. For customers in the consumer segment, the expected credit losses on trade receivables are estimated by an individual assessment of each speciﬁc customer performed by the Group’s Debt Collection Service provider. The customer’s current ﬁnancial position, adjusted for factors that are speciﬁc to the customers’, general economic conditions of the industry in which the customers operate and an assess- ment of both the current as well as the forecast direction of conditions at the reporting date, are all factors that are taken into account when measuring ECL. There has been no changes in the estima- tion techniques or signiﬁcant assumptions made during the year. The Group writes oﬀ a trade receivable when there is information indicating that the debtor is in severe ﬁnancial diﬃculty and there is no realistic prospect of recovery, e.g. when the debtor has been placed under liquidation or has entered into bankruptcy proceedings, or when the trade receivables are over one years past due, whichever occurs earlier. The trade receivables that have been written oﬀ are still subject to collection processes. The following table details the risk proﬁle of trade receivables based on the Group’s provision matrix. The following table details the risk proﬁle of trade receivables based on the Group’s provision matrix. 2023 Loss allowance provision - Days past due NOK in thousands Current 31-60 days 61-90 days 91-120 days days 180 days amount Trade receivables - Power sales - Consumer customers 2 514 252 100 592 197 7 116 10 772 216 335 Trade receivables - Power sales - Business customers 1 128 123 1 220 6 891 1 113 18 482 28 957 1 181 583 Trade receivables - Mobile sales - Consumer customers - - 38 34 48 97 217 2 047 Total Loss allowance provision 3 642 374 1 359 7 517 1 358 25 695 39 947 1 399 965 121-180 More than Total Gross nominal 2022 Loss allowance provision - Days past due 91-120 121-180 More than Total Gross NOK in thousands Current 31-60 days 61-90 days days days 180 days nominal amount Trade receivables - Power sales - Consumer customers 3 956 849 436 1 404 545 17 170 24 360 428 187 Trade receivables - Power sales - Business customers 2 089 257 3 990 3 366 2 244 12 762 24 706 1 341 488 Trade receivables - Mobile sales - Consumer customers 14 0 38 33 57 201 342 1 894 Total Loss allowance provision 6 058 1 105 4 463 4 803 2 845 30 133 49 408 1 771 569 Annual report 2023 135 Part 4 – 4.3 Notes Elmera Group 6(a) The following table shows the movement in lifetime ECL that has been recognised for trade receivables in accordance with the simpliﬁed approach set out in IFRS: NOK in thousands 2023 2022 Trade receivables and Other 49 408 45 213 non-current ﬁnancial assets Loss allowance recognised in proﬁt or loss for the period (10 245) 4 403 Currency translation diﬀerence 784 (208) At 31 December 39 947 49 408 During the year, the following gains/(losses) were recognised in proﬁt or loss in other expenses in relation to impaired receivables: NOK in thousands 2023 2022 Receivables written oﬀ 53 174 39 518 Movement in provision for impairment (10 245) 4 403 Received payment on previously written oﬀ receiavbles (8 316) (3 663) Net impairment expense recognised on trade receivables 34 613 40 258 Other non-current ﬁnancial assets The other non-current ﬁnancial assets in the consolidated statement of ﬁnancial position comprise of the following: NOK in thousands 2023 2022 Loans to employees* 10 837 14 076 Other long term receivables from customers - 21 686 Capitalised transaction costs 2 504 6 190 Other* 120 324 6 333 Total 133 665 48 285 * Loans to employees include next year’s instalments. Instalments in 2024 amount to NOKt 1 990. ** The Group has previously had a scheme for customers with home chargers for electrical cars where the customer has been able to pay oﬀ the cost of the home charger over the electricity bill. The repayment plan was set to 36 months and the Group had a lien in the home charger until it was paid oﬀ. The scheme for the sale of home chargers with a repayment plan over the electricity bill was discontinued in 2023. The residual value of the repayment plans is to be repaid in 2024 and is presented as part of trade receivables as of 31 December 2023. *** Transaction costs related to establishing the RCF, the guarantee facility and the overdraft facility, see more details in note 6(c). Included is an indemniﬁcation asset of approx. SEK 101m against Troms Kraft AS, see more details in note 28. Annual report 2023 136 Part 4 – 4.3 Notes Elmera Group 6(c) Credit facilities 6(b) Trade and other payables Current liabilities NOK in thousands 2023 2022 Trade and other payables 3 246 231 5 828 373 Trade and other payables are unsecured and are usually paid within 30 days of recognition. The Group’s main supplier is Statkraft Energi AS. Of the total Trade and other payables at 31 December 2023 the outstanding balance with Statkraft Energi AS was NOKt 2 712 546 (31 December 2022: NOKt 5 249 292). The payment terms of the Group’s power purchase agreement with Statkraft Energi AS are 45-days with agreed intention to pay before due date in order to reduce credit exposure and interest cost. In addition, the agreement in Norway includes a right for the Group to postpone payments for an additional 15 days if prices exceed an agreed upon price level. The power purchases under this agreement are invoiced monthly in arrear and are interest bearing. The agreement expires 31 December 2024. Fair value of trade and other payables The carrying amount of trade and other payables are considered to be the same as their fair values due to their short-term nature. NOK in thousands Effective interest rate 2023 2022 Term loan NIBOR 3 months + 1,75 % 632 475 726 175 Revolving credit facility NIBOR 3 months + 1,75 % 275 000 275 000 Total principal amounts 907 475 1 001 175 Credit facilities agreement Elmera Group’s facilities agreement with DNB includes the following credit facilities; - a NOKt 1 000 000 term loan - the acquisition facility - a NOKt 500 000 revolving credit facility - a NOKt 2 250 000 guarantee facility - a NOKt 1 300 000 overdraft facility The termination date of the term loan facility, the revolving credit facility, and the guarantee facility has been extended until 31 December 2024. The agreement also includes an option to extend the termination date to 2 January 2025. The term loan - NOKt 1 000 000 - The acquisition facility Each term loan drawn upon the facility is to be repaid in quarterly repayments of 2,5 % of the original amount of the term loan, with the remainder being repaid in full on the termination date. The reference interest rate is NIBOR. The term loan principals are being repaid in quarterly instalments of total NOKt 23 425. At 31 December 2023 the remaining term loan principal balance is NOKt 632 475. The loan instalments of NOKt 93 700 that are due the next twelve months are report- ed in interest-bearing short term debt in the statement of ﬁnancial position. As the agreement includes an option to extend the termination date to 2 January 2025, the remaining balance is reported as interest-bearing long term debt. The revolving credit facility - NOKt 500 000 - The RCF The revolving credit facility is available up until one month before the termination date. Any drawings for the purpose of ﬁnancing permitted acquisitions shall be converted into term loan drawings with the same repayment proﬁle as the acquisition facility, and amounts so converted shall not be available for re-drawing. The Group drew NOKt 275 000 on this facility in 2022, and another NOKt 150 000 in Q1 2023. The latter was repaid in Q2 2023, thus NOKt 225 000 remains undrawn at 31 December 2023. The revolving credit facility is classiﬁed as interest-bearing short term debt in the statement of ﬁnancial position. The guarantee facility - NOKt 2 250 000 The purpose of the guarantee facility is the issuance of guarantees and letters of credit for the general corporate and working capital purpose of the group, here- under gurantees related to re-invoicing agreements with grid owners, property rental agreements and so on. At 31 December 2023 guarantees of total NOKt 2 093 015 were issued under the guarantee facility. Annual report 2023 137 Part 4 – 4.3 Notes Elmera Group 6(c) Credit facilities The overdraft facility - NOKt 1 300 000 The overdraft facility has been extended until 31 December 2024. The overdraft facility was increased from NOKt 1 000 000 to NOKt 1 300 000 in 2022. At 31 December 2023 the Group had not drawn on the overdraft facility. Transaction costs Transactions costs of NOKt 9 570 related to establishing and extending the Term loan facility are recognised as part of amortised cost of the Term loan. Transac- tion costs of NOKt 18 072 related to establishing and extending the RCF, The guarantee facility, and the overdraft facility are amortised on a straight line basis over the period from establishing the facilities to the extended termination date. Security The Group’s trade receivables have been pledged as security for all credit facilities under the facilities agreement. See note 23. Financial covenant Under the credit facility, there is a leverage covenant that applies at all times, and which shall be calculated quarterly based on consolidated numbers. A leverage ratio is to be calculated as total long term interest bearing debt (term loan) deducted free cash to rolling 12 month EBITDA adjusted. The leverage ratio shall not exceed: - more than 2,5 in respect of more than one quarter-end during any ﬁnancial year, and - more than 2,0 in respect of the remaining three quarter-ends during any such ﬁnancial year. The Group is in compliance with the covenant at the end of this reporting period. Liabilities from ﬁnancing activities NOK in thousands Interest-bearing Interest-bearing Lease liability Overdraft Total long term debt short term debt facilities Balance at 1 January 2022 720 009 93 700 86 314 - 900 023 Cash ﬂows (93 700) 275 000 (20 245) 534 112 695 167 New leases - - 3 638 - 3 638 Foreign exchange adjustments - - 54 - 54 Other changes 2 860 - - - 2 860 Balance at 31 December 2022 629 169 368 700 69 761 534 112 1 601 741 Balance at 1 January 2023 629 169 368 700 69 761 534 112 1 601 741 Cash ﬂows (93 700) - (20 606) (534 112) (648 418) New leases - - 11 077 - 11 077 Foreign exchange adjustments - - 105 - 105 Other changes 2 149 - - - 2 149 Balance at 31 December 2023 537 617 368 700 60 336 - 966 653 Annual report 2023 138 Part 4 – 4.3 Notes Elmera Group 6(d) Cash and cash equivalents Current assets NOK in thousands 2023 2022 Cash at bank and in hand 338 746 70 548 Total 338 746 70 548 The above ﬁgures equals the amount of cash shown in the statement of cash ﬂows at the end of the ﬁnancial year. Classiﬁcation as cash equivalents Term deposits are presented as cash equivalents if they have a maturity of three months or less from the date of acquisition and are repayable with 24 hours notice with no loss of interest. Restricted cash Please refer to note 23 for information about restricted cash. Annual report 2023 139 Part 4 – 4.3 Notes Elmera Group Note 7 Fair value measurement of financial instruments This note explains the judgements and estimates made in determining the fair values of the ﬁnancial instruments that are recognised and measured at fair value in the ﬁnancial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Group has classiﬁed its ﬁnancial instru- ments into the three levels prescribed under the accounting standards. An explanation of each level follows underneath the table. Recurring fair value measurements At 31 December 2023 NOK in thousands Level 1 Level 2 Level 3 Total Financial assets Derivative ﬁnancial instruments - 1 433 738 110 982 1 544 720 Total ﬁnancial assets at fair value - 1 433 738 110 982 1 544 720 Financial liabilities Derivative ﬁnancial instruments - 1 358 890 113 384 1 472 275 Total ﬁnancial liabilities at fair value - 1 358 890 113 384 1 472 275 Recurring fair value measurements At 31 December 2022 NOK in thousands Level 1 Level 2 Level 3 Total Financial assets Derivative ﬁnancial instruments - 4 073 672 159 996 4 233 668 Total ﬁnancial assets at fair value - 4 073 672 159 996 4 233 668 Financial liabilities Derivative ﬁnancial instruments - 3 032 664 152 663 3 185 327 Total ﬁnancial liabilities at fair value - 3 032 664 152 663 3 185 327 Annual report 2023 140 Part 4 – 4.3 Notes Elmera Group There were no transfers between level 1 and 2 for recurring fair value measurements during the period. The Group’s policy is to recognise transfers into and transfers out of fair value hier- included in level 3. archy levels at the end of the reporting period. Valuation techniques used to determine fair values • Nordic system price for delivery periods beyond the next 10 calendar years, Level 1: The fair value of ﬁnancial instruments • Area prices for price areas in Norway for traded in active markets (such as publicly Speciﬁc valuation techniques used to value delivery periods beyond the next 3 calendar traded derivatives, and trading and avail- derivative ﬁnancial instruments, in majority years, able-for-sale securities) is based on quoted electricity derivatives, include present value • Area prices for price areas in Sweden and market prices at the end of the reporting period. of future cash ﬂows based on forward power Finland for delivery periods beyond the next The quoted market price used for ﬁnancial prices from Nasdaq Commodities at the bal- 4 calendar years. assets held by the Group is the current bid ance sheet date. In the case of material long- price. These instruments are included in level 1. term contracts, the cash ﬂows are discounted The Group does not hold electricity deriva- at a discount rate calculated by using interest tives with maturities beyond the next 10 calen- Level 2: The fair value of ﬁnancial instru- rates on Government bonds with matching dar years at 31 December 2023, hence all level ments that are not traded in an active market maturities, added a risk premium of 0,2 per- 3 derivatives are long term area price contracts. (for example, over-the-counter derivatives) is centage points. Valuation method is used for determined using valuation techniques which bilateral forward contracts and option contracts maximise the use of observable market data associated with purchase and sale of electricity. and relies as little as possible on entity-speciﬁc Key inputs to the valuation are expected power estimates. If all signiﬁcant inputs required to prices (Nordic system price and area prices in fair value of an instrument are observable, the the power price areas in Norway, Sweden and instrument is included in level 2. Finland), contract prices and discount rates. Level 3: If one or more of the signiﬁcant inputs to a fair value valuation are not based on observable market data, the instrument is Level 3 inputs consist of expected power prices for delivery periods without an observ- able market price: Note 7 Fair value measurement of ﬁnancial instruments Annual report 2023 141 Part 4 – 4.3 Notes Elmera Group Note 7 Assets and liabilities measured at fair value based on level 3 Fair value measurement of ﬁnancial instruments At 31 December 2023 NOK in thousands Assets Liabilities Total, net Opening balance 1 January 2023 159 996 152 663 7 333 Transferred to level 2 (90 575) (83 377) (7 198) Additions or derecognitions - - - Unrealised changes in value recognised in proﬁt or loss 41 561 44 099 (2 537) Closing balance 31 December 2023 110 982 113 384 (2 402) Net realised gain (+) / loss (-) recognised in proﬁt and loss 2023 - Sensitivity analysis of factors classiﬁed to level 3 NOK in thousands 10 % reduction 10 % increase Net eﬀect from power prices (481) 481 Fair value of other ﬁnancial instruments The Group also has ﬁnancial instruments which are not measured at fair value in the statement of ﬁnancial position. For the majority of these instruments, the fair values are not materially diﬀerent to their carrying amounts, since the interest receivable/payable is either close to current market rates or the instruments are short-term in nature. A signiﬁcant diﬀerence between fair value and carrying amout at 31 December 2023 has not been identiﬁed. Annual report 2023 142 Part 4 – 4.3 Notes Elmera Group Note 8 Financial risk management objectives The Group classiﬁes the following categories of ﬁnancial risks: ket risk – commodity prices”. market prices for electricity, but also to mar- information about climate risk and how these • Climate risk Elmera Group is operating in a renew- ket prices of el-certiﬁcates and guarantees of are managed. • Market risk able industry and the demand for electric- origination (GoOs). When selling electricity to end users the • Credit risk ity is expected to increase going forward. The market price for electricity (spot price) Group oﬀers a large scale of diﬀerent product • Liquidity risk Increased penetration of solar panels among is the hourly price from the Nordic power types with diﬀerent pricing structures. The Climate risk consumers can reduce the customers’ con- exchange Nord Pool Spot. Norway, Sweden, product types vary from spot-priced products, sumption of electricity through the electricity and Finland are geographically divided into where the sales prices are connected to the In preparing Elmera Group’s annual ﬁnancial statements, a comprehensive evaluation of climate-related risks was conducted to accu- rately reﬂect the Group’s ﬁnancial position and outlook. This evaluation considered the poten- tial impacts of physical risks, such as extreme weather events and shifts in climate patterns, as well as transition risks associated with the global move towards a low-carbon economy. Physical risk involves costs associated with physical damage due to climate change. Elmera Group has very few assets that could be physically damaged as a consequence of climate change. The increased frequency of extreme weather conditions could result The Group’s ESG-report contains more to electricity costs, perceived as challenging in signiﬁcant damage to grid owners’ infra- information about climate risk and how these by many in both the private and corporate structure, which could aﬀect Elmera Group’s are managed. sectors. reputation in the event of prolonged power Market risk A higher ratio of renewable energy in the outages. The Group’s exposure to physical power system also increases price volatility. risk is considered to be low. Market risk is the risk of losses arising from Production will vary according to weather con- Transitional risk involves economic uncer- movements in market prices. The Group is pri- ditions. The price of electricity produced from tainty related to the transition to a low-emis- marily exposed to the market risks of changes coal and gas is aﬀected by high CO2 prices. sion society, and is divided into four in commodity prices, climate risk, interest Weather conditions also aﬀect the demand categories: Technology, Market, Policy and rates, security prices and foreign currency side. Climate change therefore aﬀects key Reputation. exchange rates. factors such as price and volume. It also As we are transitioning towards a low-emis- drives regulation and increased reporting sion society, the mix of production sources will requirements, as well as the demand for prod- change, which again can aﬀect commodity prices. This is further described under “mar- retailers, but also represents growth oppor- tunities for the Group, as the Group is both a distribution channel of solar panels and facil- itates solutions for i.a. insight and virtual stor- age of production. This area is an important focus area for the Group in the years to come. The various aspects of climate risk men- tioned above have been assessed for their potential inﬂuence on the recognition, meas- urement, depreciation proﬁles and impairment considerations of the Group’s assets and lia- bilities, and it was concluded that, as of the current reporting period, climate-related risks do not have material eﬀects on the Group’s ﬁnancial statements. Market risk – commodity prices The commodity price risks related to sales of electricity to end-users are primarily related to diﬀerent electricity price areas. The spot price is determined by Nord Pool Spot within each of these price areas by the balance between demand and supply. Diﬀerent factors have contributed to high price volatility for a sustained period. These include geopolitical conditions, such as Russia’s invasion of Ukraine and the conse- quences of this for gas supplies in Europe, high CO2 prices, and the transition to renewa- bles that bring more non-regulated power into the system. Going forward, the new normal is expected to be characterised by higher price volatility than before the electricity price crisis. This leads to unpredictability related ucts such as solar panels and guarantees of origin. The Group’s ESG-report contains more spot price the Group pays when purchasing the electricity in the spot market, to variable price and ﬁxed price contracts where the sales price is a ﬁxed price for a ﬁxed period. The diﬀerent product types expose the Group to diﬀerent risks, including price risk, proﬁle risk, and volume risk. Proﬁle risk arises when using standardized electricity deriva- tives, where the contractual price is ﬁxed for all hours during the contractual period, to hedge power sales in the retail market where power prices vary from hour to hour through- out the day and week. The majority of end-user-sales in Norway are from spot-priced product types, where there Annual report 2023 143 Part 4 – 4.3 Notes Elmera Group Note 8 Financial risk management objectives is no price-, proﬁle- or volume risk. Variable price contracts oﬀer the customers the pre- dictability of a ﬁxed price without a ﬁxed vol- ume. The price in the variable price products in the consumer segment can be changed with a 30 days’ notice period. In the business segment the notice period is seven days. In the Consumer segment, the Group has initi- ated a soft phase-out of these contracts and year-end 2023 this contract type represents less than 7% of the customers in the segment. A portion of end-user sales in the Nordic segment are at ﬁxed price contracts. The volume of ﬁxed price power contracts has decreased during the year due to a phase-out of the product and movement towards spot- based products for new customers. These legacy ﬁxed price contracts were contracts without ﬁxed volume, exposing the Group to both price-, proﬁle-, and volume risks. The Group ended new sales of this type of ﬁxed price contracts in the Nordic segment during the ﬁrst quarter of 2022. Since then, new sales of ﬁxed price contracts are contracts where the customer carries the price-, proﬁle-, and volume risks. Thus, the Group’s exposure to these risks was signiﬁcantly decreased in 2022 and further decreased through 2023 as ﬁxed price contracts expired. Whenever Elmera enters into customer contracts where the electricity sales price is ﬁxed or partially ﬁxed, the related price risk is managed by purchasing ﬁnancial electric- ity derivatives for hedging purposes. When hedging the price risk from ﬁxed price con- tracts without ﬁxed volume, the electricity vol- ume expected to be delivered on the ﬁxed price contracts is estimated. To manage the volume risk in these customer contracts the volume estimates are periodically updated, and the portfolios of hedging derivatives are rebalanced accordingly. The remaining risk exposure is taken into account when pricing these customer contracts. The Group oﬀers large business customers and Alliance partners to enter into ﬁnancial power contracts, enabling them to utilize the market for ﬁnancial trading of electricity to hedge the price risks in (parts of) their elec- tricity purchases and/or sales. Any ﬁnancial derivative sold to a business customer is hedged back-to-back by purchasing a cor- responding ﬁnancial derivative from a third party, thus any price or volume risk on these ﬁnancial customer contracts is eliminated. The Group’s ﬁnancial electricity trade is mainly conducted through agreed bilateral frame- works with Statkraft as the main trade counter party. When selling electricity to end users in Norway and Sweden, the Group is required to purchase and cancel el-certiﬁcates. Further, when selling electricity on products includ- ing guarantees of origination, the Group is required to purchase and cancel GoOs. To manage risk exposure towards ﬂuctuations in el-certiﬁcate and GoO market prices, the Group purchases el-certiﬁcates and GoOs, either in the spot market, or by purchasing forward contracts. The forward contracts are contracts with physical delivery, accounted for as own-use contracts, hence they are not recognised in the statement of ﬁnancial position. Market risk – interest rates The Group’s exposure to interest rate risk arises from variable rate credit facilities. The long term loans, the revolving credit facility, the guarantee facility and the overdraft facil- ity described in note 6(c), are all variable rate facilities. In addition, interest rate risk is related to short-term trade payables towards Statkraft related to purchase of electricity, and short-term receivables for customers who choose to extend their payment terms. Variable rate credit facilities, trade payables, and trade receivables expose the Group to cash ﬂow interest rate risks. The Group has set out parameters to actively monitor this risk going forward. Market risk – security prices The Group is indirectly exposed to security price risk through its deﬁned employee beneﬁt obligations where parts of the pension plan assets are invested in securities. This risk is managed through investment in diversiﬁed portfolios managed by external insurance companies. For further disclosure on fair value of plan assets and risk exposure related to employee beneﬁt obligations, please refer to note 17. Market risk – foreign exchange rates Following the acquisition of Troms Kraft Strøm AS and its subsidiaries’ operations in Sweden and Finland, the Group increased its expo- sure to foreign exchange risk (primarily the Swedish Krone and the Euro). The acquisition was ﬁnanced by a term loan denominated in NOK, and cash in hand. The Group’s operations however still have limited exposure to foreign exchange cur- rency ﬂuctuations, as the vast majority of local revenues, operating expenses and ﬁnancial expenses are denominated in local currency. Through its agreement with Statkraft, the Group has the opportunity to conduct all of its physical and ﬁnancial purchase of electricity in local currency. Derivatives All ﬁnancial electricity derivatives are either ﬁnancial customer contracts, or purchased for the purpose of hedging physical or ﬁnancial customer contracts. Hence derivatives are only used for economic hedging purposes and not as speculative investments. However, where derivatives do not meet the hedge accounting criteria, they are classiﬁed as ‘held for trading’ for accounting purposes and are accounted for at fair value through proﬁt or loss. Derivatives are presented as current assets or liabilities to the extent they are expected to be settled within 12 months after the end of the reporting period. The Group’s accounting policy for cash ﬂow hedges are set out in note 9. Annual report 2023 144 Part 4 – 4.3 Notes Elmera Group Note 8 The group has the following derivative ﬁnancial instruments: Financial risk management objectives NOK in thousands 2023 2022 Derivative ﬁnancial assets Designated as hedging instruments for accounting purposes Electricity derivatives - Hedge contracts - 2 077 Electricity derivatives - Customer cont racts 118 924 - Classiﬁed as held for trading for accounting purpose Electricity derivatives - Hedge contracts 444 722 2 745 315 Electricity derivatives - Customer contracts 717 417 1 486 276 Other derivatives - - Hedged item in fair value hedge Firm commitments 263 657 - Total derivative ﬁnancial assets and ﬁrm commitments 1 544 720 4 233 668 Derivative ﬁnancial liabilities and ﬁrm commitments Designated as hedging instruments for accounting purposes Electricity derivatives - Hedge contracts (2 735) 72 772 Electricity derivatives - Customer contracts 273 933 - Classiﬁed as held for trading for accounting purpose Electricity derivatives - Hedge contracts 401 027 129 552 Electricity derivatives - Customer contracts 691 402 2 982 676 Other derivatives - 328 Hedged item in fair value hedge Firm commitments 108 648 - Total derivative ﬁnancial liabilities and ﬁrm commitments 1 472 275 3 185 327 Annual report 2023 145 Part 4 – 4.3 Notes Elmera Group Note 8 Credit risk the related credit risk. The power support purchased under the Group’s electricity pur- Financial risk management Credit risk refers to the risk that a counter- scheme has been revised by the Norwegian chase agreement with Statkraft, which is the objectives party will default on its contractual obligations government and extended to include the year Group’s most signiﬁcant purchase agreement, resulting in ﬁnancial loss to the Group. As of 2024. The Group is required to provide letters are invoiced monthly in arrear, with a 45-day 31 December 2023, the Group’s maximum of credit to the grid owners, guaranteeing their payment term. In addition, the agreement in exposure to credit risk without taking into settlement of re-invoiced grid rent. However, Norway includes a right for the Group to post- account any collateral held or other credit the grid owners are not required to reimburse pone these payments for additional 15 days if enhancements, equals the carrying amount the Group for any re-invoiced grid rent not the volume weighted average price excl. VAT of the respective recognised ﬁnancial assets settled by the customer. exceeds NOK 1.00 per kWh. as stated in the consolidated statement of The credit risk on bank deposits is limited Details of additional undrawn facilities that ﬁnancial position, see note 6. because the counterparties are banks with the Group has at its disposal to further reduce Trade receivables consists of a large num- high credit-ratings assigned by international liquidity risk are set out in note 6(c), Credit ber of receivables on end-user customers, credit-rating agencies. facilities. mainly households and business customers Derivative ﬁnancial contracts are traded spread across diverse industries in Norway, either bilaterally with third party counterparties Sweden and Finland. The Group uses an (mainly Statkraft), or customers (mainly large external credit scoring system to assess the business customers and Alliance partners). potential customer’s credit quality before Credit risk associated with derivative ﬁnan- accepting any new customer. The Group cial contracts with Statkraft (and other third uses publicly available ﬁnancial information parties) is considered to be limited as these and its own trading records to rate its busi- counterparties are highly rated state-owned ness customers. Refer to note 6 for details of enterprises. The credit risk related to deriv- concentration of credit risk related to trade ative ﬁnancial contracts with customers is receivables. managed by only oﬀering ﬁnancial contracts In addition to invoicing electricity sales to customers with a suﬃcient credit rating, or and other services provided to customers, by requiring security from the customer in the the Group provides re-invoicing to customers form of a deposit or a letter of credit. in Norway related to grid rent on behalf of Liquidity risk the grid owners (“gjennomfakturering”). This contributes to an increase in credit risk as The Group manages liquidity risk by maintain- the amount of trade receivables increases ing adequate cash reserves, bank overdraft with the re-invoiced grid rent. However, the facilities and reserve credit facilities, by con- Norwegian power support scheme (“strøm- tinuously monitoring forecasts and actual cash støtteordningen”) has signiﬁcantly reduced ﬂows, and by matching the maturity proﬁles the amounts which are re-invoiced, and thus of ﬁnancial assets and liabilities. Electricity Annual report 2023 146 Part 4 – 4.3 Notes Elmera Group Note 8 Liquidity risk tables The following tables detail the Group’s remaining contractual maturity for its non-derivative- and derivative ﬁnancial liabilities. The tables have been drawn based on the undiscounted cash ﬂows of ﬁnancial liabilities based on the earliest date on which the Group can be required to pay. All electricity derivatives are settled Financial risk management objectives monthly in arrear. Contractual maturities of non-derivative ﬁnancial liabilities 31 December 2023 NOK in thousands Less than 1-3 months 3 months to 1-5 years 5+ years Total Carrying 1 month 1 year amount Trade and other payables 3 246 231 - - - - 3 246 231 3 246 231 Overdraft facilities - - - - - - - Interest-bearing short term debt - 23 425 70 275 275 000 - 368 700 368 700 Interest-bearing long term debt - - - 538 775 - 538 775 537 617 Leasing liabilities - 4 867 14 602 43 775 - 63 244 60 336 Total 3 246 231 28 292 84 877 857 550 - 4 216 949 4 212 884 * Ordinary trade and other payables are not interest bearing. However included in Trade and other payables are interest bearing trade payables related to the Group’s electricity purchase agreement with Statkraft, the Group’s main supplier of electrical power. This agreement allows for payment terms of 45 days, of which the oustanding balance is interest-bearing from day 1. The Group also has the right to postpone the payments by an additional 15 days if prices exceed an agreed upon price level. The agreement expires at 31 Decemver 2024. At 31 December 2023, the interest bearing balance with Statkraft was NOKt 2 712 546 (31 December 2022 was NOKt 5 249 292). ** Interest-bearing short term debt includes the amounts of the term loan that are due within the next 12 months. Contractual maturities of derivative ﬁnancial liabilities 31 December 2023 NOK in thousands Less than 1-3 months 3 months to 1-5 years 5+ years Total Carrying 1 month 1 year amount Electricity derivatives - Hedge contracts - 14 290 104 662 318 652 1 122 438 725 398 292 Electricity derivatives - Customer contracts - 204 794 284 928 500 081 32 584 1 022 388 965 335 Firm commitments - - 8 051 101 233 8 976 118 260 108 648 Other derivatives - - - - - - - Total - 219 085 397 642 919 966 42 681 1 579 373 1 472 275 Annual report 2023 147 Part 4 – 4.3 Notes Elmera Group Note 9 Hedge accounting Cash ﬂow hedges of forecast power purchase transactions The Group designates certain derivatives as hedges of a particular risk associated with the cash ﬂows of highly probable forecast power purchase transactions (cash ﬂow hedges). Elmera Group sells retail electricity-con- tracts with diﬀerent pricing structures. All electricity purchases are however made in the spot market. The majority of the custom- ers have contracts where the price is based on spot market prices. The Group also oﬀers ﬁxed price contracts for a deﬁned period, and variable price contracts with or without price ceiling. In Norway, the price in the variable price products in the consumer segment can be changed with a 30 days notice period. In the business segment the notice period is seven days. The Group seeks to reduce price var- iability for a higher percentage of the future power purchases in Norway. This supports the commercial goal to reduce the number of price changes for the variable price prod- ucts, and at the same time acknowledge the risk that the Group might not be fully able to follow the price curve in a market with reduced prices. Because of the increased volume of hedging activity for future power purchases, the Group implement hedge accounting in 2021. Hedge accounting only applies to contracts entered into after the revised risk management policy. Elmera uses diﬀerent derivatives to reduce variability in future power purchases, depend- ing on availability in the market. The Group has prepared formal hedge documentation for area price forward contracts, Nordic sys- tem price forward contracts, EPAD (Electricity Price Area Diﬀerence) forward contracts, and for combinations of system price forward con- tracts and EPAD forward contracts, that are all part of the same risk management strategy. The Norwegian group entities purchase electricity in all ﬁve Norwegian price areas. When a Nordic system price forward contract is designated as a hedge instrument, the con- tract is designated to the diﬀerent price areas at the inception of the hedge. The Nordic system price is the main refer- ence price in the Nordic electricity market, with area prices to a varying degree correlat- ing to the system price. The three southern price areas in Norway (NO1, NO2 and NO5) are highly correlated with both the system price and each other. The correlation for the area prices in the two northern areas (NO3 and NO4) and the system price is signiﬁcantly weaker than for the southernmost areas. When implementing hedge accounting in 2021, management considered the market structure and concluded that the system price can be characterized as an identiﬁable and measurable component of the power price. In general, a change in the system price will cause a change in the price in all price areas and will also impact the pricing of long-term contracts in all areas. In addition, most mar- ket participants develop expectation of future prices estimating future system price and area diﬀerentials individually. This implies that the system price is an identiﬁable risk component in the future purchase of electricity. When des- ignating system price forward contracts as hedging instruments for power purchases in price areas where the forward area price is expected to be higher than the forward sys- tem price (NO1, NO2 and NO5), the hedged item is deﬁned as the cash ﬂows related to future purchase of electricity in the relevant areas, but only for those changes that are attributable to changes in the system price. From the beginning of 2022 the Group has not designated system price forward con- tracts as hedging instruments for power pur- chases in price areas NO3 and NO4, unless they are part of a hedge where the hedging instrument is a combination of a system price forward contract and an EPAD forward con- tract. The Group’s strategy when hedging the future cash ﬂows related to power pur- chases in price areas NO1, NO2 and NO5 has changed towards using area price forward contracts as hedging instruments, rather than Nordic system price forward contracts. For all price areas the hedged item is deﬁned as the ﬁrst units of electricity pur- chased every hour, not already designated as a hedged item in another hedge. Since only a limited portion of the total purchase volume is hedged, actual purchase volume will be signiﬁcantly higher than the hourly volume of the derivatives. Because of this there will not be any timing diﬀerences causing inef- fectiveness. Annual report 2023 148 Part 4 – 4.3 Notes Elmera Group Note 9 Fair value hedge Hedge accounting tracts, where the price is ﬁxed for the delivery of the hedged items and the hedging instru- From the beginning of 2023 the Group des- of a ﬁxed volume in a ﬁxed delivery period in ments are identical. Credit risk associated ignates certain ﬁxed price power sales con- a designated price area. These contracts do with these contracts is considered immate- tracts as fair value hedges of power price risk not qualify for recognition in the statement of rial. The fair value hedges are expected to associated with certain ﬁrm commitments. ﬁnancial position in accordance with IFRS 9 be highly eﬀective and there was no signiﬁ- The ﬁxed price power sales contracts which as they are entered into and continue to be cant impact on the statement of proﬁt or loss are the hedging instruments are customer held for the purpose of the receipt of power resulting from hedge ineﬀectiveness during contracts which contain terms that the cus- in accordance with the Group’s expected pur- the year. tomer will be ﬁnancially settled for the diﬀer- chase and should be accounted for as “own In a fair value hedge the value change ence between the agreed price and the spot use” contracts. They do however meet the in unrealised gains or losses of the hedg- price in the event of under-consumption. The deﬁnition of a ﬁrm commitment and can be ing instrument will meet the corresponding contracts also include a choice of net cash designated as hedged items in a fair value change in value of the hedged item and it is settlement. As the contracts fails the own- hedge according to IFRS 9.6.3. presented on the same line item in the state- use criteria under IFRS 9 the contracts are The objective of the economic hedging ment of proﬁt or loss. Ineﬀectiveness is recog- presented at fair value in the balance sheet arrangements is to hedge the exposure to nised in proﬁt or loss. Accumulated unrealised in accordance with IFRS 9. changes in the fair value of the ﬁxed price gains or losses on the hedged items are rec- The ﬁrm commitments which are the hedged purchase contracts. ognised as ﬁrm commitments in the line item items are ﬁxed price power purchase con- The hedge ratio is 1:1 as the critical terms Derivative ﬁnancial instruments and ﬁrm com- mitments in the statement of ﬁnancial position. . The accounting implications of hedge accounting for the period are summarised in the tables below. Cash ﬂow hedges - Change in fair value of hedging instruments where hedge accounting is applied NOK in thousands 2023 2022 Cash ﬂow hedge of highly probable power purchase: Ineﬀective portion, recognised in P&L, total 5 (12 512) Eﬀective portion, recognised in OCI, total 73 424 20 781 Change in fair value - Cash ﬂow hedges 73 429 8 269 Eﬀective portion, recognised in OCI, net of tax (22 %) 57 270 16 209 Ineﬀective portion of changes in fair value of designated hedging instruments are recognised to Direct cost of sales in the statement of proﬁt or loss. Eﬀective portion of realised gains and losses on hedging instruments are reclassiﬁed from OCI and recognised to Direct cost of sales in the period they are realised. Annual report 2023 149 Part 4 – 4.3 Notes Elmera Group Note 9 Cash ﬂow hedges - Fair value of hedging instruments where hedge accounting is applied Hedge accounting Cash ﬂow hedge of highly probable power purchase in Norwegian price areas. Fair value of hedge instru- ment recognised in recognised in in MWh quarter, OCI OCI, net of tax in MWh 31 December 2023 South Norway (NO1, NO2, NO5) 270 270 211 - 21 641 - Trondheim (NO3) 2 309 2 309 1 801 - 20 554 - Tromsø (NO4) 156 156 122 - 2 137 - 31 December 2023 - Total 2 735 2 735 2 133 - 44 332 - Effective por- tion of change in fair value, Effective por- tion of change in fair value, Ineffectiveness recognised in P&L Hedged vol- ume, subse- quent quarter, Hedged vol- ume beyond subsequent 31 December 2022 South Norway (NO1, NO2, NO5) (71 809) (71 809) (56 011) - 60 944 146 Trondheim (NO3) 2 099 2 103 1 640 (3) 29 114 763 Tromsø (NO4) (984) (983) (766) (2) 7 894 967 31 December 2022 - Total (70 694) (70 689) (55 137) (5) 97 952 1 876 Cash ﬂow hedges - Hedging reserves The table below shows a reconciliation of the hedging reserve in other comprehensive income related to cash ﬂow hedges of forecast power purchase transactions. NOK in thousands 2023 2022 Opening balance 1 January (55 137) (71 347) Eﬀective portion of unrealised change in fair value of hedging instruments (68 642) (381 080) Realised (gains) and losses reclassiﬁed to proﬁt or loss 142 064 401 862 Deferred tax (16 153) (4 572) Closing balance 31 December 2 133 (55 137) Annual report 2023 150 Part 4 – 4.3 Notes Elmera Group Note 9 Fair value hedges Hedge accounting Nominal Accumulated Changes in NOK in thousands Item in Statement of ﬁnancial position amounts, hedged volume in MWh Carrying amount at end of period fair value ad- justment of the hedged items at end of period fair value used for calculating hedge ineffec- tiveness 2023 Hedged items: Fixed price purchase contracts Derivative ﬁnancial instruments 1 407 953 263 657 263 657 263 657 (Firm commitments) and ﬁrm commitments (assets) Derivative ﬁnancial instruments 958 610 (108 648) (108 648) (108 648) and ﬁrm commitments (liabilities) Hedging instruments: Fixed price sales contracts Derivative ﬁnancial instruments 942 889 118 924 - 118 924 (Electricity derivatives) (liabilities) Derivative ﬁnancial instruments and ﬁrm commitments (liabilities) 1 423 674 (273 933) - (273 933) Fair value hedges - contractual maturities of hedged volumes in hedging instruments Hedged volumes in MWh 0 - 3 months 3 - 12 months 1 - 5 years 5 + years Total 31 December 2023 Fixed price sales contracts (Electricity derivatives) 141 613 484 567 1 591 371 149 010 2 366 562 Annual report 2023 151 Part 4 – 4.3 Notes Elmera Group Note 10 Personnel expenses NOK in thousands 2023 2022 Salaries 348 669 322 878 Social security 55 354 44 091 Pension expenses 38 854 40 298 Other beneﬁts 13 950 14 870 Gross personnel expenses 456 828 422 137 - Capitalised R&D costs (2 206) (1 109) Total personnel expenses 454 622 421 029 Number of full-time equivalents (FTEs) as of 31 December 434 412 For information regarding pension schemes please refer to note 17. For information regarding management option program please refer to note 26. For information regarding remuneration to executive management and Board of Directors please refer to note 22. Annual report 2023 152 Part 4 – 4.3 Notes Elmera Group Note 11 Other operating expenses and other financial items 11(a) Other operating expenses Other operating expenses NOK in thousands 2023 2022 Sales and marketing costs 90 132 135 526 IT cost 146 469 134 331 Purchase of third- party services and external personnel 82 877 107 011 Net impairment expense on trade receivables and other losses 32 007 35 317 Professional fees * 123 962 93 184 Other operating costs 66 830 69 577 Total other operating expenses 542 277 574 946 * Includes legal fees, auditor, consultants. Auditor’s remuneration NOK in thousands 2023 2022 Statutory audit - Deloitte 5 264 3 884 Other assurance services - Deloitte 396 618 Other non-assurance services - Deloitte 133 235 Total 5 794 4 736 11(b) Other ﬁnancial items, net NOK in thousands 2023 2022 Foreign exchange gain/(losses) 7 686 (3 351) Other ﬁnancial expenses (12 241) (9 311) Total other ﬁnancial items, net (4 555) (12 660) Annual report 2023 153 Part 4 – 4.3 Notes Elmera Group Note 12 Income tax Speciﬁcation of tax expense recognised in statement of proﬁt or loss NOK in thousands 2023 2022 Tax payable on proﬁt for the year 82 874 64 831 Adjustments to prior years tax payable 17 (208) Adjustments to prior years deferred tax expense (income) - 208 Change in deferred tax/(tax asset) from origination and reversal of temporary diﬀerences (41 860) (9 986) Tax expense recognised in statement of proﬁt or loss 41 030 54 846 Speciﬁcation of current income tax liabilities NOK in thousands 2023 2022 Tax payable on proﬁt for the year 82 874 64 831 Tax payable on changes to proﬁt for the previous year (4) - Adjustments prior years tax payable 41 (14 325) Current income tax liabilities recognised in balance sheet 82 910 50 506 Reconciliation of statutory tax rate to effective tax rate: NOK in thousands 2023 2022 Proﬁt before tax 237 577 128 692 Income tax at statutory tax rate (22%) 52 267 28 312 Tax expense recognised in statement of proﬁt or loss 41 030 54 846 Difference 11 236 (26 533) Permanent diﬀerences 216 3 107 Change in deferred tax/(tax asset) from change in valuation allowance for deferred tax assets (11 508) 23 442 Adjustments prior years tax payable 55 (15) Difference (11 236) 26 533 Annual report 2023 154 Part 4 – 4.3 Notes Elmera Group Note 12 Speciﬁcation of basis for deferred tax Income tax 2023 2023 2023 2022 NOK in thousands Norway Sweden & Finland Total Total Fixed assets/intangible assets 210 564 149 776 360 340 436 020 Receivables (26 291) - (26 291) (33 617) Pension liabilities (22 958) - (22 958) (62 185) Cost to obtain contracts 132 963 - 132 963 192 420 Provisions for onerous contracts (3 809) (89 454) (93 263) (1 069 575) Other current liabilities (2 544) - (2 544) (5 115) Derivative ﬁnancial instruments 2 161 69 939 72 100 1 048 203 Leasing liabilities (3 210) (6) (3 215) (3 566) Other 17 138 - 17 138 6 322 Losses carried forward (12 245) (2 091 352) (2 103 597) (2 005 484) Temporary differences 291 769 (1 961 097) (1 669 328) (1 496 578) Tax rate 22% 20,6% / 20% Deferred tax/(tax asset) 64 189 (403 951) (339 762) (303 265) Valuation allowance for deferred tax assets - 385 139 385 139 368 555 Deferred tax asset recognised in statement of ﬁnancial position - 37 466 37 466 34 990 Deferred tax recognised in statement of ﬁnancial position 64 189 18 654 82 843 100 280 Net position (64 189) 18 812 (45 377) (65 290) * Valuation allowance for deferred tax asset There are signiﬁcant tax losses carried forward in the entities in Sweden and Finland which were acquired as part of the Troms Kraft Strøm AS acquisition in 2020. A deferred tax asset related to the portion of these tax losses carried forward which are expected to be utilised by net taxable proﬁt in the acquired businesses in Sweden (NOKt 24 508) and Finland (NOKt 12 958), was recognised as part of the purchase price allocation when accounting for the business combination. The deferred tax asset related to the remaining tax losses carried forward are not recognised in the statement of ﬁnancial position at year end 2023. Of the unrecognised deferred tax assets, NOKt 386 659 relates to losses carried forward in Sweden and NOKt 6 121 relates to losses carried forward in Finland. Tax losses in Finland may be carried forward for ten subsequent years. The tax losses carried forward in Finland are from the period between 2014 and 2023. Utilisation of the tax losses in Sweden is without time limitation. Annual report 2023 155 Part 4 – 4.3 Notes Elmera Group Note 12 Changes in deferred tax balances Income tax Changes recognised in statement of Changes recognised in other comprehen- 2023 NOK in thousands 1 January 31 December 2023 2023 proﬁt or loss sive income Fixed assets/intangible assets 82 756 (19 136) 1 359 64 978 Receivables (7 396) 1 612 - (5 784) Pension liabilities (13 681) 1 718 6 911 (5 051) Cost to obtain contracts 42 332 (13 080) - 29 252 Provisions for onerous contracts (10 770) 9 932 - (838) Other current liabilities (1 125) 566 - (560) Derivative ﬁnancial instruments 7 559 (23 237) 16 153 476 Leasing liabilities (777) 70 - (706) Other assets 1 391 2 379 - 3 770 Losses carried forward (35 000) (2 685) (2 476) (40 160) Total 65 290 (41 860) 21 948 45 377 Changes recognised 2022 NOK in thousands 2022 in statement of proﬁt or loss in other comprehen- sive income 2022 Fixed assets/intangible assets 102 056 (20 356) 1 056 82 756 Receivables (5 249) (2 147) - (7 396) Pension liabilities (20 644) 5 945 1 018 (13 681) Cost to obtain contracts 43 707 (1 375) - 42 332 Provisions for onerous contracts (8 541) (2 230) - (10 770) Other current liabilities (1 179) 53 - (1 125) Derivative ﬁnancial instruments (9 563) 12 550 4 572 7 559 Leasing liabilities (763) (14) - (777) Other assets 3 839 (2 448) - 1 391 Losses carried forward (35 136) 35 101 (35 000) Total 68 528 (9 986) 6 747 65 290 Changes recognised 1 January 31 December OECD Pillar Two The Organisation for Economic Co-operation and Development (OECD)/G20 Inclusive Framework on Base Erosion and Proﬁt Shifting (BEPS) addresses the tax challenges arising from the digitalisation of the global economy. The OECD Pillar Two Global anti- Base Erosion legislation will come into eﬀect from 1 January 2024. The Group is within the scope of the OECD Pillar Two model rules, but since the Pillar Two legislation was not eﬀective at the reporting date, the Group has no related current tax exposure. The Group applies the exception to recognise and disclose information about deferred tax assets and liabilities related to Pillar Two income taxes, as provided in the amendments to IAS 12 issued in May 2023. Under the Pillar Two legislation, the Group is liable to pay a top-up tax in Norway, on proﬁts of its subsidiaries outside of Norway that are taxed at an eﬀective tax rate of less than the 15 % minimum tax rate. Due to the complexities in the Pillar Two legislation the Group is currently engaged in assessing the application and impact of the legislation on its future ﬁnancial reporting and performance. Annual report 2023 156 Part 4 – 4.3 Notes Elmera Group Note 13 Earnings per share Earnings per share is calculated as proﬁt/loss allocated to shareholders for the year divided by the weighted average number of outstanding shares. Basic earnings per share 2023 2022 Proﬁt/(loss) attributable to equity holders of the Group (NOK in thousands) 192 288 73 847 Total comprehensive income attributable to equity holders of the Group (NOK in thousands) 316 986 92 911 Weighted average number of ordinary shares outstanding 108 623 439 110 833 229 Earnings per share in NOK 1,77 0,67 Total comprehensive income per share in NOK 2,92 0,84 Share options (see note 26) 1 932 336 1 710 000 Diluted earnings per share in NOK 1,74 0,66 Dividend per share in NOK 1,50 3,50 Annual report 2023 157 Part 4 – 4.3 Notes Elmera Group 2023 NOK in thousands Fixtures and Computer Construction Total equipment equipment in progress Accumulated cost 1 January 2023 19 313 29 813 90 49 216 Additions - 566 62 627 Transferred from construction in progress 152 - (152) - Currency translation diﬀerence 125 117 - 241 Accumulated cost 31 December 2023 19 589 30 495 - 50 085 Accumulated depreciation 1 January 2023 (14 226) (26 790) - (41 017) Depreciation for the year (1 959) (1 604) - (3 563) Currency translation diﬀerence (94) (95) - (189) Accumulated depreciation 31 December 2023 (16 279) (28 489) - (44 769) Carrying amount 31 December 2023 3 310 2 006 - 5 315 2022 NOK in thousands Fixtures and Computer Construction in Total equipment equipment progress Accumulated cost 1 January 2022 18 653 27 260 33 45 946 Additions 675 2 593 57 3 325 Currency translation diﬀerence (15) (40) - (55) Accumulated cost 31 December 2022 19 313 29 813 90 49 216 Accumulated depreciation 1 January 2022 (11 996) (25 852) - (37 849) Depreciation for the year (2 240) (954) - (3 194) Currency translation diﬀerence 10 15 - 28 Accumulated depreciation 31 December 2022 (14 226) (26 790) - (41 017) Carrying amount 31 December 2022 5 087 3 023 90 8 198 Useful life 8 years (or lease 3 years term if shorter) Depreciation method Straight line Straight line The Group has no stranded assets. Note 14 Property, plant and equipment Annual report 2023 158 Part 4 – 4.3 Notes Elmera Group Note 15 Intangible assets Non-current intangible assets 2023 Software and Fixed price Other Totalt non-cur- Total NOK in thousands development projects contracts** assets Goodwill assets Accumulated cost 1 January 2023 382 472 9 446 799 668 36 676 145 888 1 374 151 1 418 775 2 792 926 Additions - Purchase 8 174 41 471 274 - - 49 919 - 49 919 Additions - Internally generated 1 605 601 - - - 2 206 - 2 206 Additions from business combinations - - - - - - - - Transferred from construction in progress 37 983 (37 983) - - - - - - Government grants - - - - - - - - Disposals - - - (20 830) - (20 830) - (20 830) Currency translation diﬀerences 612 132 15 950 2 596 1 652 20 943 20 613 41 556 Accumulated cost 31 December 2023 430 845 13 668 815 892 18 443 147 541 1 426 389 1 439 389 2 865 777 Construction in progress Customer portfolios customer intangible rent intangible assets excl. Goodwill non-current intangible Accumulated depreciation 1 January 2023 (269 527) - (445 660) (2 085) (41 240) (758 512) - (758 512) Depreciation for the year (45 560) - (115 731) - (7 427) (168 717) - (168 717) Disposals - - - 1 286 - 1 286 - 1 286 Currency translation diﬀerences (382) - (5 646) (147) - (6 175) - (6 175) Accumulated depreciation 31 December 2023 (315 468) - (567 037) (946) (48 667) (932 118) - (932 118) Accumulated impairment 1 January 2023 (22 724) - - (34 591) - (57 315) - (57 315) Impairment for the year - - - - - - - - Disposals - - - 19 544 - 19 544 - 19 544 Currency translation diﬀerences - - - (2 450) - (2 450) - (2 450) Accumulated impairment 31 December 2023 (22 724) - - (17 497) - (40 221) - (40 221) Carrying amount 31 December 2023 92 654 13 668 248 855 - 98 874 454 051 1 439 389 1 893 440 Useful life 3 years 2-12 years Up to 5 years 3 years Depreciation method Straight line Other/ Other Straight line straight line * Depreciations of customer portfolios has previously been calculated on basis of expected churn-proﬁle of the customer portfolio. From 2023 the Group have changed the deprectiation method on the majority of customer portfolios to a straight-line method as changing market conditions have made it diﬃcult to estimate a churn-based depreciation pattern reliably. The eﬀect of the change is an increased depreciation of approximately NOKt 25 900 in 2023. The eﬀect on future periods is an increase in depreciation in 2024 and 2025 of approximately NOKt 41 000 and NOKt 30 800 respectively and a corresponding reduction in depreciation from 2026 and onwards. ** Refer note 18 for more information regarding depreciation and impairment of ﬁxed price customer contracts. *** Disposals are related to ﬁxed price customer contracts being fully delivered. This eﬀect was not included in the consolidated ﬁnancial statements for 2022. Comparative ﬁgures have been updated accordingly. Annual report 2023 159 Part 4 – 4.3 Notes Elmera Group Note 15 Intangible assets * Depreciations for the majority of customer portfolios is calculated on basis of expected churn-proﬁle of the customer portfolio ** Refer note 18 for more information regarding depreciation and impairment of ﬁxed price customer contracts. *** Disposals are related to ﬁxed price customer contracts being fully delivered. This eﬀect was not included in the consolidated ﬁnancial statements for 2022. Comparative ﬁgures have been updated accordingly. Non-current intangible assets 2022 Software and Fixed price Other Totalt non-cur- Total NOK in thousands development projects contracts assets Goodwill assets Accumulated cost 1 January 2022 345 582 5 339 796 218 111 314 145 607 1 522 414 1 419 451 2 941 866 Additions - Purchase 8 910 32 439 4 - - 41 353 - 41 353 Additions - Internally generated 858 105 - - - 963 - 963 Transferred from construction in progress 28 294 (28 294) - - - - - - Government grants (1 308) - - - - (1 308) - (1 308) Disposals - - - (76 963) - (76 963) - (76 963) Currency translation diﬀerences 136 (143) 3 446 2 325 281 6 045 (675) 5 370 Accumulated cost 31 December 2022 382 472 9 446 799 668 36 676 145 888 1 492 504 1 418 775 2 911 280 Construction in progress Customer portfolios customer intangible rent intangible assets excl. Goodwill non-current intangible Accumulated depreciation 1 January 2022 (221 534) - (321 346) (3 209) (32 514) (625 236) - (625 237) Depreciation for the year (47 861) - (123 977) - (8 726) (180 565) - (180 565) Disposals - - - 1 181 - 1 181 - 1 181 Currency translation diﬀerences (131) - (337) (57) - (526) - (526) Accumulated depreciation 31 December 2022 (269 527) - (445 660) (2 085) (41 240) (805 145) - (805 145) Accumulated impairment 1 January 2022 (22 724) - - (108 106) - (202 550) - (202 550) Impairment for the year - - - - - - - - Disposals - - - 75 782 - 75 782 - 75 782 Currency translation diﬀerences - - - (2 267) - (2 267) - (2 267) Accumulated impairment 31 December 2022 (22 724) - - (34 591) - (129 036) - (129 036) Carrying amount 31 December 2022 90 221 9 446 354 007 - 104 648 558 324 1 418 775 1 977 100 Useful life 3 years 2-12 years Up to 5 years 3 years Depreciation method Straight line Other/ Other Straight line straight line Annual report 2023 160 Part 4 – 4.3 Notes Elmera Group Note 15 Intangible assets Impairment of Goodwill and intangible assets with indeﬁnite useful life The Group has performed an impairment test of Goodwill and intangible assets with indeﬁnite useful life as of 31 December 2023 in accordance with IAS 36, using the methods outlined in note 2. Goodwill as at 31 December 2023, has a total carrying value of NOKt 1 439 389 and intangible assets with indeﬁnite useful life has a total carrying value of NOKt 86 424. The allocation, for impairment-testing purposes, on cash-generating units of the signiﬁcant amounts is shown in the table below: 2023 2022 NOK in thousands Goodwill Intangible assets with Goodwill Intangible assets with indeﬁnite useful life indeﬁnite useful life Consumer segment 771 012 42 017 771 012 42 017 Business segment 353 235 19 250 353 235 19 250 Nordic segment 315 141 25 157 294 528 23 505 Total 1 439 389 86 424 1 418 775 84 772 Intangible assets with indeﬁnite useful life are tradenames acquired as part of business combinations, which are included in Other intangible assets in the tables above. The key assumptions on which management has based its determination of the recoverable amount are Weighted Average Cost of Capital (WACC), net revenue growth and operating expenditure growth. Key assumptions – Consumer and Business segments When calculating value in use for both Consumer and Business segments the weighted average cost of capital used was 10,8 % (2022: 10,2 %) and estimated growth rate in the terminal year was set at nominal 0,5 % (2022: 0,5 %). For goodwill and intangible assets with indeﬁnite useful life allocated to the Consumer and Business segments, the calculated recoverable amount signiﬁcantly exceeds the carrying amount, and reasonably possible changes in key assumptions would not lead to impairment of the assets. Key assumptions – Nordic segment For the Nordic segment, country speciﬁc weighted average cost of capital used was 11,5 % for both Sweden and Finland (2022: 12,0 % for Sweden and 12,1 % for Finland). Estimated growth rate in the terminal year was set at nominal 1,0 % (2022: 1,0 %). Compound annual growth rate for net revenue was set at 11,8 % (2022: 12,0 %) and compound annual growth rate for operating expenditure was set at 5,3 % (2022: 4,7 %) in the ﬁve-year forecast. For goodwill and intangible assets with indeﬁnite useful life allocated to the Nordic segment, the calculated recoverable amount exceeds the carrying amount by NOKt 237 332. An increase in WACC by 4,5 percentage points, a reduction in compound annual growth rate for net revenue of 4,0 percentage points or an increase compound annual growth rate for operating expenditure of 9,9 percentage points would decrease the recoverable amount below the carrying amount. The key assumptions used in the estimates are associated with some uncertainty, however the headroom in the impairment test is signiﬁcant. Annual report 2023 161 Part 4 – 4.3 Notes Elmera Group Note 15 Intangible assets Research and development Development projects focus on preparing the company for future changes in the framework conditions, streamlining processes and future growth. The work mainly concerns customer-related system projects. Of total R&D expenditure of NOKt 48 840, NOKt 15 672 has been expensed as other operating expenses and NOKt 33 168 has been recognized as R&D assets. Current intangible assets 2023 NOK in thousands El-certiﬁcates Guarantees of Carbon credits Total current origination intangible assets Accumulated cost 1 January 2023 54 301 408 763 Additions - Purchase 8 166 77 972 7 162 93 300 Disposals (8 198) (75 372) (6 639) (90 209) Accumulated cost 31 December 2023 23 2 900 931 3 854 Carrying amount 31 December 2023 23 2 900 931 3 854 2022 NOK in thousands El-certiﬁcates Guarantees of Total current Total current origination intangible assets intangible assets Accumulated cost 1 January 2022 417 6 786 314 7 518 Additions - Purchase 9 032 29 494 3 516 42 041 Disposals (9 394) (35 979) (3 422) (48 795) Accumulated cost 31 December 2022 54 301 408 763 Carrying amount 31 December 2022 54 301 408 763 * Disposals of El-certiﬁcates refers to amount of certiﬁcates being handed over to the government to oﬀset el-certiﬁcate cancellation liability. Disposals of Guar- antees of origination (GoO) refers to amount of certiﬁcates redeemed as evidence of the origin of electricity generated from renewable energy sources. It is expected that future earnings of ongoing R&D will correspond to expenses incurred. Government grants The Group has been awarded two government grants (SkatteFUNN) in 2023. One of the grants relates to a project regarding development of a plattform for local power production, storage and distribution. The other grant relates to a project regarding development of fully automatic multi-load management in the private market. The total grants of NOK 906 thousand will be booked as a reduction of the cost price of the related assets when approved. Annual report 2023 162 Part 4 – 4.3 Notes Elmera Group Note 16 Share capital Shareholders at 31 December 2023 Number of Nominal Nominal value Voting rights Ownership shares Folketrygdfondet 10 172 840 0,30 3 051 852 9,36 % 8,90 % Gudbrandsdal Energi Holding AS 7 682 161 0,30 2 304 648 7,07 % 6,72 % Verdipapirfondet Nordea Norge Verdi 4 315 545 0,30 1 294 664 3,97 % 3,77 % Vpf DNB Am Norske Aksjer 4 036 705 0,30 1 211 012 3,71 % 3,53 % Verdipapirfondet Holberg Norge 3 300 000 0,30 990 000 3,04 % 2,89 % Landkreditt Utbytte 2 795 000 0,30 838 500 2,57 % 2,44 % Verdipapirfondet DNB smb 2 600 076 0,30 780 023 2,39 % 2,27 % Verdipapirfondet Alfred Berg Gambak 2 309 267 0,30 692 780 2,12 % 2,02 % Skandinaviska Enskilda Banken AB 2 223 364 0,30 667 009 2,05 % 1,94 % The Bank of New York Mellon sa/nv 2 220 000 0,30 666 000 2,04 % 1,94 % J.P. Morgan SE 2 104 482 0,30 631 345 1,94 % 1,84 % Fjarde AP-Fonden 1 900 000 0,30 570 000 1,75 % 1,66 % HSBC Bank PLC 1 834 093 0,30 550 228 1,69 % 1,60 % Varde Norge AS 1 829 639 0,30 548 892 1,68 % 1,60 % State Street Bank and Trust Company 1 789 386 0,30 536 816 1,65 % 1,56 % Verdipapirfondet Storebrand Norge 1 682 639 0,30 504 792 1,55 % 1,47 % Nordnet Bank AB 1 539 909 0,30 461 973 1,42 % 1,35 % Verdipapirfondet Nordea Avkastning 1 509 527 0,30 452 858 1,39 % 1,32 % Verdipapirfondet DNB Norge 1 374 270 0,30 412 281 1,26 % 1,20 % Catilina Invest AS 1 340 183 0,30 402 055 1,23 % 1,17 % Others 50 112 525 0,30 15 033 758 46,11 % 43,82 % Total outstanding shares 108 671 611 32 601 483 100 % 95 % Treasury shares 5 680 189 0,30 1 704 057 0,00 % 4,97 % Total shares in issue 114 351 800 34 305 540 100 % 100 % Share capital and share premium NOK in thousands Share capital Share premium Total 31 December 2023 32 601 993 294 1 025 896 31 December 2022 32 590 993 294 1 025 884 Fully paid ordinary shares which have a par value of NOK 0.30 carry one vote per share and carry a right to dividends (except for treasury shares). All outstand- ing shares have equal voting rights and the right to receive dividend. For computation of earning per share and diluted earning per share see Note 13. Treasury shares In the second quarter of 2022 the Group initiated a share buyback program where a total of 5 717 590 shares were purchased, corresponding to 5 % of the share capital, for a total amount of NOKt 132 827. The program’s purpose is to: (i) fulﬁl obligations arising as a result of the Group’s share option program, and (ii) to redeem (i.e. cancel) shares by way of a share capital decrease in the Company, subject to approval from the general meeting. In 2023 a total of 37 401 treasury shares, corresponding to 0,03 % of the share capital, have been sold for a total amount of NOKt 747. The sales were initiated to fulﬁl obligations arising as a result of the Group’s share option program. Annual report 2023 163 Part 4 – 4.3 Notes Elmera Group Note 16 Share capital Shares and options owned/controlled by members of the Board of Directors, CEO and other members of the Executive Management (including related parties): 31 December 2023 Number of Number of shares options Rolf Barmen (Chief Executive Oﬃcer) 69 052 250 000 Henning Nordgulen (Chief Financial Oﬃcer) 50 000 50 000 Roger Finnanger (Head of Business) 3 378 140 000 Arnstein Flaskerud (Head of Strategy, Innovation, Sustainability and M&A) 50 760 140 000 Solfrid K. Aase (Head of Alliance) 11 156 130 000 Solfrid Fluge Andersen (Head of Power markets and energy supply) 1) 5 171 135 000 Per Heiberg-Andersen (Executive Vice President Nordic) 5 000 113 334 Magnar Øyhovden (Chief Executive Oﬃcer, Fjordkraft AS) 54 600 60 000 Jeanne K. Tjomsland (Head of HR and Communications) 2) 26 028 103 334 Kari Marvik (Chief Information Oﬃcer) 3) - 30 000 Marius Sveipe (Chief Executive Oﬃcer, Gudbrandsdal Energi AS) 4) 500 - Steinar Sønsteby (Chair) 18 668 - Live Bertha Haukvik (Board member) 6 870 - Heidi Theresa Ose (Board member) 3 181 - Per Oluf Solbraa (Board member) 4 254 - Anne Marit Steen (Board member) 5) 6 681 - Frank Økland (Board member, Employee representative) 1 149 - Magnhild Uglem (Board member, Employee representative) 6) 1 261 - Stian Madsen (Board member, Employee representative) 7) 2 009 - Tone Wille (Board member) 8) - - Elisabeth Norberg (Board member, Employee representative) 9) 3 225 - Marianne Unhjem (Board member, Employee representative) 10) - - Lisbet Nærø (Chair of the Nomination committee) - - Atle Kvamme (Member, Nomination committee) - - Brede Selseng (Member, Nomination committee) 11) - - Total 322 943 1 151 668 Terms and details for the management option program are outlined in note 26. 1) Head Of Operations until 30 November 2023 and Head of Power Markets and Energy Supply from 1 December 2023 2) From 1 December 2023 3) From 1 December 2023 4) From 1 August 2022 until 30 June 2023 5) From 26 April 2023 6) From 14 June 2023 7) From 14 June 2023 8) Until 23 April 2023 9) Until 13 June 2023 10) Until 31 May 2023 11) From 26 April 2023 Annual report 2023 164 Part 4 – 4.3 Notes Elmera Group Note 17 Pension liabilities Liabilities in deﬁned beneﬁt plans that are for the employees in the companies Eidsiva funded are covered through an insurance Marked AS and Gudbrandsdal Energi AS. company. Eidsiva Marked AS was merged into Fjordkraft The liability or asset recognised in the con- AS in 2021. The subsidiary Gudbrandsdal Energi AS solidated statement of ﬁnancial position in have deﬁned contribution pension schemes respect of a deﬁned beneﬁt pension plan which at the end of 2023 are covering 24 is the present value of the deﬁned beneﬁt active members. The contribution rates for obligation at the end of the reporting period, the deﬁned contribution plans are 6 per cent less the fair value of plan assets if the plan is At the end of 2023 the group companies of salaries between 0 and 7,1 times G (where funded. The deﬁned beneﬁt obligation is cal- Elmera Group ASA, Fjordkraft AS and G is the National Insurance scheme basic culated annually by independent actuaries. Fjordkraft Mobil AS have a deﬁned contribu- amount, NOKt 118,62 in 2023), and 25,1 per tion pension scheme covering a total of 352 cent of salaries between 7,1 and 12 times active members and 4 pensioners. The con- G. The pension schemes includes retirement Deﬁned contribution plans are post-employ- tribution rates for the deﬁned contribution plan pension, disability pension, spouse’s pension ment beneﬁt plans under which an entity pays are set to 5 per cent of salaries between 0 and and children’s pension. ﬁxed deﬁned contributions into a separate 7,1 times G (where G is the National Insurance entity (a fund). scheme basic amount, NOKt 118,62 in 2023), Pension schemes in the Norwegian and 15 per cent of salaries between 7,1 and 12 times G. At the end of 2023 the deﬁned beneﬁt pen- Description of the pension schemes group entities The deﬁned-contribution pension scheme sion scheme in BKK Pensjonskasse covers Until the end of 2019 the Norwegian group also includes disability pension, spouse’s 41 active members, 77 pensioners and 532 entities had a single deﬁned beneﬁt pension pension and children’s pension. In addition, deferred vested members.These numbers Deﬁned contribution plans scheme in BKK Pensjonskasse covering all employees. As of 1.1.2020 all employees born in 1963 and later was transferred to a deﬁned contribution pension scheme. Employees born before 1963 maintained their mem- bership in deﬁned beneﬁt pension scheme, which at the same time was closed for new obligatorisk tjenestepensjon). members. Members who were enrolled in the reaching the age of 67. pension, spouse’s pension and children’s deﬁned contribution pension plan received In addition to the above mentioned deﬁned pension. The scheme complies largely with a paid-up policy for earned entitlements contribution plan (and if applicable the the regulations enshrined in the Act on the for the time they have earned rights in the deﬁned beneﬁt pension scheme if they had at least three years of service. When the group acquired the Innlandskraft-group in 2020, the group also took over the pension schemes Deﬁned contribution plan covering employees in Elmera Group ASA, Fjordkraft AS and Fjordkraft Mobil AS Elmera has chosen to introduce the contrac- tual pension agreement (CPA) scheme for private sector for those members who are enrolled in the deﬁned contribution pension scheme. The agreement entitles members to beneﬁts from the age of 62 until they are eligible for a national insurance pension when defined benefit pension plan described below), Senior Management are members of a deﬁned contribution plan, entiteling them to additional annual contribution for salary exceeding 12 G. Elmera Group’s pension schemes have been established in accordance with local laws, and include both deﬁned contribution plans and deﬁned beneﬁt plans. The pension schemes oﬀered in the Norwegian compa- nies in the group are in line with the Act on Mandatory Occupational Pensions (Lov om Deﬁned beneﬁt plans Deﬁned beneﬁt plans entitles members to deﬁned future beneﬁts. These are mainly dependent on the number of years of service, the salary level at retirement age and the size of beneﬁts paid by the national insurance. Deﬁned contribution plan covering empoyees in Gudbrandsdal Energi AS Deﬁned beneﬁt plans in BKK Pensjonskasse include employees previously employed by Eidsiva Marked AS (which were merged into Fjordkraft AS in 2021), whom have been transferred from KLP to BKK Pensjonskasse in 2022. This defined benefit pension scheme includes retirement pension, con- tractual pension agreement (CPA), disability Government Pension Fund. The liabilities are covered through the insurance company BKK Pensjonskasse. The contractual pension agreement (CPA) for members of the deﬁned beneﬁt scheme Annual report 2023 165 Part 4 – 4.3 Notes Elmera Group covers a total of 10 active members and no pensioners. The agreement entitles staﬀ to beneﬁts from the age of 62 until they are eligible for a national insurance pension when reaching the age of 67. The CPA is an unfunded pension plan. For those members who were transferred from the deﬁned beneﬁt scheme to the new deﬁned contribution pension scheme at the beginning of 2020, an additional deﬁned beneﬁt plan was established to provide sup- plementary retirement pension to employees with a long employment time and a high age transferred from KLP to BKK Pensjonskasse Risk exposure an increase in inﬂation will also increase the whom had their expected retirement pension in 2022. deﬁcit. reduced when being transferred out of the Pension schemes in Switch Nordic Green AB Through its deﬁned beneﬁt occupational pen- deﬁned beneﬁt scheme. This plan aims to sion plans, the Group is exposed to a num- counteract some of the eﬀects that the intro- ber of risks, the most signiﬁcant are detailed The majority of the plan’s obligations are to duction of life expectancy adjustment has had The following pension schemes are appli- below. provide beneﬁts for the life of the member, so for public occupational pension schemes. The cable for the employees in SNG, who are increases in life expectancy will result in an scheme applies to a closed group of employ- either employed in Sweden or at the branch increase in the plan’s liabilities. ees. The supplementary allowance was set in Finland. The plan liabilities are calculated using a At the end of this note, a table showing with ﬁnal eﬀect at the end of 2019, and the discount rate set with reference to covered sensitivity analysis of the most signiﬁcant supplement constitutes a ﬁxed percentage of bonds (“Obligasjoner med fortrinnsrett”); if assumptions is enclosed. the individual’s pension basis up to the age Note 17 of 66 years. This scheme will only provide bers of a deﬁned contribution plan which at create a deﬁcit. All plans hold a signiﬁcant Pension liabilities beneﬁts if the employees are at least 67 years the end of 2023 are covering a total of 13 portion of investments in equity instruments, old at retirement. The scheme covers a total active members. The contribution rates for which are expected to outperform corporate of 29 active members and 0 pensioners at the deﬁned contribution plan are set to 5 per bonds in the long-term while providing vola- the end of 2023. cent of salaries up until 7,5 times the Swedish tility and risk in the short-term. Inkomstbasbelopp (IBB = The Swedish As the plans mature, the Group intends to National Insurance scheme basic amount, reduce the level of investment risk by invest- The deﬁned beneﬁt plans in KLP is cover- where one IBB equals NOKt 75 in 2023), and ing more in assets that better match the lia- ing employees in Gudbrandsdal Energi AS. 30 per cent of salaries between 7,5 and 30 bilities. These deﬁned beneﬁt plans were closed to times the IBB. The pension scheme includes new members from July 2016. These funded retirement pension and disability pension. schemes are public occupational pension Employees at SNGs branch in Finland are A decrease in corporate bond yields will schemes that ensures the pensioner 66% members of a statutory pension plan (TyEL) increase plan liabilities, although this will be Deﬁned beneﬁt plans in KLP of ﬁnal salary upon 30 years of service. Retirement age is 67 years. At the end of 2023 the deﬁned beneﬁt pension schemes still covers 1 active member, 2 pensioners and 9 deferred vested members. The pension schemes includes retirement pension, disabil- ity pension, spouse’s pension and children’s pension. The liabilities are covered through the insurance company KLP. The deﬁned beneﬁt plan covering employees previously employed by Eidsiva Marked AS (which were merged into Fjordkraft AS in 2021), have been Deﬁned contribution plans Employees at SNG in Sweden are mem- which includes retirement pension and dis- ability pension and at the end of 2022 are covering a total of 62 active members. The beneﬁts are insured with an insurance com- pany and determined to be deﬁned contri- bution plans. The contribution rates for the deﬁned contribution plan are set to 24,84 per cent of salaries, which includes the employ- ee’s share of the contribution that was 7,45 per cent at the end of 2023. Senior manage- ment in SNG Finland are entitled to additional deﬁned contributions. Asset volatility; plan assets underperform this yield, this will Changes in bond yields; partially oﬀset by an increase in the value of the plan’s bond holdings. Inﬂation risk; Some of the Group’s pension obligations are linked to salary inﬂation, and higher inﬂa- tion will lead to higher liabilities (although in most cases, caps on the level of inﬂationary increases are in place to protect the plan against extreme inﬂation). The majority of the plan’s assets are either unaﬀected by or loosely correlated with inﬂation, meaning that Life expectancy; Annual report 2023 166 Note 17 Pension liabilities Amounts recognised in statement of ﬁnancial position: NOK in thousands 31 December 2023 31 December 2022 Present value of funded obligations 350 529 361 631 Fair value of plan assets 381 407 355 132 Deﬁcit for funded plans (30 878) 6 499 Present value of unfunded obligations 56 784 64 211 Total deﬁcit of deﬁned beneﬁt pension plans 25 906 70 709 Other employee beneﬁt obligations 7 115 4 893 Employee beneﬁt obligations recognised in Statement of ﬁnancial position 33 021 75 602 Presentation in statement of ﬁnancial position: Net plan assets of deﬁned beneﬁt pension plans 30 900 4 178 Net employee deﬁned beneﬁt plan liabilities 63 921 79 780 Employee beneﬁt obligations recognised in Statement of ﬁnancial position, net 33 021 75 602 Part 4 – 4.3 Notes Elmera Group Annual report 2023 167 Part 4 – 4.3 Notes Elmera Group Note 17 Amounts recognised in statement of proﬁt or loss: 2023 Pension liabilities NOK in thousands Funded obligations Non-funded obligations Total Accrued pension entitlement for the year 1 670 2 700 4 370 Payroll tax (PT) 228 377 605 Net interest expense / (income) 12 960 1 978 14 938 Expected return on plan assets (12 908) - (12 908) Settlement (gain) / loss recognized 6 603 (6 603) - Expenses paid 34 - 34 Members' contribution (171) - (171) Total amount recognised in proﬁt or loss 8 415 (1 548) 6 867 2022 NOK in thousands Funded Non-funded Total obligations obligations Accrued pension entitlement for the year 1 404 3 769 5 173 Payroll tax (PT) 197 531 728 Net interest expense / (income) 4 554 1 215 5 769 Expected return on plan assets (4 355) - (4 355) Expenses paid 31 - 31 Members' contribution (168) - (168) Total amount recognised in proﬁt or loss 1 664 5 515 7 179 Annual report 2023 168 Part 4 – 4.3 Notes Elmera Group Note 17 Change in deﬁned beneﬁt obligation: Pension liabilities NOK in thousands Present value of funded obligation plan assets of plan assets obligation At 1 January 2023 361 631 355 132 6 499 64 211 70 710 Accrued pension entitlement for the year 1 670 - 1 670 2 700 4 370 Payroll tax (PT) 227 - 227 377 604 Interest expense (income) 12 960 - 12 960 1 977 14 937 Return on plan assets - 12 908 (12 908) - (12 908) Past service cost - - - - - Actuarial gains and losses (22 940) 2 597 (25 537) (5 878) (31 414) Beneﬁts paid (7 266) (6 525) (741) - (741) Contribution - 19 347 (19 347) - (19 347) Members' contribution - 171 (171) - (171) Expenses paid (2 189) (2 223) 34 - 34 Settlement (gain) / loss recognized 6 603 - 6 603 (6 603) - Payroll tax of contribution (168) - (168) - (168) At 31 December 2023 350 528 381 407 (30 879) 56 784 25 906 Fair value of Total, funded obligations, net Present value of non-funded Total, net NOK in thousands Present value of obligation plan assets of plan assets obligation At 1 January 2022 361 192 345 243 15 949 73 785 89 734 Accrued pension entitlement for the year 1 404 - 1 404 3 769 5 173 Payroll tax (PT) 197 - 197 531 728 Interest expense (income) 4 554 - 4 554 1 215 5 769 Return on plan assets - 4 355 (4 355) - (4 355) Past service cost - - - - - Actuarial gains and losses 3 364 (5 998) 9 362 (13 990) (4 628) Beneﬁts paid (6 640) (6 640) - (964) (964) Contribution - 20 423 (20 423) - (20 423) Members' contribution - 168 (168) - (168) Expenses paid (2 387) (2 418) 31 (136) (105) Payroll tax of contribution (53) - (53) - (53) At 31 December 2022 361 631 355 132 6 499 64 211 70 709 Fair value of Total, funded obligations, net Present value of non-funded Total, net Annual report 2023 169 Part 4 – 4.3 Notes Elmera Group Note 17 Actuarial gains and losses recognised directly in Other comprehensive income (OCI) Pension liabilities NOK in thousands 2023 2022 Net actuarial gains/(losses) recognised in OCI during the year 24 504 3 610 Tax eﬀects of actuarial gains/(losses) recognised in OCI 6 911 1 018 Signiﬁcant actuarial assumptions 2023 2022 Discount rate 4,15 % 3,60 % Salary growth rate 2,50 % 3,75 % Expected growth in base social security amount (G) 3,50 % 3,50 % Estimated return on plan assets 4,15 % 3,60 % Pension growth rate 2,90 % 2,75 % CPA withdrawal 25% when 62 yrs 25% when 62 yrs Demographic assumptions K2013BE K2013BE Voluntary retirement Before 45 yrs - 4,5% Before 45 yrs - 4,5% 45 yrs - 60 yrs - 2,0% 45 yrs - 60 yrs - 2,0% After 60 yrs - 0% After 60 yrs - 0% * K2013BE is the insurance companies present best estimate based on The Financial Supervisory Authority of Norway’s mortality table K2013 and Statistics Norway’s present population projection. Sensitivity of pension liabilities to changes in signiﬁcant ﬁnancial assumptions Change in pension cost Change in employee deﬁned beneﬁt obligations NOK in thousands 1.00 % -1.00 % 1.00 % -1.00 % Discount rate (669) 845 (68 745) 90 425 Salary growth rate 270 (243) 5 759 (8 177) Expected growth in base social security amount (G) 569 (473) 84 783 (65 662) Annual report 2023 170 Note 17 Pension liabilities Pension assets Pension assets are invested in bonds and money-market placements issued by the Norwegian government, Norwegian municipalities, ﬁnancial institutions and enterprises. Foreign currency bonds are hedged. Investments are made in both Norwegian and foreign shares. Any estimate deviation is distributed pro-rata between the individual asset categories. At the end of 2023 the plan assets were invested as follows: Level 1 Level 2 Level 3 NOK in thousands Exchange listed prices Observable prices Non-observable prices Total %-share Equity instruments 52 899 44 442 46 902 144 242 38% Interest bearing instruments 15 404 217 712 1 102 234 218 61% Real estate - - 2 947 2 947 1% Total investments 68 303 262 154 50 950 381 407 100% The total contribution to deﬁned beneﬁt plans for next annual reporting period is expected to be NOKt 19 050. Part 4 – 4.3 Notes Elmera Group Annual report 2023 171 Part 4 – 4.3 Notes Elmera Group Note 18 Onerous contract provisions Fixed price customer contracts The Group has certain portfolios of ﬁxed price power contracts with end user customers where the volume is not ﬁxed, mainly in the Nordic segment. These customer contracts do not qualify to be recognised as ﬁnancial instruments. Portfolios of Fixed price customer contracts acquired as part of business combi- nations are however recognised as intangible assets (refer note 15), and depreciated systematically over the contract lengths using a pattern that reﬂect how the acquisition value of the contracts are distributed over the remaining length of the contracts (up to ﬁve years) (cost model in IAS 38). Fixed price customer contracts, not acquired through a business combination, are not recognised in the statement of ﬁnancial position, unless the contracts are identiﬁed as onerous contracts. Fixed price customer contracts are assessed as onerous contracts if the estimated unavoidable costs of purchasing the estimated power volumes to be delivered on these contracts exceed the ﬁxed price to be received from the costumers. The price risk related to ﬁxed price customer contracts are hedged with portfolios of electricity derivatives which are recognised as derivative ﬁnancial instru- ments and measured at fair value through proﬁt and loss. The hedged forward power prices in the corresponding portfolios of derivative hedge contracts are not taken into consideration when estimating the contracts’ unavoidable costs as hedge accounting is not applied. The Group has recognised the following provisions for onerous contracts: NOK in thousands 31 December 2023 31 December 2022 Onerous contract provisions - Non-current 68 383 784 239 Onerous contract provisions - Current 24 879 285 336 Onerous contract provisions - Total 93 263 1 069 575 When the onerous contracts are intended to be settled within 12 months of the reporting date, the provisions are presented as current. The diﬀerence between the change in onerous contracts provisions in the statement of ﬁnancial position and the corresponding amount recognised in the state- ment of proﬁt or loss (see table below) is due to currency translation diﬀerences. The following table shows the movement in provisions for onerous contracts: NOK in thousands 2023 2022 Opening balance 1 January 1 069 575 1 089 027 Release of provisions (730 981) (1 018 751) New and changed provisions (173 478) 1 019 102 Currency translation diﬀerence (71 852) (19 804) Closing balance 31 December 93 263 1 069 575 Annual report 2023 172 Part 4 – 4.3 Notes Elmera Group Note 18 Financial statement impact of unrealised gains/losses: Onerous contract provisions The Group’s portfolios of ﬁxed price customer contracts and the corresponding portfolios of derivative hedge contracts resulted in the following unrealised eﬀects recognised in the statement of proﬁt or loss: NOK in thousands 2023 2022 Impairment and provisions for onerous contracts: Change in provisions for onerous contracts 1 048 166 39 256 Impairment of cost to obtain contracts 14 548 (39 282) Total depreciation, impairment and provisions for onerous contracts: 1 062 714 (26) Unrealised gains and losses on derivative hedge contracts related to ﬁxed price customer contracts (1 029 437) (6 439) Net unrealised gain/loss recognised in statement of proﬁt or loss 33 277 (6 465) Change in provisions for onerous contracts includes both release of provisions for (parts of) contracts which have been delivered in the period, and change in provisions for new and remaining contracts. Forward market prices decreased signiﬁcantly during 2023. The remaining volume of ﬁxed price power contracts has also decreased during 2023 due to a movement towards spot based products for new customers and existing ﬁxed price customer contracts being delivered. These eﬀects have lead to a signiﬁcant decrease in provisions for onerous contracts and the unrealised gains on the corresponding portfolios of derivative hedge contracts. Market conditions in 2022, with high and volatile power prices, lead to high proﬁle costs and expectations of high proﬁle costs going forward. This eﬀect caused negative estimated margins on some ﬁxed price customer contracts, leading to a corresponding impairment of the cost to obtain these contracts. As parts of these ﬁxed price contracts with negative estimated margins were delivered in 2023, a corresponding reversal of the impairment of cost to obtain contracts was recognised. The net impact in the statement of proﬁt or loss, which is an unrealised net gain in 2023 of NOKt 33 277 (2022: NOKt 6 465 net loss) is mainly caused by improved margins in the customer contracts and imbalance between the portfolios of customer contracts, and the corresponding portfolios of derivative hedge contracts. Change in provision for onerous contracts and unrealised gains and losses on derivative hedge contracts related to ﬁxed price customer contracts are both presented as Direct cost of sales in the statement of proﬁt or loss, while impairment and reversal of impairment of cost to obtain contracts is presented on a separate line. Annual report 2023 173 Part 4 – 4.3 Notes Elmera Group Note 19 Other current liabilities NOK in thousands 2023 2022 El-certiﬁcate cancellation liabilities 6 475 9 641 Accrued power purchase 373 463 731 799 Prepayments from customers 40 808 46 656 Payroll liabilities 68 988 58 537 Other 59 410 26 594 Total Other current liabilities 549 145 873 227 Note 20 Other current assets Other current assets consists of the following: NOK in thousands 2023 2022 VAT receivable - 5 901 Other prepaid costs 11 968 58 128 Prepaid taxes 503 1 996 Total other current assets 12 471 66 025 Annual report 2023 174 Part 4 – 4.3 Notes Elmera Group Note 21 Related party transactions As at 31 December 2023, the Group’s related parties include Board of Directors and key management. Transactions related to these groups are disclosed in note 22. Pricing of services and transactions between related parties are set on an arm’s length basis in a manner similar to transactions with unrelated third parties. The following transactions were carried out with related parties (NOK in thousands): Expenses to related parties (NOK in thousands) Related party Relation Purpose of transactions 2023 2022 Telia Norge AS Other Purchase of telecom services 65 896 - Metzum AS Associated company Purchase of other services 40 234 38 500 Atea AS Other Purchase of products and other services 8 472 9 922 Other services consists of payroll expenses, IT, oﬃce expenses and customer service. Purchase of assets (NOK in thousands) Related party Relation Purpose of transactions 2023 2022 Metzum AS Associated company Research and development 344 2 666 Atea AS Other Products and development 925 481 Current liabilities to related parties (NOK in thousands) Related party Relation 31 December 2023 31 December 2022 Telia Norge AS Other Telecom services 29 809 - Metzum AS Associated company Research and development 6 836 959 Atea AS* Other Products and development 1 943 138 * The chairman of the Board of Directors in Elmera Group ASA is the CEO of Atea ASA. ** Telia Norge AS is part of the Telia Company Group, which is a shareholder (non-controlling interest) in the Group’s subsidiary Fjordkraft Mobil AS. Payables to related parties are unsecured and are expected to be settled in cash. Annual report 2023 175 Part 4 – 4.3 Notes Elmera Group Note 22 Remuneration to the Executive management and Board of Directors Executive management 2023: Other Pension Total Loans NOK in thousands Salary Bonus beneﬁts costs neration 31 December Rolf Barmen (Chief Executive Oﬃcer) 3 477 375 150 774 4 776 - Henning Nordgulen (Chief Financial Oﬃcer) 2 693 12 150 360 3 215 - Roger Finnanger (Head of Business) 1 836 47 110 211 2 204 - Arnstein Flaskerud (Head of Strategy, Innovation, Sustainability and M&A) 2 007 47 120 324 2 498 - Solfrid K. Aase (Head of Alliance) 1 672 47 100 265 2 084 - Solfrid Fluge Andersen (Head of Power markets and energy supply) 1) 1 785 47 100 198 2 130 - Per Heiberg-Andersen (Executive Vice President Nordic) 1 672 47 100 178 1 997 - Magnar Øyhovden (Chief Executive Oﬃcer, Fjordkraft AS) 2 550 70 150 298 3 068 - Jeanne K. Tjomsland (Head of HR and Communications) 2) 156 - 10 28 194 - Kari Marvik (Chief Information Oﬃcer) 3) 142 - 8 9 159 - Marius Sveipe (Chief Executive Oﬃcer, Gudbrandsdal Energi AS) 4) 467 95 - 56 618 - Total remuneration executive management 2023 18 457 787 998 2 701 22 943 - In 2023 the CEO received a discretionary bonus of NOKt 375 based on the Group’s performance in 2022. In 2023 the Board of Directors have awarded the CEO a discretionary bonus of NOKt 1 485 based on the Group’s performance in 2023, which will be paid in 2024. ** The Group’s executive management had no outstanding personnel loans at year end in 2023. The Group discontinued the loan scheme for personnel loans in 2023. 1) Head Of Operations until 30 November 2023 and Head of Power 3) From 1 December 2023 Markets and Energy Supply from 1 December 2023 4) From 1 August 2022 until 31 May 2023 2) From 1 December 2023 Executive management 2022: Other Pension Total Loans remu- outstanding NOK in thousands Salary Bonus beneﬁts costs neration 31 December Rolf Barmen (Chief Executive Oﬃcer) 3 311 500 150 846 4 807 294 Henning Nordgulen (Chief Financial Oﬃcer) 1) 660 - 38 86 784 - Roger Finnanger (Head of Business) 1 692 54 100 219 2 065 - Arnstein Flaskerud (Head of Strategy and M&A) 1 934 67 120 430 2 551 - Solfrid K. Aase (Head of Service Companies) 1 612 67 100 354 2 133 - Solfrid Fluge Andersen (Head of Operations) 1 667 67 100 219 2 053 - Per Heiberg-Andersen (Head of Nordic and other end-user companies) 1 662 67 100 173 2 002 - Marius Sveipe (Chief Executive Oﬃcer, Gudbrandsdal Energi AS) 2) 467 50 - 53 570 - Magnar Øyhovden (Chief Executive Oﬃcer, Fjordkraft AS) 3) 995 - 60 127 1 182 - Birte Strander (Chief Financial Oﬃcer) 4) 792 54 50 183 1 079 - Jeanne K. Tjomsland (Head of HR, Communications and Sustainability) 5) 1 021 67 70 237 1 395 - Christian Kalvenes (Head of Consumer) 6) 592 54 37 68 751 - Alf-Kåre Hjartnes (Chief Operating Oﬃcer) 5) 1 016 54 70 199 1 339 290 Total remuneration executive management 2022 17 421 1101 995 3194 22 711 584 In 2022 the CEO received a discretionary bonus of NOKt 500 based on the Group’s performance in 2021. remu- outstanding 1) From 1 October 2022 2) From 1 August 2022 3) From 8 August 2022 4) Until 31 May 2022 5) Until 31 July 2022 6) Until 16 May 2022 Annual report 2023 176 Part 4 – 4.3 Notes Elmera Group Note 22 The members of the Board of Directors have received the following remuneration during the year ended 31 December 2023 and 2022:: Remuneration to the Executive NOK in thousands 2023 2022 Steinar Sønsteby (Chair) 605 545 Live Bertha Haukvik (Board member) 446 401 Heidi Theresa Ose (Board member) 400 360 Per Oluf Solbraa (Board member) 347 312 Anne Marit Steen (Board member) 1) 311 - Frank Økland (Board member, Employee representative) 109 108 Magnhild Uglem (Board member, Employee representative) 2) - - Stian Madsen (Board member, Employee representative) 3) - - Tone Wille (Board member) 4) 101 312 Elisabeth Norberg (Board member, Employee representative) 5) 49 108 Marianne Unhjem (Board member, Employee representative) 6) 45 108 Lisbet Nærø (Chair of the Nomination committee) 54 53 Atle Kvamme (Member, Nomination committee) 10 32 Ragnhild Stolt-Nielsen (Member, Nomination committee) 7) 10 32 Brede Selseng (Member, Nomination committee) 8) 23 - Total remuneration Board of directors 2 551 2 371 management and Board of Directors There are no additional bonus agreements or agreement of similar proﬁt sharing with the CEO or Chairman of the board. The rest of the executive management is also included in the Group’s performance bonus scheme. If the company chooses to terminate the employment, the CEO is entitled to 12 months severance pay after the expiry of the ordinary notice period, which is 6 months. The Group’s executive management has the right to apply for loans on the same grounds as all the employees in the company. Maximum duration for loans to employees are 15 years. The interest rate for loans to employees is approximately equal to the current limit regarding taxation of beneﬁts for such loans, plus up to 1 percentage point. Current limit for taxation of beneﬁts is 4,5 %. The loan scheme for personnel loans was discontinued in 2023. Loans entered into before the termination of the scheme continue as normal. The CEO and Group management is included in the current pension plan for the Group - see note 17. 1) From 26 April 2023 2) From 14 June 2023 3) From 14 June 2023 4) Until 23 April 2023 5) Until 13 June 2023 6) Until 31 May 2023 7) Until 26 April 2023 8) From 26 April 2023 Annual report 2023 177 Part 4 – 4.3 Notes Elmera Group The Board of Director’s guidelines for remuneration to directors in and keep qualiﬁed directors, without being a for the long term proﬁtability and sustainability Note 22 wage leader in the relevant business sector, of the Company. It is the Company’s policy Remuneration to the Executive of the Norwegian Public Limited Liability Companies Act and without the variable wage element con- that base salaries shall reﬂect the individual’s management and Board of Directors stituting such a large proportion of the total position and degree of responsibility. The size wage compensation that it can give unfortu- of the ﬁxed cash salary shall be in line with These guidelines have been prepared by nate incentives and short-termism. market conditions, be competitive with com- the Board of Directors of Elmera Group ASA The remuneration shall generally stimulate parable businesses within the industry, and (“Elmera” or the “Company”) in accordance to goal achievements and good risk man- shall take into account inter alia the scope with the Norwegian Public Limited Liability agement, counteract excessive risk-taking, and responsibility associated with the posi- Companies Act Section 6-16a and related and contribute to avoid conﬂict of interests. tion, as well as the skills, experience, and regulations. The guidelines was approved The remuneration shall be in line with the performance of each director. The ﬁxed cash by the Company’s annual general meeting Companys long term interests and eco- salaries have no maximum levels. in 2021 and shall apply until the Company’s nomic ﬁnancial sustainability. In general, the For directors, the base salary constitutes annual general meeting in 2025, unless remuneration shall be equal for male and the most signiﬁcant part of the remuneration. amended or replaced earlier. female employees for equal work or work of Principles for variable cash salary The guidelines apply for the following (jointly equal value. The Company conducts annual referred to as “directors”): the executive reviews of the practice of the remuneration Variable cash salary (i.e. cash bonuses) shall management, (ii) employee elected board principles, and the Companys written report be based on a set of predetermined and members, (iii) the CEO and (iv) other leading (the “Remuneration Report”) is reviewed by measurable performance criteria that reﬂect employees deﬁned as key employees. independent control functions. the key drivers for pursuing the Company’s Remuneration to persons mentioned in (ii) Elements of remuneration business strategy, longterm interests, and are regulated by “Remuneration to employee sustainable business practices. elected board members”. Remuneration includes all beneﬁts a per- Principles for pension beneﬁts son receives by virtue of his/her position Purpose and general principles for remuneration as a leading person in the Company. This Directorspension arrangements shall gen- includes base salary, bonuses, allotment of erally follow the arrangements established The main principle of the Companys guide- shares, warrants, options and other forms of for the employees in Elmera Group ASA and lines for remuneration, is that the directors remuneration related to shares or the devel- Fjordkraft AS. Pension beneﬁts shall be based shall receive a competitive salary, including a opment of the share price in the company, on local practices and applicable law. More result-based salary tied to the business results pension schemes, early retirement schemes, information concerning pension is included and shareholder value to ensure the desired and all forms of other variable elements in the in note 17 of the annual account. competence and director incentives. remuneration, or special beneﬁts that are in Principles for non-ﬁnancial beneﬁts Remuneration is an important instrument addition to the basic salary. in order to harmonize the interests of the Principles for ﬁxed salary Company and its directors. The Company’s Non-ﬁnancial beneﬁts shall be based on mar- remuneration principles are designed to Fixed cash salary allows the Company to ket terms and shall facilitate the duties of the ensure that the Company is able to attract attract and recruit directors that are necessary executive management. The Company aims Annual report 2023 178 Part 4 – 4.3 Notes Elmera Group to have suﬃciently competitive salary and (i) as a main rule, share options may not be bers is proposed by the Remuneration Note 22 incentive programs to minimize additional redeemed before three years have elapsed, Committee and is handled further by the non-ﬁnancial beneﬁts, and such shall gener- ally be oﬀered only to the extent they are in line with generally accepted customs locally. percent of the Companys outstanding shares, determination of the remuneration takes into The executive management may receive (iii) the exercise price for share options shall consideration the work load, comparable certain limited beneﬁts in kind, including be set at market price at the time of allot- companies and the general wages in the company car/car arrangement, telephone, ment, (iv), the exercise price shall be adjusted Company. internet access, and magazine/newspaper for dividend paid before redemption, (v) the Deviations from these guidelines subscriptions. share options have a cap on gains of three Purchase of shares times the exercise price (before adjustments The Board of Directors may, on recommen- for dividend payments). The options can be dation from the Remuneration Committee, in The management may participate in any settled by the Company in cash if the share the circumstances described below resolve Company employee share purchase plans price exceeds the cap set out in (v), and if so, to deviate from any sections of these remu- or similar plans on substantially on the same based on the gain of such cap, which con- neration guidelines: terms as all employees. stitutes the limit of maximum potential gain. • upon change of the CEO; Share-based incentive programs Employment agreements • upon material changes in Company’s organization, ownership and/or business Share-based payments, settled in shares The CEO and executive management have • upon material change in the Company’s or cash, are used as part of the Company’s six month notice periods. strategy; incentive schemes. In the view of the Board The CEO is entitled to a severance pay in • upon changes in or amendments to the of Directors, attractive share-based long-term case of termination of employment by the relevant laws, rules, or regulations; incentive programs is an important part of the Company for a period of 12 months after • upon other exceptional circumstances total compensation for the executive manage- expiry of the ordinary notice period. During where the deviation may be required to serve ment, and which may be necessary to allow employment and for 12 months after expiry the long-term interests and sustainability of the Company to retain and hire the talent it of the notice period (or from the time of the Company as a whole or to assure its via- needs for further growth. dismissal), the CEO is bound by the provi- bility. The executive management and key per- sions on non-competition and recruiting the Any deviation from these guidelines shall sonnel shall be concerned with the value Company’s customers and employees in be reported in the Remuneration Report for development for the Companys sharehold- accordance with the provisions in chapter the relevant year. ers. A share option program may bind the 14A of the Working Environment Act of 2005. The Board’s declaration on determining key employees to the Company and may also Remuneration to employee elected board members directors pay will be sent out or made availa- contribute to a more cautious wage growth in ble to the shareholders on the Company’s web the years to come. site, together with notice of the annual general The following speciﬁc limitations apply for The level of remuneration to employee elected meeting of the Company and the Company’s granting of share options in the Company: board members for their role as board mem- annual report and accounts. (ii) the maximum amount of share options signed in a given year shall not exceed 0.6 Nomination Committee which propose a remuneration to the general meeting. The Remuneration to the Executive management and Board of Directors Annual report 2023 179 Part 4 – 4.3 Notes Elmera Group Note 23 Collateral and restricted assets NOK in thousands Item in Statement of Note 31 December 31 December ﬁnancial position 2023 2022 Collateral Security over trade receivables Trade receivables 6 3 694 872 7 138 260 Total collateral 3 694 872 7 138 260 Restricted assets Restricted cash - Payroll tax deductions Cash and cash equivalents 22 21 Total restricted assets 22 21 Trade receivables held by the Norwegian entities in the group are pledged as collateral for credit facilities - see note 6. Annual report 2023 180 Part 4 – 4.3 Notes Elmera Group Note 24 IFRS 16 Leases The Group’s leasing activities The Group’s lease agreements mainly consists of various oﬃce leases, car-leases and oﬃce machine-leases used in the operating activities. Cars usually have a lease term of 3 years, while several of the oﬃce leases have longer lease terms. The oﬃce machines are leased on 3-5 year contracts. Some of the oﬃce leases have extension options and these have been included in the calculation if the group is reasonably certain that they will be exercised. NOK in thousands 2023 2022 Non-current assets Right of use assets Property 56 380 64 769 Equipment 309 643 Cars 432 782 Total 57 121 66 195 Non-current liabilities Lease liability long term 40 945 49 477 Current liabilities Lease liability short term 19 391 20 284 Total 60 336 69 761 Additions to the right-of-use assets in 2023 were NOKt 11 077. Amounts recognised in the statement of proﬁt or loss The statement of proﬁt or loss shows the following amounts relating to leases: NOK in thousands 2023 2022 Depreciation right-of-use assets Property 19 102 19 250 Equipment 333 333 Cars 795 720 Total 20 230 20 303 Interest expense lease liability 1 621 1 934 Expenses relating to short-term leases 1 409 1 400 Expenses relating to leases of low-value 869 1 320 The total cash outﬂow for leases in 2023 was NOKt 24 480. Annual report 2023 181 Part 4 – 4.3 Notes Elmera Group Year ended 31 December 2023 NOK in thousands Within 1 year Between 1 and More than Total 5 years 5 years Property 18 923 43 536 - 62 458 Equipment 265 65 - 330 Cars 281 175 - 456 Total 19 469 43 775 - 63 244 Note 24 IFRS 16 Leases Variable lease payments terms of managing the assets used in the The Group has variable lease payments in Group’s operations. its property lease agreements. Variable lease payments consists of annual adjustements Maturity analysis to lease payments based on the Consumer The following table details the Group’s remain- Price Index. ing contractual maturity for its leasing liabil- ities. Extention and termination options The tables have been drawn based on the EExtension and termination options are undiscounted cash ﬂows of instalments on included in a number of property and equip- leasing liabilities. ment leases across the Group. These are used to maximise operational ﬂexibility in Annual report 2023 182 Part 4 – 4.3 Notes Elmera Group Note 25 Subsidiaries and subsidiaries with non- controlling interests Subsidiaries The following subsidiaries are fully consolidated in the ﬁnancial statements as per 31 December 2023. Name of entity Place of business Ownership interest Principal activities held by the Group Fjordkraft AS Bergen, Norway 100 % Purchase, sales and portfolio management of electrical power TrøndelagKraft AS Trondheim, Norway 100 % Purchase, sales and portfolio management of electrical power Gudbrandsdal Energi AS Nord-Fron, Norway 100 % Purchase, sales and portfolio management of electrical power Energismart Norge AS Hamar, Norway 100 % Management, research and development of product and services related to electrical power Elmera Industrial Ownership AS Bergen, Norway 100 % Portfolio management of electrical power and related products AllRate AS Bergen, Norway 100 % Management and services related to electrical power Steddi Payments AS Bergen, Norway 100 % Management and services related to electrical power Elmera Nordic AS Bergen, Norway 100 % Portfolio management of electrical power and related products Switch Nordic Green AB Stockholm, Sweden 100 % Purchase, sales and portfolio management of electrical power Fjordkraft AB Stockholm, Sweden/ Vaasa, Finland 100 % Portfolio management of electrical power and related products Annual report 2023 183 Part 4 – 4.3 Notes Elmera Group Note 25 Subsidiaries with non-controlling interests Subsidiaries and subsidiaries with non-con- The following subsidiaries are fully consolidated in the ﬁnancial statements as per 31 December 2023. trolling interests Financial information on subsidiary with non-controlling interests NOK in thousands 2023 Net sales 84 258 Operating proﬁt (3 977) Proﬁt/(loss) for the year (3 020) Net income attributable to non-controlling interests 4 258 Telia Company AB’s share of the proﬁt/loss from the date of acquisition. Non-current assets 37 681 Current assets 66 438 Non-current liabilities - Current liabilities (48 336) Net assets 55 783 Net cash from operating activities 23 668 Net cash used in investing activities (8 696) Net cash used in ﬁnancing activities - Net change in cash and cash equivalents 14 972 Name of entity Place of business Principal activities Ownership share Ownership interests held by non-controlling interests Fjordkraft Mobil AS Bergen, Norway Telecommunications services 61 % 39 % During the year, the Group demerged its mobile business into the new entity Fjordkraft Mobil AS and disposed of 39 % of its interest in the entity to Telia Company AB. The proceeds on disposal of NOKt 116 917 were received in cash and are presented as Non-controlling interests in the Consolidated statement of changes in equity. Annual report 2023 184 Part 4 – 4.3 Notes Elmera Group Note 26 Option program Type Options Grant Date 15 February 2023 The options vest in one tranche with vesting 15th of February 2026 Vesting conditions The Employee must remain an employee of the Company or an aﬃliated company at the end of the vesting period. Expiry date 14 February 2029 Exercise price (NOK) 14,50 Total number outstanding 359 000 Type Options Grant Date 15 February 2023 Measurement date 15 February 2023 Share price (NOK) 15,19 Lifetime (years) 3,00 Volatility 45,63% Risk-free interest rate 3,26% Fair Value (NOK) 4,4288 Elmera Group ASA established a management option program 10 December 2018. The option program was established to align management’s and shareholders’ incentives and to reduce turnover for key employees. In total 359 000 share options were issued to employees during 2023. volume weighted average for options The fair value of the options was calculated using the Black-Scholes model. The model utilizes certain information, such as the interest rate on a risk-free security maturing generally at the same time as the option being valued, and requires certain assumptions, such as the expected amount of time an option will be out- standing until it is exercised or it expires and the volatility associated with the price of the underlying shares of common stock, to calculate the fair value of stock options granted. The model also estimate the likelihood of performance fulﬁllment and takes this into account in the valuation. The expected volatility for options issued in 2023 is estimated at average of 45,63% where historical volatility is not available. Where historical volatility is available this is calculated using the Elmera Group ASA share price. Interest rates used are quoted Norwegian government bonds and bills retrieved from Norges Bank. The total carrying amount per 31 December 2023 is NOK 2 458 989, not including social security. Annual report 2023 185 Part 4 – 4.3 Notes Elmera Group The following table shows the changes in outstanding options in 2022 and 2023: Note 26 Period activity: Option Program 01.01.2023 - 31.12.2023 01.01.2022 - 31.12.2022 Shares Exercise Price (NOK) Shares Exercise Price (NOK) Outstanding at the beginning of period 1 710 000 39 1 500 000 45 Granted 372 334 17 390 000 36 Exercised (26 664) 19 (50 000) 24 Cancelled - - - - Forfeited - - (130 000) 53 Expired (110 000) 21 - - Adjusted quantity - - - - Modiﬁcation / Dividends (13 334) 73 - - Outstanding at the end of period 1 932 336 34 1 710 000 39 Vested outstanding 943 336 32 790 000 22 Vested and expected to vest 1 932 336 34 1 710 000 39 Intrinsic value of in-the-money outstanding at the end of the period 1 012 336 13 105 162 - - Intrinsic value vested outstanding at the end of the period 633 336 6 726 362 - - Outstanding instruments Vested outstanding Exercise price Outstanding per Weighted average re- Vested options per Weighted Average 31 December 2023 maining Contractual Life 31 December 2023 Exercise Price (NOK) 0,00 - 25,00 379 000 5,13 - - 25,00 - 30,00 - - - - 30,00 - 35,00 603 336 1,17 603 336 33 35,00 - 40,00 350 000 3,87 30 000 38 40,00 - 45,00 - - - - 45,00 - 50,00 - - - - 50,00 - 55,00 - - - - 55,00 - 60,00 - - - - 60,00 - 65,00 - - - - 65,00 - 70,00 270 000 3,13 270000 68 70,00 - 330 000 3,88 40 000 79,7 Total 1 932 336 3,17 943 336 45,19 At 31 December 2023, the range of exercise prices and weighted average remaining contractual life of the options were as follows : Annual report 2023 186 Part 4 – 4.3 Notes Elmera Group Note 27 Investments in associates and joint ventures The table below presents the Group’s share of equity and proﬁt from associated companies: NOK in thousands Location Ownership/ Equity 2023 Proﬁt 2023 Book value voting right Metzum AS Dale, Norway 40 % 21 451 913 21 147 Sunpool AS Bergen, Norway 50 % 122 (378) 337 Note 29 Events after the reporting period The Board of Directors has in the Board Meeting on 14 February 2024 proposed a dividend to the shareholders of NOK 2.30 per share. The proposed dividend is subject to approval by the general meeting. There are no other signiﬁcant events after the reporting period that have not been reﬂected in the consolidated ﬁnancial state- ments. Note 28 Provisions for other liabilities and other assets The Group purchased the subsidiary Switch Nordic Green AB from Troms Kraft AS in November 2020. Switch Nordic Green AB has been involved in a legal dispute with Grant Thornton Sweden AB. In 2021 the Public Court in Sweden ruled in favor of Switch Nordic Green AB. An appeal was made by Grant Thornton Sweden AB. In 2023 the Swedish Court of Appeal awarded Grant Thornton Sweden AB’s legal costs of approx. SEK 101m from Switch Nordic Green AB. Subsequently, an appeal was made to the Swedish Supreme Court. Based on the judgement by the Swedish Court of Appeal in 2023, the Group has made a provision for the liability of approx. SEK 101m. Simultaneously, the Group has recorded a claim (indemniﬁcation asset) against Troms Kraft AS for a corresponding amount. The reasoning for this provision is an indemnity in the Share Purchase Agreement between the parties, stating that Troms Kraft must indem- nify the Group for possible claims, includ- ing costs associated with the legal dispute between Switch Nordic Green AB and Grant Thornton Sweden AB. The provision for the liability is presented as Other provisions for liabilities and the indemni- ﬁcation asset is presented as Other non-cur- rent ﬁnancial assets in the Group’s Statement of ﬁnancial position. Annual report 2023 187 Directors responsibilty statement Today, the Board of Directors and the Chief Executive Oﬃcer reviewed and approved the Board of Director’s report and the consoli- dated and separate annual ﬁnancial state- ments for Elmera Group ASA, for the year ended 31 December 2023 (Annual report 2023). Elmera Group ASA’s consolidated ﬁnancial statements have been prepared in accord- ance with IFRSs and IFRICs as adopted by the EU and applicable additional disclosure requirements in the Norwegian Accounting Act. The separate ﬁnancial statements for Elmera Group ASA have been prepared in accordance with the Norwegian Accounting Act § 3-9 and Finance Ministry’s prescribed regulations from 21 January 2008 on simpli- ﬁed IFRS, amended on 28 December 2020. The Board of Directors’ report for the Group and the parent company is in accordance with the requirements in the Norwegian Accounting Act. To the best of our knowledge: • The consolidated and separate annual ﬁnancial statements for 2023 have been prepared in accordance with applicable ﬁnancial reporting standards • The consolidated and separate annual ﬁnancial statements give a true and fair view of the assets, liabilities, ﬁnancial position and proﬁt as a whole as of 31 December 2023 for the Group and the parent company • The Board of Directors’ report for the Group and the parent company includes a fair review of: i. the development and performance of the business and the position of the Group and the parent company, and ii. the principal risks and uncertainties the Group and parent company face. Part 4 – 4.3 Notes Elmera Group The Board of Directors of Elmera Group ASA, Bergen, 22 March 2024. Per Oluf Solbraa Board member Heidi Theresa Ose Board member Stian Madsen Board member Magnhild K. B. Uglem Board member Rolf Barmen CEO Frank Økland Board member Steinar Sønsteby Chairman Live Bertha Haukvik Board member Anne Marit Steen Board member Annual report 2023 188 Alternative performance measures The alternative performance measures (abbreviated APM’s) that hereby are provided by the Group are a supplement to the ﬁnancial statements prepared in accordance with IFRS. The APM’s are based on the guidelines for APM published by the European Securities and Markets Authority (ESMA) on or after 3 July 2016. As indicated in the guidelines an APM is a ﬁnancial measure of historical or future ﬁnancial performance, ﬁnancial position, or cash ﬂows, other than a ﬁnancial measure deﬁned or speciﬁed in the applica- ble ﬁnancial reporting framework. The per- formance measures are commonly used by analysts and investors. The Group uses the following APM’s (in bold). The words written in italics are included in the list of deﬁnitions or in the statement of proﬁt or loss. Cash EBIT is equivalent to Operating free cash ﬂow before tax and change in Net work- ing capital. This APM is used to illustrate the Group’s underlying cash generation in the period. Capex excl. M&A is used to present the capital expenditures excluding mergers and acquisitions to illustrate the Group’s organic maintenance capex. EBIT reported is equivalent to Operating proﬁt and is used to measure performance from operational activities. EBIT reported is an indicator of the company’s proﬁtability. EBIT adjusted In order to give a better representation of underlying performance, the following adjustments are made to the reported EBIT: • Acquisition related costs and other one-off items: Items that are not part of the ordi- nary business • Estimate deviations from previous periods: A substantial proportion of the Group’s power sales has historically been ﬁnally settled after the Group has ﬁnalised its periodical ﬁnancial statements. Revenues related to sale of power were thus recog- nised based on estimates. Any estimate deviation related to the previous report- ing period is recognised in the following reporting period • Unallocated revised net revenue represents net revenue items which are revised due to prior period adjustment requirements. • Unrealised gains and losses on derivatives: Consist of unrealised gains and losses on derivative ﬁnancial instruments associated with the purchase and sale of electricity • Impairment of intangible assets and cost to obtain contracts: Consist of impairment of intangible assets and cost to obtain contracts related to ﬁxed price customer contracts • Depreciation of acquisitions: Consist of depreciations of customer portfolios acquired separately and recognised as intangible assets, and depreciations of customer portfolios and other intangible assets recognised as part of a business combination. • Change in provisions for onerous contracts: Consist of change in provisions for onerous contracts associated with the purchase and sale of electricity EBIT reported margin is EBIT divided by Net revenue. This APM is a measure of the proﬁta- bility and is an indicator of the earnings ability. EBIT margin adjusted is calculated as EBIT adjusted divided by Net revenue adjusted. This APM is a measure of the proﬁtability and is an indicator of the earnings ability. EBITDA is deﬁned as operational proﬁt/loss before depreciation and amortisation. This APM is used to measure performance from operating activities. EBITDA adjusted In order to give a better representation of underlying performance, the following adjust- ments are made to EBITDA: • Acquisition related costs and other one-off items: Items that are not part of the ordi- nary business • Estimate deviations from previous periods: A substantial proportion of the Group’s power sales has historically been ﬁnally settled after the Group has ﬁnalised its periodical ﬁnancial statements. Revenues related to sale of power were thus recog- nised based on estimates. Any estimate deviation related to the previous report- ing period is recognised in the following reporting period • Unallocated revised net revenue represents Part 4 – 4.3 Notes Elmera Group Annual report 2023 189 Alternative performance measures net revenue items which are revised due to prior period adjustment requirements. • Unrealised gains and losses on derivatives: Consist of unrealised gains and losses on derivative ﬁnancial instruments associated with the purchase and sale of electricity • Impairment of intangible assets and cost to obtain contracts: Consist of impairment of intangible assets and cost to obtain contracts related to ﬁxed price customer contracts • Change in provisions for onerous contracts: Consist of change in provisions for onerous contracts associated with the purchase and sale of electricity Net income is equivalent to Proﬁt/(loss) for the period as stated in the statement of proﬁt or loss. Net income adjusted for certain cash and non-cash items is used in the dividend calculation, and is deﬁned as the following: [(Adjusted EBIT + net ﬁnance)(1-average tax rate) – amortisation of acquisition debt]. Net interest-bearing debt (NIBD) shows the net cash position and how much cash would remain if all interest-bearing debt was paid. The calculation is total Interest-bearing long term debt, Interest-bearing short term debt and Overdraft facilities, deducted with the following; transaction costs recognised as part of amortised cost of Interest-bearing long term debt, reclassiﬁcation of ﬁrst year instal- ments long term debt, Overdraft facilities, and Cash and cash equivalents. Net revenue is equivalent to Revenue less direct cost of sales as stated in the statement of proﬁt or loss. Net revenue adjusted This APM presents Net revenue adjusted for: • Other one- off items: which represents non-recurring income which is recognised in the proﬁt or loss for the period • Estimate deviations from previous periods: A substantial proportion of the Group’s power sales has historically been ﬁnally settled after the Group has ﬁnalised its periodical ﬁnancial statements. Revenues related to sale of power were thus recog- nised based on estimates. Any estimate deviation related to the previous report- ing period is recognised in the following reporting period • Unallocated revised net revenue represents net revenue items which are revised due to prior period adjustment requirements. • Unrealised gains and losses on derivatives: Consist of unrealised gains and losses on derivative ﬁnancial instruments associated with the purchase and sale of electricity • Change in provisions for onerous contracts: Consist of change in provisions for onerous contracts associated with the purchase and sale of electricity Net working capital (NWC) is used to meas- ure short-term liquidity and the ability to utilise assets in an eﬃcient matter. NWC includes the following items from current assets: Inventories, Intangible assets, Trade receiv- ables and Other current assets (that is, all current assets in the statement of ﬁnancial position except Derivative ﬁnancial instru- ments and Cash and cash equivalents); and the following items from current liabilities; Trade payables, Current income tax liabilities, Social security and other taxes, Lease liability - short term, and other current liabilities. Non-cash NWC elements and other items is used when analysing the development in NIBD. Non-cash NWC relates to items included in “change in NWC” that are not aﬀecting Net interest-bearing debt while other items include interest, tax, change in long- term receivables, proceeds from non-current receivables, proceeds from other long-term liabilities and adjustments made on EBITDA. Number of deliveries is used to present the number of electrical meters supplied with electricity. One customer may have one or more electricity deliveries. OpFCF before tax and change in NWC is Operating free cash ﬂow and change in working capital, and is deﬁned as EBITDA adjusted less Capex excl. M&A and payments to obtain contract assets. Volume sold is used to present the underly- ing volume generating income in the period. Part 4 – 4.3 Notes Elmera Group Annual report 2023 190 Financial statements with APM’s Reported amounts: NOK in thousands 2023 2022 Revenue 18 920 598 25 521 514 Direct cost of sales (17 192 526) (23 823 519) Net revenue 1 728 071 1 697 995 Personnel expenses (454 622) (421 029) Other operating expenses (542 277) (574 946) Impairment of intangible assets and cost to obtain contracts 14 548 (39 282) Operating expenses (982 351) (1 035 258) EBITDA 745 721 662 737 Depreciation & amortisation (386 519) (389 956) EBIT reported (Operating proﬁt) 359 202 272 781 Net ﬁnancials (121 625) (144 089) Proﬁt/ (loss) before taxes 237 577 128 692 Taxes (41 030) (54 845) Proﬁt/ (loss) for the year 196 546 73 847 EBIT reported margin 21% 16% Alternative performance measures Part 4 – 4.3 Notes Elmera Group Annual report 2023 191 Adjusted amounts: NOK in thousands 2023 2022 Net revenue 1 728 071 1 697 995 Other one- oﬀ items (34 076) - Estimate deviations previous periods 1 924 4 472 Unrealised gains and losses on derivatives 1 085 244 47 791 Change in provisions for onerous contracts (1 048 166) (39 256) Net revenue adjusted 1 732 998 1 711 002 EBITDA 745 721 662 737 Change in provisions for onerous contracts 6 434 2 660 Estimate deviations previous periods 1 924 4 472 Impairment of intangible assets (14 548) 39 282 Unrealised gains and losses on derivatives 1 085 244 47 791 Change in provisions for onerous contracts (1 048 166) (39 256) EBITDA adjusted 776 610 717 685 EBIT reported (Operating proﬁt) 359 202 272 781 Other one- oﬀ items 6 434 2 660 Estimate deviations previous periods 1 924 4 472 Impairment of intangible assets (14 548) 39 282 Unrealised gains and losses on derivatives 1 085 244 47 791 Change in provisions for onerous contracts (1 048 166) (39 256) Depreciation of acquisitions 123 080 132 323 EBIT adjusted 513 171 460 054 EBIT margin adjusted 30% 27% Alternative performance measures Part 4 – 4.3 Notes Elmera Group Annual report 2023 192 Net interest bearing debt (cash) NOK thousands 2023 2022 Interest-bearing long term debt 537 617 629 169 Interest-bearing short term debt 368 700 368 700 Transaction costs recognised as part of amortised cost of Interest-bearing long term debt 1 158 3 306 Overdraft facilities - 534 112 Cash and cash equivalents (338 746) (70 548) Net interest bearing debt (cash) 568 729 1 464 739 Financial position related APM’s NOK thousands 2023 2022 Net working capital (NWC) (16 847) 532 789 OpFCF before tax and change in NWC 583 142 435 807 Capex excl. M&A 52 477 44 328 Non-ﬁnancial APM’s Deliveries Numbers in thousands 2023 2022 Electrical deliveries Consumer segment 667 685 Electrical deliveries Business segment 127 120 Electrical deliveries Nordic segment 125 149 Total number of electrical deliveries 920 954 Number of mobile subscriptions 115 144 * Number of deliveries excl. Extended Alliance deliveries. Number of deliveries incl. Extended Alliance deliveries: 1 003 thousand in 2023 (2022: 1 033 thousand). Volume in GWh 2023 2022 Consumer segment 8 069 7 648 Business segment 7 609 6 978 Nordic segment 2 195 2 879 Total volume 17 873 17 506 * Volume excl. Extended Alliance. Volume incl. Extended Alliance: 21 465 GWh in 2023 (2022: 21 781 GWh). Other ﬁnancial APM’s Alternative performance measures Part 4 – 4.3 Notes Elmera Group 4.4 Financial statements Elmera Group ASA Part 4 – 4.4 Financial statements Elmera Group ASA Statement of comprehensive income (loss) 194 Statement of ﬁnancial position 195 Statement of changes in equity 197 Statement of cash ﬂows 198 Annual report 2023 193 Annual report 2023 194 Statement of comprehensive income (loss) NOK in thousands Note 2023 2022 Revenue 10 223 369 86 498 Personnel expenses 3, 8 (133 897) (53 181) Other operating expenses 4, 10 (204 862) (78 805) Operating proﬁt (115 390) (45 488) Income from investments in subsidiaries 6, 10 565 000 196 500 Interest income 10,13 16 545 8 008 Interest expense 13 (62 363) (34 989) Other ﬁnancial items, net (2) (299) Net ﬁnancial income/(cost) 519 180 169 220 Proﬁt/(loss) before tax 403 790 123 732 Income tax (expense)/income 5 (27 766) (11 375) Proﬁt/(loss) for the year 376 024 112 357 Other comprehensive income: Items that will not be reclassiﬁed to proﬁt or loss: Actuarial gain/(loss) on pension obligations (net of tax) 8 11 892 3 641 Total other comprehensive income for the year, net of tax 11 892 3 641 Total comprehensive income/(loss) for the year 387 916 115 998 Part 4 – 4.4 Financial statements Elmera Group ASA Annual report 2023 195 NOK in thousands Note 2023 2022 Assets: Non-current assets Intangible assets 387 - Plan assets of deﬁned beneﬁt pension plans 8 7 684 - Investments in subsidiaries 6,13 2 285 307 2 285 307 Other non-current assets 9 997 9 286 Total non-current assets 2 303 374 2 294 593 Current assets Trade receivables 1 246 1 289 Receivables from group companies 10, 13 898 895 1 265 247 Other current assets 998 13 666 Cash and cash equivalents 13 127 211 - Total current assets 1 028 350 1 280 201 Total assets 3 331 724 3 574 794 Equity and liabilities: Equity Share capital 7 32 601 32 590 Share premium 7 1 570 810 1 570 810 Other equity 181 955 40 419 Total equity 1 785 366 1 643 819 Non-current liabilities Employee beneﬁt obligations 8 12 010 16 801 Interest-bearing long term debt 13,14 263 342 307 194 Deferred tax liabilities 5 1 774 981 Total non-current liabilities 277 126 324 976 Statement of financial position Part 4 – 4.4 Financial statements Elmera Group ASA Annual report 2023 196 Statement of ﬁnancial position NOK in thousands Note 2023 2022 Current liabilities Trade and other payables 10,13,14 22 230 31 417 Liabilities to group companies 10,13,14 767 890 676 600 Overdraft facilities 13,14 - 534 112 Interest-bearing short term debt 13,14 171 000 171 000 Current income tax liabilities 5 30 324 13 896 Dividend payable 10 249 945 162 951 Social security and other taxes 2 116 8 023 Other current liabilities 9 25 728 8 001 Total current liabilities 1 269 232 1 606 000 Total liabilities 1 546 358 1 930 975 Total equity and liabilities 3 331 724 3 574 794 Part 4 – 4.4 Financial statements Elmera Group ASA The Board of Directors of Elmera Group ASA, Bergen, 22 March 2024. Per Oluf Solbraa Board member Heidi Theresa Ose Board member Stian Madsen Board member Magnhild K. B. Uglem Board member Rolf Barmen CEO Frank Økland Board member Steinar Sønsteby Chairman Live Bertha Haukvik Board member Anne Marit Steen Board member Annual report 2023 197 NOK in thousands Issued capital Treasury shares Share premium Retained earnings Total equity Opening balance at 1 January 2022 34 291 - 1 569 610 213 868 1 817 768 Proﬁt/(loss) for the year - - - 112 357 112 357 Other comprehensive income - - - 3 641 3 641 Share buyback (note 7) - (1 715) - (131 112) (132 827) Share capital increase 15 - 1 200 - 1 215 Share-based payment (note 12) - - - 4 790 4 790 Dividend - - - (163 126) (163 126) Closing balance 31 December 2022 34 306 (1 715) 1 570 810 40 418 1 643 819 Opening balance at 1 January 2023 34 306 (1 715) 1 570 810 40 418 1 643 819 Proﬁt/(loss) for the year - - - 376 024 376 024 Other comprehensive income - - - 11 892 11 892 Sale of treasury shares - 11 - 736 747 Share capital increase - - - - - Share-based payment (note 12) - - - 2 828 2 828 Dividend - - - (249 945) (249 945) Closing balance 31 December 2023 34 306 (1 704) 1 570 810 181 954 1 785 366 Statement of changes in equity Part 4 – 4.4 Financial statements Elmera Group ASA Annual report 2023 198 NOK in thousands Note 2023 2022 Operating activites Proﬁt/(loss) before tax 403 790 123 732 Adjustments for: Dividend recognised, not received 10 (565 000) (196 500) Share based payment expense 12 2 828 4 790 Change in post-employment liabilities, no cash eﬀect 8 2 772 (1 066) Amortisation of transactions costs, no cash eﬀect 13a 6 783 8 210 Changes in working capital: Trade receivables 10 (65 572) 677 Other current assets 12 668 3 106 Trade and other payables 10 (152 371) (116 294) Other current liabilities 9 11 820 10 200 Income tax paid 5 (13 901) (10 851) Net cash from operating activities (356 182) (173 996) Investing activities Purchase of intangible assets (387) - Dividends received from subsidiary 10 196 500 424 396 Net (outﬂow)/proceeds from current loans to/from subsidiaries 10 1 034 941 (551 911) Net (outﬂow)/proceeds from other long-term liabilities (4 509) (1 807) Net cash used in investing activities 1 226 545 (129 321) Financing activites Proceeds from overdraft facilities 13a (534 112) 534 112 Proceeds from revolving credit facility 13a - 125 000 Dividends paid (162 951) (400 231) Proceeds from issuance of shares - 1 215 Purchase of treasury shares 7 - (132 827) Sale of treasury shares 7 747 - Transactions costs (credit facilities) paid 13a (836) (300) Instalments of long term debt 13a (46 000) (46 000) Net cash used in ﬁnancing activities (743 152) 80 969 Net change in cash and cash equivalents 127 211 (222 348) Cash and cash equivalents at 1 January - 222 348 Cash and cash equivalents at 31 December 127 211 - Statement of cash flows Part 4 – 4.4 Financial statements Elmera Group ASA 4.5 Notes Elmera Group ASA Part 4 – 4.5 Notes Elmera Group ASA Note 1 General information 200 Note 2 Accounting policies 200 Note 3 Personnel expenses 202 Note 4 Operating expenses 202 Note 5 Income tax 203 Note 6 Investments in subsidiaries 204 Note 7 Share capital and shareholder information 204 Note 8 Pension liabilities 207 Note 9 Other current liabilities 210 Note 10 Related party transactions 211 Note 11 Remuneration to the Executive management and Board of Directors 213 Note 12 Option program 217 Note 13 Financial assets and ﬁnancial liabilities 219 Note 14 Financial risks 222 Note 15 Events after the reporting period 223 Annual report 2023 199 Annual report 2023 200 Elmera Group ASA, is a public limited liabil- ity company, and was incorporated on 15 December 2017. The company is the holding company and ultimate parent in the Elmera Group which core business is purchase, sales and portfolio management of electrical power to end users, as well as related activi- ties, including investment in other companies. Elmera Group ASA also provides management services to subsidiaries and other companies in the Group. Elmera Group ASA is registered and domiciled in Norway. The entity name was changed from Fjordkraft Holding ASA to Elmera Group ASA in 2022. The address of its registered oﬃce is Folke Bernadottes Vei 38, 5147 Bergen, Norway. Note 1 General information Note 2 Accounting policies Basis for preparation The ﬁnancial statements of the Company have been prepared in accordance with the Norwegian Accounting Act § 3-9 and Finance Ministry’s prescribed regulations from 21 January 2008 on simpliﬁed IFRS, amended on 28 December 2020. Principally this means that recognition and measurement comply with the International Accounting Standards (IFRS) and presentation and note disclo- sures are in accordance with the Norwegian Accounting Act and generally accepted accounting principles. Any exceptions from measurement and recognition according to IFRS is disclosed below. The accounting principles applied when preparing the separate ﬁnancial statement of Elmera Group ASA are consistent with the accounting principles in the group, described in note 1 in the consolidated ﬁnancial state- ments, with some exceptions that are described below. In all other cases, reference is made to notes to the consolidated ﬁnancial statements. Investments in subsidiaries Subsidiaries are all entities over which the Company has control. The Company controls an entity when the Company is exposed to, or has rights to, variable returns from its involve- ment with the entity and has the ability to aﬀect those returns through its power to direct the activities of the entity. Investments in subsidiaries are recognised at cost in the separate ﬁnancial statement. The carrying amount is increased when funds are added through capital increases or when group contributions are made to subsidiaries. Impairment of subsidiaries At the end of each reporting period the Company assesses whether there is any indication that an investment in a subsidi- ary may be impaired. If any such indication exists, the Company estimates the recover- able amount of the subsidiary. If the carry- ing amount of the investment exceeds the recoverable amount, the group recognises an impairment loss. Dividends from subsidiaries Dividends received from subsidiaries are rec- ognised in proﬁt or loss when the dividends received are distributions of proﬁts. Other dis- tributions are recognised as a reduction in the carrying amount of the investment. Pursuant to the exemption paragraph in Finance Ministry’s prescribed regulations from 21 January 2008 on simpliﬁed IFRS, the Part 4 – 4.5 Notes Elmera Group ASA Annual report 2023 201 company has elected to recognise dividends in accordance with the Norwegian Accounting Act and Norwegian Generally Accepted Accounting Principles. Thus, any dividend from subsidiaries is recognised as a current asset at the end of the reporting period of which the dividend proposed is based on. Dividends payable Pursuant to the exemption paragraph in Finance Ministry’s prescribed regulations from 21 January 2008 on simpliﬁed IFRS, the company has elected to recognise dividends in accordance with the Norwegian Accounting Act and Norwegian Generally Accepted Accounting Principles. Thus, any dividend payable is recognised as a current liability at the balance sheet date of the reporting period of which the dividend proposed is based on. Cash and cash equivalents The cash ﬂow statement is prepared using the indirect method. For the purpose of pres- entation in the statement of cash ﬂows and in Part 4 – 4.5 Notes Elmera Group ASA the statement of ﬁnancial position, cash and cash equivalents includes cash on hand and deposits held at call with ﬁnancial institutions. Elmera Group ASA is the group account holder in a group account system for bank deposits and bank overdrafts, where the Norwegian subsidiaries in Elmera Group holds sub accounts. The total net deposit or over- draft on all sub accounts in the group account system is presented net as either cash and cash equivalents, or overdraft facilities in the statement of ﬁnancial position. Deposits and overdrafts of the sub account holders are included in receivables from group compa- nies and liabilities to group companies in the statement of ﬁnancial positions. Comparative ﬁgures and reclassiﬁcations The consolidated statements of proﬁt or loss, comprehensive income, ﬁnancial position, equity, cash ﬂow and notes provide compa- rable information in respect of the previous period. The following changes have been made in comparative ﬁgures at 31 December 2022: Presentation of instalments on long term loan due within 12 months The instalments on term loans that are due within 12 months from the reporting date has in previous reporting been reported in Other current liabilities in the statement of ﬁnancial position. From 2023 and going forward the amounts of term loan that are due within the next 12 months will be reported in Interest- bearing short term debt. Comparative ﬁgures have been reclassiﬁed to align with current presentation increasing Interest-bearing short term debt / decreasing Other current liabilities with NOKt 46 000 at 31 December 2022. Note 2 Accounting policies Annual report 2023 202 Note 3 Personnel expenses NOK in thousands 2023 2022 Salaries 105 651 41 942 Social security 17 393 5 009 Pension expenses 10 437 3 641 Other beneﬁts 2 325 2 736 Gross personnel expenses 135 806 53 328 - Capitalised R&D costs (1 910) -147 Total personnel expenses 133 897 53 181 Number of full-time equivalents (FTEs) as of 31 December 93 88 Salaries includes payments to Board of directors. See note 12. Loans to employees NOK in thousands 2023 2022 Loans 3 036 294 Loans to employees has been granted on the following terms: Maximum duration for loans to employees are 15 years. The interest rate for loans to employees is approximately equal to the current limit regarding taxation of beneﬁts for such loans, plus up to 1 percentage point. Current limit for taxation of beneﬁts is 4,50 %. The loan scheme for personnel loans was discontinued in 2023, implying that no new loans were issued from the point of discontinuation. Loans entered into before the termination of the scheme continue as normal. Employee loans are handled by the subsidiary Fjordkraft AS. Note 4 Operating expenses NOK in thousands 2023 2022 Sales and marketing costs 913 1 173 IT costs 97 279 30 953 Purchase of third-party services and external personnel 28 632 8 845 Professional fees 67 038 32 063 Other operating costs 11 001 5 771 Toal operating expenses 204 863 78 805 * Includes legal fees, audit fee and consultancy fees. Speciﬁcation of auditors remuneration (all related to services provided by Deloitte) NOK in thousands 2023 2022 Statutory audit - Deloitte 1 723 1 125 Other assurance services - Deloitte 170 19 Other non-assurance services - Deloitte 31 410 Total auditors remuneration 1 923 1 555 Part 4 – 4.5 Notes Elmera Group ASA Annual report 2023 203 Note 5 Income Tax Speciﬁcation of tax expense recognised in statement of proﬁt or loss NOK in thousands 2023 2022 Tax payable on proﬁt for the year 30 328 13 896 Change in deferred tax/(tax asset) from origination and reversal of temporary diﬀerences (2 562) (2 521) Tax expense/(-income) recognised in statement of proﬁt or loss 27 766 11 375 Speciﬁcation of tax expense recognised in other comprehensive income Change in deferred tax/(tax asset) from origination and reversal of temporary diﬀerences 3 354 1 027 Tax expense/(-income) recognised in other comprehensive income 3 354 1 027 Reconciliation of statutory tax rate to effective tax rate: Proﬁt/(loss) before tax 403 790 123 732 Income tax at statutory tax rate (22%) 88 834 27 221 Tax effect of following items: Non-deductible costs 532 764 Tax exemption method dividends (61 600) (16 610) Tax expense/(-income) 27 766 11 375 Speciﬁcation of basis for deferred tax: Pension liabilities 5 737 (3 383) Other current liabilities (1 218) - Other non-current ﬁnancial assets 3 549 9 496 Interest carried forward - (1 652) Basis for calculation of deferred tax/(tax assets) 8 069 4 461 Total deferred tax liability/(tax assets) (22 %) 1 774 981 Changes in deferred tax balances NOK in thousands 1 January 2023 Changes recog- nised in statement of proﬁt or loss Changes recog- nised in other com- prehensive income 31 December 2023 Pension liabilities (744) (1 348) 3 354 1 262 Other current liabilities - (268) - (268) Other non-current ﬁnancial assets 2 089 (1 308) - 781 Interest carried forward (364) 364 - - Total deferred tax liability/(tax assets) (22 %) 981 (2 562) 3 354 1 774 Part 4 – 4.5 Notes Elmera Group ASA Annual report 2023 204 Note 6 Investments in subsidiaries NOK in thousands Location Ownership/ voting right Equity year end 2023 (100%) Proﬁt or loss 2023 (100%) Book value Fjordkraft AS Bergen, Norway 100 % 729 655 534 012 1 636 984 Elmera Industrial Ownership AS Bergen, Norway 100 % 218 443 (16 671) 648 322 Book value at 31 December 2023 2 285 307 Dividends The board of directors in Fjordkraft AS has approved a dividend of NOKt 168 000 and a group contribution of NOKt 285 000 and the board of directors in Elmera Industrial Ownership AS has approved a dividend of NOKt 112 000. The total of NOKt 565 000 have been recognised as income from investments in subsidiaries in proﬁt or loss for 2023. Note 7 Share capital and shareholder information Shareholders at 31 December 2023 Number of shares Nominal value per share Nominal value Voting rights Ownership Folketrygdfondet 10 172 840 0,30 3 051 852 9,36 % 8,90 % Gudbrandsdal Energi Holding AS 7 682 161 0,30 2 304 648 7,07 % 6,72 % Verdipapirfondet Nordea Norge Verdi 4 315 545 0,30 1 294 664 3,97 % 3,77 % Vpf DNB Am Norske Aksjer 4 036 705 0,30 1 211 012 3,71 % 3,53 % Verdipapirfondet Holberg Norge 3 300 000 0,30 990 000 3,04 % 2,89 % Landkreditt Utbytte 2 795 000 0,30 838 500 2,57 % 2,44 % Verdipapirfondet DNB smb 2 600 076 0,30 780 023 2,39 % 2,27 % Verdipapirfondet Alfred Berg Gambak 2 309 267 0,30 692 780 2,12 % 2,02 % Skandinaviska Enskilda Banken AB 2 223 364 0,30 667 009 2,05 % 1,94 % The Bank of New York Mellon sa/nv 2 220 000 0,30 666 000 2,04 % 1,94 % J.P. Morgan SE 2 104 482 0,30 631 345 1,94 % 1,84 % Fjarde AP-Fonden 1 900 000 0,30 570 000 1,75 % 1,66 % HSBC Bank PLC 1 834 093 0,30 550 228 1,69 % 1,60 % Varde Norge AS 1 829 639 0,30 548 892 1,68 % 1,60 % State Street Bank and Trust Compy 1 789 386 0,30 536 816 1,65 % 1,56 % Verdipapirfondet Storebrand Norge 1 682 639 0,30 504 792 1,55 % 1,47 % Nordnet Bank AB 1 539 909 0,30 461 973 1,42 % 1,35 % Verdipapirfondet Nordea Avkastning 1 509 527 0,30 452 858 1,39 % 1,32 % Verdipapirfondet DNB Norge 1 374 270 0,30 412 281 1,26 % 1,20 % Catilina Invest AS 1 340 183 0,30 402 055 1,23 % 1,17 % Others 50 112 525 0,30 15 033 758 46,11 % 43,82 % Total outstanding shares 108 671 611 32 601 483 100 % 95 % Treasury shares 5 680 189 0,30 1 704 057 0,00 % 4,97 % Total shares in issue 114 351 800 34 305 540 100 % 100 % Part 4 – 4.5 Notes Elmera Group ASA Annual report 2023 205 Note 7 Share capital and shareholder information Share capital and share premium Share capital Share premium Total NOK in thousands 31 December 2023 32 601 1 570 810 1 603 411 31 December 2022 32 590 1 570 810 1 603 400 Fully paid ordinary shares which have a par value of NOK 0.30 carry one vote per share and carry a right to dividends (except for treasury shares). All outstanding shares have equal voting rights and the right to receive dividend. Treasury shares In the second quarter of 2022 the Group initiated a share buyback program where a total of 5 717 590 shares were purchased, corresponding to 5 % of the share capital, for a total amount of NOKt 132 827. The program’s purpose is to: (i) fulﬁl obligations arising as a result of the Group’s share option program, and (ii) to redeem (i.e. cancel) shares by way of a share capital decrease in the Company, subject to approval from the general meeting. In 2023 a total of 37 401 treasury shares have been sold to fulﬁl obligations arising as a result of the Group’s share option program. Part 4 – 4.5 Notes Elmera Group ASA Annual report 2023 206 Note 7 Share capital and shareholder information Part 4 – 4.5 Notes Elmera Group ASA Shares and options owned/controlled by members of the Board of Directors, CEO and other members of the Executive Management (including related parties): 31 December 2023 Number of shares Number of options Rolf Barmen (Chief Executive Oﬃcer) 69 052 250 000 Henning Nordgulen (Chief Financial Oﬃcer) 50 000 50 000 Roger Finnanger (Head of Business) 3 378 140 000 Arnstein Flaskerud (Head of Strategy, Innovation, Sustainability and M&A) 50 760 140 000 Solfrid K. Aase (Head of Alliance) 11 156 130 000 Solfrid Fluge Andersen (Head of Power markets and energy supply) 1) 5 171 135 000 Per Heiberg-Andersen (Executive Vice President Nordic) 5 000 113 334 Magnar Øyhovden (Chief Executive Oﬃcer, Fjordkraft AS) 54 600 60 000 Jeanne K. Tjomsland (Head of HR and Communications) 2) 26 028 103 334 Kari Marvik (Chief Information Oﬃcer) 3) - 30 000 Marius Sveipe (Chief Executive Oﬃcer, Gudbrandsdal Energi AS) 4) 500 - Steinar Sønsteby (Chair) 18 668 - Live Bertha Haukvik (Board member) 6 870 - Heidi Theresa Ose (Board member) 3 181 - Per Oluf Solbraa (Board member) 4 254 - Anne Marit Steen (Board member) 5) 6 681 - Frank Økland (Board member, Employee representative) 1 149 - Magnhild Uglem (Board member, Employee representative) 6) 1 261 - Stian Madsen (Board member, Employee representative) 7) 2 009 - Tone Wille (Board member) 8) - - Elisabeth Norberg (Board member, Employee representative) 9) 3 225 - Marianne Unhjem (Board member, Employee representative) 10) - - Lisbet Nærø (Chair of the Nomination committee) - - Atle Kvamme (Member, Nomination committee) - - Brede Selseng (Member, Nomination committee) 11) - - Total 322 943 1 151 668 Terms and details for the management option program are outlined in note 12. 1) Head Of Operations until 30 November 2023 and Head of Power Markets and Energy Supply from 1 December 2023 2) From 1 December 2023 3) From 1 December 2023 4) From 1 August 2022 until 30 June 2023 5) From 26 April 2023 6) From 14 June 2023 7) From 14 June 2023 8) Until 23 April 2023 9) Until 13 June 2023 10) Until 31 May 2023 11) From 26 April 2023 Annual report 2023 207 Note 8 Pension liabilities Description of pension schemes Elmera Group’s pension schemes have been established in accordance with local laws, and include both deﬁned contribution plans and deﬁned beneﬁt plans. The pension schemes oﬀered in the Norwegian compa- nies in the group are in line with the Act on Mandatory Occupational Pensions (Lov om obligatorisk tjenestepensjon). Deﬁned beneﬁt plans Deﬁned beneﬁt plans entitles members to deﬁned future beneﬁts. These are mainly dependent on the number of years of ser- vice, the salary level at retirement age and the size of beneﬁts paid by the national insur- ance. Liabilities in deﬁned beneﬁt plans that are funded are covered through an insurance company. The liability or asset recognised in the con- solidated statement of ﬁnancial position in respect of a deﬁned beneﬁt pension plan is the present value of the deﬁned beneﬁt obligation at the end of the reporting period, less the fair value of plan assets if the plan is funded. The deﬁned beneﬁt obligation is calculated annually by independent actuaries. Deﬁned contribution plans Deﬁned contribution plans are post-employ- ment beneﬁt plans under which an entity pays ﬁxed deﬁned contributions into a separate entity (a fund). Pension schemes in Elmera Group ASA Until the end of 2019 the group companies had a single pension scheme covering all employees. As of 1.1.2020 all Group employ- ees born in 1963 and later was transferred to a deﬁned contribution pension scheme. Employees born before 1963 maintained their membership in deﬁned beneﬁt pen- sion scheme, which at the same time was closed for new members. Members who were enrolled in the deﬁned contribution pension plan received a paid-up policy for earned enti- tlements for the time they have earned rights in the deﬁned beneﬁt pension scheme if they had at least three years of service. At the beginning of 2022 Elmera Group ASA had 3 employees. During 2022 81 employ- ees where transferred from the subsidiary Fjordkraft AS to Elmera Group ASA as part of a transfer of business. Fjordkraft AS’ deﬁned beneﬁt plan liabilities related the transferred employees where transferred to Elmera Group ASA as part of the transfer of business. The employees’ right to continue earning pen- sions in accordance with the Group’s pension schemes is continued in Elmera Group ASA. Deﬁned contribution plan At the end of 2023 Elmera Group ASA has a deﬁned contribution pension scheme cov- ering a total of 96 active members and no pensioners. The contribution rates for the deﬁned contribution plan are set to 5 per cent of salaries between 0 and 7,1 times G (where G is the National Insurance scheme basic amount, NOKt 118,62 in 2023), and 15 per cent of salaries between 7,1 and 12 times G. The deﬁned-contribution pension scheme also includes disability pension, spouse’s pension and children’s pension. In addition, Elmera has chosen to introduce the contrac- tual pension agreement (CPA) scheme for private sector for those members who are enrolled in the deﬁned contribution pension scheme. The agreement entitles members to beneﬁts from the age of 62 until they are eligible for a national insurance pension when reaching the age of 67. In addition to the above mentioned deﬁned contribution plan (and if applicable the defined benefit pension plan described below), Senior Management are members of a deﬁned contribution pan, entiteling them to additional annual contribution for salary exceeding 12 G. Deﬁned beneﬁt plans At the end of 2023 the deﬁned beneﬁt pen- sion scheme covers 2 active members, 1 pensioner and 52 deferred vested mem- bers. This deﬁned beneﬁt pension scheme includes retirement pension, contractual pension agreement (CPA), disability pen- sion, spouse’s pension and children’s pen- sion. The scheme complies largely with the regulations enshrined in the Act on the Government Pension Fund. The liabilities are covered through the insurance company BKK Pensjonskasse. The contractual pension agreement (CPA) for members of the deﬁned beneﬁt scheme covers a total of 2 active members and 0 pen- sioners. The agreement entitles staﬀ to bene- ﬁts from the age of 62 until they are eligible for a national insurance pension when reaching the age of 67. The CPA is an unfunded pen- sion plan. For those members who were transferred from the deﬁned beneﬁt scheme to the new deﬁned contribution pension scheme at the beginning of 2020, an additional deﬁned beneﬁt plan was established to provide sup- plementary retirement pension to employees with a long employment time and a high age whom had their expected retirement pension reduced when being transferred out of the deﬁned beneﬁt scheme. This plan aims to counteract some of the eﬀects that the intro- duction of life expectancy adjustment has had for public occupational pension schemes. The scheme applies to a closed group of employ- ees. The supplementary allowance was set with ﬁnal eﬀect at the end of 2019, and the supplement constitutes a ﬁxed percentage of the individual’s pension basis up to the age of 66 years. This scheme will only provide bene- ﬁts if the employees are at least 67 years old at retirement. The scheme covers a total of 2 active members and 0 pensioners in Elmera Group ASA at the end of 2023. Part 4 – 4.5 Notes Elmera Group ASA Annual report 2023 208 Risk exposure Through its deﬁned beneﬁt occupational pen- sion plans, the company is exposed to a number of risks, the most signiﬁcant are detailed below. Asset volatility; The plan liabilities are calculated using a discount rate set with reference to covered bonds (“Obligasjoner med fortrinnsrett”); if plan assets underperform this yield, this will create a deﬁcit. All plans hold a signiﬁcant portion of investments in equity instruments, which are expected to outperform corporate bonds in the long-term while providing vola- tility and risk in the short-term. Note 8 Pension liabilities As the plans mature, the company intends to reduce the level of investment risk by invest- ing more in assets that better match the lia- bilities. Changes in bond yields; A decrease in corporate bond yields will increase plan liabilities, although this will be partially oﬀset by an increase in the value of the plan’s bond holdings. Inﬂation risk; Some of the company’s pension obligations are linked to salary inﬂation, and higher inﬂa- tion will lead to higher liabilities (although in Amounts recognised in statement of ﬁnancial position 2023 31 December 2023 31 December 2022 NOK in thousands Present value of funded obligations 65 522 68 221 Fair value of plan assets 73 206 62 654 Deﬁcit for funded plans (7 684) 5 567 Present value of unfunded obligations 7 441 8 137 Total deﬁcit of deﬁned beneﬁt pension plans (244) 13 705 Other employee beneﬁt obligations 4 569 3 096 Employee beneﬁt obligations recognised in Statement of ﬁnancial position 4 326 16 801 most cases, caps on the level of inﬂationary increases are in place to protect the plan against extreme inﬂation). The majority of the plan’s assets are either unaﬀected by or loosely correlated with inﬂation, meaning that an increase in inﬂation will also increase the deﬁcit. Life expectancy; The majority of the plan’s obligations are to provide beneﬁts for the life of the member, so increases in life expectancy will result in an increase in the plan’s liabilities. At the end of this note, a table showing sen- sitivity analysis of the most signiﬁcant assump- tions is enclosed. Change in deﬁned beneﬁt obligation NOK in thousands Present value of funded obligation Fair value of plan assets Total, Funded obligations, net of plan Present value of non-funded obligation Total, net At 1 January 2023 68 221 62 653 5 568 8 137 13 706 Accrued pension entitlement for the year 291 - 291 466 757 Payroll tax (PT) 41 - 41 65 106 Interest expense (income) 2 480 - 2 480 255 2 735 Return on plan assets - 2 300 (2 300) - (2 300) Actuarial gains and losses (5 755) 9 049 (14 804) (442) (15 246) Beneﬁts paid (797) (796) (1) - (1) Settlement (gain) / loss recognized 1 041 - 1 041 (1 041) - At 31 December 2023 65 522 73 207 (7 684) 7 440 (244) Part 4 – 4.5 Notes Elmera Group ASA Annual report 2023 209 Note 8 Pension liabilities Amounts recognised in statement of ﬁnancial position 2023 Funded obligations Non-funded obligations Total NOK in thousands Accrued pension entitlement for the year 291 466 757 Payroll tax (PT) 41 65 106 Net interest expense / (income) 2 480 256 2 736 Expected return on plan assets (2 300) - (2 300) Settlement (gain) / loss recognized 1 041 (1 041) - Pension expenses deﬁned beneﬁt pension schemes 1 553 (254) 1 299 Pension expenses deﬁned contribution pension scheme 9 139 Total amount recognised in proﬁt or loss 10 437 Actuarial gains and losses recognised directly in Other comprehensive income (OCI) NOK in thousands 2023 2022 Net actuarial gains/(losses) recognised in OCI during the year 15 246 4 666 Tax eﬀects of actuarial gains/(losses) recognised in OCI 3 354 1 027 Signiﬁcant actuarial assumptions Discount rate 4,15 % 3,60 % Salary growth rate 2,50 % 3,75 % Expected growth in base social security amount (G) 3,50 % 3,50 % Estimated return on plan assets 4,15 % 3,60 % Pension growth rate 2,90 % 2,75 % CPA withdrawal 25% when 62 yrs 25% when 62 yrs Demographic assumptions K2013BE K2013BE Voluntary retirement Before 45 yrs - 4,5% Before 45 yrs - 4,5% 45 yrs - 60 yrs - 2,0% 45 yrs - 60 yrs - 2,0% After 60 yrs - 0% After 60 yrs - 0% * K2013BE is the insurance companies present best estimate based on The Financial Supervisory Authority of Norway’s mortality table K2013 and Statistics Nor- way’s present population projection. Part 4 – 4.5 Notes Elmera Group ASA Annual report 2023 210 Note 9 Other current liabilities Other Current Liabilities consist of the following: NOK in thousands 2023 2022 Accrued expenses 3 965 591 Payroll liabilities 21 763 7 410 Total other current liabilities 25 728 8 001 Note 8 Pension Liabilities Pension asset comprise Pension assets are invested in bonds and money-market placements issued by the Norwegian government, Norwegian municipalities, ﬁnancial institutions and en- terprises. Foreign currency bonds are hedged. Investments are made in both Norwegian and foreign shares. Any estimate deviation is distributed pro-rata between the individual asset categories. At 31 December 2023 the plan assets were invested as follows: Level 1 Level 2 Level 3 NOK in thousands Exchange listed prices Observable prices Non-observable prices Total %-share Equity instruments 9 785 8 755 9 409 27 949 38% Interest bearing instruments 1 462 43 796 45 257 62% Total investments 11 246 52 550 9 409 73 206 100 % Sensitivity of pension liabilities to changes in the weighted ﬁnancial assumptions are: Change in pension cost Change in employee deﬁned beneﬁt liabilities NOK in thousands 1,00 % -1,00 % 1,00 % -1,00 % Discount rate (176) 218 (13 139) 17 364 Salary growth rate 78 (73) 857 (824) Expected growth in base social security amount (G) 133 (114) 16 425 (12 638) Part 4 – 4.5 Notes Elmera Group ASA Annual report 2023 211 Note 10 Related party transactions Related parties include major shareholders, Board of Directors and key management. Transactions related to these groups are disclosed in note 11. Pricing of services and transactions between related parties are set on an arm’s length basis in a manner similar to transactions with unrelated third parties. The following transactions were carried out with related parties (NOK in thousands): Income from related parties (NOK in thousands) Related party Relation Purpose of transactions 2023 2022 Fjordkraft AS Subsidiary Dividend 168 000 75 500 Fjordkraft AS Subsidiary Group contribution 285 000 121 000 Elmera Industrial Ownership AS Subsidiary Dividend 112 000 - Fjordkraft AS Subsidiary Management, IT, and other services 162 463 71 740 TrøndelagKraft Subsidiary Management, IT, and other services 17 873 7 777 Allrate AS Subsidiary Management, IT, and other services 20 610 3 752 Steddi Payments AS Subsidiary Management, IT, and other services 14 162 840 Elmera Nordic AS Subsidiary Management, IT, and other services 4 629 2 039 Fjordkraft Mobil AS Subsidiary Management services 634 - Gudbrandsdal Energi AS Subsidiary Management services 2 929 - Elmera Industrial Ownership AS Subsidiary Management, IT, and other services - 525 Other Subsidiaries Interest income cash pool 12 111 5 142 Expenses to related parties (NOK in thousands) Related party Relation Purpose of transactions 2023 2022 Fjordkraft AS Subsidiary Purchase of other services 1 022 3 230 Metzum AS Associated company Purchase of other services 43 846 13 112 Atea AS* Other Purchase of products and other services 9 919 687 Telia Norge AS Other Purchase of products and other services 4 648 - Other Subsidiaries Interest expense cash pool 17 398 4 961 Part 4 – 4.5 Notes Elmera Group ASA Annual report 2023 212 Note 10 Related party transactions Current receivables from related parties (NOK in thousands) Related party Relation 2023 2022 Fjordkraft AS Subsidiary 464 413 1 003 869 TrøndelagKraft AS Subsidiary 25 902 8 067 Allrate AS Subsidiary 24 362 3 752 Elmera Industrial Ownership AS Subsidiary 359 766 228 432 Steddi Payments AS Subsidiary 15 002 840 Elmera Nordic AS Subsidiary 6 426 2 039 Switch Nordic Green AB Subsidiary - 965 Fjordkraft Mobil AS Subsidiary 94 - Gudbrandsdal Energi AS Subsidiary 2 929 17 282 * Includes receivables in group account system, refer note 13. Current liabilities to related parties (NOK in thousands) Related party Relation 2023 2022 Fjordkraft AS Subsidiary 271 091 143 185 TrøndelagKraft AS Subsidiary 403 523 281 888 Allrate AS Subsidiary 32 757 16 888 Steddi Payments AS Subsidiary 20 604 234 520 Energismart Norge AS Subsidiary 3 4 Elmera Nordic AS Subsidiary 6 542 115 Gudbrandsdal Energi AS Subsidiary 33 370 - Metzum AS Associated company 6 836 959 Atea AS Other 1 875 67 * Includes liabilities in group account system, refer note 13. ** The chairman of the Board of Directors in Elmera Group ASA is the CEO of Atea ASA. *** Telia Norge AS is part of the Telia Company group, which is a major shareholder (non-controlling interest) in Fjordkraft Mobil AS. Part 4 – 4.5 Notes Elmera Group ASA Annual report 2023 213 Note 11 Remuneration to the Executive management and Board of Directors Part 4 – 4.5 Notes Elmera Group ASA Executive management 2023: NOK in thousands Salary Bonus Other beneﬁts Pension costs Total remu- neration Loans outstanding 31 December Rolf Barmen (Chief Executive Oﬃcer) 3 477 375 150 774 4 776 - Henning Nordgulen (Chief Financial Oﬃcer) 2 693 12 150 360 3 215 - Roger Finnanger (Head of Business) 1 836 47 110 211 2 204 - Arnstein Flaskerud (Head of Strategy, Innovation, Sustainability and M&A) 2 007 47 120 324 2 498 - Solfrid K. Aase (Head of Alliance) 1 672 47 100 265 2 084 - Solfrid Fluge Andersen (Head of Power markets and energy supply) 1) 1 785 47 100 198 2 130 - Per Heiberg-Andersen (Executive Vice President Nordic) 1 672 47 100 178 1 997 - Magnar Øyhovden (Chief Executive Oﬃcer, Fjordkraft AS) 2 550 70 150 298 3 068 - Jeanne K. Tjomsland (Head of HR and Communications) 2) 156 - 10 28 194 - Kari Marvik (Chief Information Oﬃcer) 3) 142 - 8 9 159 - Marius Sveipe (Chief Executive Oﬃcer, Gudbrandsdal Energi AS) 4) 467 95 - 56 618 - Total remuneration executive management 2023 18 457 787 998 2 701 22 943 - In 2023 the CEO received a discretionary bonus of NOKt 375 based on the Group’s performance in 2022. ** The Group’s executive management had no outstanding personnel loans at year end in 2023. The Group discontinued the loan scheme for personnel loans in 2023 Executive management 2022: NOK in thousands Salary Bonus Other beneﬁts Pension costs Total remu- neration Loans outstanding 31 December Rolf Barmen (Chief Executive Oﬃcer) 3 311 500 150 846 4 807 294 Henning Nordgulen (Chief Financial Oﬃcer) 1) 660 - 38 86 784 - Roger Finnanger (Head of Business) 1 692 54 100 219 2 065 - Arnstein Flaskerud (Head of Strategy and M&A) 1 934 67 120 430 2 551 - Solfrid K. Aase (Head of Service Companies) 1 612 67 100 354 2 133 - Solfrid Fluge Andersen (Head of Operations) 1 667 67 100 219 2 053 - Per Heiberg-Andersen (Head of Nordic and other end-user companies) 1 662 67 100 173 2 002 - Marius Sveipe (Chief Executive Oﬃcer, Gudbrandsdal Energi AS) 2) 467 50 - 53 570 - Magnar Øyhovden (Chief Executive Oﬃcer, Fjordkraft AS) 3) 995 - 60 127 1 182 - Birte Strander (Chief Financial Oﬃcer) 4) 792 54 50 183 1 079 - Jeanne K. Tjomsland (Head of HR, Communications and Sustainability) 5) 1 021 67 70 237 1 395 - Christian Kalvenes (Head of Consumer) 6) 592 54 37 68 751 - Alf-Kåre Hjartnes (Chief Operating Oﬃcer) 5) 1 016 54 70 199 1 339 290 Total remuneration executive management 2022 17 421 1101 995 3194 22 711 584 In 2022 the CEO received a discretionary bonus of NOKt 500 based on the Group’s performance in 2021. 1) Head Of Operations until 30 November 2023 and Head of Power Markets and Energy Supply from 1 December 2023 2) From 1 December 2023 3) From 1 December 2023 4) From 1 August 2022 until 31 May 2023 1) From 1 October 2022 2) From 1 August 2022 3) From 8 August 2022 4) Until 31 May 2022 5) Until 31 July 2022 6) Until 16 May 2022 Annual report 2023 214 Note 11 Remuneration to the Executive management and Board of Directors The members of the Board of Directors have received the following remuneration during the year ended 31 December 2023 and 2022: The Board of Directors: NOK in thousands 2023 2022 Steinar Sønsteby (Chair) 605 545 Live Bertha Haukvik (Board member) 446 401 Heidi Theresa Ose (Board member) 400 360 Per Oluf Solbraa (Board member) 347 312 Anne Marit Steen (Board member) 1) 311 - Frank Økland (Board member, Employee representative) 109 108 Magnhild Uglem (Board member, Employee representative) 2) - - Stian Madsen (Board member, Employee representative) 3) - - Tone Wille (Board member) 4) 101 312 Elisabeth Norberg (Board member, Employee representative) 5) 49 108 Marianne Unhjem (Board member, Employee representative) 6) 45 108 Lisbet Nærø (Chair of the Nomination committee) - 53 Atle Kvamme (Member, Nomination committee) - 32 Ragnhild Stolt-Nielsen (Member, Nomination committee) 7) - 32 Brede Selseng (Member, Nomination committee) 8) - - Total remuneration Board of directors 2 413 2 371 1) From 26 April 2023 2) From 14 June 2023 3) From 14 June 2023 4) Until 23 April 2023 5) Until 13 June 2023 6) Until 31 May 2023 7) Until 26 April 2023 8) From 26 April 2023 There are no additional bonus agreements or agreement of similar proﬁt sharing with the CEO or Chairman of the board. The rest of the executive management is also included in the Group’s performance bonus scheme. If the company chooses to terminate the employment, the CEO is entitled to 12 months severance pay after the expiry of the ordinary notice period, which is 6 months. The Group’s executive management has the right to apply for loans on the same grounds as all the employees in the company. Maximum duration for loans to employees are 15 years.The interest rate for loans to employees is approximately equal to the current limit regarding taxation of beneﬁts for such loans, plus up to 1 percentage point. Current limit for taxation of beneﬁts is 4,5 %. The loan scheme for personnel loans was discontinued in 2023. Loans entered into before the termination of the scheme continue as normal. The CEO and Group management is included in the current pension plan for the Group - see note 8. Part 4 – 4.5 Notes Elmera Group ASA Annual report 2023 215 Note 11 Remuneration to the Executive management and Board of Directors Part 4 – 4.5 Notes Elmera Group ASA The Board of Director’s guidelines for remuneration to directors in accordance with Section 6-16a of the Norwegian Public Limited Liability Companies Act These guidelines have been prepared by the Board of Directors of Elmera Group ASA (“Elmera” or the “Company”) in accordance with the Norwegian Public Limited Liability Companies Act Section 6-16a and related regulations. The guidelines was approved by the Company’s annual general meeting in 2021 and shall apply until the Company’s annual general meeting in 2025, unless amended or replaced earlier. The guidelines apply for the following (jointly referred to as “directors”): the executive management, (ii) employee elected board members, (iii) the CEO and (iv) other leading employees deﬁned as key employees. Remuneration to persons mentioned in (ii) are regulated by “Remuneration to employee elected board members”. Purpose and general principles for remuneration The main principle of the Companys guide- lines for remuneration, is that the directors shall receive a competitive salary, including a result-based salary tied to the business results and shareholder value to ensure the desired competence and director incentives. Remuneration is an important instrument in order to harmonize the interests of the Company and its directors. The Company’s remuneration principles are designed to ensure that the Company is able to attract and keep qualiﬁed directors, without being a wage leader in the relevant business sector, and without the variable wage element con- stituting such a large proportion of the total wage compensation that it can give unfortu- nate incentives and short-termism. The remuneration shall generally stimulate to goal achievements and good risk man- agement, counteract excessive risk-taking, and contribute to avoid conﬂict of interests. The remuneration shall be in line with the Companys long term interests and eco- nomic ﬁnancial sustainability. In general, the remuneration shall be equal for male and female employees for equal work or work of equal value. The Company conducts annual reviews of the practice of the remuneration principles, and the Companys written report (the “Remuneration Report”) is reviewed by independent control functions. Elements of remuneration Remuneration includes all beneﬁts a per- son receives by virtue of his/her position as a leading person in the Company. This includes base salary, bonuses, allotment of shares, warrants, options and other forms of remuneration related to shares or the devel- opment of the share price in the company, pension schemes, early retirement schemes, and all forms of other variable elements in the remuneration, or special beneﬁts that are in addition to the basic salary. Principles for ﬁxed salary Fixed cash salary allows the Company to attract and recruit directors that are necessary for the long term proﬁtability and sustainability of the Company. It is the Company’s policy that base salaries shall reﬂect the individual’s position and degree of responsibility. The size of the ﬁxed cash salary shall be in line with market conditions, be competitive with com- parable businesses within the industry, and shall take into account inter alia the scope and responsibility associated with the posi- tion, as well as the skills, experience, and performance of each director. The ﬁxed cash salaries have no maximum levels. For directors, the base salary constitutes the most signiﬁcant part of the remuneration. Principles for variable cash salary Variable cash salary (i.e. cash bonuses) shall be based on a set of predetermined and measurable performance criteria that reﬂect the key drivers for pursuing the Company’s business strategy, longterm interests, and sustainable business practices. Principles for pension beneﬁts Directors pension arrangements shall gen- erally follow the arrangements established for the employees in Elmera Group ASA and Fjordkraft AS. Pension beneﬁts shall be based on local practices and applicable law. More information concerning pension is included in note 18 of the annual account. Principles for non-ﬁnancial beneﬁts Non-ﬁnancial beneﬁts shall be based on mar- ket terms and shall facilitate the duties of the executive management. The Company aims Annual report 2023 216 Note 11 Remuneration to the Executive management and Board of Directors Part 4 – 4.5 Notes Elmera Group ASA to have suﬃciently competitive salary and incentive programs to minimize additional non-ﬁnancial beneﬁts, and such shall gener- ally be oﬀered only to the extent they are in line with generally accepted customs locally. The executive management may receive certain limited beneﬁts in kind, including company car/car arrangement, telephone, internet access, and magazine/newspaper subscriptions. Purchase of shares The management may participate in any Company employee share purchase plans or similar plans on substantially on the same terms as all employees. Share-based incentive programs Share-based payments, settled in shares or cash, are used as part of the Company’s incentive schemes. In the view of the Board of Directors, attractive share-based long-term incentive programs is an important part of the total compensation for the executive manage- ment, and which may be necessary to allow the Company to retain and hire the talent it needs for further growth. The executive management and key per- sonnel shall be concerned with the value development for the Companys sharehold- ers. A share option program may bind the key employees to the Company and may also contribute to a more cautious wage growth in the years to come. The following speciﬁc limitations apply for granting of share options in the Company: (i) as a main rule, share options may not be redeemed before three years have elapsed, (ii) the maximum amount of share options signed in a given year shall not exceed 0.6 percent of the Companys outstanding shares, (iii) the exercise price for share options shall be set at market price at the time of allotment, (iv), the exercise price shall be adjusted for dividend paid before redemption, (v) the share options have a cap on gains of three times the exercise price (before adjustments for dividend payments). The options can be settled by the Company in cash if the share price exceeds the cap set out in (v), and if so, based on the gain of such cap, which con- stitutes the limit of maximum potential gain. Employment agreements The CEO and executive management have six month notice periods. The CEO is entitled to a severance pay in case of termination of employment by the Company for a period of 12 months after expiry of the ordinary notice period. During employment and for 12 months after expiry of the notice period (or from the time of dis- missal), the CEO is bound by the provisions on non-competition and recruiting the Company’s customers and employees in accordance with the provisions in chapter 14A of the Working Environment Act of 2005. Remuneration to employee elected board members The level of remuneration to employee elected board members for their role as board mem- bers is proposed by the Remuneration Committee and is handled further by the Nomination Committee which propose a remuneration to the general meeting. The determination of the remuneration takes into consideration the work load, comparable companies and the general wages in the Company. Deviations from these guidelines The Board of Directors may, on recommen- dation from the Remuneration Committee, in the circumstances described below resolve to deviate from any sections of these remu- neration guidelines: • upon change of the CEO; • upon material changes in Company’s organization, ownership and/or business • upon material change in the Company’s strategy; • upon changes in or amendments to the relevant laws, rules, or regulations; • upon other exceptional circumstances where the deviation may be required to serve the long-term interests and sustainability of the Company as a whole or to assure its via- bility. Any deviation from these guidelines shall be reported in the Remuneration Report for the relevant year. The Board’s declaration on determining directors pay will be sent out or made availa- ble to the shareholders on the Company’s web site, together with notice of the annual general meeting of the Company and the Company’s annual report and accounts. Annual report 2023 217 Note 12 Option program Part 4 – 4.5 Notes Elmera Group ASA Type Options Grant Date 15 February 2023 Vesting conditions The options vest in one tranche with vesting 15th of February 2026 The Employee must remain an employee of the Company or an aﬃliated company at the end of the vesting period. Expiry date 14 February 2029 Exercise price (NOK) 14,50 Total number outstanding 359 000 Type Options Grant Date 15 February 2023 Measurement date 15 February 2023 Share price (NOK) 15,19 Lifetime (years) 3,00 Volatility 45,63% Risk-free interest rate 3,26% Fair Value (NOK) 4,4288 Elmera Group ASA established a management option program 10 December 2018. The option program was established to align management’s and shareholders’ incentives and to reduce turnover for key employees. In total 359 000 share options were issued to employees during 2023. volume weighted average for options The fair value of the options was calculated using the Black-Scholes model. The model utilizes certain information, such as the interest rate on a risk-free security maturing generally at the same time as the option being valued, and requires certain assumptions, such as the expected amount of time an option will be out- standing until it is exercised or it expires and the volatility associated with the price of the underlying shares of common stock, to calculate the fair value of stock options granted. The model also estimate the likelihood of performance fulﬁllment and takes this into account in the valuation. The expected volatility for options issued in 2023 is estimated at average of 45,63% where historical volatility is not available. Where historical volatility is available this is calculated using the Elmera Group ASA share price. Interest rates used are quoted Norwegian government bonds and bills retrieved from Norges Bank. The total carrying amount per 31 December 2023 is NOK 2 458 989, not including social security. Annual report 2023 218 Note 12 Option Program Part 4 – 4.5 Notes Elmera Group ASA 01.01.2023 - 31.12.2023 01.01.2022 - 31.12.2022 Shares Weighted Average Exercise Price (NOK) Shares Weighted Average Exercise Price (NOK) Outstanding at the beginning of period 1 710 000 39 1 500 000 45 Granted 372 334 17 390 000 36 Exercised (26 664) 19 (50 000) 24 Cancelled - - - - Forfeited - - (130 000) 53 Expired (110 000) 21 - - Adjusted quantity - - - - Modiﬁcation / Dividends (13 334) 73 - - Outstanding at the end of period 1 932 336 34 1 710 000 39 Vested outstanding 943 336 32 790 000 22 Vested and expected to vest 1 932 336 34 1 710 000 39 Intrinsic value of in-the-money outstanding at the end of the period 1 012 336 13 105 162 - - Intrinsic value vested outstanding at the end of the period 633 336 6 726 362 - - Outstanding instruments Vested outstanding Exercise price Outstanding per 31 December 2023 Weighted average re- maining Contractual Life Vested options per 31 December 2023 Weighted Average Exercise Price (NOK) 0,00 - 25,00 379 000 5,13 - - 25,00 - 30,00 - - - - 30,00 - 35,00 603 336 1,17 603 336 33 35,00 - 40,00 350 000 3,87 30 000 38 40,00 - 45,00 - - - - 45,00 - 50,00 - - - - 50,00 - 55,00 - - - - 55,00 - 60,00 - - - - 60,00 - 65,00 - - 0 0 65,00 - 70,00 270 000 3,13 270000 68 70,00 - 330 000 3,88 40 000 79,7 Total 1 932 336 3,17 943 336 45,19 At 31 December 2023, the range of exercise prices and weighted average remaining contractual life of the options were as follows : The following table shows the changes in outstanding options in 2022 and 2023: Period activity: Annual report 2023 219 Note 13 Financial assets and financial liabilities The company holds the following ﬁnancial instruments: Financial assets NOK in thousands Notes 2023 2022 Financial assets at amortised cost Trade receivables (1) 1 246 1 289 Receivables from group companies (1) 10,13(b) 333 895 1 068 747 Cash and cash equivalents (1) 13(b) 127 211 - Total ﬁnancial assets 462 352 1 070 035 Financial liabilities NOK in thousands Notes 2023 2022 Liabilities at amortised cost Trade and other payables (1) 22 230 31 417 Liabilities to group companies (1) 10,13(b) 767 890 676 600 Overdraft facilities (1) 13(a) - 534 112 Interest-bearing short term debt (1) 13(a) 171 000 171 000 Interest-bearing long term debt (2) 13(a) 263 342 263 342 Total ﬁnancial liabilities 1 224 462 1 676 471 (1) The fair value of cash and cash equivalents, trade receivables, receivables from group companies, overdraft facilities, interest-bearing short term debt, liabil- itites to group companies and trade and other payables approximate their carrying value due to their short term nature. Provisions for dividends received from subsidiaries which are included in receivables from group companies are not considered ﬁnancial assets until they have been approved. (2) Interest-bearing long term debts are measured at amortised cost. The fair value of interest-bearing long term debts is not materially diﬀerent from their carrying value, since the interest payable on those debts, which are variable interest rate loans, are close to current market rates. Instalments due within the next 12 months are presented as interest-bearing short term debt. NOK in thousands 2023 2022 Interest from assets held at amortised cost 16 545 8 008 Interest expense from liabilites at amortised cost (62 363) (34 989) Total ﬁnancial income and expense (45 818) (26 981) Financial Statement Impact: The company’s ﬁnancial instruments resulted in the following income, expenses and gains and losses recognised in the statement of proﬁt or loss: Part 4 – 4.5 Notes Elmera Group ASA Annual report 2023 220 Part 4 – 4.5 Notes Elmera Group ASA 13(a) Credit facilities NOK in thousands Effective interest rate 2023 2022 Term loan NIBOR 3 months + 1,75 % 310 500 356 500 Revolving credit facility NIBOR 3 months + 1,75 % 125 000 125 000 Total principal amounts 435 500 481 500 Credit facilities agreement Elmera Group’s facilities agreement with DNB includes the following credit facilities; - a NOKt 1 000 000 term loan - the acquisition facility - a NOKt 500 000 revolving credit facility - a NOKt 2 250 000 guarantee facility - a NOKt 1 300 000 overdraft facility The termination date of the term loan facility, the revolving credit facility, and the guarantee facility has been extended until 31 December 2024. The agreement also includes an option to extend the termination date to 2 January 2025. The term loan - NOKt 1 000 000 - The acquisition facility Each term loan drawn upon the facility is to be repaid in quarterly repayments of 2,5 % of the original amount of the term loan, with the remainder being repaid in full on the termination date. The reference interest rate is NIBOR. The term loan principals are being repaid in quarterly instalments of total NOKt 11 500. At 31 December 2023 the remaining term loan principal balance is NOKt 310 500. The loan instalments of NOKt 46 000 that are due the next twelve months are reported in interest-bearing short term debt in the statement of ﬁnancial position. As the agreement includes an option to extend the termination date to 2 January 2025, the remaining balance is reported as interest-bearing long term debt. The revolving credit facility - NOKt 500 000 - The RCF The revolving credit facility is available up until one month before the termination date. Any drawings for the purpose of ﬁnancing permitted acquisitions shall be converted into term loan drawings with the same repayment proﬁle as the acquisition facility, and amounts so converted shall not be available for re-drawing. Elmera Group ASA drew NOKt 125 000 on this facility in 2022. Elmera Industrial Ownership AS, a subsidiary of the Group, drew another NOKt 150 000 on this facility in 2022, thus NOKt 225 000 remains undrawn at 31 December 2023. The revolving credit facility is classiﬁed as interest-bearing short term debt in the statement of ﬁnancial position. The guarantee facility - NOKt 2 250 000 The purpose of the guarantee facility is the issuance of guarantees and letters of credit for the general corporate and working capital purpose of the group, here- under gurantees related to re-invoicing agreements with grid owners, property rental agreements and so on. At 31 December 2023 guarantees of total NOKt 2 093 015 were issued under the guarantee facility. The overdraft facility - NOKt 1 300 000 The overdraft facility has been extended until 31 December 2024. The overdraft facility was increased from NOKt 1 000 000 to NOKt 1 300 000 in 2022. At 31 December 2023 the Group has not drawn on the overdraft facility. Transaction costs Transactions costs of NOKt 9 570 related to establishing and extending the Term loan facility are recognised as part of amortised cost of the Term loan. Transac- tion costs of NOKt 18 072 related to establishing and extending the RCF, The guarantee facility, and the overdraft facility are amortised on a straight line basis over the period from establishing the facilities to the extended termination date. Security The Company’s trade receivables has been pledged as security for all credit facilities under the facilities agreement. Annual report 2023 221 13(b) Cash and cash equivalents Current assets NOK in thousands 2023 2022 Cash at bank and in hand 127 211 - Total 127 211 - The above ﬁgures equals the amount of cash shown in the statement of cash ﬂows at the end of the ﬁnancial year. Classiﬁcation as cash equivalents Term deposits are presented as cash equivalents if they have a maturity of three months or less from the date of acquisition and are repayable with 24 hours notice with no loss of interest. Elmera Group ASA is the group account holder in a group account system for bank deposits and bank overdrafts, where the Norwegian subsidiaries in the Elmera Group holds sub accounts. The total net deposit or overdraft on all sub accounts in the group account system is presented net as either cash and cash equivalents, or overdraft facilities in the statement of ﬁnancial position. Deposits and overdrafts of the sub account holders are included in receivables from group companies and liabilities to group companies in the statement of ﬁnancial positions. Restricted cash The company does not hold any restricted cash deposits at 31 December 2023. Part 4 – 4.5 Notes Elmera Group ASA Financial covenant Under the credit facility, there is a leverage covenant that applies at all times, and which shall be calculated quarterly based on consolidated numbers. A leverage ratio is to be calculated as total long term interest bearing debt (term loan) deducted free cash to rolling 12 month EBITDA adjusted. The leverage ratio shall not exceed: - more than 2,5 in respect of more than one quarter-end during any ﬁnancial year, and - more than 2,0 in respect of the remaining three quarter-ends during any such ﬁnancial year. The Group is in compliance with the covenant at the end of this reporting period. 13(a) Credit facilities Annual report 2023 222 Note 14 Financial risks The company classiﬁes the following catego- ries of ﬁnancial risks: • Climate risk • Market risk • Credit risk • Liquidity risk Climate risk In preparing Elmera Group ASA’s annual ﬁnancial statements, a comprehensive eval- uation of climate-related risks was conducted to accurately reﬂect the company’s ﬁnancial position and outlook. The company is the holding company and ultimate parent in the Elmera Group and provides management ser - vices to subsidiaries and other companies in the Group. The Group’s core business is purchase, sales and portfolio management of electrical power to end users. Elmera Group ASA is therefore indirectly aﬀected by the potential impacts of physical climate risks such as extreme weather events and shifts in climate patterns, as well as transition risks associated with the global move towards a low-carbon economy. The various aspects of climate risk men- tioned above have been assessed for their potential inﬂuence on the impairment con- siderations of the company’s investments in subsidiaries and revenues related to manage- ment services. It was concluded that, as of the current reporting period, climate-related risks do not have material eﬀects on the company’s ﬁnancial statements. The Elmera Group’s ESG-report contains more information about climate risk and how these are managed. Market risk Market risk is the risk of losses arising from movements in market prices. The company is primarily exposed to the market risks of changes in interest rates. Market risk – interest rates The company’s exposure to interest rate risk arises from variable interest rate credit facil- ities and variable interest rate deposits and overdrafts within the group account system. Refer to note 13 for description of the Group’s credit facilities. The company has a term loan drawn upon the Group’s term loan facility, a short term loan drawn upon the Group’s revolving credit facility. The net interest-bear- ing deposits and overdrafts of each of the group companies holding sub accounts in the group account system, are included in receivables on group companies and liabil- ities to group companies in the company’s statement of ﬁnancial position. Credit risk Credit risk refers to the risk that a counter- party will default on its contractual obligations resulting in ﬁnancial loss to the company. As at 31 December 2023, the company’s max- imum exposure to credit risk without taking into account any collateral held or other credit enhancements, equals the carrying amount of the respective recognised ﬁnancial assets as stated in the statement of ﬁnancial position, see note 13. At year end 2023 the company’s only ﬁnancial assets are trade receivables, receivables on group companies and cash and cash equivalents. Receivables on group companies mainly represents receivables on those subsidiaries that have net overdrafts on their sub accounts in the group account system. Each member of the group account system is jointly and severally liable for any overdraft liabilities. Liquidity risk The company manages liquidity risk by main- taining adequate cash reserves, bank over- draft facilities and reserve credit facilities, and by monitoring forecasts and actual cash ﬂows. The company has access to the group’s credit facilities (a term loan facility, a revolving credit facility, a guarantee facility, and an overdraft facility) which ensures access to additional cash reserves. Details of the group’s undrawn facilities are set out in note 13(a), Credit facil- ities. Liquidity risk table The following table details the company’s remaining contractual maturity for its ﬁnancial liabilities. The table has been drawn based on the undiscounted cash ﬂows of ﬁnancial liabilities based on the earliest date on which the company can be required to pay. The company does not hold any derivative ﬁnan- cial liabilities at year end 2023. Part 4 – 4.5 Notes Elmera Group ASA Annual report 2023 223 Note 15 Events after the reporting period The Board of Directors has in the Board Meeting on 14 February 2024 proposed a dividend to the shareholders of NOK 2.30 per share. The proposed dividend is subject to approval by the general meeting. There are no other signiﬁcant events after the reporting period that have not been reﬂected in the consolidated ﬁnancial statements. Part 4 – 4.5 Notes Elmera Group ASA Contractual maturities of ﬁnancial liabilities 31 December 2023 NOK in thousands Less than 1 month 1-3 months 3 months to 1 year 1-5 years 5+ years Total Carrying amount Trade and other payables 22 230 - - - - 22 230 22 230 Liabilities to group companies - - - - - - 767 890 Overdraft facilities - - - - - - - Interest-bearing short term debt* - 11 500 34 500 125 000 - 171 000 171 000 Interest-bearing long term debt - - - 264 500 - 264 500 263 342 Total 22 230 11 500 34 500 389 500 - 457 730 1 224 462 * Ordinary trade and other payables are not interest-bearing. ** Liabilities to group companies are interest-bearing and includes liabilities to subsidiaries that have net deposits on their sub accounts in the group account system at year end. As there are no contractual maturities for deposits and liabilities within the group account system these amounts are not included in the table. *** Interest-bearing short term debt includes the amounts of the term loan that are due within the next 12 months. Note 14 Financial risks 4.6 Auditor’s report Part 4 – 4.6 Auditor’s report Annual report 2023 224 Annual report 2023 225 Part 4 – 4.6 Auditor’s report Annual report 2023 226 Part 4 – 4.6 Auditor’s report Annual report 2023 227 Part 4 – 4.6 Auditor’s report Annual report 2023 228

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